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Currency comes with three faces mainly.

  • A unit of account
  • Store of wealth
  • Means of exchange

Cryptocurrencies around seem to serve the second part only. So, talking about the taxation of these currencies means taxing changes in realized wealth, that is your income tax.

cryptocurrency user

As with more growing acceptability and increasing comfortableness with risks among the regulators, the crypto world is coming out stronger. But IRS has its eye on the crypto investment.

In 2014, IRS issued a legal statement stating that virtual currency will be treated as the capital asset if convertible into cash. Same rules of capital assets loss and gain apply to these digital currencies. Despite these implications, there are very fewer guidelines provided by the authority.

The gaining acceptance of these blockchain-based currencies has attracted many with tales of massive fortunes. Being decentralized and unregulated, these currencies show a great deal of volatility. The currency needs to hold its volatility in order to replace the fiat currency in long terms.

Basics

Running on the system of Blockchains which are decentralized and constantly updated. Despite the extremely complex mechanism, these blockchains are easily verified and are highly encrypted. Due to these features, blockchain has backed many cryptocurrencies including Bitcoin.

A few popular cryptocurrencies include,

  • Bitcoin
  • Ethereum
  • Ripple
  • Litecoin
  • Monero
  • Dogecoin
  • Dash
  • Tether

All the crypto coins other than Bitcoin are known as altcoins. Perks of being the pioneer, right?

Due to lesser global uniformity and lack of consistency coming with the nature of digital currency, there is a lot of challenges and understanding surrounding the tax regulations of this system. Some basic tax trends to be kept in mind are,

Different rules, different countries

The same basis as traditional businesses rules applies here. As there are different rules for different countries around the world, similarly different tax rules apply to digital currencies taxation around the globe.

If you wish to purchase services or goods using your digital currency, the cryptocurrency used will be written an asset or property. the gain over the currency will be accounted as income subject to tax- for the purchaser. The total value of the transaction is recognized as transaction tax. The seller is bound to collect and remit this value.

Countries like the U.S impose their own set of rules and regulations over tax rates and other categories of goods and services.

From small entrepreneur business planning to global, it can be a great amount of confusion and mayhem for them. In a number of countries, these tax systems are in multiple layers, including taxation for think city, federal and state altogether.

The task is not only to determine the tax payables, the real task will be to figure out the jurisdictions it falls into.

Taxman digitalized

Being a digital currency, the most undertaking is done by the digital goods here. The regulations are being monitored and are coming in shape by the EU and the Organization for Economic Co-operation and Development (OECD).

Taxing majorly base on where the consumer rides. The collection will happen via holding platforms. The tax will be collected and remitted on merchant’s behalf or the tax holder on payments sent to offshore clients.

The anonymity of this crypto nature can be of a great challenge here. There will be minimal information available regarding the receiver or the sender of the transaction.

The government is also working on simplifying this issue. They have introduced guidelines under the title, know-your-client (KYC). Records will be requested through these plans and unwilling or any party unable to disclose their credentials may dwindle.

A global default rule regarding crypto-based businesses may be introduced, accumulating same jurisdictions and rules applied to all.

Tax implied

The tax will be implied specifically in these areas.

  • Trading- it produces capital gain or loses, it has to offset gains and reduce tax.
  • Exchange- exchanging one crypto coin with another creates a taxable event. The token is sold so generates loss or profit.
  • Payment received in Crypto- receivables in exchange for goods or services will be treated as ordinary income.
  • Spending cryptocurrency may gain price during the holding period, subject to capital gain.
  • Conversion to fiat currency
  • Air Drops- income becomes the basis of the coin when sold or exchanged there will be a capital gain.
  • Mining coins

•    Initial coin offerings

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Requirements Get Tough for Crypto Financial Derivatives

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Before discussing the main issue, let’s discuss about the crypto financial derivatives and their role in digital payments. Crypto financial derivatives also known as bitcoin derivatives, are in fact security arrangements with a price that is dependent upon or derived from an underlying contract whereby differences in settlement are made in the form of digital cryptocurrencies.

Due to the insecurity involved in this whole process, the European Securities and Markets Authority (ESMA) has toughened its requirements for CFDs in terms of cryptocurrencies. If you are investing in cryptocurrency, this update may affect your future investment plans.

bitcoin investment

Role of ESMA in Financial Decision

In fact ESMA is an independent authority which makes sure to improve investor protection and promote more stable financial markets. ESMA’s board of supervisors is solely responsible for all the policy decisions. The decisions and policies of ESMA have a direct impact upon the following areas and stakeholders:

  • Financial service providers
  • The financial services industry
  • Retail and institutional investors and consumers
  • Users of financial markets
  • The economy of general public
  • Regulators of securities markets

What are CFDs?

To be precise and to the point, CFDs are in fact arrangements made in the form of a futures contract, according to which differences arising in the settlement are compensated in the form of cash payments, rather than physical goods.

CFDs are usually assumed to be an easier way of settlement as compared to other contemporary methods. It is also preferred by majority of users because as all gains and losses are paid in cash form. The most interesting case in terms of CFDs is that without actually owning one, it gives its investors all the risks and benefits of a security.

Expected change in leverage limit

It is being expected that the leverage limit of CFDs will be changed to 2:1 at its opening by the EU regulator. According to this leverage limit, the investor must have enough funds to cover at least half of the contract value upon its opening. Previously, the leverage limit was 5:1, it allowed the investor deposit only 20 percent of the CFD’s at the time of deal.

The reason behind this sanction is only that ESMA recently highlighted in one of its statements that cryptocurrencies required a deeper monitoring due to the risks it posed in case of undergoing investment deals. ESMA is not alone to show concern in case of cryptocurrencies, even the the Austrian Finance Minister proposed to strictly regulate the cryptocurrency derivatives in order to prevent money laundering with it.

Due to its lack of protection EU regulators have also warned investors about the ultimate risks associated with cryptocurrencies.

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What Is Bitcoin Hard Fork? The Most Heated Bitcoin Topic Explained!

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To begin with, Bitcoin has been the talk of every news channel, tabloid, website, etc. for a long while now. It’s increasing popularity might’ve caused a little problem for the network. Bitcoin is in a messy situation right now and something needs to be done. Fortunately, two possible solutions have been proposed as well, but only one can exist.

 

bitcoin hard fork

 

What’s The Issue?

In simple words, Bitcoin is unable to withstand the number of transactions taking place on the network.

The technical explanation is that the 1MB block size limit which is programmed into the system has become a problem and is causing delays in the processing of transactions. Basically, a purchase can take from a few minutes to hours to confirm.

Two techniques were proposed, which result in two different solutions: Bitcoin Unlimited, and Segregated Witness. They’re both proposed software updates to the Bitcoin network with the aim to completely change the way Bitcoin functions.

Obviously, the two can’t coexist, that would “fork” the Bitcoin network – splitting it into two different digital currencies.

A fork is known as a software update. Basically, updating a program from an old version to a new one.

Hard Fork:

It is a compulsory software update that is required in order for the program to function.  It can be implemented to fix bug errors or any security issues present in the older version of the software. Also, a hard fork is irreversible.

The “hard fork” will split the blockchain, leading to the introduction of a new chain of transactions branching from the original one.

Bitcoin Unlimited:

Starting off with Bitcoin Unlimited, this proposal is favored majorly by Bitcoin miners. To understand this, you must know the concept of Bitcoin mining. Bitcoin miners use specified powerful computers to solve complex mathematical algorithms in order to verify a transaction and be rewarded with newly issued bitcoins.

We are aware that there is a built-in block size limit of 1MB in the Bitcoin network, however, BU gives miners the permission to vote on increasing the block size whenever they want. This gives them control of the Bitcoin network, due to which they’re favored by miners.

Segregated Witness:

On the other hand, SegWit is being voted by many Bitcoin enthusiasts and developers. Their aim is to optimize the Bitcoin coding in a way that allows them to decrease the transaction size and increase the transaction volume, all while sticking to the 1MB block limit. They suggest the use of a soft fork.

A soft fork is a software update that lets the network to adapt to the new functionalities and features implemented. The update doesn’t interfere with the existing software and the older version will still be usable.

Who Will Be The Winner?

Aha! Too bad we can’t answer this question because half the community goes for SegWit and the other half for BU. There’s not really much we can do, just voice out our opinion and educate others with whatever we learn and maybe help them come up with opinions of their own.

We’ll just have to patiently wait and watch how this turns out.

I’d like to point out that I have a very limited technical knowledge and only know my way around a few technical terminologies. This post is a compilation of weeks of research that I’ve put together myself. So, if you do find any errors, do let me know in the comment section below and I’ll be sure to check back on them.

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Finance Minister, Wopke Hoekstra Demands ICO Regulations

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On Thursday, a letter was issued to parliament by Dutch finance minister, Wopke Hoekstra, to encourage a global approach to cryptocurrency regulation. The main focus of Hoekstra is on new consumer protections and to start it up, he wants to have a dialogue with credit card companies about potentially introducing stronger protections for those people who prefer to buy cryptocurrency with their credit cards.

According to Hoekstra, by the end of 2019, all local exchange platforms, plus, the cryptocurrency regulation and services would deceptively get registered with the government and should be also obeying their customers necessities. The finance minister also proposed some new regulations in the letter, that could also be helpful in protecting the ICOs (initial coin offering) contributors.

cryptocurrency regulation

Hoekstra highlighted;

“It is being investigated whether investors in ICOs can become just as good protected as investors with a normal IPO or bond issue. The current framework is not sufficient for this.”

In the past, particularly in ICOs, some issues were highlighted by the regulators, making these proposals more noteworthy. Last November, a statement was released by AFM (Authority for Financial Markets) of Netherlands, which is a Dutch version of U.S. SEC (Securities and Exchange Commission) and referred the ICO market to a dangerous-cocktail. Linked with these statements, a ban was proposed by Hoekstra that’d forbid marketing of risky financial products to random customers.

Moreover, Hoekstra also promised to work in the European Union with other countries as well and encourage collective research to discover the market’s cross-border nature. Yet, Hoekstra specified that even inside the Netherlands, more work is required for updating the laws of the country to account for cryptocurrencies and more erratic activities around it.

 

As in the letter Hoekstra wrote;

“The current supervisory framework and instruments are insufficiently tailored to cryptocurrency,”

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Bitcoin mining hardware

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Is the bitcoin mining being really profitable? Some of this technology users say yes, it is profitable. Whereas, bitcoin mining is a difficult task while you are competing against Chinese miners. As the year 2016 was the best for mining described by the stakeholders. While mining of the bitcoin become difficult after a second halving event. Whereas, reward on mining of one block decline from 25 to 12.5 BTC.

You need more efficient mining hardware if you want to compete and continue with bitcoin mining process. Few of the mining hardware are given below,

Ant miner S5

This is the cheapest miner often known as the entry-level miner. Users of this device are fully satisfied with it. But the block reward is decreasing now. You are not able to generate 0.05 coins in revenues. In addition, to get full BTC, miners have to operate one year and eight months.

 

Bitcoin mining hardware

Ant miner S7

You have the ability to produce 0.15 bitcoin with ant miner S7 to become a leader. While, If the currency value continually growing up, it will be the very good investment. This device is better for the early adopter of the technology. Whereas, it is not enough strong to produce a large number of bitcoin.

 

Bitcoin mining hardware

Avalon 6

Avalon 6 is same as s5 and s7 with little changes. While the users of this technology are fully satisfied with it. Miners mostly select s7 instead of Avalon 6 because of it is $100 more expensive than s7. This software has the capacity to earn 0.12 bitcoin per month.

Bitcoin mining hardware

Ant miner R4

This mining machine is specially designed to mine bitcoin at home as a hobby. It has the ability to compete with s7. In addition, the upside of this hardware is cooling machine. Furthermore, it is quite compared to the other bitcoin miners. You can break even with this device within a year. Whereas, it involves the risky investments. And miners become outdated after six to nine month. ROI only produce in case of currency values continually increases.

 

Bitcoin mining hardware

Avalon 7

Bitcoin mining hardware

Avalon introduce the most recent mining device Avalon 7 or 721. It is quite cheap as compared to the modern mining hardware devices. In addition, with entry-level mining, miners can break even within two years.

Ant miner S9

It is basically a cream of the crop. In addition, with the capacity to mine 3 or 4 times more BTC, it is five-time expensive. This device uses electricity more efficiently because it provides the profit at a short time period.

Accordingly, this device is new in the market is the most sophisticated rig. Antminer has the capacity to mine 0.5 coin monthly in which extra expenses are not included. Whereas, with the greater hashing power Antminer S9 work efficiently.

Bitcoin mining hardware

Bitmain manufacturer

A top maker of the Application Specific Integrated Circuit hardware (ASIC) Bitmain is easily available for the public in a market. S9 is the latest model in the market. Whereas, its chip is smaller than the others mining hardware but is more efficient in working.

Accordingly, miners will be able to break even within the year.

Bitcoin mining hardware

Bitcoin mining hardware

Upcoming mining hardware

Following are some mining hardware with efficient mining capacity.

Fast- hash one

Fast- hash one series is including silver edition, gold edition, platinum edition means three model machine is in one setup. Machines come with the same module. And has a capacity to up-grated up to six.

Editions Start Tops out Produce bitcoin
Silver edition 64GH/s 384GH/s 0.2 up to 0.85 bitcoin per day
Gold edition 128GH/s 768GH/s Same as above
Platinum edition 256GH/s 1.536 TH/s Same as above

 

Gold and platinum editions support up to six expansion cases. Whereas, silver does not support this sort of cases. These miners are available for pre-order and each extension contains 16 modules.

The price of this fast-hash one is $2499- $5999.

Bitcoin mining hardware

CoinTerra and TerraMiner IV

CoinTerra and TerraMiner IV is bitcoin mining machine. Which is drove by CoinTerra’s own in-house ASIC chips, Goldstrike I. In addition, TerraMiner with 4U power supply is built on 28nm process.

Specifications

This miner contains 4 ASIC chips with the hash rate of 500 GH/s. Accordingly, CoinTerra IV has the total hash rate of 2TH/s. Furthermore, a price of $ 5999, CoinTerra translate to just over 1.1 bitcoin per day.

 

 

Bitcoin mining hardware

Hashfast Sierra

Hashfast sierra is an efficient performance mining machine. It is basically built into 4U mountable case with two seansonic power supplies. Sierra has the hash rate of 1.2 TH/s means 0.66 bitcoin per day. This miner does not have an on-boarder controller. So, you have to connect through a USB. This main control is everything that will run CGminer, a mining software. Hashfast sierra with a cost of $6300 is available.

Bitcoin mining hardware

Black arrow Prospero X-3

Black arrow X-3 is presented by 20 black arrow minion ASIC chips. The ASIC built on 28 nm processor and are in-house design. The 20 Minion ASIC chips in the Prospero X-3 give it a hash rate of 2TH/s, good for about 1.1 Bitcoins per day as of the time of writing. The Prospero X-3 has been designed with up to 20% under- and overclocks in mind. It also supports the lightweight Stratum mining protocol.

The Prospero X-3 is available for pre-order and is scheduled to be available at the end of February 2014.

The price of this mining hardware is $6999.

 

 

Bitcoin mining hardware

KnCMiner Neptune

Bitcoin mining hardware

This miner is quite possibly the granddaddy of all Bitcoin mining machines. Whereas, it is basically four modular 20nm ASIC boards, designed so that the machine will continue mining even if one (or more) of the boards fails. Accordingly, it follows up from their previous miner, the Jupiter, which was built on a 28nm process.

The Neptune has a minimum hashing speed of 3TH/s, which translates to about 1.66 Bitcoins a day. This is a vast improvement on the Jupiter, which was only able to mine 0.6 Bitcoins a day. KnCMiner also mentions that they have the right to increase the speeds as it nears shipment, so the Neptune might end up being even faster once it gets into miners’ hands.

The KnCMiner Neptune is currently available for pre-order and is scheduled to begin shipping in Q1/Q2 of 2014, limited to 1200 units.

The price of this mining machine is $12,995.

Good luck!

 

 

 

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Intel Blockchain Technology: Can Blockchain Technology Overpower Next Generation Media Rights?

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Intel is a multinational corporation and technology company, which is considered as a giant tech, and the company is finally joining the rising list of initiative firms that perceive blockchain tech as a way to reinterpret digital rights management.

Intel’s Patent 

On 8th March, U.S. Patent and Trademark Office released a patent application. In that patent, a method was described by the Silicon Valley tech company to use blockchain for downloading the rights to digital images. Intel’s patent proceeds to referenced videos and various other types of content, apart from images and offers a more inclusive rights system with further extra characters.

intel blockchain technology

Let’s take an example! Intel’s system allows its users to uphold everything in progress, which includes unstructured bits like; literature with many editors. This would be the only way in which content can be solely altered according to the copyright policy settings.However, Intel is somehow far away from pursuing the idea all alone.

On the other hand, in addition to the exertion of blockchain industry, such as Berklee’s Open Music Initiative companies, including two of the Chinese companies, in order to make headlines for the same ideas in recent weeks are;

  • ZhongAn
  • WENN Digital

Patent’s Statement

In the patent application it is stated as;

“Blockchain technology is used to document and verify attributes of digital content that are relevant to copyright protection. Such attributes may include, for instance, an identifier for the author of the content, a timestamp to indicate when the content was created, and a measurement that can subsequently be used to detect copying or modification of the content.”

As it is already defined, multiple types of software are being used by this proposed platform to evaluate copyright policy settings automatically for every image, it doesn’t matter if the picture has been taken from external sources. After that, a unique identity is formed for both the original content and altered versions (if there are any). The patent has labelled these two identities as shadow-images.

The company also filed a patent, back in 2016, for blockchain-powered software in order to benefit research DNA, genetic sequencing, particularly. The patent is updated as well which makes Intel to go on a hunt to secure its intellectual conceptions, which are related to the industry.

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