Tax Concerns for Business Owners in the Cryptocurrency SpaceMay 17, 2018
The Blockchain has completely conquered the news cycle for the last quarter of 2017. The blockchain is also looking forward to doing the same for this year’s first quarter of the year 2018. Ethereum and Bitcoin – two forms of the Blockchain-based digital currency that were spoken in a nerdy subculture only a few years ago, have suddenly become the household chores.
With some of the tales about the fortunes being amazed about the selling and buying of these coins, most of the crypt users are aiming to get a piece of the pie in this modern rush for the 21st century. One of the reasons about the staggering highs that these Blockchain-based currencies have reached is the lack of regulation. As a decentralized and radically new form of currency, altcoins and Bitcoin like it have been manipulated artificially by bad players.
If most of the cryptocurrency will replace the fiat currency as the dominant holder of value, this will need to address this complete lack of regulation. It is the scenario where accountants come in. The buzz around the cryptocurrency is the potential reason for new business and for the tax professionals who are knowledgeable in this new financial sphere.
Before getting into specific cryptocurrency taxation, it will be helpful to go over with the basic concepts quickly. A Blockchain is a virtual ledger that is constantly updated and decentralized. Due to the easy verification and heavy encryption, Blockchain has been used as the basis for a new birth of online currency. With the start of the Bitcoin in 2008, more than 1000 new and different Blockchain-backed cryptocurrencies have been created, and more being made every day.
Some of the popular cryptocurrencies today are Bitcoin, Ripple, Ethereum, Litecoin, Monero, Dash, Tether, and Dogecoin. Some of the non-Bitcoin cryptocurrencies are also commonly referred to as the altcoins. Moreover, it is also essential to consider that not all of the altcoins are managed to hold or gain the significant value. However, in the year 2017, the number of the cryptocurrencies that had a market cap of over $1 million was superior to 300.
Cryptocurrency has been impacting most of the businesses. Cryptocurrencies like Bitcoin operate independently of a banking system and can also be used for in various countries as an exchange or store of value like cash. Its common use is selling and buying goods and services online. It represents a new way for most small businesses on accepting customer payments.