The Pomp Podcast - Austin Woodward, CEO of TaxBit: How to Save Money on Your Crypto Taxes

Episode Date: January 14, 2020

TaxBit is a cryptocurrency tax calculation and withholding service that serves investors, exchanges, and payment services. In this conversation, Austin and Anthony discuss the current complexities in crypto tax treatment, what the most common mistakes people make are, the basic information every crypto investor needs to know, what is like building a company outside of Silicon Valley, the current fundraising environment in crypto, and how TaxBit plans to take the industry by storm. BLOCKFI-----BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. UNSTOPPABLE DOMAINS-----Make your crypto currency payments simple and build censorship resistant websites. Visit unstoppabledomains.com and purchase your blockchain domains today! ETORO-----This episode of Off the Chain is sponsored by eToro, the smartest crypto trading platform, and one of the largest in the world. Join 11 million other traders and create an account at etoro.com and build your crypto portfolio the smart way.

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. My guest today is Austin Woodward, the co-founder and CEO of Taxbit, a cryptocurrency tax calculation and withholding service that serves investors, exchanges, and payment services. In this episode, we talked about the current complexities in crypto tax treatment, what the most common mistakes people make are, the basic information every crypto investor needs to know, what it is like building a company outside Silicon Valley, the current fundraising environment in crypto, and how Taxbit plans to take the industry by storm.

This was an awesome episode, and I highly recommend listening. Before we get started, though, I want to also cover the three advertisers that made this episode possible. The first is BlockFi. You guys know how much I love the company. We invested. If Bitcoin and other cryptocurrencies have any chance of ever becoming the next global reserve currency, we're going to need a lot of infrastructure and wealth management services

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and when you hit eToro.com, let them know Pomp sent you. The customer service tickets, social media mentions, they're stacking up. So go to eToro.com and let them know Pomp sent you. All right, now let's get into this episode. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or

follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I'm here with Austin. We've got his pretty picture up on the screen. Uh, this can be a lot of fun. Um, I'll caveat this with, uh, we're recording in, uh, early January of 2020, Austin walked in, uh, and we had a conversation about having bud lights, but we have no bud lights. We just have water. It's nine in the morning. It's snowing outside. Uh, yeah. Good New York morning. Absolutely. All right, man. I'm super excited about this. Uh, there's a whole bunch to go through. Um, my goal with this episode is to create the seminal podcast episode around crypto tax. It's a huge issue for

lots of people, pretty much anyone in the industry. And so let's start with your background. Then maybe we'll get into the IRS and their tax guidance, kind of how they treat various forms of cryptocurrency and earnings. And then we can talk about tax bit, how you guys are solving that problem and helping folks. Sound good? Absolutely. First of all, thanks for having me out. This is great. Love your big fan of your show and podcasts and it's great. Keep rocking it. So yeah, my background, I'm a CPA and I spent a good portion of my career as an early employee at a company called Qualtrics. So they were a rapidly growing SaaS company and led them through a lot of cool things. We were IPOing and then days before IPO and all that work to get ready, we were approached

by SAP and acquired for $8 billion. So that was a good run there. And it led into what we're doing now and at Taxbit. And so I recognized that there was an enormous problem surrounding cryptocurrency currency taxes. And I got into crypto in early 17. I wish I was in earlier than that, but I hit it right before that big bull run. And then 2018 comes along, it's tax season for the 2017 year. And I started doing my own taxes. I'm a CPA. I've always done that. I've done taxes for other people as well. And they started introducing crypto to me as well. Just a bunch of CSV files from exchanges. And I'm like, oh, like shit, what do we do? And so before I knew it, like I'm an Excel guy and I had an Excel model that was 15 tabs long, macros all over the place. And it took me

weeks. And I realized, dang, like if I am doing this on behalf of a client, my hourly rate is going to be way more than they would ever owe in taxes. It's going to be tens of thousands of dollars. This is a problem that software has to solve. And so that's the whole premise on what Taxbit was founded on is automating crypto tax compliance. It is beefy. It is complex on the back end. No one wants to have to worry about it. And so how can we make it simple for the everyday taxpayer? That way they can continue on using cryptocurrency like they want to do and not have to worry about tax reporting. And so as you're going through in the 2017, this was pre the IRS really putting out like specific guidance. I think they did one guidance in 2014, but there's a lot

of questions still around that. Maybe let's start with kind of the guidance that they recently put out, what were the big changes from pre-IRS guidance to today? And then we can get into the different ways that people can earn or profit from cryptocurrency. Yep. So in 2014, you nailed it right on. That was the first set of guidance. And it was basically a paragraph long. It said, cryptocurrency is property. And so property, that's been around for a long time. Property also consists of equities. Those are properties. Bonds, Those are properties, real estate, that's property. And so you really had to analogize to the guidance of those other areas. And what we did is we analogized most similarly to equities. And then this last October of 2018 or 2019, the IRS finally released a much more beefy, detailed set of guidance. And that was really nice because it clarified some things that people were analogizing to, but they weren't sure of.

So such things are cost basis assignment methods. Do you use first in, first out? What this means is, is once you acquire assets, you're going to have a basis in each one of those assets. And then when you dispose of one of them, which one do you take from? Which pool? That greatly affects your taxable gain number. Well, the IRS said, yes, you can use first in, first out. That's the default method.

But if you meet these four other criteria, such as proving transaction IDs and blockchain hashes, storing appropriate records, you can now use specific identifications. You can go and pick which lot you want to sell, which is really great for taxpayers because that can reduce your tax liability. You can pick your lots with the highest cost basis and dispose of those first. Okay, so there's a ton here, right? And as you kind of dig into tax law and tax guidance and all this stuff, uh, 99% of people just say, whoop, over my head, my accountant handles it. But there's some really interesting things that around crypto. And one of the things that you just described, uh, around this is at first in first out my understanding. Um, and you correct me if I'm wrong is if I buy Bitcoin, uh,

five times in a year, right. And the price continues to appreciate. So my last purchase is actually the highest price of the Bitcoin that I bought. And then all of a sudden the market turns and starts to fall, but only falls 50% from my last purchase. When I go to sell Bitcoin at the end of the year, let's say I want to do some tax loss harvesting. Traditionally, people have used first in first out, meaning that you have to go back to the very first time you bought it. And that's your cost basis for that sale. So if you bought one Bitcoin at $2,000, now it's sitting at 2,500. It doesn't matter if you bought Bitcoin at a higher price later on, it's the fact that that first price point, so you actually are going to book a gain.

Now what you're saying is, well, if you had bought Bitcoin at $2,000, $2,500, $3,000, all the way up to $5,000, it's now falling to $2,500. You can actually say, no, I'm selling my $5,000 Bitcoin purchase now, and I'm going to book a 50% loss rather than some sort of gain from that first purchase at $2,000. Huge deal in the tax world because you're actually being able to optimize much more for what, one, is actually happening, so you're being more accurate. But also, two, it changes the profile of what you owe or what you don't owe on the tax forms. That was a great example. You said it right. And the one caveat to that is you have to meet the IRS's four criteria in order to specifically identify. Okay, what are those? And so it really revolves around record keeping, proving on the blockchain and through transaction IDs what you're truly specifically identifying. You can't just put it into Excel and say, oh, I'm choosing this one and this one.

And when the IRS comes knocking on your door, that won't pass. And so using tax software is the only way I think to meet those four criteria. If you just turn over your records to your, even to your CPA or accountant, they're going to default to FIFO because first in first out, I'm using an acronym here because that's what is the most conservative and safe. And so tax software, it's very important that they meet those criteria in order to save you tons of money because your example is a great scenario and it's very real and it's very tangible because you want to keep as much money in your pockets as you can. Yeah. Well, and just the price volatility, right? Anything, any asset that goes up, you know, double digits up or down in short periods of time, obviously there's the potential that people are going to have either really big gains or really big losses. And so being smart about the taxes is important. Let's start with one of the nuances that I find really fascinating is the kind of wash sales at the end of the year, right? So maybe give us an understanding of what

was the history in traditional markets, so let's say stocks, et cetera, and how that's changed over time. And then where crypto is with that today. Cause I think that's like the easiest thing for people to start wrapping their head around of when they have losses. Yeah, absolutely. And wash sale rules, just to be clear here, this was the one area that the IRS didn't touch on in their new guidance where a lot of CPAs and attorneys like we have at tax bit, we were hoping they would. So in the equity space, the IRS created this thing called wash sales, and that's a 30 day rule. So if you were to buy apple stock the value of that stock tanked and you're like hey i should sell my apple stock and then harvest that loss and then buy it right back the irs right after the new

year right after yeah the irs says no no no you can't do that you have to wait a period of 30 days to repurchase that original position that you had in apple stock in order to take that loss well the guidance on washout rules apply to securities right now and the irs has said well cryptocurrency is property and Bitcoin and some other currencies aren't securities. And so just kind of doing the process of elimination, then wash shell rules don't yet apply to cryptocurrency. And so what that allows you to do is you can now there's a lot of loss harvesting ability because prices fluctuate so greatly in the cryptocurrency space. You can sell or trade your positions in an asset at a loss, get the tax loss, and then it's up to your risk tolerance. Still, there hasn't been

clear guidance on this, but you could repurchase your position in that same asset for sure after 30 days, but even within 30 days, aggressively right now, because the guidance kind of falls in line with that. And in other markets, before those kind of anti-wash sale rules were in place, Do they go back and retroactively apply those rules or how does the IRS kind of treat, hey, there was a period of time where there was no guidance. We now have guidance. Like, how do those rules apply? Yeah, it depends on what the IRS. Sometimes they'll do a retrospective guidance release that says, no, this is always how it has been.

And then sometimes they'll do a point in time forward. So, yeah, we don't know what we don't know here. I do know that most people are they're harvesting losses and they're moving coins in and out of Bitcoin all the time and and ignoring wash sale rules right now based on Bitcoin being property and not a security. And so we'll see. We'll see. I think that's that's the other place that's going to evolve with time on what the IRS will come out with. but it's something very good for everyone out there to know is, hey, having a tax software that tracks your basis, not only is important for tax reporting and compliance, but it's important in order to bring money to your pocketbooks to save you money. For sure. And I guess let's now get into the different ways that you could book profits or losses, right? So there's,

I can buy and sell cryptocurrency right off an exchange. I can obviously mine certain cryptocurrencies. I can do staking or that I can use derivative products. And then the last one is I can also earn interest now. Right. So kind of those I think those are the five general ways. I'm sure there's some nuances, but let's start with those five. So how does the IRS currently look at just the buying and selling of crypto on an exchange? Yeah. So anytime you obtain cryptocurrency, we'll just use a buying right now that sets your cost basis. That transaction does not get reported to the IRS at the time of purchase. When you dispose of that cryptocurrency, and this is where I think there's a big misconception in the tax land, disposing of

cryptocurrency, it entails two things, selling it for fiat currency or trading it for another cryptocurrency. And that's the piece where a lot of people disagree with. There's all these arguments for sure. And the IRS's eyes, they're viewing that as a property for property transaction. If you were to go and trade Apple stock for Microsoft stock directly, that would be taxable too. And so reporting all those coin for coin trades is our taxable events. And so, yeah, once you trade or sell your cryptocurrency at that point, this all goes on IRS form 8949.

That's your individual capital gain and loss report. It's the same form that's used for equities and other capital assets. You'll put in, there's all these columns, asset acquisition date, disposal date, proceeds, cost basis, and that will determine your gain or loss. so that's the buying selling and trading aspect and then you alluded to let's well so there's buying selling and trading um as a tangential piece of that there's also um the ability for me to send right so i'm not selling it for fiat i'm not selling it for another coin but i can let's say uh i have two cryptocurrency exchange uh or two wallets and i take it from one account

and i send it to another uh that's a taxable event in the irs size or no yeah great question No, that is not. So if it maintains within your possession, that is not taxable. And that's another reason why tax software is so important. When you get these CSV file dumps from exchanges and hand them to your accountant, they don't know what one was a transfer. There's a lot of tax out there that still don't have that not dialed in. And so detecting which transactions were transfers, sends, receives, and maintaining your cost basis, you don't want to reset your holding period on those transfers, which a lot of people do incorrectly as well. And so that's very important to properly detect those. Okay. And so then the other way that I could send crypto is

I'm sending it to an individual or to our business. So I'm basically spending the crypto in exchange for whether it's good services, whatever, taxable event or not. Yeah, that's a taxable event. At that time, you use property in order to receive a good or service. In the future, this is going to be a use case that's much more popular than it is today, as there's a lot of companies working on making crypto more accessible and as a means of payment. Yeah. So at that time, the fair market value of that cryptocurrency or of the good or service that you received in return will be your proceed amount. And then you'll use specific identification if you're using a tax software like Taxbit in order to pick the cost basis lot with the highest basis to then reduce your taxable

event at that case. Yeah. And to me, the taxable event when spending cryptocurrency is one of the biggest detractions or obstacles to adoption. Right. Meaning that every time I go to spend this, I've got to pay taxes if it was the sale of property. Doesn't really feel like that is going to make it easier or more enticing for people to spend crypto. And so one, do you agree with that? And two, do you feel like that'll get changed over time to kind of allow for more adoption and more spending of the crypto? Yeah. So first of all, do I agree with it? So I am a CPA, but I do not work for the IRS. And so I have relationships with some of those folks.

They're great. They're hard workers and everything. I understand where they're coming from. What they're afraid of is, hey, if we make cryptocurrency tax exempt upon purchasing a good or service, what's going to happen when all of these equity brokers now want to make equities more as means of payment? That doesn't exist today. But I can tell you, technologies are being worked on right now to make equity for equity swaps possible. And and and so I see the can of worms that it's opening from the IRS's eyes. Anything that materially fluctuates in value has always been taxable and in their eyes always will be. And so with this new guidance in October that they released, they did clarify that and say, Hey, that it is a taxable event if you use it to buy something or to receive something. And so I don't foresee that changing. Unfortunately, I do think there might be possibility for some de minimis exemption of, Hey, if my taxable gain or loss was within X amount of dollars, or I purchased a cup of coffee, like at what threshold does it become material for them?

There might be something along those lines in the future, but right now there's currently not. Got it. Very interesting. Okay, so let's move on from buy, sell, trading, and sending. There is staking, for example, right? So one, how does that work from a tax perspective? And two, how does the IRS treat it? I'm going to lump staking and mining because from the IRS's eyes, they're identical. And there was guidance just on this as well. And that is you performed an act of work and once again i'm speaking from the irs's eyes whether or not we agree with this i get it i'm going to get a ton of comments that say taxes are hell they're theft i understand so you performed an act of service or work in order to receive something and so that meets the

irs's definition of income historically you did a service in order to receive something in return and so the fair value of the cryptocurrency you received in return for staking or mining is reported as income on your tax return. And so that is important to know because that income is taxed at the highest tax rate. That's the same thing you receive from an employer. They give you your W-2 showing you how much you make. You include it in that top line on your tax return, which is the same thing with staking and mining. That income amount then sets your cost basis. So when you dispose of that cryptocurrency, if it appreciates or depreciates in value, You will then have a capital gain and loss at that time.

So mining and staking results in two taxable events down the road. The first is income, and then the second is a taxable capital gain or loss. Again, this is still taxes are intuitively hard to understand. And so software can automate this. And that's, again, why we were founded was let's not worry about all the tax reporting obligations. And if I'm reporting things correctly, let's just link up my stuff to my tax bid account and let them automatically track and populate that.

And then I can have real-time visibility. I don't need to wait until tax season to see where I'm at for my taxable position. I can monitor that ongoing. For sure. So mining, staking, both treated the same income, regardless of whether it's you as a human doing the work or let's say it's software or a hardware machine. What about derivatives?

Is that treated just the same it is in the traditional markets or is there some differences here on the crypto world? Yeah, exactly. And there's going to be, definitely needs to be more guidance here in the future. But, yeah, you're going to see more and more of this on the derivative side, margin trading, et cetera. But, yeah, it's consistent right now with the guidance of equities. And so there's no changes there. Got it.

So pretty self-explanatory in terms of you understand how it works in traditional markets. You're good here. And then one of my favorites is earning Bitcoin through, like, interest-bearing accounts, right? So everyone knows that we're big investors in BlockFi and super supportive of them. How does that work from the IRS's perspective? Yeah, so interest is well income. you got interest income. There's actually a line on your tax return dedicated to interest income. If you do earn interest, it's the same thing as kind of mining. It's pegged to the fair market

value at the time you received it. And then you just plop that in onto the interest income line of your tax return. That number then becomes your basis. And then when you subsequently dispose of that interest cryptocurrency, you'll have another capital gain or loss that you'll need to report. Got it. Let's talk a little bit about tax bit, right? So there's a whole bunch of nuance in tax law. You're a CPA, so you have much more understanding than most. As people have gone from kind of what's called pre-2017 crypto world where there wasn't a lot of sophistication, there wasn't a lot of infrastructure. Now you get more folks coming in that have expertise around legal services, tax, accounting, et cetera. There's much more sophistication coming into

the market. You saw this as a problem. What was the initial idea to go build? And then kind of what are you guys doing today? Yeah. So yeah, we were founded by a group of three people. And I emphasize this because I think it's so important. And that's CPAs, tax attorneys, and software developers. And we're talking about one of the most scrutinized spaces right now in the world. Like there's been just so many regulatory eyes on cryptocurrency. And so when you're talking about tax compliance, you have to have that confidence that you're getting attorney and CPA level service and accuracy in what you're doing. And so that's a really powerful team that really sets us apart is you're going to know that everything that we release has been thoroughly tested by CPAs around

the world. And we're constantly facilitating audits with the IRS and different communications with them. And so our software has been beat up very well from the accuracy standpoint. point. Yeah, our mission was, cryptocurrency is an amazing asset class. There are so many disruptive use cases that the finance sector just hasn't seen in decades, which is really exciting. But there's two main areas holding it back from a regulatory perspective, and that's privacy and security. You've seen that in the news all the time, especially with this Facebook Libra project, et cetera. And then tax compliance at scale. The IRS is just not going to let an asset go under the radar and be tax free. That just won't happen. And so how we want we came into existence in order

to automate the tax compliance side. That way, the industry can legitimately continue on and cranking out these disruptive projects without worrying about the burden of tax reporting. And so we're doing this at the everyday cryptocurrency user level, but also at the enterprise level, exchanges, merchants, businesses, wallets, lending platforms, anyone that facilitates the movement of cryptocurrency, there's a lot of tax reporting obligations that start at the top. And so we have a great enterprise suite of products as well to facilitate their reporting. Got it. And so let's talk philosophically first, because to me, this is really interesting, right? Is machines and software are automating lots and lots of jobs. I think a lot of people

think about this in manufacturing and truck driving, that type of stuff. I tend to think that one of the more underrated areas is white collar jobs, right? So accounting, legal, Wall Street traders, etc. Automation, you know, they're not safe, right? The machines are coming for them too. And so how do you think about the accountant's job moving forward into the future, right? Can it eventually get to the point where an accountant is fully automated away? Or is it something where maybe the repetitive tasks get automated away and their advice becomes more important. But like, just talk to me about that as like more of a framework for the industry around automation. No, there's a reason why you see the big four accounting firms, Deloitte, Ernst & Young,

KPMG, and PricewaterhouseCoopers, PwC. They are constantly at the largest cryptocurrency events in the world. They've put significant money behind cryptocurrency infrastructure and departments. Really, and blockchain, I should not limit this to cryptocurrency, really blockchain, because blockchain is essentially an immutable accounting system. It's a ledger that you have all the visibility of the ins and outs and they're verifiable. That's what accountants do. We create ledgers, we make sure things balance, we make sure the correct ins come in and the outs come in, and we're record keepers. And so absolutely, the technology here can automate the profession to a large extent and it's super powerful and in my mind it's exciting and and so as you think about

that for the crypto world um you guys specifically from functionality standpoint my understanding is you basically hook into uh different exchanges or service providers and then you pull in all of that data and this is really a data and automation exercise to uh calculate here's what you owe right but it's not just a final number at the end maybe talk a little bit about how the product actually works. And then we can get into some of the prediction software and stuff that you guys have built as well. Yeah, absolutely. So yeah, our software, we don't want to put work on the shoulder of a cryptocurrency user or a US taxpayer. So as much as we can automate as possible, that is our goal. And so we connect via API through to almost every exchange out there, we're constantly

adding more in order to have a one time setup for the user. As soon as you connect those API keys, will pull in your transaction data automatically going forward. I know what you're thinking, well, security, like custody, what are you doing? You're crazy. So rest assured, we take best practice approach to professional grade security. We only collect read-only API keys. We do not want trade access or custody access of your assets. We just hired a VP of compliance who was a former director at Coinbase, the largest exchange in the world. Really excited about him. He's making sure that we're following best practices on GDPR, data security, SOC reporting, and all of that, all the like. So it is safe. We have never had a breach or an instance, and we only have your

transaction records. We don't have your public keys, your private keys, et cetera. Your private keys, I should say, in order to access those assets. Got it. And so really the business model that you guys have is you as a business go to these exchanges, you basically integrate with the exchange, and then that exchange offers tax software essentially to their user base, right? And the reason why that's important is in many cases, if you only have one cryptocurrency exchange account or one wallet account, I don't actually ever necessarily interface with tax bit. I don't have to go create a tax bit account and sign up for another service. Instead, what I'm doing is I just go into my Coinbase, Gemini, whatever partners you guys have, and through those

services, I'm able to just simply go to a tax area and basically pull these records. That's a really unique way of doing it because for you guys, obviously, it can help you get to a lot of users very quickly, but also for me as a user, it's one less thing for me to keep track of. right? Yeah, this is interesting. You probably just blew a lot of people's minds because this doesn't yet exist in the cryptocurrency space. If you think about equities, you go into your Vanguard, your TD Ameritrade, your Schwab, any of them, there's a tax center tab in your user interface portal. Well, in crypto and on that tab, you have access to your 1099B that shows you your cost basis and your proceeds from all these trades. Well, in the crypto space, that doesn't

yet exist there. The exchanges have been, you know, the IRS has taken a lot of time, but they've been issuing 1099K tax forms, which we'll get into, which basically report income to the IRS. Well, cryptocurrency is not income. So this has caused tens of thousands of automated audits already. We facilitated tons of them, hundreds, if not close to a thousand now. And so there's been a lot of confusion on that. So yes, we are releasing and we're excited. I'll announce it right here. So Uphold, their Bay Area Exchange, amazing platform. Check them out if you haven't. They offer just very ease of use to go in and out of different cryptocurrencies and commodities. So they have precious metals, et cetera, as well as tons of fiat currency.

So it's a really slick platform. But they are launching tax center suites powered by us. And so all of their U.S. users will be rolling this out to different countries as time progresses. will have a tax center tab and they'll have proper 1099B reporting that tracks cost basis where available and have a really cool suite within the interface. So that is what we're working on doing with other exchanges as well as getting them into compliance with the correct 1099 forms, which in turn help the users from those exchanges, all of us that need better reporting in the exchanges systems themselves. Yeah. And are the exchanges opening themselves

up to risk for what they did already, right? So they basically were providing reporting that was showing it as income rather than property sales, et cetera. Does that open them up to some risk? They're already at risk. The IRS is well aware of this. You can imagine, here's the story. So we have hundreds of these. We get a taxpayer that comes to us, hey, I just got audited, got a CP 2000 letters, what it's called from the IRS. And it says, oh, we had this poor lady from Idaho. I owe $80,000. I need to mortgage my house. I make 40K a year. And we're like, calm down. You don't owe $80,000. It's going to be okay. The exchange reported $80,000 as the gross proceeds from all of your transactions, but they failed to report cost basis or even indicate that cost

basis exists for these assets. And so because we have tax attorneys and CPAs, we're a one-stop shop. We can facilitate all of these IRS audits. You don't have to go and hire a CPA or an accountant on the side that charges you $200 an hour to do this. So through communications back and forth with the IRS, this has happened again, hundreds of times. Now the IRS has said, Oh wow. Like we shouldn't have ever audited this user in the first place. Um, this wasn't income. We're our systems automatically sending these out. We're just doing a quick lookup of, Hey, just like a W-2 did the taxpayer report the number in the income section of their tax return? Well, no, she obviously didn't. And then they're like, well, if this is property, property has cost basis, why aren't the exchanges

reporting that? And it is more complex than equities. The reason, one of the reasons that people will constantly say, although this won't abate them, is transfers, transfers on and off exchange. The cost basis might not have originated on the exchange. Well, that problem exists in the equity space too, albeit at a much smaller extent. And there actually is guidance on that, on issuing 1099s when cost basis is lacking. And the IRS still needs to know that these are capital assets. These aren't eBay and Etsy sellers generating income on crypto exchanges, which is currently the misconception right now. And so I guess as the exchanges get exposed to some risk there, the best thing they can do now is kind of cure it, right? Is if they start

actually issuing the correct things. Um, I think the story you're just talking about with this, uh, with this woman, she went from, Hey, I owe 80,000 to, she actually got a check back. You told me, right? She had losses. All of her basis in her assets were greater than the proceeds received from disposing of those assets. So that in the end, we got her a 500 bucks back or something. And it was, it was a really cool story. And I mean, that's a, that's a pretty big swing. 80, Oh, 80,000 get back 500 bucks. The latest one we just last week, we had a taxpayer that their 1099-K, the IRS audit letter says, hey, you have unreported income of roughly $20 million. Are you serious? That's a big number. Yeah, it's a huge number. And this is a problem. And so

better reporting, we're really spearheading this movement. And it's really cool to see these exchanges follow suit because it's going to make life so much better for their users. 1099-Ks, they only have gone to users with $20,000 in gross proceeds and up. So these are exchanges' most valuable users. They're high traders that are being automatically audited. That is not a good user experience. Why are they only sending it to people with $20,000 in proceeds? That's the requirement for a 1099-K.

You hit a $20,000 threshold. Well, unfortunately, guidance for 1099-K issuances in the crypto space never was intended to exist in the first place. And so there's just been kind of this precedent that was unintended in the first place, instead of following the precedent that equity brokers set. And that's what they should be doing is, hey, cryptocurrencies, property, rules for property have been around for decades. In addition, on the exchange side, and on the consumer side, on the user side. Yeah, it's pretty fascinating. You guys just raised money. Maybe talk a little bit about kind of what happened. And then I'd love to talk about that experience of raising money in maybe not the depths of the bear market anymore, but definitely not in like the hype of 2017. So talk a little bit about what you guys did there. Yeah. So we just announced just over $5 million round of fundraising. And we're really excited about who has teamed up with us. When we went out to go raise money, there was obviously a lot of interest. But it was important for us to get the cream of the crop in two categories. And that's fintech and cryptocurrency, leaders in both those industries. And we were able to do that. And

that's really, really cool because it shows the investors see the market size. Cryptocurrency has not been going away, even though prices have been in a little bit of a bear market, at least compared to 17, user adoption has doubled year over year. And so that's really, really cool. We're going to continue to see that. And this is a long-term game. This is still the early innings. But yeah, that fundraising was huge because these people, you know, we're talking about Winklevoss Capital, Velar, TTV, Dragonfly, Collaborative, Global Founders, a great big round of powerful people with a lot of connections that really want to see cryptocurrency move forward. Well, they recognize if it's going to move forward, tax compliance and security and privacy,

those two regulatory concerns have to be resolved. And this is the chance to get in on the tax compliance side of things. For sure. So how many investors in the round you think? There were nine or 10. Nine or 10. And how many investors do you think you had to talk to, to get nine or 10 across the finish line? A lot or a lot? to, I talked to a lot of investors just as learning. I wanted to know, I wanted to meet people, see what they offered, what their thoughts were. Um, so, oh yeah, talk to hundreds. And it was a, it was a great experience. Really good people out there. What did you find in terms of

the investor's sentiment of just the industry in general? Was it still a, Hey, you know, yes, the people that are paying a lot of attention to crypto were excited, but kind of traditional investors were a little skeptical. Uh, are they still excited? Like what was that? Uh, those conversations. Yeah. No, there's, there's a mix of both. Yeah. You've got some investors that have a strong cryptocurrency thesis to the point where they've launched funds dedicated to blockchain and cryptocurrency startups. And you've got others that should I make my first bet in the space or not? And so what's unique about us is we're not a cryptocurrency company and we are really a fintech company that's enabling cryptocurrency adoption on the side. And so it's kind of a

more risk adverse way to get your feet wet in cryptocurrency without investing in someone that's actually touching assets, launching coins, and doing more of the traditional use cases surrounding blockchain and cryptocurrency. Got it. And then what are you gonna use the money for? Growth. Yeah. So we want to- What an answer. Spoken like a true CEO. Growth. Growth. This is a big problem. You probably have heard now the IRS just released a new tax question. It's required to all 175 million US taxpayers. This is unprecedented. You now have to go in and click yes or no. Did you engage in cryptocurrency transactions during the taxable year? Well, that alone is going to cause just a ton of education and a ton of need for software.

And so being able to scale our product to millions of people, as well as on the enterprise side to build out a comprehensive tax center suite solution for any facilitator of cryptocurrency movement is a big development task. So I'm beefing up the developer team to scale the product. We have a lot of cool features on the roadmap that the industry has never seen before because of our pedigree of attorneys and CPAs. There are cool tools that we have in development right now that are going to help taxpayers. That's our goal. Help them not only file their taxes, that's easy to do. That's a once a year software. That's what TurboTax does. But how can we save you money throughout the year proactively where you have a mobile app that you can engage in throughout

the year that's giving you recommendations and insights into what you should be doing? So yeah, first of all, that's the developer side. And then we currently are focused on the US right now. We have the US tax code, but expanding that cryptocurrency is global. And this is a huge problem all around the world, specifically right now in Asia, as well as the UK. You've seen tax authorities be vocal over there, Canada, Australia, their governments have been in talks with us as well with the Australian commissions. And so how can we solve this problem outside of the US boundaries? Yeah. And do you feel like there will be more complexity in the future? Or do you think the IRS guidance as they come out with more and more that can actually streamline this and make

your guy's job, maybe not easier, but it can actually, you know, put you guys in a position to be more helpful to the consumer. I actually think it's going to get more complex. And here's why. I think more guidance will come. I think that's great. But I think the use cases surrounding cryptocurrency, this is just the beginning. We start to see token backed real estate where people are receiving rental income in the forms of coins. This already exists to a small extent. It's just starting to proliferate. We start to see cryptocurrency used as means of payment at a wide scale. All of these use cases create taxable events. How do you automate those at point of sale? How do you automate those upon investing in real estate? So there's just going

to be a splurge of use cases where different things have to be thought about of how to report this and how to automate it. And so that's where we're going. We want to handle all of those use cases, not just the limited set that exists now, but where we're going. Got it. Very interesting. When you look out kind of as what you guys are building, one of the most interesting components, there's two pieces that you guys do that I think is really interesting and kind of rides trends that I see in other companies. The first is this predictive software, right? So basically the ability for me to go into the software and say, all right, here's everything from my exchange, or the exchanges that I have an account on. Where am I right now? So do I have gains or losses?

and then you can actually tell me well listen if right now you sell you know a thousand dollars worth of bitcoin you'll be able to uh book a loss on that bitcoin and now you'll be able to reduce your um your taxable income for this year etc so the ability to kind of predictively tell me what to do uh seems really valuable um and i haven't seen too many people doing that talk a little bit about like why you guys built that and how that works yeah so we're building that right now it's still in beta testing. Oh, did I just screw up? No, it's great. No, we'll announce it to the world. So it is something to come. And that's exciting because we're thinking about it in a different way than what's existed on the market today. And yeah, you're right on because

cryptocurrency users transact much more frequently than the average equity investor. And that's only going to continue as you start to use cryptocurrency as means of payment. You need real time visibility into what your cost basis is by asset and knowing what your tax implications are of using each asset. And so, yeah, we have a broad vision. I won't spill too much here of what's coming, of how to do that in a very innovative way

that's gonna be beneficial to everyday users. Awesome, I fucked up, my bad. No, you didn't, this is exciting. Just know where we're going because yeah, if you sign up for TaxBit right now, we're constantly iterating and releasing things. So it's important for people to know that this is not going to be a once a year tax filing tool for you to use. This is something

you're going to want to use throughout the year as we continue to add these value add features and functionality. For sure. And then the other thing that you guys do, which I've now seen folks like River Financial, et cetera, start to add is live support, right? So the ability for, I think most tech companies historically have said, look, if you want to use our product, great. There's no number to call. There's no email. We basically build out kind of automated decision trees online or like a frequently asked questions section or something like that. But that's basically all the support you get

and you're on your own. So go Google it, go find answers on Reddit or something like that. You guys take a different approach and you say that you've got these experts and that live support's there. Like how does that live support work and why spend the time, money, and resources

to build that out? Yeah, we have a great support team and you're exactly right. This has been a big decision for us. And the reason being is taxes suck. Like let's just be honest. I should title the episode. dispelling the rumors around why taxes suck. When you need a master's degree and then you

need to go work for one of the big four accounting firms. And then you, in order to become an expert in an area and all us persons have to understand this, like that's not intuitive. People distinctively, they're going to have questions and you, we, you want a place to have those questions answered. It's great to trust the experts. A lot of people do and just plug in stuff. They don't ask questions and it is accurate and that works, but other people, they want to understand what's going on and that's natural. And so we want to be able to support that and answer those questions, help people out, engage in the community. We are, we attend all the largest cryptocurrency events. That way we can get to know people and help people with what their specific

use cases are. Yeah. It, um, it feels like, uh, there's a humanization of a company when you can call and talk to somebody. Yeah. Right. It's not cheap either, though. No, it's not. And the other thing, too, is we're not going to give you the disclaimer that this is not tax advice. Consult your CPA or attorney. We are CPAs. We are attorneys. And so absolutely. When it's in our realm to do so, we can give advice that that is authoritative. Yeah, I that's my dream is to be able to say this is tax advice. Right. By the way, nothing on this podcast is tax advice, but nothing on here is, but if you want, go to a tax bid.com and you can call up a, a live expert. And that's what I should do. I should actually do a, uh, like a live stream on Twitter. I should

call up the live experts and, uh, and test them out and just give them like some crazy, uh, you know, scenario and see what they do. Yeah. We'll have to think about doing a live Q and a one day that could be a shit show. Who knows? It could be fun. Um, but yeah, there's a lot of questions out there our support team you can go in and chat into go to taxbit.com it's a little chat icon and we're uh we're available to answer yeah and as much as i joke around about the tax issues like there's some really big horror stories out there everyone's read you know on whether it's twitter reddit etc where you know somebody bought cryptocurrency it went up by a bunch of uh you know in value they uh sold it they went and spent the money and then all of a sudden here

comes the tax bill and the tax bill is you know tens of thousands hundreds of thousands sometimes even millions of dollars and they're sitting there like i don't have the money now yeah right or even worse is hey i bought bitcoin it went up i sold it for something then i bought bitcoin back now it went down in value and so i didn't necessarily spend the money but what i'm going to get taxed at is nowhere near what it's worth today and so even if i sell my bitcoin i can't pay like really really scary scenarios for some of these people it's it's a problem and there's actually a name in the IRS guidance. It's called wherewithal to pay issue, meaning you have a tax bill and you have no liquid assets to cover that tax bill. And it can happen in cryptocurrency

because of the nature of coin for coin trades being taxable. So you swapping coins around all the time and you could be incurring gains and then come tax season, the value of those coins have dipped and all of a sudden you've got gains you've got to cover and you have no assets that are worth that amount. What happens in those scenarios? Yeah, it's a problem. And so there isn't a good answer. You still owe the money from the IRS's eyes. Whether or not there's a couple of options, you can try and do some sort of settlement with the IRS. I know they've gotten some loan programs and other things. Not a great option. There's interest and other things in the setup processes that go along with that. And then there are cryptocurrency lending platforms. You

can go get asset-backed loans right now in the cryptocurrency space. I know you're affiliated with one. I won't say names here. We're looking to partner with one in the coming future where it'll be a full integration service to make it super easy for people, if that is their case, to get a crypto-backed loan and be able to have a method to cover their tax bill. Very cool. You guys are based in Salt Lake City? We are, yeah. Why? It's a great question.

By the way, you're the second founder named Austin that's based in Salt Lake City, I think. I think Lambda School is based there, or at least has a big presence there in Utah. Yeah, big presence in Salt Lake. Yeah, I know Lambda well. What's going on with Salt Lake? Salt Lake is booming right now on the SaaS tech side. Why? Really, there's great sales and marketing talent there.

Just the culture of Utah, it's a sales culture. But the influx of tech companies over the last 15 years, Qualtrics paved a great movement that was a large acquisition that brought a lot of talent in-house so the developer side we are starting to see a hub and then a lot of schools lambda etc that have great computer science programs so people are being more naturally grown now as well as an influx of out-of-state people joining it is a great place to live you talk about cost of capital and how far the dollar goes Salt Lake is at the top as far as quality of life goes what you can buy with a dollar. Um, and then the outdoor life skiing and snowboarding and summertime, you've got

great hikes and the mountains right there. And so people, you know, have really enjoyed it and we're seeing a big shift. Yeah. It's, um, it's fascinating to me how, you know, one, two, three companies, either they start somewhere, there's acquisitions. Um, you kind of start that, uh, that cycle, right. Where, uh, there's employees at a company, there's an acquisition, there's a capital windfall, that capital then gets invested into those founders or those employees becoming founders and starting companies, or they start to invest in other companies, et cetera. And once that kind of flywheel starts very quickly, you can go from, hey, there was no tech at all to, hey, there's a burgeoning kind of ecosystem here. Yeah, I think it's really cool. I think that'd be

really rewarding as one of those founders of the companies that paved the way, the Qualtrics, the domos the plural sites there's a ton of them now um to see their legacy last even beyond what they did but the people that they were able to bring up and have gone on to do great things and you know i'm a product of that so it's cool for sure uh i got a curveball for you oh man if we digitize the dollar tokenize the dollar yeah there's talk of that going on uh do you think that changes the way that the irs thinks about uh crypto assets right if you know you think about bitcoin as property if i go to spend it all of a sudden there's a taxable event yeah well if the dollar itself is quote unquote tokenized can they keep separate tax guidance

for something uses the same technology yeah i i think that would change things in addition even if it didn't change things assume it's still property if it truly is pegged to the dollar your in and outs of that is are not going to be taxable i mean you're not going to have gains and losses your cost basis was a dollar and your disposal value was a dollar in all scenarios getting into that token whether or not use bitcoin or some other altcoin to go into into that those will remain taxable anything that fluctuates in value but when things don't fluctuate in value yes there is a precedent of not making not dinging you on that yeah it's pretty uh unless you earn it if you earn the the digital dollar of course that will be income and etc well i mean and i guess that

leads to the question of like employers right if they wanted to start paying people in uh cryptocurrency because they have to do with holdings and things like that um you know it can get quite complex pretty quickly. We're working with someone that does this. They do all their payroll in crypto. It's fascinating. And so, yeah, there's a lot of reporting nuances there. And in that case, I'm assuming at some point you guys will be able to help them in terms of not only at the company level, but also the employees themselves to calculate and stuff. That's exactly right. What's your biggest concern when it comes to taxes? Like if I said to you, you know, what's the one message you want to tell folks as they think about taxes, IRS,

crypto uh what's kind of that yeah i think the biggest misconception that the industry has really and this has changed over time but from the early days to now is cryptocurrency is untraceable it's decentralized it's hidden to an extent yes much more so than traditional fiat currency but the irs is serious this year and once again i don't work for them i'm not endorsing them our software actually has helped people most of the time receive money from the irs that's what's ironic about this is we're making people money because of the nature of cryptocurrency prices have gone down recently. So this new tax question, it's serious. So just don't check the no box. I did not engage in cryptocurrency because that now gives the IRS record that

it was intentful deceit. And so in the past, you were able to sometimes prove through an audit, you plead ignorance, even though you might not have been ignorant, but there's no way to prove that. Now there is, you have a record that's showing how you answered that question. And at that point, penalties become more than monetary and we just don't want to see that. And so yeah, answer that question truthfully because they are scaling up their departments. They're investing a ton in resources to scan the blockchain. They're going to get 1099s from exchanges and other platforms. And so yeah, identity information just has to be around in order for this industry to progress mainstream and i mean real mainstream fortune 500 adoption etc

and really i guess what that does when you say like non-monetary like it becomes like true crimes right i don't want to say it because i don't i hate throwing that word out there but but it's important right it's important to have an honest conversation around like look um there's a lot of people i think encrypted just given the ethos and kind of the more libertarian uh bents etc who they don't like taxes, they don't like the government, right? It's not a secret. But at the end of the day, right, the way that I've talked to a lot of folks who work for companies we've invested in, etc. It's like, look, the rules are the rules, whether you like them or not. And so, you know, pay the taxes that you owe. And in many cases, you as an individual that, you know,

an employee at a company or an investor, you're not an expert in tax law, right? You're not an expert in uh tax guidance etc and so go work with experts whether that's through uh tax bit and kind of the software you guys provide and kind of automate this stuff or even just your local cpa that does your other taxes like they can only operate with the input you give them like that like that to me is the the thing that always has uh cracked me up right it's like well uh my accountant messed up like no if you don't give the information to the accountant or you or you don't hook up all your exchanges to tax bit etc they can't you know they can't read your mind Yeah, it's the same thing with tax. But yeah, if you fail to connect and exchange like your data, we'll we'll identify cost basis issues and flag them to you. But yeah, there's your information is only as accurate as what is what's provided for sure.

Yeah, it's pretty crazy. All right. Before we wrap up, I got rapid fire for you. What's the most important company in crypto other than tax pit? Oh, man, there's a lot of them out there. If you look at, there was an article published just the other day, actually, about the future of exchanges. And we have seen some consolidation already happening with some different exchanges shutting down and other acquisitions happening. But they mentioned three things. And exchanges in the future are going to be able to offer your traditional buy, sells, and trades, which already happened. But they're also going to be a hub for earning interest. So actually providing interest value to the, to the users. I make four things. And then the third thing was a means of payment. They will be able

to provide a card that you can go and actually use your assets. And it's not just an investment vehicle. And then the fourth thing, which was in the article is automated tax compliance. And that's where we come in is once you have all these things operating under one house, how can you then facilitate the correct reporting and compliance. And that company, there are companies that are striving towards that, but it doesn't exist yet. And so when all four of those things are in one house, I think it's going to be a super powerful platform that's going to disrupt the industry. So I'm going to defer this question to next year, because I think we're going to see a lot of innovation in the next 12 months of people working on achieving those four objectives.

I'm dealing with a politician here. He didn't even answer. Yes. I love it. I'll let you off the hook. Fine. What's the, because of the industry that, or part of the industry that you operate in, what's the one law or regulation that you would change if you could? Yeah, I would like to, once again, I want to see cryptocurrency go mainstream. And so I'm going to focus on the tax side of here. It would be great if, hey, when I went to my a little coffee shop down the road and use cryptocurrency if there was a small de minimis exemption like i am taxpayer favorable here those those transactions buying a cup of coffee even if it's every day just aren't going to be material um taxpayer revenue and so how much of uh de

minimis kind of exemption dude i i'll start small here because if i throw out a big number it's never gonna happen like let's just go for even 25 like my cup of coffee my everyday like small purchases. Um, because if I say $500, then that people won't take it seriously. So you think 500 is on the higher end, 25. Once again, this exemption doesn't exist in the traditional equity space. So it's something new. And, and then how, and then you still have a reporting problem though, because then you'd have to prove that it was de minimis. You still need a tax software to calculate the transaction. You just wouldn't report it. So yeah, it, it's a problem, but I want, i want to see um the community with regulators work together to get to a spot where uh we're not

spurring innovative projects and things that can really disrupt the financial technology sector for sure uh what's your most controversial thought what do you believe that everyone else is gonna tweet at you and tell you you're an idiot for what i already said one thing that cryptocurrency is anonymous and decentralized i'm sure i'm gonna get a lot of no i'll never pay my taxes fuck you i i've heard it all and once again i'm not the bad guy here i'm just providing a tool in order for you to if you want to comply easily comply because doing so through a traditional means is not user-friendly and it's not affordable paying someone to go run your run your records for you for sure um aliens aliens oh man actually before we talk about aliens what's your favorite

book favorite book most important book man i i'm a i'm a sports guy and this is this is what's old i love nfl and the and the mlb i love baseball i love the nba too so all right what teams i'm from seattle i'm a seahawk guy all right they're in the playoffs right now big game they won they won this week yeah they won yep exactly um so a big seahawk fan but then this is weird i'm a yankee guy so oh that's you're welcome here and the reason being is i yeah i played baseball growing up and there's a huge derrick jeter fan like to obsession and so my favorite book he wrote a book in the early 90s it's called derrick jeter the life you imagine i read that as a teenager must like 10 times because Derek Jeter, when you're living in New York, going through all the press

and the scrutiny of all of that, and he handled it just with super class. The Yankee way. The Yankee way. Exactly. So that book has definitely been an impression on me for decades now. What about A-Rod? He came through Seattle, right? Yeah. I went to many Mariner games, him and Ichiro in the back in the days. I love the old, the Mariner team. Yeah. And then what about Marshawn Lynch coming back to the seahawks love it i i was actually at the the seahawk 49er game last game of season when he scored skittles were being thrown out in the crowd everywhere guy is crazy i love his energy and yeah definitely a fan he's probably one of my uh favorite players in the nfl just because you can tell he's enjoying

playing he loves like he doesn't take it for uh for granted the things that he does in the community in oakland and seattle it's just it's really cool to see yeah that's awesome all right uh so Derek Jeter's book is uh is that was it that's one yeah I mean that's it it's it's a uncommon book but yeah I read a book maybe it is the same book uh I think he wrote it and it's all about him growing up in Kalamazoo Michigan right yeah that's it the life you imagine it's old now yeah it's a good it's a cool story of someone that just you know worked their way through he wasn't given anything he earned it and he practiced hard man that guy had a work ethic yeah for sure um all right aliens believer non-believer i mean there's tons of definitions of aliens if we're

talking about life beyond earth absolutely i'm a believer i mean this universe is massive none of the human mind can comprehend how big it is and so you're telling me that there's tons of galaxies infinite amount of planets and that um we're just the one one thing that exists so right before we started recording uh there's a article that's published on cnn that said they're hearing radio waves uh high high intensity very frequent radio waves and forget about whether that means aliens or not the thing that i took away that was uh interesting um and frankly just mind-bending is it's coming from uh 36 billion miles away right so like forget anything other than just a billion miles like 1 billion miles when you think about that number that's really far times

36 oh yeah yeah and that's just the first of it like that's what that's just where they that's just where they think the radio waves are coming from yeah it's fascinating what technology can do right now yeah the uh the other stat that i'm going to keep saying is uh uh quizzing people on how many planets do you think scientists uh estimate are out there for every one grain of sand on earth you have an answer to this yeah oh yeah yeah um i'm gonna go with a million oh you're much more ambitious uh ten thousand ten thousand okay ten thousand planets for every one grain of sand on earth yeah a hundred years from now that might a million might be correct that's just what scientists believe right now it will a million for every one grain of sand or for

sure that we're probably getting close so it's 10 to the 22nd is uh is the number of planets which i can't do that math i'm a numbers guy i love this stuff yeah this is making minds think this is good we were joking actually before the show hey when the on the alien topic satoshi nakamoto like alien like maybe bitcoin came from another planet and it was being like who knows i uh the other one that i'm now fascinated with is uh how big the ocean actually is oh so they're discovering life at the depths of the ocean and uh in the weirdest places like they can literally find life at nuclear power plants see i love this topic even maybe even more than space because space is uncomprehendable the ocean you can actually comprehend like um but it's crazy though that

they're still finding new stuff i've heard the same thing joe we got listen man joe's in the room he's over there punching on the uh on the ipad we got to get uh the i think it's a brazilian billionaire who uh has a capsule and he keeps going to the depths of every ocean he's gone to three of them so far forget his name uh we got to get him on the podcast because he's just this rich dude who's fascinated with the ocean he's like look everyone wants to go up i want to go down right and he's built a single man underwater like basically submarine that he goes in himself and he keeps going to i think he went to the bottom of the indian ocean and another wow and you're like look man that you're not like putting your money where your mouth is you're going in

right so we got to get him on here because he'd be fascinating yeah that's awesome um all right before i let you go you get one question for me what do you got pomp this is on the spot i haven't pre-planned this um what is your company to watch for in 2020 in the cryptocurrency space oh tax obviously i appreciate that um no i i uh so i always cheat when i get asked this question i always answer bitcoin um as the most important the one to watch all this stuff and yes i understand it's not a company, but to me, it is the flag for everything else, right? If Bitcoin is successful, everything else will be successful. I look at the opposite of that. Let's say that Bitcoin actually failed, whether it was a self-induced failure, meaning that there was

some kind of bug or whatever in the code, whether it was a nation state acting against it, whatever happened, if Bitcoin failed, I do question what would happen to everything else. I don't think it would be immediately everything else would fail, but I do think that that could potentially be such a fatal, um, you know, kind of event for the industry that it would be really, really hard to recover for and recover from. And so for me, it's like, what's the thing to watch? It's like on mitigating downside risk, Bitcoin succeeding is something to watch for, right. And then kind of cheer on. Uh, but then on the upside also, um, actually wrote about it today in, uh, in off the chain newsletter is, uh, there's a lot of global instability going on right now, right?

So you've got, let me, if I remember everything I wrote. So first you've got the United States engaged in two combat wars in Iraq and Afghanistan. You've got a third one potentially with Iran looming on kind of the horizon. You've got the trade war with China going on. You've got, you know, absolutely crippling economic sanctions against countries like Venezuela, North Korea, Iran, et cetera. Then you look out and you see things like the United States president is under impeachment right now, right?

And so all of that's going on. You've got incredible divisiveness just in politics in general. You've got a stock market and other assets that are at all-time highs. And so just naturally, they return back to the average at some point, whether it's short-term or long-term. And then you look at these kind of random events that keep popping up that here in the United States, people I don't think really comprehend how bad they are, but just take fires. So the Amazon fires. Then you've got Australia right now. I just saw they say one billion animals they believe have lost life.

right? Like a billion animals. Incredible, right? And so if you look at like the satellite view of Australia, like the entire continent's on fire, right? And so when you look at this stuff, you're like, look, there's just a lot of instability, uncertainty, risk, etc. In that scenario, I think historically gold has been a great kind of chaos hedge or insurance. I think Bitcoin now has stepped into and starting to serve as that role as well. And so I don't want to encourage any of that stuff to continue right like i actually am in the opposite camp like i would give up all of the benefits of bitcoin being successful if we could preserve human life animal life you know peace on earth economic you know prosperity all these kind of things but in the

case where you i and most other people can't affect that stuff one of the great hedges is bitcoin right and gold and other things and so i think that's like a narrative to watch is just um the feeling of uncertainty and risk, even if it's not true, right? We actually live today in the most prosperous time in history, right? The safest time, you know, all this kind of stuff. But because of the prevalence of an access to information, you know, 20 years ago, people might not know that the fires in Australia are going on, but the feeling of like, holy shit, like a continent's on fire, right? Global warming, everyone starts like getting all this anxiety. I think that translates into economic markets. And so what you see is you see people succumbing

to fear and greed and all this kind of stuff. Uh, and so whenever that happens, you get volatility in markets. Bitcoin becomes pretty interesting, right? That's a great answer. He nailed it. Yeah. I think too much about this stuff. I sit in like, what's the next, uh, what's the next shoe to fall? So, all right, man, where can, uh, where can people find you on the internet and also a tax bit? Yep. So yeah, go to taxbit.com backslash invite backslash pump. Oh yeah. We got the URL. Yeah, you can get a 10% discount, actually. Pomp Referral. And yeah, we can get started and help you out. And we're here for you. We got support for you whenever you need. And really just take that tax complexity off your shoulders. For sure. And then what about you

on the internet? Are you out there? I'm becoming more out there. Yeah. So follow us. Follow Tax Bit on Twitter. You can follow me on Twitter, Austin Woodward. And yeah, I'm getting out there more you have an i i've seen austin from lambda has an e so a u s t i n versus a u s t yes exactly is that a thing in the austin world like do you guys meet each other and you're like oh i'm an i you're an e it is a thing yes okay yeah it is did you ever ask your parents why they went with i i didn't no all right next time you come on we're gonna get uh we're gonna get to the bottom of the the i in austin um and then uh you guys are uh one of the newest sponsors the podcast too so uh We're super excited about that, and hopefully we can drive tons of people to go be in compliance and actually pay their taxes.

Yeah, and probably get a tax refund, let's be honest here. So help people save money. Yeah, it's always a good business model if you can help people save money. So, all right, man, listen, thank you so much for coming to do this, and we'll have to do it again. Yeah, absolutely. Pleasure. Hey, everyone. Pop here. If you like this episode of Off The Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate review and subscribe to review simply go to the off the

chain homepage scroll down until you see the five blank stars taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts i appreciate you listening and see you next time on off the chain