Currency support for Bitcoin

Robert Combs's Avatar

Robert Combs

24 Jan, 2018 09:47 PM

I am buying and selling. in Bitcoin... I need currency support for Bitcoin.
 It's hard to create double transactions to convert bitcoin to USD and then buy in USD. Thank you!

  1. 1 Posted by Bob In Hawaii on 24 Jan, 2018 11:29 PM

    Bob In Hawaii's Avatar

    I've been able to create currencies.
    Just need the tickers for Bitcoin, Ripple and the other currencies I want to track.
    Should I do these as stocks? Basically it's a currency trading account...

  2. 2 Posted by cedialogs on 12 Feb, 2018 02:57 AM

    cedialogs's Avatar

    Be aware that complying with CryptoCurrency tax accounting requirements, at least in the U.S., is a get rich quick scheme for tax accountants.

    I have not tried tracking crypto transactions with MoneyDance, but suspect that tax reporting requirements will ultimately require treating each Crypto like a security rather than like a currency.

    Consider the following scenario: You buy one bitcoin on the Coinbase exchange at the market price, and your order was filled by the exchange by aggregating several purchases of fractional bitcoins.

    A few days later you use some of your bitcoin to buy a pizza. You must report a capital gain or loss on each of the bitcoin lots you had to aggregate to pay for the pizza.

    Most cryptos must be bought and sold in bitcoin, not USD, so you send some of your bitcoin to another exchange to pay for the new crypto you are buying. When you buy the new crypto you have generated a capital gain or loss on the bitcoin used to purchase the new crypto. You have a tax requirement to track any new lots and also to track the exchange fees generated by the inter-exchange transfer and new crypto purchase.

    The scenario gets messy fast, and treating each crypto as a security having many lots could well be the best way to deal with this absurd mess. Also, be aware that crypto symbols such as BTC and ETH may be the same as the stock ticker symbols for unrelated securities.

    The moral of the story is Crypto transactions that comply with IRS requirements (and Uncle is watching your trading) are designed to make your accountant wealthy. Remember, in the 1849 California gold rush the merchants who "mined the miners" by selling them needed supplies wound up richer than most of the miners did.

    The biggest crypto mining operation of all is domiciled in the accounting realm and is bolstered by the IRS. I suspect that most bitcoin mining is far less profitable than becoming a crypto tracking accountant might be.

    BTW, I see that only one person is watching this conversation on the MoneyDance web site. Isn't it interesting that only one person is paying attention to this wave of the future. He probably works for the IRS. He certainly is not an accountant, as one must lack vision and foresight to make the really big bucks in accounting - the big bucks that lie ahead in crypto accounting are not on anybody's radar just yet. Right now, few bean counters have the imagination needed to foresee all the golden beans they will count in the future.

    Happy accounting, and let us know if you figure out a good crypto accounting methodology that will work in MoneyDance.

  3. 3 Posted by Bob In Honolulu on 12 Feb, 2018 08:10 AM

    Bob In Honolulu's Avatar

    I did create a way to manage crypto. I created
    An investment account with base currency setnas

    This allows any trades to be set relarive to as bitcoin.

  4. 4 Posted by cedialogs on 12 Feb, 2018 12:44 PM

    cedialogs's Avatar

    Thanks for your input. I probably should not be commenting on crypto accounting since I have yet to own any crypto.

    It sounds like your solution will work fine for trading purposes, but I am not convinced that you have a complete solution for the many messy and ambiguous tax requirements. In my mind the crypto trading risks are a smaller worry than is the required bean counting time.

  5. System closed this discussion on 14 May, 2018 12:50 PM.

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