If you’ve invested in cryptocurrency in Georgia or are planning to, it’s important to know the mechanics of how it works. This can help you understand why a particular cryptocurrency is a good investment or not, why certain costs are charged when you make transactions, and also how the law applies to you.
Understanding cryptocurrency blockchain
A blockchain is a digital ledger of all cryptocurrency transactions that allow users to record and distribute information. It is made in a way that it is impossible to edit, hack or trick the system.
How blockchain works
Essentially, a blockchain is just a network of computers that each keep their own copy of the transaction history. When you buy or sell cryptocurrency, everyone connected to the network will see it. The computers then race to verify the transaction by solving complex mathematical puzzles (this process is called mining).
The first computer to verify the transaction broadcasts it to the rest of the network, and everyone updates their blockchain. Once this is done, your transaction will be complete, and you will get or receive your cryptocurrency.
Cryptocurrency audits in Georgia
The Georgian government has made it clear that they are not currently regulating cryptocurrencies. However, this doesn’t mean that crypto is legal tender or that there are no taxes on crypto transactions.
Income from cryptocurrency trading is considered taxable income in Georgia. If you’ve made a profit from buying and selling crypto, you should declare this on your annual tax return. Cryptocurrency mining is also subject to taxation. If you’re mining crypto as a business, you will need to pay corporate income tax on your profits.
Cryptocurrency audits occur because the government treats crypto as any other property. This means that crypto transactions will be subject to the same rules and regulations as other financial transactions.
Blockchain technology is one of the most advanced developments we’ve had when it comes to making transactions. It is still generally new, so there are still more developments to expect and also laws that would apply to it.