What is bitcoin and how does it work?

What is Bitcoin? Bitcoin is the first and most widely recognized cryptocurrency. It enables peer-to-peer exchange of value in the digital realm through the use of a decentralized protocol, cryptography, and a mechanism to achieve global consensus on the state of a periodically updated public transaction ledger called a 'blockchain.'

How is bitcoin taxed?

Consult your tax expert.) How Is Bitcoin Taxed? The good news is that bitcoin and other crypto assets have just about the best possible tax treatment available for long-term investors. According to the IRS’ official guidance on crypto taxation, crypto is taxed as “property,” which is just a fancy way to say it's taxed like a stock.

Is bitcoin an asset or a currency?

The IRS said that the bitcoin should be treated as an asset or an intangible property and not a currency, as it is not issued by central bank of a country. Bitcoin's treatment as an asset makes the tax implication clear.

What is an example of a bitcoin sale?

Sale of Bitcoins, bought from someone, to a third party. For example, if you purchase Bitcoin at a cryptocurrency exchange or from another person and sell it for a profit, then you have to pay capital gains taxes on the transaction. Using mined Bitcoins to buy goods or services.