What do you know about cryptocurrency particularly Bitcoin? Today we're gonna find out what Bitcoin is about and what is the accounting issue around Bitcoin What is Bitcoin? Bitcoin is the first decentralized digital currency
Bitcoins are digital coins you can send through the internet Compared to other alternatives, bitcoins have a number of advantages Bitcoins are transferred directly from person to person via the net without going through a bank or clearing house This means that the fees are much lower, you can use them in every country Your account cannot be frozen and there are no prerequisites or arbitrary limits
Let's look at how it works Several currency exchanges exist where you can buy and sell bitcoins for dollars euros and more Your bitcoins are kept in your digital wallet on your computer or mobile device Sending bitcoins is as simple as sending an email and you can purchase anything with Bitcoin The Bitcoin network is secured by individuals called miners
Miners are rewarded newly generated bitcoins for verifying transactions After transactions are verified, they are recorded in a transparent public ledger How is Bitcoin evaluated? Does it have any fair value? Bitcoins have values because they are useful as the form of money Bitcoin has the characteristics of money based on the properties of mathematics rather than replying on physical properties like gold and silver or trust in central authorities like fiat currencies In this case of Bitcoin, it can be measured by its growing base of uses, merchants and startups as good own currency, Bitcoin value comes only and directly from people willing to accept them as payment Bitcoin now is in the market
So what are the accounting issues around Bitcoins? There are six specific financial accounting issues around Bitcoin: asset clarification – – mining activity – investment holdings – exchanges – merger and acquisition (M&A) transactions and disclosure At the moment there are no accounting standards could offer guidance on the recognition and measurements of these virtual currencies The ATO (Australian Taxation Office) has released the standard for Bitcoins So they gonna tax on Bitcoins Let's find out how the Australian Taxation Office tax you if you have a gain on Bitcoins
How it will be taxed depends on the nature of the transactions Bitcoin (or similar) for personal transactions, if Bitcoins are used to acquired goods or services for personal use then it is taxed as a personal use asset, meaning any gain or loss is disregarded providing a cost of the Bitcoin is $10,000 or less Bitcoin (or similar) for investments if you acquire Bitcoin as a capital asset For example, it seems not a short-term profit, the ATO believes Bitcoin would be subject to capital gains tax Bitcoin (or similar) for trading the ATO view is that just like other assets if you trade with the underlying intention to carry on a profit-making undertaking of business then you are taxed on the full profit
If you are trading you are essentially carrying on a business GST treatments for Bitcoin: It is also important to note the sales and purchases of cryptocurrencies are no longer subject to GST as after 1st July 2017 What are the risks and opportunities to invest in Bitcoin? Bitcoins pose various risks Some of them are being remote and others are more intermediate If remote risks do not presently requiring any regulatory intervention, intermediate risk should not remain beyond the risk of financial law
Regulators need to put in place the frameworks that protect against these risks, but in a way that does not not restrain innovation The important protection offered to bank customers and credit card users are however not available So there is no right of charge -back and Epayment code, the code of banking practice and financial Ombudsman services do not generally apply to Bitcoin transactions The regulatory framework for cryptocurrency should be revisited as they are unlikely to disappear and piecemeal development of regulation may lead to legal incoherence So regulation should however not restrict development in Blockchain technologies because of this wide-ranging benefits
Listen to our next video for more information about bitcoins and cryptocurrency for your future investment Thank you for watching!
