So What’s the Deal with Bitcoin?

If you’re like me, you’ve pondered what exactly Bitcoin is. And you’re possibly uneasy about the thought of a “virtual currency.” Or maybe that’s just me.

Elaine Bedel of Bedel Financial Consulting is widely thought of as one of Indiana’s top financial experts (and we’re proud to say she serves on the Indiana Chamber’s finance/audit committee). She recently offered a useful summary of Bitcoin for Inside INdiana Business:

Bitcoin is a “virtual” currency. There is no physical paper or coins that you can touch or feel. It is an online currency. There is no centralized authority controlling bitcoin like other currencies such as the U.S. Dollar, Euro, and Yen.

How Do You Get Bitcoin?

Bitcoin can be purchased through an exchange or received in return for the sale of products and services. Once received, bitcoin can in turn be spent for other products or services. Today, there are almost 2,400 online businesses that accept bitcoin.

What is the Appeal of Bitcoin?

There are several reasons why bitcoin has appeal to some individuals. They include both good and not so good reasons:

-Limited Supply. The amount of bitcoin that can be created is capped at 21,000,000. For individuals concerned that governments are printing too much money, having a type of currency with a limited amount of supply is appealing.

-Privacy. Bitcoin provides a certain amount of privacy for its users. The ownership and recording of transactions with bitcoin is essentially a numerical code; therefore, there is no personal information attached when a person uses it. However, depending on where the bitcoin is used or stored this may be changing and some privacy may be given up. Several stories regarding bitcoin being used for online illegal activity has raised issues concerning the level of anonymity.

-Speculation. The value of bitcoin has skyrocketed in the past year. It has ranged from $100 to over $1,100 over the past twelve months and is now valued at approximately $500. This volatility in value is not appealing for a currency. To be widely accepted and used, the value of a legitimate currency needs to remain relatively stable.

What Does the IRS Say?

The IRS announced last week that bitcoin will be treated as property and not as currency. This ruling will likely make it more difficult for bitcoin users. Every time someone uses bitcoin to purchase a good or service, they will be required to keep track of their cost basis on those bitcoin for tax purposes. If the bitcoin was purchased or received a long time ago, it has likely gone up in value. Therefore, the individual will pay either capital gain or ordinary income tax on the increase in value when he/she files income taxes for that year. When the tax impact is included, a purchase may cost more when bitcoin is used than when dollars are spent.

The tax impact may cause some bitcoin holders to treat it more like an investment and less like a currency. If investors hold on to their bitcoin as a long term investment, it will limit the bitcoin in everyday circulation. A currency cannot exist if the everyday supply is too limited.

Beer Market: Hoosier Beer Climate Continues Upswing

Business Insider recently posted a list of what’s been designated as the 20 best beers in the world. Check it out and see which one’s you’ve had — and need to try.

We’re also happy to say that Munster-based Three Floyds Brewing has two on the list. In fact, the top two beers in the world are mentioned in an anecdote from Indiana: One Pint at a Time author Douglas Wissing in an article I wrote for BizVoice last year about Indiana brewing, “Taste of Success: Local Craft Brewers Building an Industry.”

For more on the state of the industry in Indiana, see this Inside INdiana Business interview and accompanying article with Sun King Brewing founder Clay Robinson and Barnaby Struve of Three Floyds Brewing.

New Job, New Faces, New City

Congratulations! You’re about to embark on one of life’s most exciting experiences: starting a new job. It’s also one of the most stressful. Now let’s add another element to the mix: The position is in a different state. That’s right – it’s time to relocate.

Moving can bring many positive life changes (imagine all of the memories you’ll create in your new home!), but often not without some bumps along the way. So, where do you begin?

A story on Forbes.com provides several helpful tips. Staying organized, asking for relocation assistance (even if your employer doesn’t typically offer it), taking time to familiarize yourself with your new environment before you move and building a social support network can help ease the transition.

Check out Eight Tips for a Successful Job Relocation and share your input with us. What do you wish you would have known prior to moving to another city or state for a new job?

GUEST BLOG: Poverty, Inequality and Opportunity

New national research reveals that America is still a land of opportunity, but many Indiana communities rank poorly in fostering upward economic mobility for children and youth.

According to Harvard University’s Equality of Opportunity Project, despite a growing income gap between wealthy Americans and the rest of the country, the prospects of moving up the economic ladder are at least the same and even a little better today compared with 1971.

After examining changes in income over time for 40 million children and their parents, the Harvard researchers concluded, “Contrary to the popular perception, measures of (economic) mobility have remained extremely stable. If anything mobility may have increased slightly. The rungs of the ladder have grown further apart, but children’s chances of climbing from lower to higher rungs have not changed.”

However, economic advancement is not equal in all places. The Harvard study divides the United States into 741 regions and ranks those regions on the likelihood of a child moving from the bottom fifth of income into the top fifth. Of the 17 regions in Indiana, only five – including cities such as Vincennes, Greensburg, Madison, Wabash and Lafayette – are above the national median.

More concerning, four Hoosier regions – including cities such as South Bend, Muncie, Richmond and Indianapolis – rank in the bottom fourth in the country. In fact, among the nation’s 50 largest metropolitan areas, children raised in the Indianapolis region have the fifth worst likelihood of improving economically.

Yet, people move to Central Indiana for jobs in life sciences, technology, health care, higher education, advanced manufacturing and logistics. So how can the region that includes the state’s capital city fare so poorly in comparisons of economic mobility?

“There’s an important distinction between kids who grow up in an area and kids who move to an area to find a job,” explained Sarah Abraham, a senior researcher in the Harvard study. “When we’re talking about (the Indianapolis region) being a place of low mobility, we’re talking about the kids who are born and raised in those school systems and in that environment.”

Quality K-12 education is essential, as is additional education after high school. Without discounting the importance of the other factors, Raj Chetty who leads the Harvard project and his colleagues place priority on raising educational outcomes to improve economic results – starting at the earliest grades.

“There’s an incredibly powerful relationship between kindergarten test scores and earnings 20 to 25 years later,” Chetty told the World Bank. “If we can figure out (how to help more of our youngest students succeed academically), we can potentially have really big effects on children’s success.”

Bill Stanczykiewicz is President & CEO of the Indiana Youth Institute. He can be reached at iyi@iyi.org.

Feds Raid Township Trustee Office

The reason the Indiana Chamber continues to push for local government reform is the opportunity to provide more effective services with more efficient use of taxpayer money.

The fact that some township trustees continue to draw the scrutiny and action of authorities only adds to the logic of modernizing Indiana’s local government system. A portion of the latest from Lake County (the Northwest Indiana Times has the full story):

FBI and IRS agents raided the Calumet Township Trustee’s office and removed boxes full of documents and at least one computer shortly after noon Thursday as part of a federal investigation of the office.

Bob Ramsey, the supervisory agent for the FBI office in Merrillville, said his office, the Internal Revenue Service in Merrillville and state police are taking part in a joint operation.

Calumet Township Trustee Mary Elgin, who operates one of the largest township government units in the state, couldn’t be reached for comment. She has been under official scrutiny for her office’s spending on assistance to Gary’s low income residents and the use of take-home cars.

The state has been threatening to take over the finances of her office if she doesn’t reduce administrative costs. Elgin is suing Gov. Mike Pence to stop enforcement of a 2013 law that would significantly reduce her control over more than $5 million in annual spending.

The law requires Elgin to reduce the property tax rate supporting her township assistance program to less than 12 times the average of the state’s 1,008 townships. Calumet Township’s tax rate has been as much as 22.6 times the state average. Elgin said her tax rate is much lower when the impact of state-mandated property tax cuts are calculated.

A Times investigation found her office spent almost as much on employees’ salaries and benefits and business vendors, as it did on direct assistance for  emergency shelter, utilities, health care and food. Elgin puts her administrative costs at 37 percent of her budget.

 

 

 

Throwback Thursday: Land of the Free, Home of a Few “Scoundrels”

Historically, America has been a remarkable nation, filled with bright, innovative and incredibly noble people.

But we’ve had our share of bad apples. No place is perfect, after all. The Huffington Post recently posted “10 of the Biggest Scoundrels in American History.” Here are a few folks from the past you wouldn’t want anywhere near you or your business.

Daniel Drew – Wall Street Pirate
From the 1840s to the 1870s, Daniel Drew was one of America’s most ruthless financiers—a man who believed that speculating on Wall Street without insider knowledge was like “buying cows by candlelight.” During the Civil War, he scalped the public in collusion with New York’s infamous Boss Tweed. Drew made a chunk of his fortune by manipulating New York & Erie Railroad stock, but his association with swindlers Jay Gould and Jim Fisk cost him dearly. Once worth $13 million ($194 million today), old “Uncle Daniel” died with an estate of $148.22.

Hetty Green – Tax-dodging Miser
In the late nineteenth century, investor Hetty Green lived like a wretched pauper, despite having become the first woman to earn a fortune on Wall Street. The multimillionaire was so miserly that she once dressed her son in rags in an attempt to obtain free medical treatment. To avoid establishing a permanent residence and having to pay state taxes, she moved from one flophouse to another in New York and New Jersey. Her brazen tax dodging helped spur the passage of a federal income tax in 1894 and a federal estate tax passed two months after her death in 1916.

Samuel Dickstein – Congressman/Spy
In the years prior to and during World War II, New York congressman Samuel Dickstein kept watch on the subversive efforts of Nazi supporters in the U.S. He also bolstered his income from 1937 to 1940 as a bumbling Soviet spy. Code-named “Crook” because of his persistent demands for money, Dickstein fed his handlers newspaper articles and public government reports—“rubbish,” the Russians called it. Dickstein’s congressional endeavors led to the creation of the House Un-American Activities Committee, an investigative body that would trample individual rights.

Don Lapre – Infomercial Huckster
Starting in the early 1990s, shrieking pitchman Don Lapre made and lost fortunes peddling questionable self-help products on late-night TV. His biggest profits came from selling add-on services to those who set up 1-900 numbers or websites through his company. His empire came tumbling down in 2011 when he was indicted for fraud over his Greatest Vitamin in the World business, charges that led to his suicide. Selling online distributorships for $35, along with endless marketing products, Lapre had raked in $52 million in three years but paid out a pittance in commissions.

Nate Silver: GOP Has 60% Chance of Taking Control of Senate

Nate Silver has built a brand as a successful prognosticator of U.S. elections — and fantasy baseball projections, for the record. So Democrats are understandably concerned about his prediction that Republicans will regain the U.S. Senate in 2014. The Huffington Post writes:

Cue the hand-wringing in Democratic circles everywhere: Nate Silver says the GOP will probably re-take the Senate in November’s elections.

After he ran the table in 2012, correctly predicting the electoral outcomes in every single state, Silver has become something of a modern-day oracle to political junkies.

On Sunday, Silver took to his new FiveThirtyEight website—and his new TV home on ABC—to deliver one of his breathlessly awaited prognostications.

Republicans need six seats to regain control of the Senate chamber. How many seats did Silver think the GOP would win? “Exactly six,” he told ABC’s Jonathan Karl.

Silver gave Republicans a 60 percent chance of wresting the Senate out of Harry Reid’s hands—a big blow to the final two years of the Obama presidency. In Silver’s words, that only makes the GOP “slightly favored” to win, and there are still very many months to go until November.

Indy Still Miles Behind on Mass Transit Compared to Other Cities

While mass transit in Central Indiana finally received a somewhat-limiting go-ahead from the Indiana General Assembly in the recently completed session, others with long-established systems are moving forward.

A recent Governing article noted:

  • Boston plans to extend weekend transit service until 3 a.m. Young professionals gave an enthusiastic thumbs-up to the longer hours for subways, light rail, streetcars and buses.

And here, it took three years to get state permission to have a local referendum to approve a system that would likely only include some faster buses (light rail not allowed). Just saying that despite Indiana being a great place to live, we’re way, way behind on this amenity.

  • London plans 24-hour weekend service on some subway lines in 2015. Chicago, New York and Philadelphia already do the same.

Why is this so important? The article notes: “As young professionals, many of whom are car-free, seek out vibrant cities in which to live and work, this is seen as a way to attract them. … Transit at all times ensures that mobility is available to everyone.”

Man’s Self-Written Obit Goes Viral

I seem to be writing a lot about death and dying lately (see Confessions of a … Funeral Director?) for no real reason I can determine, except for the fact that I’ll be turning 30 next year and maybe the whole “you’re not so young anymore” thing is starting to get to me.

All that aside – I have to share about a self-penned obituary from a Delaware man. The man’s grandson published the obituary online after his grandfather passed away last week and it’s getting some buzz around the Internet for the humor and matter-of-factness of life and death. I assume, for its length, that it did not go into the newspapers as a paid obituary, as I believe that would cost a small fortune.

The whole thing is witty and interesting, but my favorite part is the end, where George Bruhl, Jr. asks everyone to remember him in their own way, maybe by raising a glass of their favorite drink in his memory. And, in lieu of flowers, Mr. Bruhl requested everyone perform a random act of kindness in his name.

The Daily Mail has a little story about Mr. Bruhl and links to the full obituary, in case you’d like to read it, which I suggest. But, here are a few of my favorite parts:

“Walter George Bruhl Jr of Newark and Dewey Beach DE is a dead person, he is no more, he is bereft of life, he is deceased, he has wrung down the curtain and gone to join the choir invisible, he has expired and gone to meet his maker.”

“Walt was preceded in death by his tonsils and adenoids in 1935; a spinal disc in 1974; a large piece of his thyroid gland in 1988; and his prostate on March 27, 2000.”

And of course, a hint to his wishes about what happens to his body:

“There will be no viewing since his wife refuses to honor his request to have him standing in the corner of the room with a glass of Jack Daniels in his hand so he would appear natural to visitors.”

Cremation will take place at the family’s convenience, and his ashes will be kept in an urn until they get tired of having it around. What’s a Grecian Urn? Oh, about 200 drachmas a week.

If ever there is a cool way to say adieu to the mortal world, it’s something like this.