Manage Your Blockchain Assets with NODE40
NODE40 is a blockchain platform that enables hosting of blockchains as well as management of blockchain assets. During this interview, the NODE40 team is going to share additional information with us.
1) Please tell us a little bit about yourself.
Perry Woodin, NODE40’s co-founder and current Chief Executive Officer
My interest in blockchain technologies was initially sparked by the financial incentives used by digital currencies to encourage network participation. These financial incentives range from early Bitcoin mining to Dash incentivized full nodes.
NODE40’s Chief Technology Officer and co-founder, Sean Ryan
I spent the majority of my professional life working as a software engineer in a variety of settings, including the government of one state, academia, consulting, and a number of different non-profit organisations. My first foray into entrepreneurship was the joint establishment of NODE40 that I did with Perry Woodin. Because our customers were paying us in digital currencies, I was required to acquire a solid understanding of accounting for this new asset class. That in-depth investigation led to the development of our flagship accounting product.
2) Can you tell me about NODE40?
NODE40 was established in 2015, and our initial focus was on ensuring the integrity of the blockchain by facilitating the operation of incentivized second-tier nodes. However, we quickly became aware of a gap in the market for efficient accounting software geared toward cryptocurrency investors.
When it came time to calculate taxes, those who invested in cryptocurrencies and tokens often found themselves in a state of bewilderment. NODE40 Balance was our solution to this problem. We have been working on refining the software for accountancy and accurate reporting in relation to digital assets. This will enable users to interface with the various exchange accounts they have, view their profits and losses, annotate the various transactions with helpful information, and even generate automated forms for the tax authority.
3) What are the issues with the tax laws that pertain to cryptocurrencies and the wider world of technology in the United States and other countries?
Legislators appear to be preoccupied with squeezing digital currencies into pre-existing legal frameworks, without giving much consideration to the complexities of the networks or the tokens issued on top of them. This is a broad generalisation, but the point is that legislators appear to be preoccupied with this issue. Despite the fact that the United States of America and European countries appeared to be making progress in this field in 2014, there has been very little deliberation or tax guidance offered since then, leaving investors in the dark for the most part. Expanding each regulator’s rules to talk specifically about cryptocurrencies would be a better approach, and it would also be more appropriate. Even if the authorities classify the asset as a commodity, security, property, or currency, this does not fulfil the requirements of their own guidelines. This is due to the fact that disagreements can arise between these categories, which may necessitate the involvement of the court. The confusion is detrimental to more than just the efficient implementation of regulations. It is unfortunate for those involved in the space who are attempting to behave ethically but may have unintentionally violated some arcane regulation imposed by some government agency.
4) Why is it so important to clarify the tax laws regarding cryptocurrency?
Everyone is talking about mainstream adoption, but we still have a few hurdles to overcome before we can get there. These hurdles include improving the user interface and user experience of wallets and platforms, increasing scalability, and attracting institutional investment.
However, there is no question that the absence of an appropriate legal framework is one of the most significant barriers to widespread adoption. Because of the lack of clarity surrounding the tax treatment of cryptocurrencies and tokens, many individual investors as well as businesses prefer to stay on the sidelines for fear of running afoul of applicable regulations.
5) In your experience, what kinds of oversights do you see individuals and companies making in relation to cryptocurrencies?
The blockchain provides a very accurate record of the transactions that have taken place. The most common oversight that we observe others committing is making an attempt to apply accounting principles such as FIFO or LIFO after the fact. Such trading strategies are considerations that should be made during the trading period, not during the taxation period. For the sake of precision, it is essential to use a service to back up your tax position like the one that we provide, which generates an audit trail of the activities that have actually taken place on the blockchain. If you fail to report transactions to the appropriate tax authorities in the proper manner, you are setting yourself up for future hassles.
6) Would you recommend that individuals or businesses start taking cryptocurrency as a form of payment?
The answer is going to depend on the business model. Existing payment methods, such as cash or cards, may be preferable for transactions that need to be confirmed instantly (for example, at a coffee shop). However, layer 2 solutions are currently being developed that allow for settlements to take place in a nearly instantaneous manner. There are a few examples of this, including payment channels, the lightning network, and Dash InstantSend. For companies like online businesses, where instantaneous transactions are not a priority, it is very simple to deploy something like BTCPay to accept a myriad of cryptocurrencies; this, of course, presupposes that these companies are willing to risk holding such a volatile asset. BTCPay is a cryptocurrency payment processor (though automated fiat off-ramps exist, too). The volatility of cryptocurrency makes it an unreliable unit of account, which means that balance sheets will need to be adjusted on a regular basis if they are to include digital assets. Although using cryptocurrencies to conduct transactions can be significantly less expensive than using traditional payment networks,
7) What information about cryptocurrency are executives and business owners required to have?
It is abundantly clear that they will remain. Since the first Bitcoin block was mined ten years ago, the cryptocurrency industry as a whole has seen a never-ending stream of innovation aimed at making cryptocurrencies quicker, more scalable, and simpler to use. When a country’s currency is denationalised, transaction fees are reduced, and security is returned to the owners of the funds rather than being outsourced to a third party such as a bank.
However, they are not exempt from the requirements of the law. Because of the lack of clarity in many of the regulations, it is essential to keep accurate records at all times, especially when engaging in active trading. Spreadsheets aren’t always up to the task, so if you want to keep track of the inflows and outflows of cryptocurrency-related money, as well as profits and losses, it’s highly recommended that you use software designed specifically for cryptocurrency.
Collaborate with industry professionals who are experts. As the industry develops, more and more people are specialising in various aspects of cryptocurrencies, such as accounting, taxes, legal issues, and security, amongst other areas. The leaders of businesses need to be aware of who these experts are and how to make the most of the services they provide.
8) Where do you envision NODE40 being in the next five years?
In the future, we plan to continue developing software that eliminates the monotony and uncertainty associated with tax reporting pertaining to cryptocurrencies. This software will undergo continuous improvement to take into account what we anticipate will be more targeted legislative frameworks in both the United States and other countries. We anticipate that the needs of our customers will change as a result of such legislation, and we intend for our platform to continue to be a leader in tax analytics within the sector.