Withum ALM webinar

1. Mark Eckerle, CPA, Manager,
Cryptocurrency Team Leader -
Technology and Emerging Growth
Services
CRYPTO 101 –
FOR
BUSINESSES &
REAL ESTATE

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INTRODUCTION
Mark Eckerle, CPA
Manager, Audit
Team Leader, Digital Currency & Blockchain Technology
Technology and Emerging Growth Services
meckerle@withum.com

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AGENDA
1. Intro to Cryptocurrencies & Blockchain
Technology
2. Crypto in Business
3. Impact on Real Estate
4. Q&A

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WHAT IS “CRYPTOCURRENCY?”

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CURRENTLY OVER 9,600 DIGITAL CURRENCIES

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THE BIRTH OF “BITCOIN”
• In November 2008, a whitepaper was posted on
the internet under the name Satoshi Nakamoto
titled bitcoin: A Peer-to-Peer Electronic Cash
System.
• “Satoshi Nakamoto” is presumed to be a
pseudonym for the person or people who
designed the original bitcoin protocol in 2008.
• This protocol was built on new technology called
“blockchain”.

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WHO OWNS BITCOIN, THE IP?
• No one! It is an “open source” platform.
• Bitcoin.org indicates that it is analogous to the
technology behind email. No one “owns” the
technology itself; it simply exists.

8. Fun Fact
First Ever Bitcoin Transaction….

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HOW IS IT DIFFERENT FROM USD?
• Bitcoin is a peer-to-peer currency and runs on a system which allows you
to send and receive bitcoins without a third party.
• Traditional currencies (USD) rely on third parties, such as banks or
payment processors to verify transactions.
• Bitcoin transactions are recorded in a public ledger called the
“blockchain.”
– https://www.blockchain.com/explorer
• Wallet address: 1HDWAto9mD4vwZkxE7RZ4nxvgYcA5vJQpG

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HOW DO I GET IT?
• You can purchase cryptocurrency (using
USD) at “Bitcoin exchanges” at the current
exchange rate.
• You can accept them as payment for goods
or services.
• You can earn them through “mining.”

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WHAT IS THE BLOCKCHAIN?
• A shared set of database – ledgers
– Like Excel spreadsheets
• Immutable
– Once transactions are validated, they can be relied upon
• Decentralized
– There's no need for a central authority to approve transactions
• None of this is “new” technology
• The 51% debate…..

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BLOCKCHAIN ANALOGY
• A book is the entire blockchain.
• The writers are people transacting in
Cryptocurrency.
• As chapters are written, they are added
to the chain as miners agree.
• A new chapter can only be added to the
book when a majority of the minors
agree that this new chapter begins
where the old chapter left off.
• There is no need to validate the entire
book every time someone adds a
chapter because the previous chapter
was validated.
• Changing an old chapter would alter all
of the future chapters.

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OTHER POPULAR CRYPTOCURRENCIES
• Ethereum (ETH)
– Etherscan.io
• Litecoin (LTC)
• Dogecoin
• Tether / Stablecoins

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CRYPTO
IN
BUSINESS

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WHAT WOULD BE THE PURPOSE?
• Reserve asset / investment
– Can you earn Interest?
• Can be used as a medium of exchange
– Pay employees / vendors

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ARE COMPANIES ACTUALLY DOING
THIS?
• YES!
• As of May 10th, 60+ public companies held:
– 1,423,927 BTC (7.6% of all BTC)
– $80B of Total value
• There will only ever be 21 million BTC

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IMPACT ON REAL ESTATE

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WHAT’S HAPPENING?
• More and more people want to use crypto for home
buying…..but why?
– Volatility
– Market is booming!
• What would a transaction look like?

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THINGS TO KEEP IN MIND
• How to store your Crypto
• How to liquidate your Crypto
– What are the tax consequences?

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INTERNAL REVENUE SERVICE (“IRS”)
• IRS announced – Notice 2014-21
– Virtual currencies are treated as Property
– Gain or Loss recognized when virtual currencies are
used as:
• Payment for goods or services,
• Exchanged for other property, or
• Sale of virtual currencies

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THE TAXATION OF CRYPTOCURRENCY: BASIC
PRINCIPLES
• Federal Income Tax Characterization
– Treated as property
– Gain or loss recognized when exchanged for fiat currency, other property, or used in the
purchase of goods or services
• Character of gain or loss
– Held by taxpayer as a capital asset
• Gain or loss is capital gain or loss
• Preferred tax rates apply on capital gain for individuals and trusts
– Held by taxpayer as other than a capital asset (e.g., inventory)
• Gain or loss is ordinary

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HOW TO REACH ME?
– Email – Meckerle@withum.com
– Twitter - @MarkEckerle
– Linkedin – Mark Eckerle, CPA
Mark Eckerle, CPA
Manager, Audit
Digital Currency & Blockchain Technology Team Leader, Technology and Emerging Growth Services

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THANK YOU!