Bitcoin is “the grandfather” of cryptocurrency, as well as the first official application of blockchain technology. Given this, it is an inherently disruptive technology. Just as blockchain technology has disrupted traditional ledger technologies, Bitcoin has made waves in the fintech and currency spaces by successfully sustaining a decentralized, yet secure digital currency solution.
Bitcoin does not need centralized institutions—like banks—to be its backbone. Instead, a cryptographic encryption system acts as the mathematical authority required to organize and verify transactions. Bitcoin miners task their PCs with solving pieces of an open-source algorithm, which helps to organize and verify transactions. In return for their hard work, this mathematical authority compensates miners in Bitcoin in proportion to their efforts.
Miners can then exchange Bitcoin for fiat money like USD, or use them to buy goods and services directly.
Bitcoin and the US government have an interesting relationship. Between Bitcoin’s trademark volatility, and its superficial associations with the nefarious, not to mention the anxieties officials must have about ceding monetary control and fiscal policy to what is essentially an algorithm and those that verify the transactions (if it would ever come to that), it makes sense that the government would be uneasy about mainstream acceptance of the currency.
However, over time, Bitcoin’s resilience as a network and a currency, as well as the expediency and cost-effectiveness of blockchain payments have made a case for the cryptocurrency that has proved quite effective. Accordingly, officials have tolerated a gradual yet substantial induction of Bitcoin into conventional financial services.
First, cryptocurrency exchanges started pairing Bitcoin to fiat counter-currencies such as the dollar. These platforms, like Binance and even Coinbase remain popular today. The increasing presence of Bitcoin in finance is also evidenced in Bitcoin futures contracts, which are traded on major institutional exchanges like the Chicago Mercantile Exchange and the Chicago Board Options Exchange.
Given this acceptance, and Bitcoin’s gradual inroads into the established market, it only makes sense that Bitcoin has become subject to some institutional pressures. And indeed, regulators watching over this latest entry to their ecosystem have also exerted their own influence on Bitcoin.
Bitcoin and Taxes
While originally proclaimed anonymous, the lion’s share of Bitcoin transactions today are transparent. Governments have observed surges of black-market trading using Bitcoin in the past. Exchanges now impose anti-money laundering requirements on Bitcoin traders to avoid drawing the ire of regulators.
The biggest change for Bitcoin traders, though, has been taxes.
While regulators, central bankers, and federal judges all have different opinions on how to categorize Bitcoin, whether a currency or commodity, they all seem to agree it should be taxed. Most major countries tax cryptocurrencies similarly, too.
So, what does that mean for traders?
The first thing to know is that nothing matters until it’s put into law. There’s always speculation about what will happen based on what some financial regulator says, but no individual has the ability to redefine an asset or unilaterally alter tax code, and little has changed since the IRS first addressed cryptocurrencies in 2014.
In the United States, IRS Notice 2014-21 defines virtual currencies as property. This means anything purchased using a digital currency is liable to be taxed as a capital gain whether short or long term depending on how long the asset was held.
For instance, if you buy a cup of coffee using Bitcoin that you purchased when it was worth $1,000, you must also account for the price of Bitcoin at the time of the coffee purchase. If Bitcoin is trading at $1,200 when you buy the coffee, you’ve purchased a dollar-denominated good with another asset that is now worth more in dollars than it used to be. That means the amount of Bitcoin you spent on the coffee will be taxed according to capital gains rules.
While cryptocurrency brokers aren’t required to issue 1099 forms to clients, traders are supposed to disclose everything to the IRS or face tax evasion charges. Taxable transactions include:
Exchanging cryptocurrency for fiat money, or “cashing out”
Paying for goods or services, such as using Bitcoin to buy a cup of coffee
Exchanging one cryptocurrency for another cryptocurrency
Receiving mined or forked cryptocurrencies
The following are not taxable events according to the IRS:
Buying cryptocurrency with fiat money
Donating cryptocurrency to a tax-exempt non-profit or charity
Making a gift of cryptocurrency to a third party
Transferring cryptocurrency between wallets
How to Determine What You Owe
Determining how much profit you’ve made and how much you’re liable for in taxes is a bit complicated.
Cashing Out of Crypto
In keeping with standard tax rules, when cashing out cryptocurrency for fiat money like dollars, one will need to know the basis price of the Bitcoin they’re selling.
For example, if you bought Bitcoin at $6,000 and sold it at $8,000 three months later, you’ll pay a short-term capital gains tax (equivalent to one’s income tax) on the $2,000 gained. If the same trade took place over a two-year timeline, long-term capital gains taxes correspondneymar to one’s tax bracket are applied. This is 0% for those in the 10-15% income bracket, 15% for those in the 25-35% income bracket, and 20% for those in higher brackets.
Selling the cryptocurrencies that one has mined instead of those that they bought previously with fiat is a different story. Since they’re receiving dollars in exchange for mining inputs that can only be described as work (and indeed is so with the term “Proof of Work”), the profit made from selling mined cryptocurrencies is taxed as business income. One is also able to deduct the expenses that went into their mining operation, such as PC hardware and electricity.
The taxes on buying a cup of coffee with cryptocurrency are also convoluted. One must know the basis price of the Bitcoin they used to buy the coffee, then subtract it by the cost of the coffee.
Currently, tax code allows taxpayers to exclude up to $200 per transaction for foreign currency exchange rate gain, if the gain was derived from a personal purchase, like a cup of coffee. This is known as a de minimis election. But there is no “de minimis” clause that exempts small transactions, which can create a very tangled tax problem if one is constantly trading crypto and also using it to buy goods and services.
Determining which coins were used to buy the coffee, their basis price and according gains, and then repeating this for every purchase only gets more complicated if the buyer is also trading coins frequently. It’s therefore vital to remember to keep all transaction information for each digital wallet and currency.
Another complication comes with the fact that this only works with gains. Declaring a loss and getting a tax deduction is relevant only for capital asset trades or for-profit transactions. If one buys Bitcoin at $8,000 and then uses it to purchase a pair of jeans when Bitcoin is worth $6,000, they can’t declare this a loss on their tax forms.
Exchanging cryptocurrencies exposes investors to taxes as well. You’re effectively selling Bitcoin if you buy Ethereum with it, so you’ll need to report the difference in Bitcoin’s price between when you bought it and when you spent it on Ethereum, plus make note of the price of Ethereum at its purchase time for when you sell it later.
Many exchanges help crypto traders keep all this information organized by offering free exports of all trading data, which an accountant (or a diligent enthusiast) can use to determine their tax burden. Blockchain solutions are also well-suited to record this data and highlight relevant points of tax interest. Platforms like TrustVerse have smart-contract based wealth management services that organize one’s digital identity and their assets on the blockchain, to ensure that tax and estate obligations are addressed with immutable accuracy according to the asset owner.
It is always recommended to go to a certified accountant when attempting to file cryptocurrency taxes for the first time. While it might seem daunting to tackle a multi-year trading career, it must be done, and it’s getting easier as CPAs and other tax professionals learn more about crypto assets. For now, the IRS is letting people become accustomed to the new way of doing things and has published a guide on amending old tax returns to include cryptocurrency. Savvy traders are already ahead of their obligations and are now focusing on the next year’s crypto market without this cloud of uncertainty over their heads.
[Interview] Reasons for regulation prerequisite with CEO Michael K. Jeoung
Interview with CMN on reasons for regulation prerequisite, Michael K. Jeoung, CEO of TrustVerse
Published on Nov 14, 2018
Michael Kiook Jeoung, CEO of TrustVerse told about the stance of South Korea on ICOs and the benefits of the regulation along with John McAfee, Roger Ver, Miko Matsumura, Ian Balina, Brock, W. Scott, Charlie Lie at 2018 Futurama Blockchain Innovators Summit in Spain.
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TrustVerse is a blockchain based intelligence platform for personal wealth management and a digital asset decentralization protocol. It manages and decentralizes all digital identities and proprietary information (such as iTunes, social media and subscription information) online as well as encrypted assets. When the transfer of managed assets and information is required, TrustVerse DAPP with Smart Contract Design helps to deliver it correctly and securely to the designated party.
TrustVerse’s asset management intelligence platform is powered by a state-of-the-art artificial intelligence (AI) deep neural technology and a multi-data financial portfolio optimization engine. The TrustVerse project began with the fundamental questions,
“how do you safely protect your digital estate and other assets?”, “how can we reduce information asymmetry and maximize the utility of DAPP with niche and highly demanded service related to wealth management?” We aim to answer that question by providing practical services that enable current and future crypto asset owners to safely handle their assets and also to provide proper management service (Tax, Legal services and etc.)
Co-Founder & CEO: Michael K. Jeoung
- Global Business Development
- MBA from the University of Chicago, Booth School of Business
- 15 years of high-tech business development and go-to-market strategy experiences in global MNCs, international organizations, public sector & startups
- Professional career at Cisco Systems as Head of Global Partners Organization-Service Provider Business, coverage for APJC and EMEAR(InterCloud and XaaS), Consultant at OECD Executive Directorate ITN(Business Intelligence and ICT Strategy), Chief Advisor at Ministry of Land & Transport (Smart City-Urban Integrated Operations Center Standardization)
- Responsible for US$500M in cloud, IoT and network business
- Lived and worked over 25 years in Singapore, Paris, Jakarta, Vietnam, S.Korea, and U.S.
- 4 publications on ubiquitous computing and sensor network
Official Site : https://trustverse.io/
Telegram : https://t.me/trustverse_officialchannel
KakaoTalk : https://open.kakao.com/o/gFG3TPR
Facebook : https://www.facebook.com/trustverseofficial/
Twitter : https://twitter.com/trustverse/
Instagram : https://www.instagram.com/trustverse_official/
LinkedIn : https://www.linkedin.com/company/trustverse/
Medium : https://medium.com/@trustverse
Steemit : https://steemit.com/@trustverse
Korea Blog : http://trustverseblog.com
TrustVerse – “Navigating the New Crypto Investment Class” – 12 November 2018
Most notably, the emergence and expansion of digital currencies like bitcoin and hundreds of others like it has presented investors with a compelling asset class that is both novel and opportunistic.
Interestingly, enthusiasm for crypto assets has created a need for additional financial services as novice and experienced investors alike pursue this relatively new market, creating demand for supportive services including long-term financial planning and near-term investment strategies related to cryptocurrencies. Therefore, companies like TrustVerse, Protos, and Digital Capital Management are building platforms that are striving to meet this demand.
The Expansive Crypto Economy
While bitcoin has been around for nearly a decade and several other prominent tokens have existed for several years, the market boom is relatively recent.
Throughout 2017, the return on investment on crypto assets was cartoonish, the equivalent of stats on a video game. Day after day brought new market highs, and these gains were not slight. As many have noted, by the end of the year, the price of bitcoin would come close to $20,000, an incredible jump for an asset worth less than $1,000 at the start of the year. Not to be left out, other digital currencies gained value as well, expanding by thousands of percent as 2017 progressed.
At the same time, burgeoning crypto investment space created an opportunity for new, ancillary financial products related to digital currencies. For example, more than 200 hedge funds crypto-focused hedge funds have emerged in the past several years, bringing a pillar of the traditional financial system into the crypto community.
At the same time, financial institutions are showing an increasing willingness to create products for interested crypto investors. Several institutions including Cboe, CME, Goldman Sachs, and Morgan Stanley offering bitcoin futures contracts, and the highly anticipated bitcoin ETF is expected sometime in the not too distance future.
The Role of Crypto Asset Management
Taken together, there is now a robust crypto investment scene, but it’s one that remains mostly unchartered and is still susceptible to dramatic value or sentiment swings.
As a result, there is a growing market for crypto asset management services. People want the kind of financial guidance and investment protection available to investors in traditional markets. They want to invest in crypto, but they want protection from extreme volatility and unnecessary risk, and several companies are striving to fill the void.
TrustVerse, a blockchain-based wealth management platform, is helping investors identify risk and diversify their investments appropriately. Using the power of AI and deep learning algorithms, TrustVerse not only helps investors with estate planning related to crypto assets, but it helps them establish a low-risk crypto portfolio that produces profits even during times of extreme market volatility.
Indeed, the market turbulence that frequently defines crypto markets is exhausting for investors. As Jim Smigiel, CIO of absolute return strategies at SEI Investments Co., told CNBC, “Looking at something with such high volatility all the time is not conducive to an investor’s mental health.” With TrustVerse, investors can harness the computational power of AI to create a more stable and profitable investment strategy while avoiding the headache of the always-in-flux crypto markets.
Meanwhile, other companies like Protos and Digital Capital Management are offering more traditional advisory services including merchant banking and professional fund management. In an industry dominated by a DIY ethos, these companies bring institutional knowledge and attention to crypto investment.
By professionalizing the movement and providing seasoned investors with quality tools for growing and diversifying their wealth, these companies represent the latest installments in the cryptocurrency movement.
Cryptocurrencies are an inclusive asset class. They are available to just about anyone, and their novelty means that the playing field is significantly more level than it is in traditional markets. However, even in this modern environment, investors don’t have to navigate this new investment class alone. They can turn to qualified professional platforms with innovative and capable technology that can support their investment initiatives on an individual basis.
TrustVerse – “AI Is Helping People Manage Their Crypto Assets” – 11 November 2018
Few things illicit excitement like the mention of AI. It’s everywhere right now. Microsoft is unleashing an aggressive advertising campaign touting its “amplification of human ingenuity,” and IBM’s Watson continually achieves new human-like feats.
AI is even transcending the technology space. Robin Sloan, a California-based author, is using the technology to help him write a novel, which shows, as The New York Times notes, “it is quickly clear that programming is on the verge of redefining creativity.”
That’s the fundamental premise of artificial intelligence. It can replicate human thought and address their tangible needs, not supplanting human ingenuity but enhancing it. In short, AI is a more human-like approach to computing that can be more applicable to people’s actual lives.
Therefore, it’s no surprise that AI capabilities are being applied to financial planning and asset management, an area where the demand for personalized advice and bonified investment intelligence is far outstripping the number of people who can practically provide those services.
This is especially true in the burgeoning crypto market where millions of investors have poured into the new investment space, eager to invest their money but lacking the knowledge to adequately allocate and differentiate their finances. With few experts to assist in these decisions, companies like TrustVerse, VectorSpace, and Elpis, bring AI-powered crypto investment services to market.
Managing Risk & Mitigating Losses
Although cryptocurrencies are most known because of Bitcoin, thousands of other currencies comprise this ecosystem. Taken together, they represent a compressive investment ecosystem that requires knowledge and intentionality to effectively navigate.
What’s more, despite their recent stability, cryptocurrencies remain an unusually volatile investment, prone to wild, unexplained price swings that aren’t typically experienced by other assets. This just underscores the importance of diversification.
TrustVerse, a comprehensive investment management platform that handles crypto as well as other financial assets, deploys AI to help its customers achieve a holistic investment strategy. By combining AI and the blockchain, two technologies on a tandem ascent, TrustVerse optimizes customer portfolios, making specific recommendations that are relevant for the user’s lifespan and beyond.
In comments on the emerging class of AI asset management platforms, Michael Tsang, formal managing director at Alibaba Group Americas and Microsoft HQ in Seattle, described TrustVerse as “the most advanced and profitable investment information construction service with one click.”
Elpis, Switzerland-based artificial intelligence platform, is likewise harnessing the power of AI to equip investors with the knowledge and technology necessary to pursue crypto and traditional assets in a single portfolio.
Meanwhile, other companies including VectorSpace are bucketing crypto products that contain different assets to mitigate exposure to market volatility. Using AI to determine the most appropriate investments based on the user’s comfort with volatility, long-term investment goals, and other factors, VectorSpace is using the best technology to create complete investment strategies in a unique financial market.
It’s a diverse market that is similarly applying artificial intelligence to create compelling platforms that meet customers’ unique needs. Their timing couldn’t be better. There is a profound shortage in the number of people able to provide in-person advice, and AI is effectively bridging the gap.
Just as there is tremendous demand for blockchain professionals, there are fourteen open jobs for every qualified candidate, there is a shortage of financial advisers who can provide reliable insight into crypto investments.
While traditional financial institutions offer low-cost or even free financial planning services for their customers, they do not cover cryptocurrencies. In contrast, there are a growing number of institutions that provide crypto-only investment advice that can help people navigate the crypto ecosystem, but it doesn’t account for a holistic approach to wealth management.
AI can bridge that divide, building and managing comprehensive portfolios that account for the nuance and peculiarities of an individual’s investment ambitions.
Companies like TrustVerse are counting on customers integrating crypto assets into their lifetime portfolios, and they are accounting for the inevitable transition of these assets from generation to generation, something that would never be possible without the help of AI.
Indeed, there is hardly an industry that AI doesn’t impact in a significant way, and the crypto investment landscape is ripe for enhancement. As companies provide increasingly capable platforms for asset management and allocation, users will benefit from a strategic and holistic approach to financial success. Much like Robin Sloan’s AI-written novel, this is a story that’s still in progress, and it’s moving forward every day.
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