A new technological solution finds a smart way to save on your crypto taxes.
By now everyone knows that IRS treats cryptocurrency as property, whenever you trade, sale or exchange you need to pay gain-taxes for it. The most important number in your taxes is the cost-basis, the initial price of your coins.
So here is the trick, let’s assume you have an apple shop and you except crypto as a form of payment. For each transaction to your wallet, you need to remember the cost-basis. When you spend your coins, later the week, you need to pay gain taxes. Because let’s face it, crypto goes up and down but eventually, it always manages to set a new high record.
No more! Decentralized Trusted Party(D.T.P) is a new technology that allows you to have 0 tax, yes ZERO tax! It’s powered by Confidence Coin(Coco) and here how it works.
D.T.P is a company that performs the transactions on your behalf, the smart technology of Coco allows D.T.P to access your wallet without you having to reveal your private key. The D.T.P transactions are instant as they are made off-chain. But once a month(every first of the month) there is a special D.T.P transaction over the chain that matches your balance in Coco to your balance in D.T.P, in other words, the D.T.P is aggregating all your monthly transaction to a single day.
So here is the taxes trick. The cost-basis is calculated from the day the transaction was made over the blockchain, with D.T.P it’s always the first of the month.
Let’s get back to the apple shop. Since all the transactions are coming in at the first of the month and all the expenses also made during the first of the month, the cost-basis of buying and selling is the same! Meaning that you don’t need to pay any tax(or remember every transaction you made)
D.T.P is the perfect solution for the crypto world. The transaction fees are small since all the monthly transactions aggregated to a single day. And the best part is that you don’t need to pay IRS taxes anymore!
With D.T.P you can perform instant micro and macro transaction and enjoy the freedom of the REAL cryptocurrency world.
Transaction aggregation also means that only your final balance is revealed, the information of who you sent your coins to or who you got them from is not recorded in the public ledger. D.T.P is increasing your privacy.
You can find more details about D.T.P in the links below.
Feel free to ask questions in the comments and share the story.
IRS treats cryptocurrency as property, whenever you sell a crypto coin you must pay the short or long-term capital gains tax for it. Also since Jan 1, 2018, the like-kind does not work with crypto anymore.
So yeah IRS wants you to pay “gains” for your crypto transactions, but there is a loop hall in the law. And it’s not going to be easy to fix it.
The question is when do you need to pay? Is it from the moment you decided to sell your coins? Is it from the moment you logged in to your website?
IRS is using two methods to track your transactions. The obvious one is the public ledger, the place in the blockchain where all the transactions are stored. Whenever IRS see a new transaction on the public ledger, and they are capable of telling whos wallet made the transaction(btw it can work retroactively as well), then they can charge. Another less trivial way is the exchange place. Transactions on exchanges take place off-chain and are not recorded in the public ledger, but ever since IRS won the case with Coinbase, all the exchanges report all the transactions to IRS, it allows them to charge you there too.
So let’s go back to the “when” question, try to think when will I be charged in the next scenario. My good friend Mike is an Icecream owner, he except crypto as valid payment for his icecreams. I visit his shop every morning(he is really good!) and so I offered him not to pay every day but once a week. When will IRS charge me, when I buy my daily ice cream or when I make my weekly transaction? Don’t answer me yet. It gets more interesting next.
One day I won a bet with Mike, he owned me two coins after losing the bowling game. So I offered him to reduce those coins from my weekly ice cream payment, the result was me paying two coins less of gain tax to IRS.
Is it legit? Is it enforceable? To be frank, those are not easy questions to answer, but it led me to a bigger idea, which is more legit and more flexible.
I call it Decentralized Trusted Party(D.T.P), and this is how you are going to save on your taxes to IRS.
First, you allow the D.T.P to access your wallet and make transactions on your behalf. All your purchases will be made via the D.T.P. But here is the tricky thing. D.T.P can’t really access your wallet in any time. It can only do so once a month.
So when making transactions via D.T.P you will be agreeing to pay at the first of the month, no actual transaction will happen before that. If you should receive coins, the game works the same. You will only get them at the first of the month.
When the first of the month arrives, your income will be substituted with your expenses, and the only thing the public ledger will show is a single transaction from your wallet.
Confidence Coin is the first cryptocurrency to implement this technology, at the moment it’s under a pending patent and is scheduled to be released by May 2019.
Disclaimer: I am not a lawyer and cannot give advise on taxes.
How did Coco manage to break the one Gigabyte barrier block size, while Bitcoin(1 MB), Lightcoin(2 MB) and Bitcoin Cach(16 MB) barely handling few MB, not to talk about Ethereum wich average block size is only 30KB…
The pending patent Coco’s solution comes from its Royal Network. In order to become a peer in Coco’s network, one must solve a block. It makes the network size small and the speed very high.
Since it requires such a big effort to become a peer in the network, only Pools can actually compete on a spot, and Coco knows it! Therefore the hardware requirement from the peers is also nontrivial. The basic setup requires a dedicate cluster for networking rother then just a single machine.
In addition, Coco is using UDT, UDP-based Data Transfer Protocol for block exchanges, it makes oversee networking feels like it comes from the backyard.
All those properties together make Coco’s network faster by far from any other cryptocurrency.
An upgrade to the block-chain technology, an innovation in the field of cryptocurrency, the solution so many were waiting for, the coin the glory, the Coco