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ICOs (Initial Coin Offerings) have skyrocketed in the past few years. A lot of attention has been given to regulatory matters than the potential tax issues that may soon arise for both investors as well as issuers. The IRS (Internal Revenue Service) didn’t issue any guidance related to the tax treatment of token issuances. Taxpayers are mostly left to apply existing-tax-rules, depending on regulations and models that offer flawed analogies to token issuances.

cryptocurrency and taxes

Cryptocurrency and Taxes

Overall, the facts of a certain token issuance, which includes the rights related to tokens must be scrutinized to regulate the proper characterization of the tokens for tax-related matters. A token has to be considered as an equity interest in the issuing entity, however, the tax consequences to the holders and issuers will rely on the buckets that token falls into.

The rules can be way too much complex if the equity interest is in a partnership, and if the taxable income partnership will surge over to the investors, so they may have a constant tax liability. Furthermore, if an investor uses “appreciated cryptocurrency” to get the tokens, it will end up in current-tax to the investor on the appreciated cryptocurrency, however, considering other facts, the investor may have the ability to claim that the cryptocurrency exchange for tokens was “tax-deferred.”

There are few token issuers that issue some of their tokens for free through an “airdrop.” Receivers usually sign up for airdropped-tokens through the website of the issuer, and sometimes they have to use social media platforms to disseminate information about tokens in order to receive them. For the receiver, the value of tokens that he/she receives in an airdrop is a taxable income.

Token issuers usually pre-sell some tokens via SAFT or SAFE-T. The holder, under a SAFT usually pays a fixed-amount for getting the right to collect a determinable number of tokens. SAFT often provide that the envisioned SAFT’s tax treatment is as a “forward contract.” If this treatment is appreciated, then the tax on the purchase amount must be delayed ’til the tokens get delivered to the SAFT holder.

Though, SAFT as a forward contract won’t necessarily be appreciated by the Internal Revenue Service, as the agency may pursue to re-characterize SAFT to extricate it from a traditional prepaid “forward contract.”

Based on SAFE (Simple Agreement for Future Equity), SAFE-T is planned to be considered as an equity instead of alterable debt. SAFE-T’s tax treatment is ambiguous; however, it comprises the elements of both SAFE and SAFT.

It’s quite clear from that there’s only a little guidance from the IRS about how token offering is treated for tax purposes. Determining how to describe these tools for tax-purposes is an exhaustive procedure. Issuers must look up for a tax adviser to get some help in organizing their token offerings.

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UNDERSTANDING BITCOIN – Recap

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We’re well aware that Bitcoin is an entirely digital currency that lets its users trade money without the involvement of any third-party authority (such as bank, government etc.).  Also, these trades are made anonymously, that means no personal information is given out or even required for a transaction.

Out of the many perks of Bitcoin, two happen to stand out the most:

Instant Transactions:

  • With Bitcoin, you can exchange money almost instantly with anyone anywhere in the world (but do check if Bitcoin is banned in that country or not). You don’t require a bank account, just a Bitcoin wallet that could be installed on your smartphone, tab, computer etc.

Anonymity:

  • You aren’t required to mention any personal details which reduce or eliminates the risk of identity theft.

Bitcoin Mining & Blockchain:

For understanding Bitcoin, one must understand how Bitcoin mining works. It is the process behind the creation of bitcoins. During this process, complex mathematical equations are solved by mining hardware in order to verify and generate a block. Every time a transaction takes place, it is tracked digitally by computers in a record, where all transaction details are described.

Bitcoin miners are the people who own those computers and confirm transactions. Moreover, they’re also paid in bitcoins and sometimes even paid a fee for the transactions. Since there’s no involvement of a central authority, miners ensure whether the right amount has been transferred and each member has the right balance after the transaction is completed.

These transactions are shared onto a public ledger, also known as, the Blockchain, which can be accessed by anyone. Every transaction that ever took place is mentioned here along with the Bitcoin address linked to it.

Bitcoin Wallet:

Now you must be wondering, what’s a Bitcoin address?

Let me help you. In order to own bitcoin(s), one must have a Bitcoin wallet. You can get all sorts of wallets, hardware, and software. Install one on your phone, computer or just purchase a physical one. After you’ve got your personal wallet, the next step is generating a bitcoin wallet address and a private key. This is the address you’re going to share with everyone, whenever you want to make a purchase or transaction. Whereas, a private key is meant to be a secret as it basically holds the key to your coins, if you lose your private key, you lose everything.

Remember! Every transaction generates a new Bitcoin address and this is the reason for its anonymity. No one can actually trace the transaction back to you since it’s always a different address.

 

While Bitcoin has major advantages compared to fiat currency, it’d only seem fair if the drawbacks are pointed out as well.

  • The Bitcoin network is also vulnerable to hackers and viruses. Remember, you cannot enter any personal details on a site promising to give out free bitcoins.
  • Bitcoin is highly volatile, which means that its price is constantly fluctuating.
  • Another drawback is that there are only 21 million bitcoins available. So nobody knows what’s going to happen once it reaches that limit.
  • If you lose your wallet, those coins are gone forever, unless you’ve created a backup of it.
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Bitcoin in Business – What Role Bitcoin May Play in B2B Community

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What Role Bitcoin May Play in B2B Community

Since the introduction in 2009, Bitcoin has been on an incredible rise. The value is always going up, and so is the speculation about BTC’s future.

At the time of writing, Bitcoin had already gone past the $2500 mark – and the trend is still expected to continue. Incredible! Isn’t it?

Considering bitcoin’s popularity, it is clear as rain that this currency is surely going to play a huge role in the B2B (Business to Business) community in future. However, the question is; what role will it play and how will bitcoin affect the B2B community worldwide?

Anyone with the slightest of the knowledge of business community would know that the volume of B2B transactions is way too higher than the volume of P2P (Person to Person) transactions.

Moreover, bitcoin in business has all the potential and tech to replace traditional payment systems – wire transfer being the most common one. In terms of speed, wire transfer is quite slow. The transfer between two countries may take up to a week; which, in business terms, is a waste.

Another traditional payment method used in the business community is ACH (Automated Clearing House). The method is cheaper but slower than the wire transfer, so it needs replacing too.

On the other hand, the client, as well as the merchant prefer instant Bitcoin payments and is a perfect fit for it. The crypto can be used to send/receive payments within a short period of time which may range from one to a couple of hours.

After reading all that, one might wonder: “if Bitcoin is instant and convenient, what’s stopping it from breaking into the Bitcoin B2B community?” It’s the acceptability and lack of usage. Bitcoin payments can only work if both parties are willing to use it – and considering the risks associated with this currency, not many are ready to accept bitcoin as a payment method.

However, if the business community decides to go with bitcoin, here are some benefits that they can enjoy:

Speed:

Compared to conventional payment methods, Bitcoin is super-fast. The ability to complete international transactions within a few seconds/minutes can solve the speed issues.

Cost:

Low transaction cost is another advantage of Bitcoin. Where other methods cost up to 10-40 USD, transactions through Bitcoin only cost a few cents.

Ubiquity:

The majority of the adult population relies on services like Money Gram or the Western Union for money transfer. Services like these follow a set of rules and restrictions imposed by the government; which greatly affects one’s ability to do business.

However, Bitcoin can solve the issue as it is regulated by a third party to impose restrictions on users. It ultimately provides users with more freedom and makes the transfer process simple. Anyone with a regular PC and access to the internet connection can transfer the coins to whichever part of the world they want.

These are some of the pros that Bitcoin brings with it for the business community. However, all is not that simple. Bitcoin adoption in B2B community can also bring about some harms with it – security and price volatility being the most common ones in Bitcoin community.

Security:

One of the biggest issues with Bitcoin is that the security is the responsibility of the individual making payments. For example, if someone is sending a certain number of bitcoins to someone else, the first thing they will need to make sure is to send it to the right address. A slight mistake and the coins are gone forever.

Another issue is that your computer at which bitcoins are stored must not have any spyware and other suspicious programs installed on it. It compromises the security of the bitcoins.

Volatility:

Another issue with Bitcoin is high volatility. The value of Bitcoin changes in a matter of minutes. With such instability, it’s almost impossible for the business community to adopt Bitcoin payments.

Conclusion:

Although Bitcoin is the most popular form of cryptocurrency and allows instant transfers, there some issues with it – stopping it from a wider adoption. Once these issues are dealt with, there is no doubt that bitcoin will rule the business world.

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China Becomes the Country with Most Filed Blockchain Patents In 2017

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According to a Financial Times report, China became the country with the most patent filings for Blockchain technology to the WIPO (World Intellectual Property Organization) in 2017. Thomson Reuters collected data from the international patent organization which shows that in 2017, overall 406 patents were filled, from which more than 225 were from China.

At this time, Tech companies from all around the world are rushing to patent their innovative systems developed by using blockchain tech, which is just like a game changer supply chain management.

blockchain patent

Last year, patent applications for Blockchain technology got tripled. An editor at Thomson Reuters’ Practical Law, Alex Batteson said:

“Companies are moving fast in order to protect their ideas in new areas of technological development — long before the technology actually goes to market.”

From 2012 to 2017, Chinese companies held the sixth spot out of the top nine filers for Blockchain patents. Even though all patents didn’t lead to feasible products, but the data remained substantial in that as it shows activity in a particular area of industry and could produce blocks to the entry.

Filed Patents from 2016-2017

China filed 225 patents in 2017 and 59 patents in 2016, while the US filed 91 patents in 2017 and 21 in 2016. Australia in on the third number with 19 and 13 blockchain-related patents in 2016 and 2017, individually.

A patent is an essential tool for any company in order to attract investment. If we talk about the US, then MasterCard, which is a payment processing giant had filed 25 patents for blockchain at the same time. Also, Lichtenstein’s nChain Holdings, which is considered as the worldwide leader in development and research of blockchain technologies by itself has filed 18 applications.

But one thing, that should always be remembered is that not all companies patent their innovations. Also, all patents don’t result in the formation of a workable product/use case. However, according to Thomson Reuters, the patent information imitates activity in a certain sphere and produce entry barriers.

Is Chinese government taking interest in the Blockchain Technology?

The Chinese government is officially taking an interest in the development of Blockchain technology in the country. As there’ve been many reports, the Investment Association of China has approved the development of a Blockchain Development Center.

As well as,  list of objectives was published by the Chinese Ministry of Industry and Information Technology on 23rd March, to boost the development and regularization of Blockchain technology.

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Bitcoin Future — What Will Happen When There’ll Be No Bitcoin to Mine?

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In the month of April 2018, 17 millionth Bitcoin was mined. But why this number is significant? Well, only four million tokens are left to mine. Bitcoin’s blockchain protocol is what makes Bitcoin mining a bit difficult, and the Bitcoin reward for mining a block also splits every 210,000 blocks. As seen, 12.5 BTC reward is received by the miners for unlocking a new block.

future of bitcoin mining

Mining of the Last Bitcoin

At this time, miners are deeply encouraged to mine so that they can get gradually more treasured Bitcoin tokens as a reward — before the supply reaches the capacity. However, when 21 million market cap is hit, there won’t be any Bitcoin rewards for miners. Though, transactions will be still required to get validated and stored on blocks, so that miners can profit from the transaction fees.

Segwit

  • Last year, the issue of scalability – block capacity – transaction costs showed up.
  • 1MB size limit for blocks was implemented by Nakamoto for halting miners making bigger blocks that were expected to be excluded from the network, as it could cause the blockchain to split.
  • At that time, the limit was big enough because of the small number of transactions. However, apprehensions that elevated were ultimately comprehended as Bitcoin advanced in popularity.
  • Ultimately, Bitcoin Core developers came up with a solution under the name “Segregated Witness,” which is more commonly known as SegWit.
  • Fundamentally, Segwit splits non-signature data from signature data of all transactions — significantly reduces transaction sizes that are stored on a block.
  • Moreover, it cancels out transaction flexibility by eliminating signatures from transaction data, paving the way for ‘Lightning Network’ incorporation.

Eventually, Segwit was implemented in August 2017, as a foremost stakeholder from the major Bitcoin mining pools and Bitcoin companies – for a solution to high transactions fees instigated by an accumulation due to the block size limits.

Core warning — the implementation of Segwit was possible because of the consent of the Bitcoin community. Even though there were huge concerns such as the inadequacies of Segwit2X, the community was divided up and the change was certainly not implemented.

  • Since August 2017, the implementation of Segwit has been slow across the global network. However, Bitfinex and Coinbase only presented the alteration in February 2018.
  • The launch matched with reducing the transaction fees – a testament to the envisioned outcome of Segwit incorporation.

future of bitcoin mining
Lightning Network

  • SegWit’s implementation laid the foundation for second layer solutions as well, in order to improve the network of Bitcoin.
  • The most projected one is the Lightning Network – it will do the same as the SegWit – though on a grander scale.
  • In terms of layman, the Lightning Network lets users excavate many payment channels amid themselves – off the Bitcoin blockchain.
  • The channel is going to be opened and recorded on the blockchain, though transactions will be made “off chain” till the payment channel is closed.
  • Basically, Bitcoin is deposited in this channel by users, so that they could make transactions by transferring potential of possession to each other.
  • When they plan to close the channel, users take their part of the total sum – the ownership of those sums is recorded on the blockchain.

This second layer solution matters a lot, as it will significantly upsurge the speed of transactions and the whole network. But if we talk about the future of bitcoin mining, this does stance few interesting questions for miners in the upcoming time. Once all 21 million Bitcoin have been mined – transaction fees would be the one and only incentive for miners. If the Lightning Network is completely integrated by that time, there’d be quite fewer transactions being recorded per-day. This could at the same time affect the amount of money that miners will be getting from transactions. Though, if we look 100 years from now, it is expected that all of these issues will have been solved by the wider crypto-community and Bitcoin Core developers.

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Easiest and Legal Way for Bitcoin Exchange

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India coin was established in 2014 and did the service of exchange since. Majority looking to buy bitcoin in an easy and simple way. And they also don’t like the lengthy process of transactions for the exchange. India coin provides complete satisfaction to its users, fulfill the need exactly.

If you want to buy bitcoin, you need to fulfill the payment form and within 4 days you’ll receive a call with pin code to complete your transaction.

The system receives debit or credit card or pays only, so make sure that they are 3d secure.

Easiest and legal way for your exchange

 

This process of transaction seems much easier than the other but two things you have to know about;

Buying limits

There is strictly buying limits of bitcoin. The first transaction limited to $100 and after 4 days of confirmation it grows from $100 to $200 and then after a week means after 7 days this limit is $500.

Exchange rate

Fees are extremely high for example Bitcoin exchange rate on Bitstamp was $1001.52 and $1507.31 no India coin. Means you are paying 50% more for this process

Its seems that legal bitcoin exchange rate is too high. By using the prepaid debit card for bitcoin, you can have achieved anonymity and temporary skype number in order to complete your buying process.

Once your account will be approved, no need of further verifications until you are going to use the same email. More than 100 countries buy bitcoin through India coin.

India coin states that process of purchasing take 15 min but it takes some extra time .so, doesn’t lose your hope.

Tags: Easiest bitcoin exchange

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