Bitcoin and other cryptocurrencies

Moneydance can be set up to track cryptocurrencies, such as bitcoin. At the moment, Moneydance cannot automatically update cryptocurrency exchange rates with its source for securities and currencies. Cryptocurrency markets are also fairly decentralized and volatile, producing different values on different exchanges. However, you can set up cryptocurrencies manually, and update their values manually at any frequency you would like.

There are two general options for tracking cryptocurrencies in Moneydance: setting them up as a currency, or setting them up as a security in an investment account. Due to the somewhat ambiguous nature of cryptocurrencies there is no one right way to do this.

Cryptocurrencies as a currency

This is perhaps most intuitive, since most cryptocurrencies of course have put themselves forth as actual currencies.

Advantages: Can track and make purchases with your cryptocurrencies just as any other currency in Moneydance. Easy to see the value of your cryptocurrencies relative to each other and state-issued currencies.

Disadvantages: Can't use most of Moneydance's investment reporting tools for currencies.

To create a cryptocurrency as a currency in Moneydance, set it up as you would any other currency. Note that the quotes and exchange rates updater will likely return an error for your cryptocurrency. If it doesn't make sure that the currency code you have given the cryptocurrency does not match an existing security or currency. If it does, you will need to choose a slightly different ticker symbol to make sure you don't pull data from a different security or currency into your cryptocurrency.

After creating the currency, you should create an asset account to hold your cryptocurrencies. Since an account has to be associated with a specific currency, you will have to repeat this step for each cryptocurrency. For organizational purposes, you may want to make all of these sub-accounts of one larger cryptocurrency asset account, or perhaps organize them by the online service or 'wallet' that holds these.

Once your accounts are set up, you can enter in your purchases of cryptocurrencies as a transaction from your bank account (in normal currency) to your asset account (in cryptocurrency). This same process can work for sending funds in the other direction, or between cryptocurrencies themselves if you make a direct exchange. You may need to enter in the exact rate of exchange for these transactions.

Cryptocurrencies as a security

This is somewhat less intuitive, however in practice may be much closer to how most people are actually using cryptocurrencies: not as a currency to exchange for goods and services, but as an asset to buy with the expectation it will increase in value, similar to a standard security on a stock exchange. It also seems like various jurisdictions are moving towards treating cryptocurrencies more like a security than a currency for regulatory and tax purposes. That being said, this is in flux and varies based on your country, so you should consult with your tax professional.

Advantages: Can use most of Moneydance's investment reporting tools, such as tracking capital gains. Likely mimics how most people are buying and holding cryptocurrencies through one or two exchanges, which can be set up here as separate investment accounts.

Disadvantages: Cumbersome to use cryptocurrencies as currencies in this setup, as one would have to 'sell' the cryptocurrency first, then make the corresponding purchase.

For this method, first decide how you want to organize your cryptocurrency accounts. (This is important because it will be difficult to move securities between investment accounts later without using the buy/sell functions, which will interfere with tracking your cost basis.) Go to Account -> New Account and create the number of Investment accounts you want for this purpose. Options could include putting all of your cryptocurriencies in one investment account (regardless of how they are actually held), or creating a different account for each online trading site or wallet you use.

Next, create a security for each type of cryptocurrency you wish to use. Be sure to specify the correct number of decimal places for the security in this initial setup; it's common for cryptocurrencies to use eight or more decimal places. Note that the quotes and exchange rates updater will likely return an error for your cryptocurrency. If it doesn't make sure that the ticker code you have given the cryptocurrency does not match an existing security or currency. If it does, you will need to choose a slightly different ticker symbol to make sure you don't pull data from a different security or currency into your cryptocurrency.

When adding the security to the investment account, you may also want to give it a custom subtype such as "cryptocurrencies." This is optional, but will allow this subtype to be displayed in certain places in the program, such as your Asset Allocation graph and report, allowing you to see the percentage of this type of asset.

After creating your securities, enter your initial holdings.

At whatever frequency you desire, update your cryptocurrency prices. You will likely have to do this manually, although it may be possible to find an online source that can export your prices into a compatible CSV file.

To make a purchase for goods and services with your cryptocurrencies in this method, it will first be necessary to sell the cryptocurrency to convert it into your standard fiat currency, and then create another transaction of the purchase with that amount of fiat currency in the bank register of your investment account.