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Not So Fast on Bitcoin’s Anonymity As Taxman Can Find Out Who You Are

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  • Eric Eissler
    ⭐ Features

    Bitcoin isn’t nearly as anonymous as you think. In fact, the very nature of Blockchain is to preserve an auditable record. The taxman is watching.

Not So Fast on Bitcoin’s Anonymity As Taxman Can Find Out Who You Are
Cover image via u.today
ByBit

One of Blockchain’s attributes is to allow for transparency of ledger transactions and creation of incorruptible files. It was made to be easily audited, and that could happen to millions of people who hide their gains from their representative tax authorities.

Tax season is in full swing in the US, and many people have a dilemma: whether to claim crypto gains from 2017 or not? That is the question of Q1 2018. Last year saw an explosion of Bitcoin and altcoins on to the mainstream.

Bitcoin mania enchanted millions in the final quarter of 2017. Many people believe that their funds are hidden and that the government cannot see their trading activity because their wallets are anonymous.

They are wrong. Essentially, Blockchain equals digital paper trail. The whole reason behind Blockchain is to increase accurate reporting and ease of auditing transactions. It is designed to promote transparency and reduce fraud with incorruptible ledgers of transactions.

Hidden links

All of your transactions are visible. There are companies such as Chainalysis that audit transactions and are partnering with government tax authorities to hunt for people who are not reporting their gains. According to the company’s website:

“Through formal partnerships with Europol and other international law enforcement, our investigative tools have been used globally to successfully track, apprehend, and convict money launderers and cybercriminals.”

While some wallets are anonymous, your bank account is not. If you’ve transferred any fiat from cryptocurrency sales to your bank account, there is a record of that activity. If you transferred over $10,000 in a single transaction, the bank will have already filed a suspicious activity report (SAR) flagging your account.

With relative ease, auditing companies working with government tax collection bodies can start to figure out who has not been reporting their gains. You might want to think about listing your gains and losses when you file your taxes this year.

Fuzzy descriptions, but determined

While the IRS still has a fuzzy description of what cryptocurrency is and how to tax it, the agency did go after Coinbase, the largest exchange and broker of cryptocurrencies. The IRS initially requested Coinbase to turn over the accounts of customers who bought Bitcoin between 2013 and 2015. During this time, the value of Bitcoin soared dramatically from around $13 to a high of more than $1,100 in 2013, then back below $200 in 2015. Not everyone was “Hodling” at that time- profits were made.

In nine short years, Bitcoin went from being an underground “nerd” currency to one bordering on the mainstream.

In the process, it has made tens of thousands of people wealthy and brought about incredible technology that will revolutionize our world.

Now that Blockchain, Bitcoin and cryptocurrencies are in the public eye, the regulators and the governments of the world want to claim their share of your profits.

The taxman is now savvy to Blockchain and will use it to his advantage to collect. You better check your taxes closely this season.

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About the author

Eric Eissler is based in Chicago and works in higher-education administration and finance. He is a freelance writer covering blockchain technology, fintech, cryptocurrency, the oil and gas industry, and international politics.

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Bitcoin Price Forms Diamond Bottom Pattern, Signalling Bullish Breakout

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  • Alex Dovbnya
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    Bitcoin could witness a bullish breakout if its looming diamond pattern gets confirmed

Bitcoin Price Forms Diamond Bottom Pattern, Signalling Bullish Breakout
Cover image via u.today

Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of U.Today. Every investment and all trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.

ByBit

The Bitcoin price is on the verge of forming a diamond bottom, which represents two juxtaposed symmetrical triangles. This a major bullish pattern that could be the bellwether of substantial price gains. 

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Top Bitcoin Trader on BitMEX Says He's "Long and Strong" as BTC Price Struggles to Hold $8,000

Top Bitcoin Trader on BitMEX Says He's

According to cryptocurrency trader "The Moon," Bitcoin has a 70 percent chance of a bullish breakout if the aforementioned pattern gets confirmed.   

That said, Bitcoin would need a huge buying volume for this scenario to translate into fruition. 

Trading vet Peter Brandt noticed that the XRP/BTC pair was about to complete a diamond bottom. However, Ripple's native token failed to rally even before the much-awaited SWELL event that took place on Nov. 7-Nov. 8.     

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Bitcoin Price Could Soon Drop 40 Percent, BitMEX Data Shows

Bitcoin Price Could Soon Drop 40 Percent, BitMEX Data Shows

As reported by U.Today, BTC dropped to the low-$8,000 level due to lack of enthusiasm on the buyer's side who failed to step in to reclaim $9,000. At press time, the coin that started it all is changing hands at $8,165 after being rejected at $8,200. 

Given that Bitcoin has trimmed all of its recent gains, market sentiment is now predominantly bearish. It remains to be seen how long it will be able to hold the crucial $8,000 support.      

Bitcoin Price
image by coinstats.app

Earlier, market analyst Willy Woo claimed that BTC's bearish price action ahead of the halvening event could mean that it might not witness another bull market. 

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with an extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets.

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