ruletheworld

Jul 292020
 
how to buy YFII token

This is a guide on how to buy YFII token, a fork of the original YFI DeFi Token. If you are looking to buy YFI instead, check out this guide or our guide on how to buy DeFi tokens without KYC.

YFII is a fork of the original YFI project from Andre Cronje by a community within the original YFI community. The split occurred mostly over the proposal “YIP-8” in the original YFI community. The YFII community adopted this proposal whereas the original YFI community rejected it (it did not reach the required quorum). The proposal essentially continues yield farming rewards on a weekly halving schedule (10,000 YFII in week 1, 5,000 YFII in week 2 and so on)

So why care about YFII? In many ways, YFII has retained the original ethos of the YFI project namely there is no developer pre-mine (i.e. no YFII is allocated to the dev team – they need to farm or buy it like everyone else), there are no VCs or advisors or any other sort of entities that want to dump on the community.

The biggest contention about YFII in the original YFI community seems to be around not forking the holders of YFI, i.e. YFII is starting the community from scratch instead of starting from a point where holders of YFI also hold YFII. Depending on your point of view, this may be good or bad – good because the project can develop without the baggage of YFI holders and bad because the original YFI community has no stake in YFII.

Also, please do your own research into YFII and smart contract safety – several prominent “western” crypto companies like etherscan, metamask, and even Balancer have put phishing warnings against YFII – something the emergent YFII community (a lot in China) is vehemently opposed to. Balancer in fact completely removed the YFII pool from their frontend (without any input from BAL “governance token” holders), a controversial decision to say the least.

Update: After some Twitter wars and lots of back and forth, all of them have partially relented – for example Etherscan simply lists YFII as “high risk” and Balancer has brought back the YFII pool on the frontend with a warning instead of outright censorship.

How to Farm YFII

Before we discuss buying options for YFII, it would be better to mention the ways you can farm YFII (again, please do your own due diligence around smart contract safety).

As of this writing, there are two ways you can farm YFII:

  • Staking yCRV (yTokens in the Curve y pool) via the staking contract at yfii.finance (note that at the time of this writing, MetaMask still shows a phishing error and doesn’t even let you access the site).

If you don’t want to farm or limit your risk exposure to YFII via farming, you can of course just buy the token. There is a community-written guide that has more information on farming YFII.

How to Buy YFII

There are a few options available to buy YFII right now:

As of this writing, the Uniswap pool of YFII/ETH seems to have the best liquidity and pricing. So the best execution steps would be:

  • Go to 1inch and trade your tokens for ETH (optional – if you are trading a token into YFII)
  • Go to Uniswap YFII/ETH pool to trade your ETH for YFII.

1inch hasn’t integrated YFII natively yet. Once they do, you don’t need the second step at all and can just trade there for best execution.

Keep an eye out on YFII – the farming yield APY is over 1000% in the second pool right now, and trade volume is $1.5 Million on Uniswap YFII/ETH pool so far just in the last 24 hours.

Important Resources

Since there seems to be a lot of censorship going on, here are the major details about YFII (again – do you own research and due diligence)

Jul 252020
 
Understanding YFI token DeFi

This guide will help you understand what the YFI token from yearn.finance is, what the role of the token is, its economic and governance rights and future potential and an explanation of how yTokens work. If you are looking to buy YFI, please read our guide on how to buy YFI.

What is YFI Token?

YFI token is the governance and economic layer on top of the yearn protocol, which is a suite of smart contracts that track the best yields on underlying assets.

YFI token was released to the world in the fairest possible launch:

  • There was no pre-mine
  • No ICO – not a single token was sold by the team before launch
  • No VCs – the bane of a lot of crypto projects
  • No “advisors” to shill the token on Twitter and make money by dumping their bags on you
  • No developer allocation. Yes, really.

The most interesting thing? It is all built by a single developer, Andre Cronje!

If you want to buy YFI, you want to do this for two purposes:

  • Govern the protocol by setting parameters on everything from inflation rate to protocol fees.
  • Earn fees from “assets under management” based on how well the protocol does in providing returns.

Unlike other vaporware tokens like BAL from Balancer which are a promise of future governance and have a marketcap of $1 billion fully diluted with literally 0 economic utility (and currently 0 governance utility as well), YFI has both governance and economic utility since launch. As the assets under management for yTokens goes up, the value of YFI also goes up and holders can expect a real non-speculative return.

YFI has been steadily going up in price over the last week since launch. A passionate community has formed around it and is building tools from governance to returns trackers.

What are yTokens?

Let us also understand what yTokens are. yTokens are simply wrappers around existing tokens, currently stablecoins. Therefore ydAI is a wrapper around DAI, yUSDT is a wrapper around USDT, yUSDC is a wrapper around USDC, and yBUSDC is a wrapper around TUSDC.

But what does this wrapper do? Simply put, it takes the underlying asset, like DAI, and finds the best possible yield for that asset. So for example if Aave yields 8% on DAI and Compound yields 6%, then yDAI would move your DAI into Aave. yTokens are ‘yield optimized tokens’ based on the underlying.

Therefore, you don’t need to worry about trying to track aDAI vs. cDAI and where you can get the best returns. The yearn protocol automatically does this for you. Since it is currently managing a few hundred million dollars, it can move around large sums of money without gas being an issue either.

Things get more interesting with the yield farming and liquidity mining incentives, so that yTokens can actually be much more powerful than simply yield seeking instruments, but can combine yield maximizing based on yield farming. A lot more of this will become a reality in V2, slated to be released in a few days.

In a nutshell, yTokens are super-charged DeFi wrapper tokens that seek out the best yield for you. Therefore if you are new to DeFi or don’t want to spend every waking minute of your existence refreshing twenty web pages to track everything, just let yearn do its thing while you sit back and enjoy your yield.

What is yCRV

A quick detour into yCRV is warranted. This was the first pool where you could “mine” for YFI at launch. Essentially, it is a stablecoin pool (therefore well suited for Curve) on Curve where you can trade between different yTokens derived from USD stablecoins, i.e. yDAI, yUSDC, yUSDT, yTUSD.

You can think of the yCRV pool tokens as a basket of yield maximizing stablecoins, but in addition they also accrue liquidity provider fees on Curve! Pretty neat.

Jul 192020
 
Buy YFI token yield farming defi

This is a guide on how to buy YFI token from yearn.finance team. YFI is a really interesting DeFi token, which helps regular users utilize the full power of Decentralized Finance (DeFi) tools, including the now famous “yield farming”. This means you can simply own, for example yDAI, and get exposure to all yield farming opportunities from Compound to Balancer while also maximizing your yield in the process.

The YFI token is also interesting in that it is pretty much run and created by a single developer, Andre Cronje. This just shows how much impact a single developer can have on the entire ecosystem and create a protocol worth tens of millions of dollars on other money legos already built on Ethereum.

YFI is gaining momentum because it has proven to be a truly bottoms-up community driven project. There is no pre-mine or pre-sale or VCs or ‘thought leaders’ or other shenanigans. What is remarkable is that Andre, the developer, doesn’t even have any YFI reserved for his own work! That has attracted a lot of passionate community members to become stewards of the project.

After you’ve learned the basics, it is time to start learning how to buy YFI tokens. However, before that, let’s first learn about how to “farm” YFI tokens. Farming YFI tokens may be a better strategy than buying YFI tokens for some people. This is especially true for those who are ‘liquid’ in USD or DAI since most of the pools and farming opportunities for YFI are based on DAI and not ETH.

How to Farm YFI

There are three ways currently to farm YFI –

  • On Curve, with the “Y” tokens (original reward completed)
  • On Balancer, with the 2/98 YFI/DAI pool (original reward completed)
  • On Balancer with the YFI/yCRV pool (reward expires on July 26, 2020)

How to Buy YFI

There are several places you can currently buy YFI via Decentralized Exchanges without account creation/KYC etc.

Centralized exchanges where you can buy YFI are –

Balancer has a pool that is being used to farm YFI, so there seems to be higher liquidity there. If you want to buy large amounts of YFI, Balancer may be a better bet. The downside with Balancer is that the gas price is much higher than Uniswap, almost by a factor of 3x. Therefore for smaller amounts, Uniswap may give better returns including the gas fee.

However, in any case, always make sure to check on 1inch before you buy directly on Unswap or Balancer. This is because 1inch will tell you the best execution for the trade. For example, going from ETH to DAI and then to YFI may be more profitable than buying directly in the ETH/YFI pool or vice versa. Also, the site will include the gas prices in the calculation, so you don’t need to worry about the best execution at all.

Also, 1inch is really good with converting the crypto you have via the best possible execution via multiple decentralized exchanges. For example, here is an example of their ‘Pathfinder’ algorithm – something very hard to replicate manually.

Pathfinder on 1inch for best trade execution

We suggest using DeFi exchanges like Uniswap, Balancer, and Kyber instead of centralized exchanges since you can execute the trade directly from your Web3 wallet like Metamask or Ledger instead of going through account creation, KYC, withdraw limits, etc.

All of these can be accessed via MetaMask. If you have a decent sized crypto portfolio, make sure to use a hardware wallet like Trezor or Ledger, which you can easily connect via MetaMask.

Jul 132020
 
Trading Defi tokens

Here is a guide to buying “DeFi” tokens like $COMP, $BAL, $CRV, $REP, $AAVE, $KNC, $BNT, $LRC, etc. without having to go through KYC or time-consuming registration processes.

Decentralized Finance, or “DeFi” for short, has seen an emergence on Ethereum over the last few months. Many investors are now looking to get exposure to this area via DeFi tokens. Several tokens like COMP from Compound, a lending protocol, and BAL from Balancer, an automated market maker, currently trade at valuations of over $1 billion (fully diluted marketcap).

If you don’t care about KYC or prefer using a centralized exchange, go with the ones that are most trusted, like Coinbase. Coinbase actually lists a lot of these DeFi tokens like KNC, COMP, etc. In fact, Coinbase listed COMP even before Binance did!

You may of course be familiar with many “Decentralized Exchanges” or “DEXes” for short, like Uniswap, Kyber, Balancer, etc. However, we don’t recommend going through these to get the best price. This is because at any given time, there is price variation between them. Also, there are nuances, such as Uniswap V1 vs. Uniswap V2. Finally, there are exchanges that you may not know about or forget to check.

Instead, we recommend going through an aggregator because it can not only find you the best price but also the best way to route the order. If your order is large, it would get the best price when you use multiple exchanges and orderbooks in one transaction. In addition, aggregators are able to use exchanges like Bancor that may be restricted in your country (like the US).

Among all the aggregators we’ve reviewed, we recommend going through 1inch. The team is highly competent technically (they find smart contract bugs in other projects!) and they deliver at a high speed. They also build new amazing features like the Pathfinder which can compute order routing and paths that other aggregators can never find (such as multiple hops to get to your desired output currency)

Step-1: Go to 1inch exchange and connect your Web3 wallet like MetaMask. Here is what it looks like – specifically, take note of all the exchanges that they connect to.

Step-2: Enter the tokens you with to buy, and with what token. This is where 1inch shines. Here, I am trying out a test trade to sell 200 COMP for LEND. 1inch gives me 145,068 LEND for this trade whereas the best individual exchange, Uniswap, only gives 141,053 LEND.

Why this difference? You can see when you hover over the Pathfinder algorithm

As you can see, this is a fairly sophisticated order routing that would be quite hard if you were to manually try to do this.

Step-3: Just hit ‘Swap Now’ and you’ll be all set. You may need to ‘Unlock’ your tokens for trading, which is something you need to do for any DEX trading ERC20 tokens.

1inch actually gives you the option to unlock the exact amount of tokens or ‘infinite approval’. If you’re security minded or trade large volumes, take the first option because if you take the second option, you are taking on smart contract risk (the 1inch smart contract will have authorization to spend infinite COMP on your behalf in this case). Exchange like Uniswap only allow for infinite approvals, so 1inch is a step up for security. However, the downside is you need to approve tokens every time you trade. If you trade often, infinite approvals might just be the way to go.

This is how you get the best prices for DeFi tokens and trade these without worrying about KYC and your identity getting stolen in an exchange hack.

Jun 252020
 

This is a guest post from Kieran Smith

Bitcoin critics suggest the cryptocurrency has become a dinosaur, left behind by technologically superior altcoins.

But while the protocol is mostly unchanged since Segregated Witness (SegWit) was activated in August 2017,there are several upgrades in the pipeline promising to bring fresh innovation to the leading cryptocurrency.

CoinPool

A new second-layer privacy protocol proposal—CoinPool—was shared on the bitcoin dev mailing list by Antoine Riard and Gleb Naumenko earlier this month. The protocol promises to upgrade bitcoin privacy and scalability, guarding against block chain surveillance by allowing several users to trustlessly share a single UTXO.

As it relies on Taproot, the protocol is not tipped for implementation anytime soon, but it could represent a significant step forward for Bitcoin. 

AltNet

AltNet is another proposal put forward in May by Bitcoin Core contributor Antoine Riard that aims to make the P2P layer of Bitcoin more robust. This would enable full nodes to communicate with alternative data transports across the network, making it easier for nodes to receive data from other data transport methods like bluetooth, orbital satellites, or the lightning network.

Dandelion

The Dandelion protocol was originally proposed in 2017 to help improve privacy by concealing the IP address behind a transaction. The protocol breaks transactions in two parts—the “stem” and the “fluff”—to obfuscate its origins.

After some feedback and subsequent adjustments, an improved version of the Dandelion Protocol was proposed in May this year called Dandelion++. And it now looks ready to be included in an upcoming Bitcoin Core release.

Simplicity

Simplicity is a proposal from 2017 for Bitcoin itself to upgrade its scripting capabilities and become more versatile and attractive to developers.

The original Bitcoin script was somewhat limited by Nakamoto for security purposes, and Simplicity attempts to preserve this original ethos but allow for more complex applications like smart contracts.

Merkelized Abstract Syntax Trees (MAST)

First proposed by Dr Johnson Lau in 2016, MAST is a combination of Merkle trees and Abstract Syntax Trees (AST).

The protocol would allow more complex data sets to be added transactions, and also use Merkle Proofs to reduce transaction size. This would increase scalability and privacy on bitcoin and make it possible to implement complex smart contracts.

At present there are several different proposals containing MAST, and the technology looks set to eventually make it on to the network.

Drivechains

The idea of Drivechains was conceived by Paul Sztorc in a November 2015 blog post as a way to implement his peer-to-peer oracle protocol known as Bitcoin Hivemind.

The protocol seeks to “peg” additional sidechains to Bitcoin, with each having their own qualities. For example, one sidechain might have privacy functionality, and another might be built specifically for running smart contracts. Unlike other sidechain projects like Liquid and Rootstock, drivechains would be secured by Bitcoin miners. 

Schnorr/Taproot

The Schnorr/Taproot upgrades encompass several different technologies that also promise greater scalability and privacy for Bitcoin.

Schnorr signatures have been tipped for implementation on Bitcoin since 2014. These signatures replace Bitcoins’ signature digital algorithm, ECDSA, and would create efficiency benefits by allowing the aggregation of signatures to minimize network load and improve scalability.

Several bitcoin devs are working on a Schnorr signature proposal that would include another proposal called Taproot in a single protocol upgrade. While Schnorr lets signatures aggregate, thus allowing bitcoin multi-signature transactions to appear as if they were standard transactions, Taproot allows an even broader set of transaction types to be condensed—offering even more significant privacy benefits.

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As this selection of proposals from the past few years show, bitcoin is constantly subject to change, and has innovative upgrades in store.

With that said, one should remember that as an asset with the potential to become a global reserve, the Bitcoin network benefits from stability because individuals must be able to have confidence that the key aspects of the network—including the hardcoded supply cap and the block size—will remain unchanged.

About the Author

Kieran Smith provides content strategy and copywriting services for cryptocurrency companies at Bitcopy.

Photo Credit: Davidstankiewicz

Jun 112020
 

You can set nonce in MetaMask but it is hidden by default. You may want to set your nonce because the gas prices are high and you want to unstuck your transaction. By setting your own nonce, you can try to override a pending transaction. You may not be able to do this via the MetaMask UI – for example if you imported your Ethereum wallet.

Before we begin, note that you need to double-check the nonce that you’re setting. If you set the nonce too low or too high, the transaction won’t get confirmed. This is definitely for advanced users of MetaMask and Ethereum, so do this with care. Read more about nonce on Stack Overflow.

Now that you’re ready, let’s get down to setting your own nonce in your MetaMask

Step-1: Go to your account on the top right corner of your MetaMask extension and click on Settings.

MetaMask Account Settings

Step-2: Under Settings, click on Advanced Settings. Then find the setting that says: “Customize transaction nonceTurn this on to change the nonce (transaction number) on confirmation screens. This is an advanced feature, use cautiously. Toggle this to “ON” state.

MetaMask Advanced Settings

Step-3: Now you can create a transaction as you normally would (e.g. if you want to send a 0 ETH transaction to yourself) and you’ll see a new field appear called “Set Custom Nonce“. This will show up in the confirmation screen when you try to send the transaction out.

MetaMask Set Custom Nonce

Here, we have manually set the custom nonce to 10000. Make sure you double check the nonce value!

When you hit confirm, MetaMask will broadcast your transaction with the custom nonce that you chose above.

Related: Learn how to speed up your MetaMask if it is slow

Tip: 0x5109110A484D4E20e1e5f5E94dc9620d7DD0819E

May 272020
 

This is a sponsored post by Sharleen Ross

https://www.123rf.com/stock-photo/cryptocurrency_trading.html?start=100&sti=o9y1mq1z576e4ivas8|&mediapopup=92125482
Gold BitCoin standing on a computer keyboard

If you weren’t a germaphobe before 2020, you probably are now. Being more aware of germs and how they spread is going to help future generations better handle virus outbreaks and disease pandemics, but when it comes to the world of finance and transactions, there are some helpful things you can do now to slow the spread of germs. 

Stop the Spread

Cryptocurrency is gaining more popularity every year and many predict it will be the way of the future. In times like these, going crypto can be especially helpful. Physical currency is ranked among some of the dirtiest objects around. It goes through thousands of hands and places before it reaches your wallet and gets passed on again. In trying to stop the spread of COVID-19 and other diseases, using virtual currency may be one of the most health-conscious choices you can make. 

In addition to slowing the spread of germs and the virus specifically, cryptocurrency can also help lower your taxes. Donating crypto is not taxable in the United States and many other countries. That’s good news for you and the millions in need at this time of trouble. There are many who are unemployed, sick or don’t have money to purchase food and other necessities. You can use cryptocurrency to make donations to your favorite charity, count it as a tax deduction and even prevent the spread of COVID-19. It’s a win-win, win! 

Safe Transactions

https://www.123rf.com/stock-photo/cyber_security_business.html?&sti=lvllyhim7tdz2kk913|&mediapopup=101155207
Padlock wrapped around a laptop.

Cryptocurrency is also an extremely safe way to make transactions due to the numerous verifications each exchange must go through. Cryptocurrency is checked by people called “miners” and their job basically is to confirm that the transaction is legitimate and meets all necessary standards. As transactions accumulate, you build what is referred to as a blockchain. Blockchain is like layers of verification on where the currency has been; it is protected by virtually thousands of eyes and monitors, which is more security than banks and credit union s can offer. 

Hectic times like this can also be vulnerable times. Criminals trying to hack bank accounts is a legitimate concern and you should do all you can to stay protected. Cryptocurrency can keep funds safe and secure. 

Globalization

Another benefit, besides helping with taxes is the speed and fluidity of transactions across borders. The world is more globalized than ever and from the looks of things, it will continue to move in that direction. Transactions will not only influence the U.S., but also the global economy. The future holds a lot of new possibilities and crypto currencies are a great tool to keep up with changing times. 

Stay Safe

The ultimate goal of course right now is to keep yourself and your families safe. It is vital that we take every precaution necessary to beat the virus that has taken over. Cryptocurrency is another way we can help avoid the spread of germs and fight this thing together. Of course cryptocurrency will help you with your taxes (there are even helpful cryptocurrency tax guides out there), make for safer transactions and keep you moving in a fast-paced world, but the most important thing is you. You and your loved ones can’t be replaced, so be smart and stay safe. 

Apr 222020
 
Photo by Dmitry Demidko on Unsplash

Despite cryptocurrencies’ substantial rise in prominence in recent years, we are still a long way from being able to use Bitcoins to complete everyday purchases. For this process to become a reality, large industries need to commit to cryptocurrencies and get behind their potential. There are some that have already done just that, even if they’ve not heavily publicized it, playing an important part in there rise. Here are just a few doing interesting things. 

Online gambling

You would think the world of online gambling and cryptocurrencies sit at odds with one another. While they both come from somewhat mysterious and shrouded backgrounds, gambling has traditionally been quite rigid in its rules, playing by a specific set of rules that wouldn’t necessarily allow for new forms of currency. Despite this, unstable and untested currencies such as Bitcoin have found their place in the world of online betting and casinos. 

The advent of cryptocurrencies in online gambling actually owes a lot to online gaming, where ‘token’ payments have been completely normalized and integrated into most AAA releases in some fashion. While the dangers of this practice on players have been well-noted and discussed, it has opened the door to alternative ways of paying to play. This transfers over to online gambling, which has also seen a significant rise in the last decade thanks to the ease and availability of games and odds across major websites and apps. 

There have been two major avenues for cryptocurrencies venture into the world of online gambling. While many of the best betting sites used for sports gambling, such as the ones listed here, don’t allow players to use Bitcoin and other alternative currencies, many casino game websites have embraced it as an option.

Alternatively, Bitcoin only casinos have also sprung up, giving players additional benefits such as reducing waiting times for deposits and withdrawals. 

Sports

The world of sport is absolutely awash with money, particularly at the top of international games. This willingness to take money from any available avenue makes sport a perfect candidate for integrating cryptocurrencies.

Although, the fashion in which it has embraced these advancements has been quite unique in comparison to other industries. 

The soccer world has been willingly fertile ground for cryptocurrency experimentation. Numerous advertising deals have been established for leading English clubs with crypto-trading companies, including a high-profile deal in which sponsorship money has been paid from eToro in Bitcoin. 

Beyond sponsorships, some soccer teams have found more practical uses for cryptocurrencies within the game, such as Gibraltar United, who promised to start paying its players in cryptocurrencies.

Although this is yet to fully come into fruition, and complications within the game caused by the coronavirus may have put a stop to this venture, it is an ambitious project that teams are no doubt going to be influenced by.

Similarly, the Turkish side Harunastaspar made history in 2018 when they completed the first purchase of a player by paying the full transfer fee in Bitcoin. 

Expect a more common implementation of cryptocurrencies in sport to be payments within stadiums and the alternative currencies being used to stop ticket-touting, a problem plaguing major sports and events. 

Ecommerce

There’s no industry where the merits of cryptocurrencies are more transferable than ecommerce. Buying and selling goods using Bitcoin and its digital brothers and sisters just makes sense and feels like a natural evolution point for the world of digital retail. Despite a trepidatious start, the industry is beginning to catch up and see the benefits cryptocurrencies offer both retailers and customers. 

Although you may not know it, a significant portion of mainstream ecommerce CMS now either support the use of Bitcoin on stores made using their platform or can be adapted to do so through the use of community-made plugins.

This easy fix is particularly important for small scale ecommerce stores who usually get their start using these platforms, as it offers customers additional payment options that are not only safer but cost-effective and without chargebacks thanks to blockchain technology.

Cryptocurrencies will never truly find their place in the mainstream until they infiltrate existing markets. However, crypto-based stores offer a new way for enthusiasts to shop in a more transparent manner.

Cryptocurrency only marketplaces such as OpenBazaar and Forra offer an online retail experience free from constraints of third-party interference, showing potential to flip the industry and the way people look at online shopping on its head.

They have eliminated transaction fees, giving both retailers and customers better returns in more transparent circumstances. If these websites can be looked at by the general public as legitimate, regular stores will have to embrace new currencies to keep up. 

These industries and key companies within them may be leading the way, but there is significant work to be done to normalize the practice of paying with cryptocurrencies. A lot of these examples have seen alternative models pop up within existing industries. To break into the mainstream, in-roads need to made into the biggest players. 

Mar 012020
 

This is a guest post from We Accept Cryptocurrency

Most people see cryptocurrency as an investment; a hedge against the inflationary fiat monetary system. But that was not the original intention of the Bitcoin founders. They saw Bitcoin as “electronic cash,” a radical alternative to fiat money. They envisioned people spending Bitcoin on everyday items. They envisioned people sending Bitcoin to friends and family as a gift, and using it to pay contractors for their work. Anything money can do, cryptocurrency can do better.

We Accept Cryptocurrency is a newly launched website with a mission to increase real-world cryptocurrency use and adoption. The website is a resource of online merchants and services (as well as charities) that accept cryptocurrencies as a method of payment. Bitcoin has the largest directory, but the site also lists the following cryptocurrencies: ETH, BCH, LTC, DASH, NANO, XMR, EOS, XRP.

There is a strong need for such a resource, because currently the information on real-world crypto adoption is scattered. There are many coin-specific resources (a website listing merchants accepting Litecoin for example), and several geography-specific resources (a website listing places to spend crypto in NYC for example), but a global Internet resource is needed. We Accept Cryptocurrency remains geography-agnostic by listing online merchants only. 

Many people today are privileged to be able to consider cryptocurrency exclusively in investment terms. In countries with stable monetary policy, that makes sense. However there are countries like Venezuela where cryptocurrency adoption is growing rapidly as a matter of necessity due to hyperinflation. 

For users in countries like Venezuela, the mission of We Accept Cryptocurrency is even more crucial, because finding merchants that accept cryptocurrency when fiat is no longer a viable option takes on another level of importance. If We Accept Cryptocurrency continues to expand its directory it may become an asset to those who really need cryptocurrency the most. 

The way We Accept Cryptocurrency vets a merchant before its inclusion into the website is as follows: the We Accept Cryptocurrency team first reaches out directly to the merchant asking them to confirm that they do currently accept cryptocurrency. They ask the merchant for the page on their website where their crypto policy (and discounts) is listed, and link to that page directly. This methodology leads to significantly fewer broken or outdated listings when compared with various coin-specific directories.

Photo by Brooke Cagle on Unsplash

Oct 112019
 
IRS tax guidelines crypto bitcoin

This is a guest post from Andrea Pretorian

For the first time since 2014, the IRS released two new pieces of guidance—Revenue Ruling 2019-24 and frequently asked questions (FAQs)—on October 9, 2019, indicating how taxpayers should proceed when it comes to reporting and paying taxes on virtual currency.

Fundamentally decentralized, cryptocurrency has no single official body directly responsible for regulating it—and so frequently it ends up standing at the intersection between fiat money and assets. In the United States, the IRS is the single biggest establishment player that “touches” crypto with rules, since failure to comply can lead to penalties or even incarceration. 

Releases like this one from the IRS can have a significant impact on the decisions that cryptocurrency holders will make in handling their property. This week’s release has generated a lot of buzz.

What was new in this release?

The IRS primarily addressed the case of hard forks, where a new branch appears in the blockchain protocol and does not recognize old blocks and transactions. Hard forks most commonly arise when a new spin-off cryptocurrency comes about (e.g. Bitcoin Cash from Bitcoin), or when Ethereum created a hard fork to reverse the DAO hack. 

The release indicates that once the new fork appears, the taxpayer has a new tax obligation tied to the new fork. The taxpayer has to have “dominion and control” over the currency, meaning they have to be able to transact with it, which is technically true regardless of whether the taxpayer stores this cryptocurrency in an exchange or in a private wallet.

This release also addressed airdrops, and specifically noted that not all hard forks should be considered as airdrops. Essentially, it is only when a hard fork results in new currency that this should be reported as gross income; and per the IRS’ release, this can occur via airdrop and result in a new tax liability.

The new IRS release generates a new set of questions.

One-size-fits-all rules are a challenge within the widely varied world of crypto. This release by the IRS has generated even more questions about how to handle various situations that may arise, even within the context of a hard fork. The biggest questions center around how to treat the “old” currency:

  • How do you determine value of the old and new coins?
  • What if the coin is in a private wallet?

If the coin is in an exchange and not a wallet, the exchange will declare the new and old coins and note whether new assets—and therefore new tax obligations, as clarified under this release—were created. 

But if the coin is held in a private wallet, demonstrating this can get tricky. While Q27 of the release tries to answer the question of how individuals can determine a cryptocurrency’s fair market value if there is no published one, this can get tricky since cryptocurrency doesn’t carry intrinsic value.

People frequently turn to wallets with private keys for increased security, and so they will not welcome added layers of complication to wallet ownership.

While public buzz notes that the IRS recognizes actions taken in good-faith, this does not necessarily assuage the fears of a public seeking clarity and security that they will not be penalized, particularly if any further changes arise in the future.

How has the release been received?

The release’s reception could perhaps best be summarized by the CCN headline, “IRS Tries, Fails to Explain Your Crypto Tax Liabilities After a Hard Fork.”  Twitter was set ablaze with reactions to this ruling from everyone in the cryptocurrency and blockchain community, who were overall disappointed with the release.

One recurring sticking point has to do with the way the release handles airdrops, and how value is taxed even before the value is truly recognized—such as by a sale. ConsenSys’ legal expert Matt Corva likened it to oil: “If I discover oil is on my property, I don’t recognize income (thereby forcing me to set up a mining operation to extract it to offset my tax burden).” Instead, he recommends the same for both oil and crypto airdrops: “no tax until manipulated.”

Another contention with this release has to do with how this tax guidance could be used as a weapon by one exchange against another. If an exchange were to hard fork a cryptocurrency and then use a bit of capital to inflate the “fair market value,” this would create a new, unforeseen tax liability for those holding the original cryptocurrency—including other exchanges.

According to Cointelegraph and Blockonomi, this particular release came as a result of the Congressional Blockchain Caucus’ request for clarity on how to report cryptocurrencies for tax purposes. It will be interesting to see what further clarifications, if any, will be requested over time. 

The IRS is maintaining high visibility in their attempts to educate the public, having even sent out letters to taxpayers who may have filed incorrectly. As a result, the IRS might have a stronger case for the prosecution of noncompliant taxpayers.

Author Bio: Andrea Pretorian is Content Manager over at BitIRA, leaders in digital IRA set-up and management