Crypto-currency

Financial markets are experiencing uncertainty and fluctuations, as inflation and other business shocks affect currency values, supply of goods and services, and market stability and perception. Interest rate rises by central banks to combat inflation have also forced changes in investment and lending. This uncertainty has not been confined to traditional currencies, but also cryptocurrencies that trade outside of the control of banks and Government. These currencies are still in their infancy and remain poorly understood and accounted for.

Cryptocurrency is a digital payment system operating on peer-to-peer system that can enable anyone, anywhere to send and receive payments. Instead of being physical money carried around and exchanged in the real world, cryptocurrency payments exist purely as digital entries on an online database describing specific transactions. When you transfer cryptocurrency funds, the transactions are recorded in a public ledger. Cryptocurrency is stored in digital wallets. The numerous different currencies in existence maintain their own, separate wallets.

Bitcoin the first cryptocurrency, has been around since 2009, and there are thousands of others, including Ethereum, Litecoin or Ripple. Cryptocurrencies and applications of blockchain technology are still emerging in financial terms, and more uses are expected in the future.

Although you don’t own physical assets when you own cryptocurrencies, you use these assets, via debit or credit cards, to purchase them. The crypto wallet is where they are stored and keeping these secure is how you protect yourself from loss or theft.

As with physical currencies and traditional markets, cryptocurrency is in a period of volatility and loss of value. Being new, many are questioning the viability and future of cryptocurrency.

For tax purposes, you need to keep detailed records of your transactions, buying, and selling of the currencies. How they are taxed depends on how they have been used, what has been acquired or sold, and what kind of trading you are undertaking.

If you’re engaged in cryptocurrency transactions, you can contact us for assistance with record-keeping and taxation requirements.

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