Is Bitcoin a Currency, or an Asset?

July 29, 2019 By E.J. Smith - Your Survival Guy

By Wit Olszewski @ Shutterstock.com

Bitcoin speculators are in the midst of another wild ride in the crypto-currency’s price, which shot up as high as $13,387.26/bitcoin on June 26 after having settled for months in the $3,500-range. Prices have now fallen back below $9,500 in the span of a month, taking back some, but certainly not all, of what speculators made in the last rally.

Something many Americans are confused about is, whether bitcoin is a currency, or an asset. For tax purposes, the IRS is treating bitcoin like an asset. Laura Saunders reports for the WSJ:

According to an IRS spokesman, there is no explicit requirement that many cryptocurrency sales be reported to the agency by third parties. Sales of stock shares must generally be reported on Form 1099-B to the IRS by the brokerage firm.

Among the possible taxes: If an investor sells a cryptocurrency after holding it longer than a year, the profits are typically long-term capital gains.

The tax rate is 0%, 15%, or 20%, plus a 3.8% surtax in some cases, depending on the owner’s total income.

Bitcoin prices have proven to be extremely volatile, and bitcoin should probably be avoided by any investor seeking to minimize risk in a portfolio. I don’t see much value in the crypto-currency, but I have written regularly that there is merit to the underlying blockchain technology that runs bitcoin.

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There are a number of companies including banks and IBM that are using blockchain technologies to revolutionize their businesses.

Read more about what I think about bitcoin, the blockchain, and where the technology will ultimately take the internet.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

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