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Newsletter 05/2018

Finance | Cryptocurrency in Australia: the facts

 

Cryptocurrency in Australia; what you need to know

You’re at a barbeque with your mates and work colleagues, everyone is having a great time until someone says: “Did you see the Bitcoin market this week?” The reactions to this question generally fall into two categories, either one of interest and confessions of one’s own intrigue, or confusion and mild embarrassment. If you fall into the latter category, we’re here to change that.

If this happened to you last December, then it’s likely that the person mentioning crypto was bragging about how much money they made that month, when a single bitcoin reached a whopping price of $20,000. Needless to say, much has changed since then, and much more will change, as this volatile market has the habit of overseeing billions both wiped off and injected into the market within less than 24 hours. In fact, after months of a dreadful bear market and millions slowly bleeding away, an epic bull rally on the 12th of April saw a massive cash injection of $20 billion in just a matter of hours, turning the entire market around, re-igniting interest and driving more venture capital into cryptocurrencies.

But what is Bitcoin, and more importantly, what is a cryptocurrency?

Bitcoin is the first ever cryptocurrency created back in 2008 by Satoshi Nakamoto. It is a decentralised digital asset or currency that uses cryptography and public ledger technology to send and receive transactions through a global network of computers that run Bitcoin’s software. To this day, nobody has ever managed to crack Bitcoin’s freely available underlying code, as it uses a public verification system that has proven impossible to alter.

However, Bitcoin is not synonymous with cryptocurrency, as some believe. There are many other crypto assets that apply variations of blockchain technology to their own ideas, such as Ethereum, Ripple, Litecoin and Dash.

Great, so you know the basics of cryptocurrencies, but how do you enter the market?

Currently, there are a number of exchanges that allow users to trade crypto assets in the market. But many of these systems are clunky, unintuitive and not user friendly. As such, we endeavoured to build deVereCrypto, a mobile trading application that operates seamlessly, efficiently and hassle free. Our application includes the top most traded cryptocurrencies which we handpicked after analysing the market to separate the wheat from the chaff.

In this burgeoning crypto space, a degree of caution cannot really be understated, as ICOs (initial coin offerings) rise and fall like there’s no tomorrow.

Speaking of caution, any prospective investor should pay close attention to the relevant regulations that apply to where they’re operating from. In March, the Australian Tax Office’s (ATO) website released a section regarding the taxation of cryptocurrencies, specifically Bitcoin, where they say: “financial supply for goods and services tax (GST) purposes. Bitcoin is, however, an asset for capital gains tax (CGT) purposes.”

The section goes on to add that no income or GST tax will apply for goods and services paid in BTC for which the cost totals less than $10,000.

At the moment, cryptocurrencies are still in a “Wild West” state, where many aren’t aware of any tax obligations, partly because they’re still being formulated, but also because of other factors like how some countries treat Bitcoin (to name one) as a currency while others treat it as an asset.

Since tax laws can be both tedious and cumbersome, we would advise getting in touch with one of our financial advisors before cashing out. But until then, if you’re looking for a seamless, uncryptic experience, signup with deVereCrypto and enjoy the ride!

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