Resources
We want to help you find what you need to participate in blockchain with and outside of Foleum
We want to help you find what you need to participate in blockchain with and outside of Foleum
The process of adding records to the blockchain ledger with Proof-of-Work (PoW). The purpose serves two folds 1) Confirm transactions as legitimate transactions, and 2) Create new blocks as records onto the blockchain. Completing this process earns you rewards from the blockchain. When it comes to blockchain mining there several factors to take into considerations:
Hardware
Electricity
Software
Individual or Pool
Holding your coins, similar to keeping funds in a bank, and earning rewards (or dividends) based on the time period you are holding them for and the amount you are holding. This is also known as Proof-of-Stake (PoS). The more coins you are holding, the longer you hold them, the more rewards "dividends" you will receive.
A full cryptocurrency node or wallet that keeps a full copy of the blockchain. This requires the node or wallet to be running all the time. The purpose of a masternode is to facilitate resolving lead times it takes to process a transaction onto the ledger. In efforts to incentive having a masternode, you can receive rewards for hosting a masternode. To run a masternode you must place coins up for collateral. Similar to a financial institution "CD", your coins are locked as a collateral. You receive rewards "dividends" for running the masternode.
Both can receive rewards "dividends" for holding coins. Masternodes require you to lock a specific amount for each masternode, while staking does not require any coins to be locked. Staking earning rate is based on how many coins you have and the length of time you have had them. Masternodes can earning rate is based on how many masternodes you have. Masternodes can earn both staking rewards and masternode rewards. Not all coins have masternode rewards and not all coins have staking.
** Its important to make sure you report your income, gains, and losses to the IRS (or your country's tax authority). Foleum is not a tax service or agency, we are not responsible for improper filing, refer to your CPA or tax service. Below is only informational to understand what may or may not be considered taxable. **
When you are receiving mining rewards, staking rewards, cryptocurrency, or interest (depending on exchange) you will be required to pay income taxes. The income amount is based on the value of the coin at time receiving the amount.
Gains and losses are calculated based on the "cost basis" at which time you either conducted an exchange to receive coins in comparison of when you exchanged them to another coin or used them for purchase. There are different factors but the most common are based on FIFO (First in First Out), LIFO (Last in First Out), and HIFO (High in First Out) which are similar to regular stock gains/losses.
When moving your coins between wallets you own or to/from exchange and your wallet. These actions are considered non-taxable as they are your accounts. Similar to moving from one bank account to another. However, there is a fee associated with moving your coins. These transaction fees are still unknown on how they are taxed. Some consider them as a loss since you lost those coins while moving them from one account to another. Some consider an "expense" which will require a gain/loss calculation on that transaction.
Depending on your country's rules will determine the punishment for failing to file. Currently for the U.S. if you fail to file previous years you will need to still file and include all of those transaction. Foleum recommends getting with a qualified CPA to ensure all necessary back filing is taken care of to prevent any form of IRS fees.