I actually have a #Bitcoin question that I think most of you can answer, so it's finally advantageous to be here being nostr dev updates.
If a person does recurring btc buys from a exchange, say every fucking day even, then also maybe adds here and there from gifts, zaps, etc. and then 50 years later cashes out, how tf would you calculate the cap gains based on how long you've had every little segment of money from a ton of sources? Does the currency (or rather the ledger location information?) itself hold all that historical buy/transfer date information and an app/wallet can just calculate all of in an automated way?
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Btw this is just a technical question. I'm not a huge Bitcoin maxi so I'm not like advocating for using Bitcoin as just a eat to gain more fiat. I'm just curious on the tools to make calculating such a thing easy for a regular person.
Also if you cash out just a little bit, is it always the oldest money you had that is converted fiat? If not how would you know how long it existed?
The way I understand it (and please correct me if I'm wrong, everyone) is that you want to have your BTC in smaller parcels, and not on exchanges preferably. Also, send it around to yourself, using always a new generated address, which blurs your tracks.
At some point in the future, the government may come knocking on your door, and you may find yourself faced with capital gains tax - but only from that one parcel that you used for the fiat/BTC deal.
So this is useful for dodging taxes. Also interesting to know. However,let's say in my case... honestly it just would be my case if I had a bunch of money, that I would be trying to pay taxes not dodge them.
Well, the more taxes you want to pay, the bigger the parcel that you show the government.
And let's also think about the BTC price in 10 years or so.
I don't know if there's a tool to keep track of all the small buys. If you buy from a KYC onramp they should at least keep a record of your transactions and make it available at tax time. For zaps, etc. you would have to check the value at the time received and keep a record. Again, I don't know of any wallet or service that does this. The decision to report or not is left to personal convictions and applicable tax code.
The USD price is not recorded on chain, but you could use the block timestamp to look up the historical price at that time. It wouldn't be exactly what you paid, though.
Thanks for your insight. To me it sounds like it's just fully manual kind of like keep receipts unless the exchange you buy from provides you with what you need. If I had random small buys 2-10 dollars every day, 20 years later, things shifting around here and there, I can't imagine the ridiculous task of calculating the gains properly. Or even accessing the info to do that.
