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Bitcoin (BTC)

Bitcoin is a digital asset and a payment system invented by Satoshi Nakamoto. Transactions are verified by network nodes through cryptography and recorded in a public dispersed ledger called a blockchain. Bitcoin is unique in that there are a finite number of them: 21 million.

How does Bitcoin Work?

Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.

What are the advantages of Bitcoin?

Bitcoin has several advantages compared to other traditional payment methods, such as bank transfers and credit cards. These include:

  • Immediacy: bitcoin transactions are nearly instantaneous, unlike bank transfers that can take days to clear.
  • Low or no fees: most bitcoin transactions are processed with either no fees or very low fees. This is in contrast to typical credit card processing fees, which can be high.
  • Global reach: bitcoin is accepted by merchants all over the world, giving you greater purchasing power wherever you are.
  • Security: bitcoin transactions are secured by cryptography, a tamper-resistant technology. This ensures that your money is safe even if your bitcoin wallet is compromised.

Bitcoin Taxes

Bitcoin income is taxable, just like any other income. The IRS treats bitcoin as property for tax purposes, meaning that you must report any gains or losses on your bitcoin transactions as capital gains or losses. You must also pay tax on the fair market value of bitcoin at the time of receipt.

There are a few things to keep in mind when filing bitcoin taxes:

- Bitcoin is considered property, not currency. This means that you will have to declare any bitcoin gains or losses as capital gains or losses.

- The fair market value of bitcoin on the date of purchase or sale should be used to calculate gains or losses.

- You must report all bitcoin transactions, even if they result in a loss.

Cryptocurrency taxes can be confusing, especially when you thought you were just buying your favorite meme cryptocurrency and now the taxman has come knocking at your door. With the IRS stepping up its enforcement of crypto tax evaders, you don't have to let crypto taxes ruin your day. With Ledgible's integrated current year planning features and tax loss harvesting capability, you can minimize your tax burden as significantly as possible and make sure you pay uncle sam as little as possible on your crypto earnings.

Ledgible is also completely free to get started, meaning you can integrate all of your accounts and determine your expected tax burden all before you pay a dime. If you're looking for one of the most affordable and powerful crypto tax solutions designed for professionals, consumers, and enterprises, the Ledgible Platform is the way to go.

Read more on Bitcoin and crypto taxes here.

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