Major Cryptocurrency Trading Prices (US$s)

Source: CryptoCompare

Blockchain technology is a rapidly evolving industry with the potential to reshape the manner in which corporations, governments, and individuals record and exchange information.

Blockchains are a type of distributed ledger in which new information is introduced into a database via “mining”, a cryptographic securing of groups of data known as “blocks”.

Cryptocurrencies (or virtual currencies) are the digital assets that incentivize maintenance of the blockchain, acting as a financial reward to the entities that ultimately mine new blocks of the blockchain.  The most prominent cryptocurrencies are Bitcoin, Ether (Ethereum), Ripple, and Litecoin.

The Ethereum blockchain, a protocol-level blockchain, offers unique capabilities that allow for the creation of decentralized applications (dApps). These dApps integrate with the Ethereum blockchain via “smart contracts”, a programming language native Ethereum. Each dApp is capable of having its own token, which facilities the transfer of utility amongst its users and incentivizes maintenance of the dApp-specific distributed ledger. These tokens are often sold in events known as initial coin offerings (ICOs), or follow-on token sales and can have tax implications for participating parties, per the US Internal Revenue Service (IRS).

Teknos Associates has extensive experience working with high-profile companies specializing in the blockchain and digital currency industries, and brings a unique understanding of the various tax implications associated with these events.