Crypto now and beyond…
It is not very far since the cryptocurrency was first invented by anonymous in 2008. But in these thirteen years, it has revolutionized the world’s monetary system. At present more than 1500 cryptocurrencies are online. Bitcoin, Ethereum, Dogecoin, and Ripple are some of the popular cryptos. While many countries have declared it illegal, the rest of the world has embraced it as their next-generation currency. Today countries are developing their own digital currency. European Union is talking about starting digital euro. Sweden has already successfully started e-krona and increased its pilot project till 2022. China, Singapore, Estonia, Ecuador, and many more countries are planning to develop their own cryptocurrency. Major organizations like Microsoft, Tesla, Amazon, Starbucks, and Paypal are investing in crypto and accepting this as their official payment method for their products and services.
We have seen a lot of changes in the last few years in the financial system. The usability of the internet has increased, and smartphones are more reasonable hence people are doing more digital transactions than before. The growing number of transactions is helping to invent new technologies and platforms to make the process secure and smooth. Coinbase is a platform where interested people can buy and sell their cryptocurrency listed in the US share market in April 2021. The transaction fee is low as well as the risk so investors are optimistic to invest. Tesla’s founder Elon Musk alone invested $1.5 billion in Bitcoin. So companies like Tesla, Amazon, and Microsoft have large contributions to making it popular and trustworthy. Today someone who cannot invest a large amount but owns a computer can mine crypto from his bedroom.
The changes that happened in the last few years have both sweet and sour feelings for everyone. Big investors came to the market so small miners are losing their investment to those giants. At the same time, interested people can easily buy crypto from their smartphone just sitting in their living room. So now it’s easy for anyone than before to do crypto trade through their phone. But since 2014, IRS (International Revenue Services) has implemented a tax on crypto transactions. That means if someone buys or sells or does any crypto transaction that is taxable. Also, your crypto earnings need to be reported to the US tax authority for tax purposes.
The best way to get ready for filing taxes is to plan ahead. There is already a number of software to simplify the task. CoinTracker, TokenTax, CryptoTrader.Tax and a few others are already available to help crypto traders. All you have to do is to input your data and these programs will dictate your profit and loss. These programs will also help you to make a report which you can submit to the tax authority or government. Even if you are not being able to use one of these programs, you can hire someone professional who is experienced in the sector. There are several gaps in the current crypto tax guidance so a professional who knows about the rules and regulations and experiences in how to deal with this can be really helpful for a newcomer.
As of today, everyone started to show their interest in cryptocurrency. Governments are coming up with new rules for the crypto trade. Despite having taxes on crypto transactions, including new rules and regulations people are still coming with big investments and the price of the cryptos are rising as well. The fun part would be the competition among the different cryptocurrencies. Bitcoin tops the race with about a 40% market cap. How they can be a normal part of the economy and act as a regular currency would be a major challenge for them.
Arafen K. Shovon
November 2021
