Cryptocurrency & Blockchain Podcast
IRS FAQ Question 5
Matt Metras, an Enrolled Agent at MDM Financial Services and overall crypto tax expert, joins the show to talk about the recently added IRS FAQ Question 5. More @ Talk.Bitcoin.Tax
IRS Crypto Tax FAQ
Cryptocurrency Adoption in Finance, Pop Culture, Art, and Music
Today’s episode will cover events happening the week ending December 11th, 2020. This week we’ll be discussing a few of the big adoption stories of the week. More information about all of the stories discussed today can be found on Talk.Bitcoin.Tax
Full Show Notes:
(00:23) It shouldn’t come as much of a surprise to frequent listeners that large mainstream corporations and businesses are rapidly adopting cryptocurrency, generally by investing into BTC.
There are a couple of whales this week, one who is no stranger to Bitcoin and one who has been around for ages, but is just now getting into the world of crypto.
The new whale this week is MassMutual, an insurance company that was founded in 1851 and currently serves five million clients. Not only did they invest $100 million into Bitcoin, they also “acquired a $5 million minority equity stake in NYDIG, a subsidiary of Stone Ridge that provides cryptocurrency services to institutions”, according to Bloomberg.
The familiar whale this week is MicroStrategy, who has purchased hundreds of millions of dollars’ worth of BTC in the past 6 months or so. According to Cointelegraph, “The company currently sits on 40,824 BTC representing over $734 million, which represents a gain of nearly $260 million from the basis acquisition price.” Earlier in the week, they announced that they were working to raise an additional $537 million dollars to invest in Bitcoin…but today they issued a press release stating that they have surpassed that goal by successfully raising $650 million – which is over 36,000 BTC. This means MicroStrategy will nearly double their BTC coffers, and secures their place as the number 1 publicly traded company investing in Bitcoin, according to the list at Bitcoin Treasuries. While exciting for advocates of BTC adoption, it’s been reported that traditional financial analysts are worried that the company is investing too much in BTC.
(02:01) Adoption isn’t only infiltrating the financial world this week. In pop culture, a movie about The Silk Road, a notorious marketplace for buying and selling illicit materials, is set to release this coming February. This mainstream recognition could be good or bad for cryptocurrency adoption. If the movie is successful, it will undoubtedly increase mainstream exposure to the world of cryptocurrency. However, illicit activities, which essentially defined The Silk Road, are often conflated with cryptocurrency in general, since purchased on The Silk Road were made with cryptocurrency.
(02:33) In music, the popular music and podcast streaming app Spotify may be the next big company to embrace crypto, at least according to a recent job listing. According to FXstreet, “A job offer posted by Spotify recently on Lever, an end-to-end talent acquisition platform, seems to indicate that the giant audio streaming service is looking at potentially enabling cryptocurrency payments.”
(03:06) Finally, in the art world, Beeple, a popular contemporary online graphic designer, has gone all in on NFTs, or non-fungible tokens. Beeple, the alias of Mike Winkelmann, is known for his long running daily abstract digital art releases. Beeple first ventured into NFTs by offering his first collection of unique art-based NFTs during the presidential election. Today, and throughout the weekend, Beeple is dropping his second collection, which will include a number of his daily art works, auctioned off in the form of NFTs. Of course, anyone can view his art for free, but as his FAQ states “This for people who are interested in COLLECTING artwork, which is a very different experience. I want people to feel like they can truly own, collect, and display this artwork in a way that feels more exciting and engaging than just viewing a picture on Instagram.” Some of the NFTs also include a physical token that will be shipped to the winning bidder. If you haven’t heard of Beeple, I would definitely suggest checking his unique art-
Bitcoin (Maybe) Hit An All Time High; ETH 2.0 Launches Phase 0; ETH 2.0 Taxable Consequences
Today’s episode will cover events happening the week ending December 4th, 2020. This week we’ll be talking about Bitcoin’s all-time-high, Ethereum 2.0, and some of the tax-related questions people have been having about staking. More Information @ Talk.Bitcoin.Tax
Full Show Notes:
(00:26) The big news this past week is that Bitcoin hit it’s all-time high since December 2017 – or did it? Most people in this space are aware that December 2017 was when Bitcoin first reached it’s all time high price. It’s when Bitcoin gained a lot more popularity in the mainstream and when a lot more people got into the space. But, if you want to get specific about the exact price, it’s actually a bit difficult, as prices vary depending on where the coin was exchanged. Coinmarketcap actually lists the all time high of $20,089.00 on December 17th, 2017. CoinDesk has a graphic showing the all time high of BTC in December 2017 from three major exchanges… and they all have different values. Their own price index, known as the CoinDesk Bitcoin Price Index, lists the December 2017 all time high as $19,783.
So, depending on how you look at it, Bitcoin may or may not have reached and exceeded it’s all time high this week. However, much of the community did indeed celebrate on Monday, when Bitcoin reached $19,850, according to CoinDesk.
Usually when discussing Bitcoin’s ATH, I personally have found it most convenient to say “nearly 20k”. If we are following the CoinDesk pricing model, that holds true. Interestingly, even though Coinmarketcap is still listing the all time high as over 20k back in 2017, they are currently holding a contest to guess when Bitcoin will reach $20,000.
(02:01) Next up, let’s talk about Ethereum 2.0 – this week, phase 0 occurred, bringing The Beacon Chain into existence. The first major change that the Beacon Chain will bring is the transition from using a Proof of Work consensus to a Proof of Stake consensus, which will effectively replace mining.
Proof of stake, like proof of work, is a consensus mechanism. The specific proof of work consensus model that is being used in the Beacon Chain is called Casper.
Instead of miners utilizing the energy of their mining rigs to create and validate blocks, ETH 2.0 will utilize validators, who are participants in the network who have at least 32 ETH, to propose and vote on the creation of blocks. A validator is chosen pseudo-randomly or randomly to create or propose a block. Blocks are validated once a specific number of validators have stated that they’ve seen the block. Validators who propose a block and validators who then confirm they have seen the proposed block, are rewarded ETH for their work, either in terms of network fees or a predetermined network issuance.
If a validator is selected and isn’t available at the time of selection, they essentially lose a bit of ETH. However, if a validator attempts to act maliciously by attempting to compromise the validity of a block, a mechanism, called slashing, is in place that siphons some or all of their staked ETH and then removes them from the network. This reward/penalty scheme is what fuels the PoS mechanism and (theoretically) lowers the chance of bad actors being involved.
You can go to launchpad.ethereum.org to get more details about the process of becoming a validator, and to start staking.
(03:42) With the launch of The Beacon Chain many crypto users are asking about the related tax implications. Currently, the two main questions people are asking are “how are my staking rewards taxed” and “will the future ETH to ETH 2 transition be a taxable event”. One of the BitcoinTaxes full-service partners, Andrew Gordon, released a great FAQ about the tax implications of ETH 2.0, which we’ve linked on our blog talk.bitcoin.tax.
This FAQ answers both the aforementioned questions - regarding staking, the FAQ states that “Staking rewards are considered income at the time of receipt and ta
Thanksgiving Break – Check Out The Newest BitcoinTaxes Episode
We’ll be taking the week off from doing news due to the US Thanksgiving Holiday – I hope you all made the most of your day during this tough year!
Over on The BitcoinTaxes Podcast, we interviewed two cryptocurrency-based attorneys, Zach Ziliak and Andrew Gordon, about the current-day infrastructure of BTC and how it differs from 2017, the politics of Bitcoin with a new presidential administration incoming, and we also discussed some really excellent tax planning strategies for crypto holders. In lieu of our normal episode today, we’ll be sharing that episode with all our listeners. If you haven’t yet subscribed to The BitcoinTaxes Podcast, now is the time! We interview some of the smartest people in cryptocurrency taxation and blockchain technology and ask them the questions that a lot of people want answered! Enjoy the episode and have a great weekend everyone!
The BCH War Saga Draws To A Climax; Biden Appoints Crypto Fanboy; Decentralized Philanthropy’s First Conference
Today’s episode will cover events happening the week ending November 13th, 2020. This week, Bitcoin Cash is undergoing a hard fork over the weekend, President-Elect’s Biden’s transition team gains a crypto savvy financial lead, and the first decentralized philanthropy conference is right around the corner! More Info @ Talk.Bitcoin.Tax
Full Show Notes:
(00:29) First up – the seemingly inevitable Bitcoin Cash hard fork is happening this weekend. If you’ve been following this podcast, or keeping current with all things BCH, you’ll know that there’s been an ideological split between two implementations of Bitcoin Cash. That ideological split is right on the edge of becoming an actual coin split.
For those unfamiliar, Bitcoin Cash is a cryptocurrency that exists as a result of an August 2017 fork from the original Bitcoin. Subsequently, in 2018, BCH was forked into two different versions of the coin; for all intents and purposes, those two resulting coins were known as Bitcoin ABC (Adjustable Blocksize Cap) and Bitcoin SV (Satoshi’s Vision). It can be a bit confusing but, as Coinmarketcap says, “Bitcoin ABC became the dominant chain and took over the BCH ticker”. So, as of now, when we discuss the BCH ticker, we are referring to the dominant coin - Bitcoin ABC. Bitcoin SV is referred to as BSV. However, the Bitcoin ABC dominance could be in danger.
Back in August, Amaury Séchet, a leading developer of BCH, released a blog post detailing the plan for a November 2020 Bitcoin Cash Network Upgrade. The plan did not sit well with everyone involved in BCH and only one day later, a statement was released by a number of notable miners that they do not accept Sechet’s vision for altering the BCH implementation. According to Bitrates.com, “The two factions are divided over a single controversial feature. Bitcoin ABC intends to introduce an Infrastructure Funding Plan (IFP), which will collect 8% of miner rewards and reallocate those funds toward development. BCHN, on the other hand, opposes that plan due to the effect it will have on mining profits.”
As a result, a fork of the current BCH blockchain will occur on Sunday, November 15th, resulting in two blockchains – Bitcoin ABC (or BCHABC) and Bitcoin Cash Node. There are a few different possible results of this fork – the commonly held belief, as reported by Bitcoin Magazine, “Currently, Bitcoin Cash Node has much more hash power support than Bitcoin ABC: more than 80 percent … versus less than 1 percent for Bitcoin ABC. Bitcoin Cash Node also appears to have significantly more community support, and large Bitcoin Cash-supporting companies like Coinbase, Kraken and BitGo have also indicated support for Bitcoin Cash Node. It therefore seems likely that (the name) Bitcoin Cash will live on through Bitcoin Cash Node…(It would then probably also receive the “BCH” ticker on most exchanges…)”
What does this mean for current BCH holders then? Time will tell what will actually happen – but a 1:1 ratio airdrop is very likely to occur for current BCH holders.
One thing is definite - Bitcoin Cash is certainly a coin fraught with conflict, and one that is likely to confuse a lot of crypto newcomers.
(03:17) Former Vice President Joe Biden will become the 46th President of the United States. This fact has proven to be quite divisive in the United States. That being said, the President-Elect is already preparing for his transition, and has recently appointed a crypto-savvy and crypto-friendly lead to his financial policy transition team. Gary Gensler, a former chairman of the Commodity Futures Trading Commission, was formerly named this week – his role will be “…to oversee a team of volunteers focused on banking and markets regulators, such as the Federal Reserve and the Securities and Exchange Commission, as part of an agency review process that occurs with every transition.” according to The Wall Street Journal.
Gensler is Senior Adviso
The US Political Election – What Role Does Crypto Play?
Today’s episode will cover events happening the week ending November 6th, 2020. This week has been quite intense, from a US political perspective! If you are an American, or follow American politics, you know that this week has been the US Presidential Election – and one of the most nail-biting ones at that. Big things are happening in the world of crypto as well. Namely the price of BTC is absolutely skyrocketing. Are these two events connected? Let’s find out! More Information @ Talk.Bitcoin.Tax
Full Show Notes:
(00:37) The big story this week isn’t (exactly) crypto related, but is too big to ignore on this week’s episode. The United States is currently in the midst of a presidential election, and it’s certainly been one to remember. As of recording, the fate of the election hinges on four states: Arizona, Georgia, Pennsylvania, and Nevada – all four states that the former Vice President Joe Biden currently has a lead in. It seems as though the writing is on the wall – it’s very likely that Joe Biden will become the next President of the United States.
So, how does this relate to cryptocurrency? Of course, neither Biden nor Trump included any type of cryptocurrency related issue in their presidential platform. Libertarian candidate Jo Jorgensen discussed her admiration for Bitcoin, but it wasn’t a part of her platform either. Cryptocurrency is more and more becoming mainstream, but it’s not at that point yet…unfortunately. The only democratic candidate that mentioned cryptocurrency during the primary elections was Andrew Yang. However, with mainstream adoption continuing at its current rapid pace, we are likely to see an intersection between politics and cryptocurrency sooner than later.
(01:32) There are a few notable ways we can link this election cycle and crypto/blockchain. A number of Senate seats are up for grabs in this election, and some of those senators have either a cryptocurrency related past, or are actively involved in shaping crypto and blockchain related legislation. GOP Senator Kelly Loeffler, for example – is the former CEO of the crypto exchange Bakkt. Her involvement with cryptocurrency is undeniable, but her time in Congress has yielded zero actual legislation or even mention of crypto. Coindesk has a great extensive list of all of the current Senate and House races involving candidates with some sort of cryptocurrency or blockchain relation, so be sure to check that out if you are interested. Some of these candidates are pro-crypto and blockchain while some could be considered anti-crypto and blockchain – realistically though, the majority of these politicians probably don’t know a ton about the world of crypto.
(02:31) The next way we can link this election discussion to cryptocurrency is the discussion of utilizing blockchain technology to vote. Realistically, any type of widespread implementation of this is a long way away – however, there are certainly proponents of it, and those proponents are using this point in history to make their voices heard. That’s primarily because this election had a record number of mail-in ballots due to the ongoing coronavirus pandemic – those mail in ballots have proven to take an increasingly long time to count. Of course, in such a big election, this delay has put many on both sides of the isle on edge.
Gemini co-founder Tyler Winklevoss said on Twitter “The technology and cryptography exists to allow us all to vote online in a fraud-proof manner. We could all know the outcome instantly and w/ mathematical certainty. Yet voting entails paper ballot & requires in person or snail mail casting. It’s as if the Internet doesn’t exist.” Cointelegraph reports that “Binance’s chief executive Changpeng Zhao or CZ and Ethereum’s co-founder Vitalik Buterin are in furious agreement that a new blockchain-based voting system is required to improve democratic processes in the United States.”
Of course, any advocate for c