Due to the high market value of Bitcoin, users who are capable of consistently verifying transactions, called commercial miners, can make a considerable profit. These profit-oriented miners are the primary targets of the CRAâ€™s rules which require mining profits to be reported as income. Hobby miners, on the other hand, are quite different in terms of the effort and skill they put into the mining process. The typical hobby miner can be described as an individual who uses his or her personal computer to slowly mine Bitcoins in their spare time, often as a part of a larger mining pool. The CRA has failed to adequately explain how it differentiates between commercial and hobby miners, a topic that will be subsequently explored in this analysis.
Although Bitcoin is the dominant digital currency in the world of online transactions, there are in fact thousands of other types of digital currency which operate much in the same way, albeit with variations in terms of levels of encryption and market value.
The second most popular type of digital currency is called â€œLitecoinâ€. The current market value of an individual Litecoin is $1.69 CAD. Similar to Bitcoin, Litecoin is a peer-to-peer virtual currency that enables users to make instant, low-cost payments to anyone in the world. It is also worthy of mention that the Litecoin block chain is capable of handling a higher transaction volume than Bitcoin.
Darkcoin is one of the worldâ€™s fastest growing cryptocurrencies. The current market value for an individual Darkcoin is $3.74 CAD. The most impressive feature of Darkcoin is the fact that it offers a higher degree of anonymity than Bitcoin due to its system of mixing up usersâ€™ transactions and thereby increasing the difficulty required to trace payments. While Bitcoin users who desire a greater degree of privacy and anonymity must often use a â€œlaundryâ€ service that mixes up transactions, Darkcoin achieves this automatically by combining every transaction with those of two other users (a feature called Darksend).
Dogecoin emerged in late 2013, born from an internet meme involving Shiba Inu dogs which has since exploded into one of the worldâ€™s most valuable digital currencies. Dogecoin helped fund the Jamaican bobsled team for the 2014 Winter Olympics.
Digital currencies have not been recognized as legal tender in Canada. According to s. 8 of the Canadian Currency Act, a tender of payment of money is a legal tender if it is made: (a) In the coins that are current under section 7 (e.g. coins issued under the authority of the Royal Canadian Mint Act); and (b) In notes issued by the Bank of Canada pursuant to the Bank of Canada Act intended for circulation in Canada. Digital currency does not fall within this definition of â€œLegal Tenderâ€ and is therefore not legally recognized as such in Canada.
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