Archive Monthly Archives: March 2018

Nigeria’s Central Bank Warns Against Cryptocurrency Investments, Again


Nigeria central bank cryptocurrency bitcoin

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Nigeria as a nation is popular for its peculiarity on how to interpret events, developments and innovations, especially when it has to do with technological disruptions. Often times, this popularity happens for the very wrong reasons, but in the long run, the dust usually settles and ideas take off with the correct solutions that they have to offer.

The Dark Years of Cyber Fraud

Between the final years of the 20th century and the very early years of the new millennium, the internet found its way unto the shores of the most populous black nation in the world. Despite the uncountable benefits that the new technology brings like we see and experience today, it was an effective tool in the hands of bad players who carried out different forms of scams and internet fraud. As a matter of fact, the stigma left by this development is yet to be erased completely as most online transaction websites still do not allow transactions passing through the Nigerian cyberspace.

Such developments as mentioned above may not be peculiar to Nigeria or Africa, however, the absence or rather slow rate of advancing the positives that come with new innovations makes it easy for bad players to overshadow genuine developments. Therefore a trend of sinking before attempting to climb out and thrive becomes repetitive.

Insufficient Human Capital Investment

This slow rate of positive advancement can be largely attributed to the lack of adequate investment in the young people in the areas of education and health infrastructure by the nation’s leaders, both past and present. This is a deficiency that was clearly noted by the Co-Chairman of the Bill and Melinda Gates Foundation, Bill Gates during his recent visit to the country.

Gates further defended his criticism of the nation’s approach by saying:

“As a partner in Nigeria, I am saying the current plan is inadequate. Nigeria has all these young people and the current quality and quantity of investment in these young generations; in health and education just isn’t good enough. So, I was very direct. “If they can get health and education right, they will be an engine of growth not just for themselves but for all of Africa.”

Clearly, this lack of proper human capital development leaves a vacuum that is usually filled by desperate actions by the youths who employ their wits in any way they deem appropriate for the sake of survival.

Desperation is not exempted as one of the major forces behind the initial general opinion that was created with the influx of all manner of ponzi schemes within the past 18 months. These schemes camouflaged themselves under the umbrella of Bitcoin and cryptocurrencies, parading different forms of investment plans that have led to citizens losing their wealth to con artists and scammers. Apparently, it all boils down to the lack of proper knowledge and education, coupled with the ‘get-rich-quick’ mentality that is prevalent within the country.

An Institutional Warning

As a result, regulatory institutions seem to be currently responding by seeking ways of protecting the citizens from misguided investments. This is evident in the recent statement that was made by the Manager in charge of Research Department at the Nigeria Deposit Insurance Corporation (NDIC), Mr. Adikwu Igoche.

Igoche clarified that cryptocurrencies were not deposits or financial instruments authorized by the Central Bank of Nigeria, CBN. Therefore, such instruments “are not insured by the NDIC” and if anyone loses his money trading in the business, the person does so at his own risk.

“These forms of currencies are not backed by any physical commodity, such as gold or other precious stones. “They do not belong to the category of currencies or coins issued by the CBN or the central bank of any other country,” Igoche said.

Proper Education Matters

According to him, the NDIC will not relent in sensitizing Nigerians to financial, operational, legal and security risks they face by patronizing ponzi schemes and digital currencies.

Apparently, for the umpteenth time, someone from the authorities lumps digital currencies and ponzi schemes together. This is a scenario that does not usually go down well with digital currency enthusiasts and blockchain experts both within and outside the country. This raises the question whether the agencies will continue in its traditional reactive approach of damage control or tow that path of Bill Gate’s advice by investing in human capital, especially in areas of health and education. By doing so, youths within the nation may become discouraged from such desperate measures that they are becoming used to while equipping themselves to differentiate between genuine technology and fraudulent practices.

Featured image from Shutterstock.

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Crypto Markets Experience Slight Uptick After Week Of Lows

The crypto markets are seeing a slight upward trend Saturday, March 31, after hitting monthly lows this week, according to data from Coin360.

Coin360

Bitcoin (BTC) is above $7,000 again, trading for around $7,140 and up over 2 percent over a 24 hour period to press time. BTC saw a 24 hr low today of $6,623, and is currently trading 8 percent higher.

Bitcoin Charts

Ethereum (ETH) is also in the green, up almost 3 percent over a 24 hour period and trading at around $406 by press time, up from a 24-hour low of $371. 

Ethereum Charts

All of the top ten coins listed on CoinMarketCap are showing positive gains, with Stellar (XLM) showing the most growth, over 13.5 percent on the day, trading at an average of $0.21 at press time. Of the top ten, Neo is showing the least growth on the day, still green, but up only 0.16 percent over a 24-hour period.

This week’s market slump has been attributed to Twitter’s announcement of a crypto-ad ban, as well as MailChimp’s apparent closure of crypto-related accounts.

However, the week has also seen some wins for crypto adoption – possibly causing the slight market gains today – as South Korean capital Seoul has announced plans to launch its own cryptocurrency and thus create a friendlier environment for crypto and Blockchain innovation.

Poland, a country that made the news last month when it was uncovered that its central bank was secretly funding anti-crypto ads, is also now opening up towards crypto tech adoption, with one of Poland’s largest banks planning to implement a Blockchain storage system.

IBM Is Finally Getting Serious About Cryptocurrency

It wasn’t long ago that your average enterprise wouldn’t even mention bitcoin, ethereum, or any number of cryptocurrencies in public.

Instead of using the cryptographically secure tokens to streamline workflows – or even talking about doing so – some of the most recognizable enterprises in blockchain have largely confined themselves to uses of blockchain as a new decentralized database, absent any digital assets.

Slowly however, over the past several years that has started to change. Executives at large corporations have shown themselves to be increasingly willing to take public stances both for (and against) what is now a $300 billion token market.

But if 2017 was the year that companies began talking about crypto, it wasn’t until recently that enterprises have been willing to publicly use cryptocurrencies in both early-stage prototypes and live applications.

Now, it would seem the floodgates are prepared to open, with the $140 billion IBM revealing to CoinDesk that it has been meeting with executives from commodities trading platforms, large corporations, and perhaps most importantly, central banks, to explore how cryptocurrencies can help save them money and generate revenue.

“We’re seeing tons of demand for digital asset issuance across the board,” said IBM’s new head of blockchain development Jesse Lund, who was hired from Wells Fargo earlier this year to help develop the computer giant’s cryptocurrency strategy.

At the moment, that work is largely being pursued using the public Stellar platform, and its native cryptocurrency, the lumen (XLM), a partnership made public last October.

But in interview, Lund said IBM is interested in expanding the business applications of cryptocurrencies in a number of ways.

Lund told CoinDesk:

“What’s happening is there’s this emergence of a new segment that could actually be one of the biggest segments, that is a permissioned but public blockchain network typology.”

The central bank ‘big toe’

There’s perhaps no better symbol of this convergence than IBM’s early work with central banks.

Over the past year, Lund says he’s met with 20 central banks exploring the potential benefits of issuing their own fiat cryptocurrency on a blockchain.

Specifically, he described the “most durable digital asset” as one that is “issued by a central bank that represents a claim on fiat deposits in the real world,” but still maintains “some semblance of monetary policy.”

Though he wouldn’t reveal the names of most of the central banks with which he’s meeting, he described them as largely comprised of banks from the G20, an international forum with members including China, Russia, the U.S. and the EU.

Lund further described the central banks as “clients in some capacity.” Based on these conversations, he said he expects the first central banks to issue a fiat currency on a blockchain will be “the smaller ones” with a high concentration of interest in Asia and North America.

However, “the most inspiring of the visions of the central banks I’ve talked to has been Sweden’s Riksbank,” said Lund.

In December 2017, the Riksbank published a white paper detailing its interest in moving Sweden’s cash supply to a digital platform, though it didn’t mention blockchain specifically.

Still, Lund expects to see decentralized cryptocurrency converge with central banks some time soon.

“I expect that we’ll see — sometime this year — a central bank at least putting its big toe in the water to issue a digital denomination of their fiat currency into the wild,” said Lund. “Probably in a controlled format.”

Beyond currency

But IBM’s work with assets issued on a blockchain goes beyond central bank-sanctioned cryptocurrency.

By using the same technology that is allowing an increasing number of startups to raise capital on the Stellar platform, IBM is exploring a wide range of other tokens.

Lund breaks down the demand IBM is seeing into three main kinds of tokens: securities tokens that give owners a stake in the issuing company, utility tokens that give users access to a service such as phone minutes and commodities tokens that represent precious metals and other physical assets.

“We’re actually seeing a move toward the issuance of tokens that have a higher velocity that represent, for example, a claim on a portion of gold bullion sitting in a vault somewhere,” he said.

Beyond the obvious potential interest in this work from commodities exchanges, Lund said IBM is being approached by retail companies, beverage providers and energy companies looking to tokenize various aspects of their business offerings.

A fourth category of companies Lund said is approaching IBM are startups looking to raise capital, though he admits these opportunities have proved less enticing.

“We’re less inclined to do those, we like to see more maturity in the clients that we work with,” Lund added.

Beyond Stellar

So far, IBM’s work with cryptocurrencies has been largely confined to the Stellar network and its native lumen cryptocurrency, which it has used largely in cross-border payments trials.

The company itself is running nine Stellar nodes that help confirm those transactions based in locations around the world, such as Australia, Brazil, Hong Kong and the U.S. However, going forward, IBM is open to working with any number of blockchains.

The most serious of that work appears to be with the Sovrin Foundation that contributed the original codebase of Hyperledger Indy, and is now preparing to issue a crypto asset in an ICO.

While Lund didn’t reveal details about that work, he indicated there is an early-stage partnership forming with the non-profit organization. More news, he said, is expected shortly.

From there, IBM’s work with cryptocurrencies even further converges on its work with permissioned blockchains.

In January, IBM Research published a detailed white paper that described their work to apply a transaction model used by bitcoin into Hyperledger Fabric’s underlying chaincode.

Designed for purely experimental purposes to help compare transaction through-puts in the permissioned blockchain to those on public ledgers, the “Fabric Coin” effort resulted in improvements that were included in the Hyperledger Fabric 1.1 released earlier this month.

In this way, Lund expects to see further business opportunties between public and private blockchains continue to develop.

He concluded:

“We’re going to see a lot more convergence between those two ends of the spectrum. The bitcoin and cryptocurrency space that has been hands-off for enterprises and the private, country club blockchain space that is on the other side.”

IBM image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

IBM Evolution: Big Blue Is Finally Getting Serious About Cryptocurrency

It wasn’t long ago that your average enterprise wouldn’t even mention bitcoin, ethereum, or any number of cryptocurrencies in public.

Instead of using the cryptographically secure tokens to streamline workflows – or even talking about doing so – some of the most recognizable enterprises in blockchain have largely confined themselves to uses of blockchain as a new decentralized database, absent any digital assets.

Slowly however, over the past several years that has started to change. Executives at large corporations have shown themselves to be increasingly willing to take public stances both for (and against) what is now a $300 billion token market.

But if 2017 was the year that companies began talking about crypto, it wasn’t until recently that enterprises have been willing to publicly use cryptocurrencies in both early-stage prototypes and live applications.

Now, it would seem the floodgates are prepared to open, with the $140 billion IBM revealing to CoinDesk that it has been meeting with executives from commodities trading platforms, large corporations, and perhaps most importantly, central banks, to explore how cryptocurrencies can help save them money and generate revenue.

“We’re seeing tons of demand for digital asset issuance across the board,” said IBM’s new head of blockchain development Jesse Lund, who was hired from Wells Fargo earlier this year to help develop the computer giant’s cryptocurrency strategy.

At the moment, that work is largely being pursued using the public Stellar platform, and its native cryptocurrency, the lumen (XLM), an partnership made public last October.

But in interview, Lund said IBM is interested in expanding the business applications of cryptocurrencies in a number of ways.

Lund told CoinDesk:

“What’s happening is there’s this emergence of a new segment that could actually be one of the biggest segments, that is a permissioned but public blockchain network typology.”

The central bank ‘big toe’

There’s perhaps no better symbol of this convergence than IBM’s early work with central banks.

Over the past year, Lund says he’s met with 20 central banks exploring the potential benefits of issuing their own fiat cryptocurrency on a blockchain.

Specifically, he described the “most durable digital asset” as one that is “issued by a central bank that represents a claim on fiat deposits in the real world,” but still maintains “some semblance of monetary policy.”

Though he wouldn’t reveal the names of most of the central banks with which he’s meeting, he described them as largely comprised of banks from the G20, an international forum with members including China, Russia, the U.S. and the EU.

Lund further described the central banks as “clients in some capacity.” Based on these conversations, he said he expects the first central banks to issue a fiat currency on a blockchain will be “the smaller ones” with a high concentration of interest in Asia and North America.

However, “the most inspiring of the visions of the central banks I’ve talked to has been Sweden’s Riksbank,” said Lund.

In December 2017, the Riksbank published a white paper detailing its interest in moving Sweden’s cash supply to a digital platform, though it didn’t mention blockchain specifically.

Still, Lund expects to see decentralized cryptocurrency converge with central banks some time soon.

“I expect that we’ll see — sometime this year — a central bank at least putting its big toe in the water to issue a digital denomination of their fiat currency into the wild,” said Lund. “Probably in a controlled format.”

Beyond currency

But IBM’s work with assets issued on a blockchain goes beyond central bank-sanctioned cryptocurrency.

By using the same technology that is allowing an increasing number of startups to raise capital on the Stellar platform, IBM is exploring a wide range of other tokens.

Lund breaks down the demand IBM is seeing into three main kinds of tokens: securities tokens that give owners a stake in the issuing company, utility tokens that give users access to a service such as phone minutes and commodities tokens that represent precious metals and other physical assets.

“We’re actually seeing a move toward the issuance of tokens that have a higher velocity that represent, for example, a claim on a portion of gold bullion sitting in a vault somewhere,” he said.

Beyond the obvious potential interest in this work from commodities exchanges, Lund said IBM is being approached by retail companies, beverage providers and energy companies looking to tokenize various aspects of their business offerings.

A fourth category of companies Lund said is approaching IBM are startups looking to raise capital, though he admits these opportunities have proved less enticing.

“We’re less inclined to do those, we like to see more maturity in the clients that we work with,” Lund added.

Beyond Stellar

So far, IBM’s work with cryptocurrencies has been largely confined to the Stellar network and its native lumen cryptocurrency, which it has used largely in cross-border payments trials.

The company itself is running nine Stellar nodes that help confirm those transactions based in locations around the world, such as Australia, Brazil, Hong Kong and the U.S. However, going forward, IBM is open to working with any number of blockchains.

The most serious of that work appears to be with the Sovrin Foundation that contributed the original codebase of Hyperledger Indy, and is now preparing to issue a crypto asset in an ICO.

While Lund didn’t reveal details about that work, he indicated there is an early-stage partnership forming with the non-profit organization. More news, he said, is expected shortly.

From there, IBM’s work with cryptocurrencies even further converges on its work with permissioned blockchains.

In Janauary, IBM Research published a detailed white paper that described their work to apply a transaction model used by bitcoin into Hyperledger Fabric’s underlying chaincode.

Designed for purely experimental purposes to help compare transaction through-puts in the permissioned blockchain to those on public ledgers, the “Fabric Coin” effort resulted in improvements that were included in the Hyperledger Fabric 1.1 released earlier this month.

In this way, Lund expects to see further business opportunties between public and private blockchains continue to develop.

He concluded:

“We’re going to see a lot more convergence between those two ends of the spectrum. The bitcoin and cryptocurrency space that has been hands-off for enterprises and the private, country club blockchain space that is on the other side.”

IBM image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Company Enables Artists to Sell Unlimited Concert Tickets by Using Blockchain-Powered VR

Millions of tickets are sold yearly for musiс fans to see artists of all calibers, from small venues to large arena concerts. However it is not physically possible for every fan to be able to see their favorite artist; the more popular they are, the more people miss out, as venues quickly reach capacity. Yet virtual reality company CEEK are looking to change this and tackle the issue of demand outstripping supply in live music.

Viewing the concert through a headset

According to CEEK, by allowing artists to sell unlimited ‘virtual’ tickets for fans to view the concert through a headset, the company have removed the upper limit (and therefore lost potential revenue) on tickets available to be sold. They are already available to purchase at retailers such as Amazon (and recently sold out at US retailer Best Buy), and simply connect to the user’s smartphone to allow for streaming. Since CEEK have partnered with Universal and Apple, music fans can enjoy concerts from an impressive lineup of artists who typically sell out, including Katy Perry, Lady Gaga and U2. In addition, they have partnered with T-Mobile to enable customers to use VR data-free; a seemingly small detail that will actually make a real beneficial difference for customers.

Celebrity Coin Mint

A unique and defining feature of CEEK is the ‘Celebrity Coin Mint,’ which allows artists to create unique custom virtual coins for fans, in order to purchase virtual merchandise or take part in VIP events. Artists can create these custom coins ‘within minutes’ on the CEEK platform without having to have an ICO. As each of these coins have a linked Ethereum address, the CEEK tokens act like a cryptocurrency and allow fans to possess bespoke items that will increase in value over time. Fans can also use CEEK tokens to vote for concert content. Established partners and other ticket sellers could also accept CEEK tokens as a payment method for gig tickets, allowing these tickets to be traded within CEEK and further increasing demand. The company claims, as unique minted tokens are created, demand for the service will increase, as it is not a feature offered by other crypto. Thus it is an area of potentially unlimited revenue for artists of any level of popularity.

CEEK are also decimalizing rights clearances which will allow creators to use the licensed music worldwide, further boosting revenues and simplifying the overall process.

When it comes to security, the Ethereum Blockchain provides consumers with confidence that their transactions are secure and transparent. According to the company, those using the CEEK Blockchain can maintain or trade their digital assets for a much lower price than on other platforms. The souvenir merchandise purchased by fans using CEEK have both physical and digital assets cryptographically authenticated, eliminating the risk of counterfeit goods. CEEK declare that ‘we are actually using Blockchain in the way it was intended,’ by driving this decentralized sales process and increasing efficiencies.

Future Plans and Token sale

With a formidable team at the helm (CEO Mary Spio has previously founded media platforms with clients including XBOX and Coca-Cola), CEEK’s white paper sets out ambitious plans for the future, including having their VR in use by 100 mln devices by the end of 2018. They are continuing to expand and build upon their existing infrastructure to support the Blockchain ecosystem. Their public token sale begins on April 15th. Further into 2018, they plan to enable live VR streaming of music festivals, and the introduction of a Smart Wallet system.

 

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

Bank of England to Test Blockchain Tech in Domestic Payments System


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The Bank of England is beginning its Proof of Concept (PoC) to examine its potential in RTGS functionality with decentralized blockchain technology. Providing a resilient, strong, innovative system for the UK in mind, the PoC serves as a response to changes within the fintech industry.

The Bank looks to protect financial stability along with embracing innovation while keeping data integrity at the heart of the matter. The Real Time Gross Settlement (RTGS) handles nearly one-fourth of the annual GDP for the UK on an average day and must be able to continue to meet demand from users.

After releasing a renewed RTGS vision last May, this PoC is part of the bank’s strategic plan for 2020, which will see the “right technology at the core.

Also included in the vision are an external-facing API and an increase in the number of firms able to access RTGS directly for payment flow settlement.

Proof of Concept

The BOE is opening itself up to outside evaluation, searching for solutions to blockchain/cryptocurrency system integration and capacity for new technologies.

With distributed ledger technology picking up pace, the Bank of England is now working to navigate RTGS through cooperation with Clearmatics Technologies Ltd, Token, R3, and Baton Systems. Greater insight will be provided to the bank, with multiple firms involved. All four firms have access to a replica of a pre-funded settlement service for UK retailers.

Learning how to support settlement once DLT is deemed “mature enough” for sterling markets is the goal. Additionally, seeing if innovative settlements will be able to properly function within the RTGS, and how functionality may be expanded.

Bank of England’s History with Blockchain Technology

In 2016, referring to DLT, the Bank’s Executive Director for Banking, Payments, and Financial Resilience, Andrew Hauser, stated: “there’s no likelihood of such an extreme revolution occurring any time soon.” That was in 2016.

Yet, in May 2017, the bank offered an RTGS blueprint regarding services for various settlement models. Regardless of executive statements offered the previous year, the necessity to include emerging payment systems was clear.

The Bank of England’s proof of concept findings is expected to be published later this year, including functionality expansion possibilities and necessary steps for implementation.

Time will tell how the Bank will adjust to the findings and what they’ll offer regarding DLT innovation…and when.

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Everything You Were Afraid to Ask About Crypto Taxes

Busayo Ogunsanya is the CEO of AMUS Inc., an artificial intelligence tax platform, and the managing partner of BigAppleTaxReturn, a CPA firm in New York.

The following article is an exclusive contribution to CoinDesk’s Crypto and Taxes 2018 series.


Many cryptocurrency investors have made a fortune the past several years selling high-flying bitcoin and other cryptocurrencies for cash. Unfortunately, far too many of them in the U.S. did not report this taxable income to the IRS.

The agency figures hundreds of thousands of U.S. residents did not report income from sales or exchanges of cryptocurrency and it might be able to collect several billion dollars in back taxes, penalties, and interest.

In just a taste of what’s to come: After a two-year battle with the IRS, Coinbase, one of the largest cryptocurrency exchanges, recently turned over information about 13,000 customers who had traded more than $20,000 worth over a two-year period.

Fortunately, the IRS has issued guidance – labeling cryptocurrency an “intangible asset” for investors subject to capital gains and loss treatment using the realization method.

Nevertheless, when it comes to cryptocurrency, most investors are uncertain about the tax consequences.

FAQ

To help navigate this minefield, here are answers to some frequently asked questions from investors on bitcoin and other cryptocurrencies:

How is virtual currency treated for federal tax purposes? 

As property. General tax principles applicable to property transactions apply to transactions using virtual currency.

Among other things, this means that virtual currency is not treated as currency that could generate foreign currency gain or loss.

Must a taxpayer who receives virtual currency as payment for goods or services include in computing gross income the fair market value of the virtual currency? 

Yes. The value must be measured in U.S. dollars, as of the date that the virtual currency was received.

How is the fair market value of virtual currency determined? 

If a virtual currency is listed on an exchange and the exchange rate is established by market supply and demand, the fair market value of the virtual currency is determined by converting the virtual currency into U.S. dollars (or into another real currency which in turn can be converted into U.S. dollars) at the exchange rate, in a reasonable manner that is consistently applied.

Does a taxpayer have a gain or loss upon an exchange of virtual currency for other property? 

Yes. If the fair market value of property received in exchange for virtual currency exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has a taxable gain. The taxpayer has a loss if the fair market value of the property received is less than the adjusted basis of the virtual currency.

What type of gain or loss does a taxpayer realize on the sale or exchange of virtual currency? 

The character of the gain or loss generally depends on whether the virtual currency is a capital asset in the hands of the taxpayer.

If it is, a taxpayer generally realizes a capital gain or loss on the sale. If not, the taxpayer realizes an ordinary gain or loss. The distinction is more than academic. Ordinary gains are taxed at the top marginal income tax rate of 37 percent, while capital gains tax rates run as high as 15 percent depending on the tax bracket.

For example, stocks, bonds, and other investment property are generally capital assets, which produce capital gains or losses. Inventory and other property held mainly for sale to customers in a trade or for businesses are examples of property that is not a capital asset and therefore would produce ordinary gains or losses.

What are tax consequences of mining bitcoin and other cryptocurrencies?

When a taxpayer successfully mines virtual currency, the fair market value of the virtual currency generated as of the date of receipt is includable in gross income.

Further, if a taxpayer’s mining of virtual currency constitutes a trade or business, and the mining activity is not undertaken by the taxpayer as an employee, the net earnings from self-employment (generally, gross income derived from carrying on a trade or business, less allowable deductions) resulting from those activities constitute self-employment income and are subject to the self-employment tax.

What about an independent contractor who gets paid in cryptocurrency for performing services? 

Generally, self-employment income includes all gross income derived by an individual from any trade or business carried on by the individual as other than an employee.

Consequently, the fair market value of virtual currency received for services performed as an independent contractor, measured in U.S. dollars as of the date of receipt, constitutes self-employment income and is subject to the self-employment tax.

If an employer pays workers for their services in virtual currency, is that considered taxable wages? 

Yes. Generally, the medium in which remuneration for services is paid is immaterial to the determination of whether the remuneration constitutes wages for employment tax purposes.

Consequently, the fair market value of virtual currency paid as wages is subject to federal income tax withholding and federal insurance contributions.

Is a payment made using virtual currency subject to information reporting? 

Yes, to the same extent as any other payment made in property.

For example, a person who in the course of a trade or business makes a payment of “fixed and determinable income” using virtual currency with a value of $600 or more to a U.S. non-exempt recipient in a taxable year is required to report the payment to the IRS and to the payee.

Examples of payments of fixed and determinable income include rent, salaries, wages, premiums, annuities, and compensation.

What about paying an independent contractor with cryptocurrency?

Generally, a person who in the course of a trade or business makes a payment of $600 or more in a taxable year to an independent contractor for the performance of services is required to report that payment to the IRS and to the payee on Form 1099-MISC.

Are payments made using virtual currency subject to backup withholding? 

Yes – again, to the same extent as other payments made in property.

Therefore, payors making reportable payments using virtual currency must solicit a taxpayer identification number (TIN) from the payee. The payor must backup-withhold from the payment if a TIN is not obtained prior to payment or if the payor receives notification from the IRS that backup withholding is required.

Are there IRS information reporting requirements for a person who settles payments made in virtual currency on behalf of merchants that accept such currency from their customers? 

Yes, if certain requirements are met.

In general, a third party that contracts with a substantial number of unrelated merchants to settle payments between the merchants and their customers is a third party settlement organization (TPSO). A TPSO is required to report payments made to a merchant on a Form 1099-K, Payment Card and Third Party Network Transactions, if, for the calendar year, both (1) the number of transactions settled for the merchant exceeds 200, and (2) the gross amount of payments made to the merchant exceeds $20,000.

When completing Boxes 1, 3, and 5a-1 on the Form 1099-K, transactions where the TPSO settles payments made with virtual currency are aggregated with transactions where the TPSO settles payments made with real currency to determine the total amounts to be reported.

When determining whether the transactions are reportable, once again the value of the virtual currency is the fair market value of the virtual currency in U.S. dollars on the date of payment.

Word to the wise

Yes, that’s a lot of information to process, but ignoring these questions can be hazardous. The IRS is going to come after investors who are not reporting their realized gains.

Complicating matters, most cryptocurrency platforms do not issue a Form 1099 (Form 1099 is one of several IRS tax forms used in the United States to prepare and file an information return to report various types of income other than wages, salaries, and tips).

I recommend investors use software that keeps track of their cost basis, unrealized gains and losses to accurate report their investment gains.

If you stay ready, you don’t have to get ready when the IRS issues an audit on your tax return for unreported income.

April 2018 calendar image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

An Inside Look At China’s Government Controlled Cryptocurrency Project


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China, a country that has exerted more control over cryptocurrency than most, continues to move forward in its efforts to introduce a government-controlled cryptocurrency.

A group of Shanghai reporters recently got a chance to learn about this secretive project during the Global Blockchain Summit Forum, sina.com.cn reported. The visit shed light on the extent of the government’s efforts to create a national cryptocurrency. The reporters visited the Bank of China Credit Card Industry Development Co., Ltd. Hangzhou Blockchain Technology Research Institute.

Standards Announced

China’s ministry of industry and information technology revealed last week that it has already conducted a study exploring a framework for standardizing blockchain technology domestically. The ministry’s information and software services division and the China Electronics Standardization Institute proposed that a new technical committee to be established.

The embracive stance toward blockchain technology is in stark contrast to China’s crippling curbs against local cryptocurrency markets which have seen initial coin offerings (ICOs) outlawed and crypto exchanges phased out to effectively shutter domestic trading markets.

The China Banknote Bank Credit Card Industry Development Co., Ltd., one of the core companies of the China Banknote Printing and Minting Corporation, is the earliest team to study digital currency and blockchain technology within the central bank system, sina.com.cn reported.

The team last year established the Banknote Blockchain Technology Institute.

Leading the team is the central bank’s science and technology leader Zhang Yifeng. According to Yifeng, the overall research and development team is less than 100 people.

The Project Progresses

The China Boxer Blockchain Technology Research Institute has applied for 22 blockchain technology invention patents so far, sina.com.cn reported.

The team’s underlying technology architecture has been completed and the central bank’s digital billing business has also been completed, according to Yifeng. Currently, it is promoting the opening and closing of a blockchain registration platform.

Yifeng said the most important part of the blockchain is to re-optimize the technology in combination with the actual business while looking for application scenarios.

Not only can the participants of the platform use it, they can also conduct institutional certification and circulation, and achieve mutual trust and cooperation among all parties.

The biggest difference between digital currency and the existing electronic payment is that it can be account-based or non-account-based, Yifeng said.

Digital currency seeks to facilitate the convenience, speed and low cost of a retail payment system, while at the same time providing security and protection of user privacy.

Also read: ‘ASAP’: China  is working toward national blockchain standards

Only The Official Cryptocurrency Recognized

Only the statutory digital currency issued by the central bank is the real digital currency, he said. Not bitcoin or Ethereum.

The digital currency represented by bitcoin is actually a digital asset with stronger attributes, more volatility, and mostly lacks intrinsic value, he said. Digital currency still needs to satisfy the basic attributes of money, and the basic characteristics of value scale, exchange media, payment instruments, and value storage have not changed.

The coins issued by ICO are even more ridiculous, Yifeng said. In addition, he asked, how can a sovereign credit currency act as a liquidity instrument and payment instrument?

There is no clear timetable for the launch of the legal digital currency, he said.

Meanwhile, the Blockchain Technology Research Institute will establish cooperative relationships with a number of universities and research institutes to promote research in areas such as cryptography algorithms, zero-knowledge proofs, and distributed technologies. At the same time, it will apply for more financial technology patents.

The Digital Billing Platform based on blockchain technology that was undertaken by the Group of China Boxer Blockchain Technology Research Institute in 2016 was successfully tested on the Stock Exchange on Jan. 25 this year, according to sina.com.cn.

Fan Guiluo, chairman of China Bills Credit Card Industry Development Co., Ltd., said that blockchain, as a trusted technology, will be used under the trustworthy system of the Chinese banknote printing and minting company.

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Thought – The World’s First Mineable Public AI Blockchain Is More Than Just a Regular ICO Project


This is a paid-for submitted press release. CCN does not endorse, nor is responsible for any material included below and isn’t responsible for any damages or losses connected with any products or services mentioned in the press release. CCN urges readers to conduct their own research with due diligence into the company, product or service mentioned in the press release.

Solving one of the most prominent issues in the data and AI industry

The world’s first university backed ICO, Thought.live, is developing the first mineable public AI blockchain, which will create a completely new way of utilizing the data generated by our society.

Thought is embedding smart logic and AI into every bit of information, making information aware of its origin and able to act on its own to accomplish its purpose.

Thought patented technology of making data smart reduces the need for external applications that until this point have been required, increasing processing speed and decreasing the complexity associated with these application. In addition, it decreases the problem with the exponentially increasing amounts of data.

„With the advancements in technology we are also experiencing an increase in information created by our society. Everything from social media to human genome research generates data, and we are already struggling to process it all.“ Explains Professor Andrew Hacker, the CEO of Thought. „With Smart Data, we can usher in a whole new paradigm of active data, where we can do the things we want more securely, efficiently, quickly and intelligently.”

Introducing unparalleled security to artificial intelligence

Sam Jones, the Chief Software Engineer of Thought: „Using blockchain technology allows us to protect every bit of information with multi-layered encryption, creating the highest level of security.“

„Being able to secure individual bits of data is like the Holy Grail of cybersecurity.“ Adds Professor Hacker, who in addition to running Thought is a cybersecurity expert in residence at Harrisburg University of Science and Technology, which is one of Thought’s closest partners.

Bringing equality to the monopolistic world of AI

In addition to vastly improving the security of information by integrating blockchain technology and multi-level encryption, Though opens up many new opportunities in the field of artificial intelligence.

One of the main aspects of Thought is their ecosystem where data is used as the commodity. Until this point AI and data analytics has been the playground for giant corporations who have billions of dollars and millions of active users. The smaller guys who don’t have such funding are left out of the game. Thought’s ecosystem will change that, giving everyone the possibility to access AI and valuable data for reasonable prices.

“AI, by its very nature, must be personalized in order to be accepted and effective. AI cannot remain trapped at Google, Amazon, Microsoft or IBM – it is designed to help people, not only huge companies. There’s no way AI gets developed to its greatest potential if it’s only limited to these large enterprises.” Says Matthew Hykes, Chief Software Archidect of Thought.

„Till this day, access to AI and big data has been limited to only a handful of organizations, but for seeing true innovation take place, AI and data have to become easily accessed and available to everyone who’s looking to work with this emerging technology.” Says Nathaniel DiMemmo, COO of Thought.

The importance of a great team

Nathaniel adds: „Coming up with world-changing ideas and realizing them to bring the state of the art innovations to the world, have always been the priorities for our team. Our team has worked together for years, developing the next thing that will take the field of artificial intelligence and data handling to the next level.“

„It is incredible to witness how our team is able to crush one obstacle after another with collective passion, even if it requires sleepless nights and 20-hour workdays.“ Says Andrew Hacker. „Three patents and 10 years of work later, things are finally coming together. Every day interest and support behind our project increases dramatically and we are powering towards to the completion of our platform.“

Collaboration with Harrisburg University

„We’re proud of Andrew’s accomplishments and are honored to have him as a valuable member of Harrisburg University,” said the President of Harrisburg University Dr. Eric Darr. „The upcoming release of this new technology, Thought, and its applications for businesses and consumers in AI and analytics represents the bleeding edge of innovation. Harrisburg University looks forward to continuing its work with Mr. Hacker and Thought as they continue developing new and valuable technology.“

„We are not only developing AI, we are educating people on this new field. Working closely with Harrisburg University has allowed us to bring knowledge to thousands of people, bringing great AI blockchain technology to the forefront and training a new generation of people knowleageable in the latest advancements in tech.“ Says Professor Hacker.

Join the ICO

Thought’s ICO is live now. Sign up at https://thought.live to receive a 10% discount on your purchase until the end of March. From the 1st of April to the end of the ICO on the 30th of April participants receive a 5% discount.

GIFcoin: Gambling Investment Fund – an ERC-20 Token Supported by a Real, Money-Generating Business


This is a paid-for submitted press release. CCN does not endorse, nor is responsible for any material included below and isn’t responsible for any damages or losses connected with any products or services mentioned in the press release. CCN urges readers to conduct their own research with due diligence into the company, product or service mentioned in the press release.

People have been placing wagers since the olden days. It comes as no surprise that online gambling today has become one of the world’s TOP 3 most profitable markets, thanks to mainly to the Internet. New avenues for improvements have appeared on the digital horizon, mainly due to the ICO hype in recent days.

Among the multitudes of Initial Coin Offerings at present, there’s one that stands out – GIFcoin, the first Gambling Investment Fund on a global scale.

About GIFcoin 

– Leverages on the gambling industry’s colossal revenues.

– Backed by a real, money-making bookmaker – VitalBet.

– Shares 80% of VitalBet’s net profits with investors in return.

Outstanding ICO Features

– Ultra-Transparent Team

– Weekly Live Streams

– Investors Only Telegram Chat Rooms

– Behind-the-scenes Sneak Peeks

– Supersonic Support

Roadmap of GIFcoin

– Release of a revolutionary mobile betting application for Android, iOS, and Windows.

– The ultimate goal is to enter the ranks of the TOP 15 betting websites in the world by 2020. 

GIFcoin’s Team

– The CEO has more than 50 online betting projects under his entrepreneurial sleeves.

– Specialists in Blockchain development, branding, marketing, and sports betting work together to provide an ICO that revolutionizes the market.

– Legal, financial, and marketing advisors ensure the smooth operation.

GIFcoin Main Sale

The Main ICO Sale consists of seven (7) stages:

    • Stage 1 – 6,400,000 GIF – SOLD OUT
    • Stage 2 – 7,000,000 GIF with a 40% Bonus
    • Stage 3 – 7,800,000 GIF with a 30% Bonus
    • Stage 4 – 8,400,000 GIF with a 20% Bonus
    • Stage 5 – 92,400,000 GIF with a 15% Bonus
    • Stage 6 – 77,000,000 GIF with a 10% Bonus
    • Stage 7 – 61,000,000 GIF with NO Bonus

* Price of GIF token: 1 ETH = 10,000 GIF + bonus

* Total token distribution: 300,000,000 GIF (total public distribution: 260,000,000 GIF)

* Accepted Payment Methods – ETH, BTC, LTC

* FIAT payments – not accepted

* Minimum investment during Stage 1-5 – 0.5 ETH, 0.05 BTC, 2 LTC

* Soft Cap – 5,000 ETH

* Hard Cap – 24,000 ETH

JOIN THE MAIN SALE NOW

White Paper:  https://www.gifcoin.io/GifCoin-WhitePaper.pdf

Lite Paper: https://www.gifcoin.io/GIFcoin-Litepaper.pdf

Social Networks

Telegram: https://t.me/gifcoin  

Bitcointalk: https://bitcointalk.org/index.php?topic=2785607

Facebook: http://fb.com/gifcoin.io  

Twitter: https://twitter.com/gifcoin_io

Medium: https://medium.com/@gifcoin/  

E-mail: [email protected]

Related Videos:

https://www.youtube.com/watch?v=6520U4qrLi8

https://www.youtube.com/watch?v=iq7cPiUvXY4

https://www.youtube.com/watch?v=ZaLQoAevJWc

 If you have any questions about GIFcoin ICO, message the team on Telegram, Facebook, or via e-mail. Thank you.

Please join GIFcoin’s official Telegram channel to get prompt and accurate feedback. 

Do not trust anyone who is not an official team member of GIFcoin.

*Disclaimer: This is not investment advice, please do your own research prior to participating in any ICO. The sender of this email may/may not have taken a promotional fee for the distribution of this email. 

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