Understanding The Basics of Cryptocurrency Trading and Its Tax Implications
Cryptocurrency is a digital or virtual currency that is secured by cryptography and is based on blockchain technology. It is increasingly gaining popularity due to its lack of need for a third party such as a bank or credit card company to facilitate its trade. However, it is important to understand the tax implications that come with cryptocurrency, as income received from it is taxable.[0]
For those looking to engage in cryptocurrency trading, it is important to understand the process of how to do so. The first step is to choose a payment method, such as fiat currency. Next, make the payment and transfer the cryptocurrency from your personal wallet to the secure escrow of the trade. The next step is to trade, with pricing and trade instructions.[1] Finally, cryptocurrency can be transferred between your own wallets.
Cryptocurrency is becoming more and more popular in the ecommerce landscape, yet it comes with a few risks. It is important to be aware of the warning signs of crypto scams, as the FBI reports that about 46,000 people have lost more than $1 billion.[2] Special Agent in Charge Mark Michalek emphasizes that “the best path is not to fall victim in the first place.” By understanding the process of cryptocurrency and its associated risks, you can make an informed decision about whether or not to use it.[3]
0. “UK cryptocurrency tax guide: everything you need to know” www.unbiased.co.uk, 6 Feb. 2023, https://www.unbiased.co.uk/discover/personal-finance/savings-investing/uk-cryptocurrency-tax-guide-everything-you-need-to-know
1. “Buying Cryptocurrency with Digital Currencies (Altcoins) – Paxful …” paxful.zendesk.com, 6 Feb. 2023, https://paxful.zendesk.com/hc/en-us/articles/360013668993-Buying-Cryptocurrency-with-Digital-Currencies-Altcoins-
2. “FBI: More than $1 billion lost in cryptocurrency scams as popularity …” denvergazette.com, 6 Feb. 2023, https://denvergazette.com/news/local/fbi-more-than-1-billion-lost-in-cryptocurrency-scams-as-popularity-increases/article_5807978c-a32b-11ed-a7f4-c313b881fb62.html
3. “The Future of Ecommerce: What Role Will Cryptocurrency Play?” www.corecommerce.com, 6 Feb. 2023, https://www.corecommerce.com/blog/cryptocurrency/
