The City of Miami is making strides to position itself as a global cryptocurrency leader.
In fact, Mayor Francis Suarez announced plans to create and distribute digital wallets to residents last November during an interview with CoinDeskTV.
“We’re going to be the first city in America to pay a bitcoin return as a dividend directly to its residents,” Suarez said.
Miami also hosted the world’s largest cryptocurrency conference and launched its own digital currency – MiamiCoin.
The city’s moves have been welcomed, but many South Floridians are still baffled by the concept of cryptocurrency, NFTs, crypto-mining, and everything else embedded in the crypto-verse.
So, let’s dive deep into all things cryptocurrency for a better understanding.
Decoded Crypto 101: What is cryptocurrency and how does it work?
Although cryptocurrency has become popular all over the world, many are still confused about it. In the first episode of “Crypto Decoded”. NBC 6’s Jose Sepulveda delves into the cryptoverse for better understanding.
Cryptocurrency is a form of digital currency that can be used on the internet and is not backed by a central banking system like the Federal Reserve does for the US dollar.
“Cryptocurrency is actually backed by very complex crypto-based technology, and that’s actually what gives it value rather than a country saying it has value,” the gatekeeper said. -word by NerdWallet, Chris Davis.
Bitcoin became the first cryptocurrency in the market after its debut in 2009. It is also the most recognizable digital currency of the bunch. Today, there are thousands of alternative coins, including Ethereum, Litecoin, Dogecoin, and Solana.
Every transaction made using Bitcon or any other “Alt-coin” is tracked on a blockchain, which records every transaction made using this crypto.
Rather than being recorded on a single ledger, transactions are widely distributed across thousands of computers in what are called blockchains.
Read our Crypto 101 guide to learn more.
Decoded Crypto 102: What are NFTs?
What are NFTs and how do they work? Artists and digital experts break down NFTs and explain how to buy, sell and trade them.
NFT is an acronym that stands for Non-Fungible Token.
Fungible is the ability to be converted with other goods or assets of the same type such as commodities, shares of companies, precious metals and currencies.
Money is a great example of something fungible, like a dollar bill that can be converted into four quarters or dimes.
When something is non-fungible, it means that it cannot be reproduced or replaced.
In general, NFTs are retrievable, unique and non-transferable. They get their value because the transaction proves ownership of the art. When you own an NFT, you can either hold it or wait for it to appreciate and then sell or trade it.
NFTs are becoming increasingly popular and some have even sold for a premium.
A 5,000 NFT collage by an artist known as Beeple sold for $69 million at a virtual auction last March. It became the third-highest price ever achieved by a living artist at Christie’s, a world-renowned auction house.
The buyer, Vignesh Sundaresen, who also goes by the nickname Metakovan, claims he would have even paid more for it.
Read our NFT guide to learn more.
Crypto Decoded 103: Is investing in cryptocurrency safe?
Is investing in cryptocurrency safe? As digital money evolves, so do hackers’ methods.
The uncertainty of cryptocurrency makes many investors fearful of diving into the crypto world.
One of the biggest misconceptions is that transactions are anonymous and untraceable.
However, cryptocurrencies can be vulnerable at three different levels – the blockchain or network level, the exchange level, and the individual level.
“Right now, there are only two ways to break the cryptonet,” said Ray Aria, professor of computer science at the University of Central Florida. “Either you have to break the protocol, or you have to hack 50% of the computers on the network plus one. Both seem to be very difficult to do.
Exchanges that run on these blockchains are more vulnerable because the code they use to program their exchanges is usually open source and hackers can exploit any vulnerabilities.
The most common way individuals have their crypto stolen is through investment scams and business opportunities, especially through social media. However, there are ways to spot them so that you don’t fall victim to them.
Digital cash is a relatively new concept, and hackers and scammers are eagerly waiting to exploit any vulnerability at every level.
In 2021there have been over 20 hacks where at least $10 million worth of digital assets from a crypto exchange or project have been stolen and in at least six of those cases hackers have stolen over $100 million million, according to data compiled by NBC News.
Read our crypto investing guide to learn more.
Crypto Decoded 104: Is Cryptocurrency Taxed?
Digital currency is not exempt from taxes. Crypto and tax experts explain what you need to know and how to navigate the gray areas.
Cryptocurrencies aren’t backed by any federal government agency or central bank, but that doesn’t mean money can be held without paying taxes.
There are tax implications for most scenarios in the cryptoverse, including buying and selling digital currency for a profit. In some scenarios, these implications can become extremely complicated and confusing.
Crypto accountant Carolina Martinez says digital currencies and taxes are confusing because there are a lot of gray areas when classifying them.
For federal tax purposes, cryptocurrencies are treated as property. As with stocks, capital gains and losses are taxed.
During the 2021 tax season, the first page of Form 1040 asks, “At any time in 2021, did you receive, sell, trade, or otherwise dispose of a financial interest in virtual currency?”
Crypto tax experts say most people involved in cryptocurrencies will have to answer “yes”.
Read our crypto and tax guide to learn more.
“Crypto Decoded” is an ongoing digital series on NBC 6 South Florida that explores and explains the unknown parts of cryptocurrency. Check back for new episodes and explanations.