Cryptocurrency and Taxation

Cryptocurrency is a form of virtual currency which is popular across the globe. It is something which is purchased by spending the fiat currency and getting the digital asset in the form of virtual currency. Now wherever the concept of fiat currency is introduced then the concept of taxation comes within it and it is very much important for a progressive government to collect taxes and maintain the balance of the currency flow in and out of the country. 

Whenever a transaction is made while purchasing a cryptocurrency it is the fiat currency which is used and whenever that fait currency is used the composition of tax is always there and as the value of the virtual currency is fluctuating so when a person is drawing out the money he has already investment so the person needs to pay taxes on it as well so it is very important for the government to look into the details of the transaction made so that they can keep a close look on the activities of the people who are trading in and out with the matters related to the cryptocurrency. 

As a general term, cryptocurrency refers to a group of digital assets which are stored, transferred, and generated with the help of blockchain technology and kept in digital lockers by using cryptography. Approximately 100 million people worldwide hold the famous and most widely accepted cryptocurrency Bitcoin. While traditional money is backed by the government as legal tender, cryptocurrency has not yet been recognized as legal tender by any country to deal with their day-to-day affairs. The nature of cryptocurrencies is decentralized, they are free from government control, and they are controlled by no one government. Because paper money is less volatile than cryptocurrency, some people prefer to invest in Fiat money over cryptocurrency. Cryptocurrencies and fiat money have only one thing in common: demand and supply directly determine their value.

It is very much agreed that the cryptocurrency is something which has developed in recent years and is giving a very high return on the investment which is very much evident from the records of the sale and purchase of the cryptocurrency which are available in the market and is a matter of research. Now the latter part of the confusion which is one of the prominent confusion in the mind of the investors that when the traditional form of investment is paying us well as the return on investment then why do we need to shift on to some other form of investment so the easiest answer to the said question is the kind of ease the cryptocurrency is providing as you can buy it by sitting at your home, office or a cafe and make the payment for the same in the mode which is preferred by you which is again making the lives of the investor easy. 

Cryptocurrency has a long history and a passage through which it has evolved and has taken a long time to trace the process of its evolution. It comes with a combination of blockchain and ledgers. It is a bit technical as it is working in online mode and hence people are not having the adequate education regarding the cryptocurrency but there are several websites like how blockchain is different from bitcoin which are providing the services to invest in the cryptocurrency and are also educating the people and spreading a word about the pros and cons of the cryptocurrency and helping people to know about the cryptocurrency. 

There are a variety of cryptocurrencies in the market with different names but the concept behind the crypto is somewhat similar to all of them and the only difference which is there is the name and the group of brands that is naming the cryptocurrency. However, because Bitcoin is one of the oldest cryptocurrencies on the market, it is the most popular of all the brands. Some people who are having very little knowledge about cryptocurrency believe that it is Bitcoin-only which is the virtual currency and nothing else. 

Taxation system of a country is considered as a backbone of any country and with the coming of the cryptocurrency the process of the taxation has been diluted a bit and there is also a possibility of double taxation and hence the buyer needs to be very careful while making a transaction.