Cryptocurrency & Tax

Frequently Asked Questions:

1. What is Cryptocurrency: digital currency based on Blockchain technology intended to act as a medium of exchange.

2. What is Bitcoin: type of cryptocurrency created in 2009. It is the most recognized in the current market.

3. What is Blockchain: digital system exchange that is used as a ledger to track and record all cryptocurrency transactions.

4. What is Gemini: exchange platform used to buy, sell, or trace cryptocurrency. Other similar platforms are Binance, Coinbase, Kraken, and more.

5. What is Altcoin: cryptocurrencies that are not Bitcoin. There are more than 8,000 altcoins currently on the market.

6. Which is better? Bitcoin or Others: There is no clear answer as it depends on personal goals. If you are looking for short-term or long-term gains, it is recommended to study the history, community, stability of the cryptocurrency interested in.

7. What is the bear market: is when supply may be greater than demand which can cause a downward trend for pricing on cryptocurrency.

8. What is DeFi: also known as decentralized finance, which are new ways to execute transactions through applications. Transactions are done over the blockchain.

9. Can I lose all my accounts: yes! You can possibly lose your accounts but not probable. To prevent losing your cryptocurrency. You could move your cryptocurrency off the exchange to a cold wallet. Make sure to keep your keys and password, as if lost you can lose your cryptocurrency forever.

10. Does the IRS track cryptocurrency: absolutely! The IRS has ramped up its tracing of cryptocurrency. They are getting advance in new methods of tracing and looking at the blockchain for transactions.

11. What are smart contracts: automated programs stored in the blockchain that can run when certain conditions are met. All digital and can run without the assistance of a third party.

12. Is there tax-free investing in Cryptocurrency: yes! CJ the Smart Guy mentions buying, holding, borrowing against the cryptocurrency, and writing off the interest. There is no taxable event as the cryptocurrency was not sold. Another option is using self-directed IRA’s. Even though it may be taxable at the onset, all gains are no longer taxed when withdrawn at retirement age.

13. What is taxation in cryptocurrency: cryptocurrency is taxed similarly to real estate for the IRS. Cryptocurrency is known as a capital asset and is either taxed as a short-term or long-term asset.

14. How is mining taxed: mining is taxed as earned income and would be included as gross income.

15. How is crypto price determined: pricing is determined by the market and demand at the time of the mining of the cryptocurrency.

16. Does the US allow cryptocurrency as legal tender: As of this moment it is not considered legal tender in the US.

17. When I purchase cryptocurrency, where does the money go: money stays on the blockchain exchange. Purchase is kept on the ledgers and when sold you get your money back.

18. Does bitcoin have a CEO: no! There is no board and there is no official owner of cryptocurrency.

19. When will be the last Bitcoin Mined, 2140: There is no clear expectation of the evolvement of Cryptocurrency or Bitcoin. It is technology based and changes constantly due to developments of new coins and expectations.

20. Could another cryptocurrency take over Bitcoin: there may be a possibility. Coins are ever evolving, and popularity of a coin can cause the coin to emerge and take over as superior.