Wait! What does your startup do?
I’ve been sharing about my startup since a year now and some understood it and some don’t as it’s not an Instagram or Snapchat that caters everyone. Given its niche, I think it needs an explanation and I am happy to do it for my friends.
To start with, it’s not “what does your startup do?” but it should be “what problem does your startup solve?”
If you are following me on Twitter or been friends with me in the real world or Facebook, I’ve been talking, working, thinking, tweeting, sharing a lot about my startup BearTax and what it can do for people. But, a common question I get from my friends is what actually do we do at BearTax and how does it matter?
It’s been an awesome one year working on this and will be very glad to share the journey in another article. Today, let me explain what we actually do at BearTax or what BearTax can do for its users.
TL;DR: BearTax is a software as a service platform, which can fetch your cryptocurrency trades from multiple exchanges and match them against buys and sells in a particular order to provide you with a gain-loss document (sounds easy) for tax purposes. Read more to understand the complexity involved in it and how we are helping our users save hundreds of hours of manual effort.
This is a term you might have heard more than a year ago with all the hype around it. Bitcoin might be another word you’ve heard in tandem. Not many people invested in cryptocurrency (relatively, but a lot of them had heard about it). Many think it’s progressive towards the decentralized world and many more are still skeptic about the whole thing. Leaving all the judgments aside, most of us might have traded to test the waters.
Playing with money has its implications
Irrespective of whether you like cryptocurrency or not; Invest in out of belief or trade it to make profits — You got to pay taxes on your gains because IRS treats it a property and capital gains rules apply to it. Yeah!
So, what’s the big deal — you buy something and you sell something, know what you bought for and what you sold for — Why not get a calculator and find the gain and report it to IRS — simple enough eh?!
What’s the complexity?
Cryptocurrency like Bitcoin is traded on thousands of exchanges across the world — to be exact 16002 as of today as per Coinmarketcap.com. Won’t believe me? Here’s a list of top 400 exchanges by volume where Bitcoin is traded.
- So, it’s price changes every second.
- It’s different on every exchange.
- It is traded 24x7x365 days a year — Market never sleeps, unlike stocks!
- Imagine not just Bitcoin, there are 1500+ of those!
- Whoa! you know what, trading one crypto to another is taxable — how are you going to calculate gains in Fiat(normal) currency like USD? Can do for one, what if you’ve converted Bitcoin to Ripple and used it to buy Litecoin and withdrew from an exchange for safety and deposited it back to buy Ethereum, used it to buy some tokens in an ICO (an IPO equivalent here).
- Which of those actions are taxable and which are not?
- How do you keep track of prices every second if you are a day trader?
- When you look at your trades at the end of the year, how do you reconcile everything?
Apart from this, if you buy 1 Bitcoin, you can sell it in chunks, unlike stocks. So an algorithm like FIFO has to be applied to keep track of purchase price.
You can do manually if you’ve got 10–20 trades, but think of 100 trades, think of 200 trades, think of 1000 trades, think of 10K trades — Imagine the amount of effort needed for a normal man or an accountant.
BearTax does it all for you — Just in a few minutes!
Yes, it can understand what is a taxable event, it knows how to smartly match deposits and withdrawals to keep right purchase price assigned for a quantity of digital currency, can fetch the price for any given timestamp on any day for more than 1500 cryptocurrencies, it can derive fiat transactions from crypto to crypto transactions (Eg: Buy ETH with BTC meaning selling BTC for USD and buying ETH with USD).
These are the capabilities we have built as a solution for a painful problem being faced by cryptocurrency traders and accountants helping them
Solutions we offer at BearTax
- B2C tax assistance platform where users signup and use to generate tax documents
- B2B platform for CPAs and accounting firms to manage clients’ transactions and tax documents
- On-demand processing engine for cryptocurrency exchanges to process their users’ transactions and deliver tax documents.
- Platform as a service for hedge funds and fund administrators to consolidate transactions and process as per their needs
So, that’s the problem we are solving for the world at BearTax. We hope to make it much easier for people to consolidate and calculate tax liability and play our role in driving mainstream adoption of cryptocurrency across the world. Working towards our goal is our small team based in Atlanta, GA
Again, it’s not “what does your startup do?” but it should be “what problem does your startup solve?”
If you like my attempt to explain things about my startup, hit the clap button as many times as you can and share it with your friends. That fuels me to write more of such content. Stay tuned for the article on technology and marketing efforts at BearTax which can help any bootstrapped SaaS startups.