CryptoSpace
IRS Crypto tax AUDIT notice probes deep - Key Takeaways & next steps
What you can expect in this article?
- Deeper look at the IRS Crypto Tax Audit notice letter
- Key takeaways from this audit notice you need to know
- Why this notice shows lack of IRS’s awareness about crypto space
- Next steps if you have received the IRS Crypto Tax Audit notice
- Will you need representation if you received this IRS Crypto Tax Audit notice?
- Is using Crypto tax software catch all strategy?
An IRS Crypto tax audit notice has been circulating on Reddit. Originally posted by user Ubuntaire titled “Anyone wants to see what an IRS audit notice looks like?” has been making waves on social media.
If this is a genuine tax audit notice, the kind of detail that IRS seeks is pretty far reaching. Some of the Redditors have commented on this audit to be a ‘colonoscopy’ and ‘probe’.
The crypto tax audit notice page posted on Reddit has been replicated below.
_________________________________________________________________________
Below is the text format of the IRS Notice, find the original here.
To make Examination as brief as possible, please have the following information available:
- A copy of your 2017 tax return
Provide the following for all virtual currency transactions during the time period 01/01/2017-12/31/2017
- Detailed records for the acquisition and disposition of any virtual currency (domestic or international), including but not limited to:
o Emails, screen prints, hardcopy prints, and transaction receipts maintained by the taxpayer or provided by any third-party such as an exchange, broker, or peer-to-peer facilitator (e.g. Paxful, Localbitcoins.com)
o Wire transfer or direct deposit records, including automated clearing house (ACH) and electronic funds transfer (EFT) records.
o List of all virtual currency kiosk (i.e., BTM or cryptocurrency kiosk or ATM) locations used along with copies of any transaction receipts or acknowledgements whether provided electronically or in paper.
o A detailed list of cryptocurrency transactions involving cash including dates, input/output counterparties involved in the transaction, and the cryptocurrency involved
o All correspondence (I.e., emails, texts, tweets, etc.) with all counterparties to any virtual currency transactions
o List of all virtual currency received from hard forks, faucets, tipping, or any other method where a sale, buy, or exchange was not initiated by the receiver of cryptocurrency (commonly called airdrops), including date, type, and amount of virtual currency received with the date of sale, or other disposition, including amounts and description of what was received
o Explanation of the method used to compute basis relating to the sale or other disposition of virtual currency
o Records reflecting the valuation of any sale or other disposition of virtual currency at the time of acquisition and disposition
- Records relating to any expenses paid or items purchased (whether domestic or international) using virtual currency
- List of all blockchain addresses owned or controlled by taxpayer
- Records of all transactions relating to lending of virtual currency or use of virtual currency as collateral for loan, including, but not limited to, loan agreements, promissory notes, ledgers, transaction receipts, pledge, security, or collateralization agreements
- List of all digital currency exchanges (DCE) and peer-to-peer (P2P) facilitators (e.g., Coinbase, Paxful or Localbitcoins.com) (foreign and domestic) with associated user Ids, email addresses, IP addresses, and account numbers relating to those platforms
- List of all counterparties for any P2P virtual currency transactions (identifying the on-chain and off-chain transactions), email address, user IDs transactions.
This is not an all-inclusive list. Requests for additional information may be made if considered necessary.
_______________________________________________________________________
Key takeaways from the IRS Crypto Tax Audit notice
IRS seems to be coming hard and mighty at the folks who have either ignored to report their cryptocurrency taxes or have not reported everything. This particular IRS Crypto Tax Audit notice pertains to 2017 tax year. Let’s look at some of the key takeaways from this notice.
Emails and correspondence requested
- IRS is asking for emails, hard copy prints, transaction receipts to substantiate the information provided by you on your tax returns. If you have knowingly ignored to disclose your crypto transactions - then IRS seems to know exactly how to get your information.
Airdrops, Hardforks, faucets and tipping
- Probably one of the trickiest and most difficult of all the requests on this notice is the information about Airdrops, Hardforks, faucets and tipping information. Forget about the users keeping track of this information, it is unclear as to how IRS is going to track this information since most of the airdrops and faucet drops are probably worth nothing and they may have been long forgotten because they were worth nothing.
Even if they were worth something, it is quite difficult (or even impossible) for individuals to keep track of the number of places one would have given their wallet address to receive something.
List of blockchain addresses owned
- Creating wallet addresses is free and happens in seconds. As such, many people would have created numerous addresses on various wallets and may have never used them. As such, it is unclear why the IRS would simply ask for ALL blockchain addresses ‘controlled’ by taxpayers, instead of saying ‘blockchain addresses controlled by taxpayer with any crypto transactions’.
All in all, the language is designed to be all inclusive and being a relatively new technology - IRS covered all the known basis where a transaction history might live.
Why this notice shows lack of IRS’s awareness about crypto space?
The request shows the shortage of understanding on the IRS’s side as to how the airdrops and other rewards work. We think a think tank and revisit on certain aspects of Crypto space is required from the IRS side to develop a practical framework:
- Set de minimis to report airdrops and rewards
- For the projects that go bust or out of business should be exempt from reporting
- Proposal to Assume ‘0’ as cost basis and have reporting mandated on “sale” rather than receipt
- Open up a public access to track wallet address based transactions so that people can reconcile what they have/remember with IRS records, this will help honest taxpayers who may otherwise inadvertently miss certain transactions
Those are our thoughts on what needs to change to make these reporting requirements more sensible for an average taxpayer with average technical sophistication.
Next steps if you have received the IRS Crypto Tax Audit notice
Here are few things you should do, in our opinion:
- Put together the documents substantiating what has been reported on the tax returns
- Scour through all of your wallets and check the transactions in the relevant tax year
- Create a checklist (ideally in a spreadsheet) to track all of your wallets and related transactions
- Print out any emails, correspondence and other transaction details, and arrange them in order of occurrence (date)
- Check to see if you can hire a Crypto Tax Advisor. Here are the key things you need to look in a crypto tax advisor
- In some cases, depending on the seriousness, you might need a tax attorney to represent you to avoid complications
Is representation required if you receive this IRS Crypto Tax Audit Notice?
It is unclear as to what happens if you are unable to track down your emails or just don’t have the information about your airdrops, hard forks, faucets and tipping details. What if you have long forgotten or do not have access to those wallets anymore?
Will the IRS subpoena your emails and electronic communication?
Will the IRS subpoena your bank accounts and credit card accounts?
How long will this IRS Crypto Tax Audit take to resolve?
What implications will it have on your future taxes?
Given these and other questions that we have not yet thought of to ask, in our opinion, we think it would help to have proper legal representation when dealing with this IRS Crypto Tax Audit notice.
Is using Crypto tax software ‘catch all’ strategy?
If you have used crypto tax software, it might help you document your ‘best efforts’ in reporting the crypto transactions for taxes, however, it is not a panacea to your tax woes.
For starters, crypto tax software only picks up the transactions that you link through an API. Most crypto tax software do not pick transactions that happen from wallet to wallet outside the exchange.
If you have used the Best Crypto Tax Software and connected all of your exchanges and do not have transactions outside of these exchanges, chances are, you may not get the IRS Crypto tax notice at all.
The fact that one has received the IRS Audit notice might indicate that you have either ignored to report certain transactions or have not reported them at all.
Either way, go back and check all of your crypto transactions, keep the documentation ready.
Do NOT underestimate IRS’s ability or outreach
Even when we were mocked for suggesting to report All of your crypto transactions on your tax returns, we continued to maintain our stand.
All those social media trolls are not going to come to your rescue when IRS knocks on your door.
If you are among those who received this IRS Crypto Tax Audit Notice, do not ignore it thinking that IRS will not have the know-how or outreach, because, both of those assumptions could lead to your peril.
We don’t mean to sound apocalyptic about these affairs and our genuine hope is to encourage you to take the right action as per the law. Whether that is using a representation or doing it on your own is your choice as long as you do not simply throw this IRS Crypto Tax Audit Notice in the dustbin.
Immediate tax article references that might be of interest to you:
- Comparing Best Crypto Tax Software [2020]
- What to do if you receive IRS Letter 6173 or 6174?
- Do not ignore the Virtual currency question on 2019-Form 1040
- IRS issues tax guidance on Airdrops and Hardforks
- All you need to know about the crypto taxes in 2019
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IMPORTANT DISCLAIMER
Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.
We do not endorse or guarantee the accuracy of the information and claims made.
All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.
Devaluation of the US Dollar
What to expect in this article?
- What is devaluation of currency
- How devaluation of currency impacts us
- Strategies to hedge against the currency devaluation
There is an apparent disconnect between Wall Street and Mainstreet.
This divide has not been as apparent and blatant as it has during this COVID crisis.
As the number of unemployment claims are rising to levels never seen before, Wall Street is rallying at full swing.
In the middle of this disparity and economic unrest, some economists are warning us to brace yet another crisis called Devaluation of Currency.
What is devaluation of currency?
Devaluation of currency is essentially reducing the value of currency.
This can be done through:
- Printing more money: When supply increases, price falls. This simple economic principle applies to everything
- Policy makers decision: Policy makers may decide to ‘devalue’ the currency to keep the country’s exports competitive. The US is a heavy importer, so this strategy, if implemented, could hurt the US more than other countries
- Selling off reserves: A country could dispose its reserves that pegs the fiat and then set a new exchange rate for its own currency (the disposal of reserves to buy its own currency either by taking out of circulation or printing more)
Sometimes devaluation of currency is not voluntary.
Look at countries like Argentina, Venezuela, etc., their currency devalued by multiple folds because their economy was deemed to be unsustainable.
Why devalue the currency?
Countries devalue their currency primarily for following reasons:
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Exports
Let’s say if I export Saffron from India at 2 bottles per $1. IF India devalues its currency by 50%, now I can get 4 Saffron bottles for $1.
This drop in currency value encourages exports.
Countries like China, India and others who rely on exports (of goods and services) can reap greater economic benefit by devaluing its currency.
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Trade Buffer
When a country notices that its imports far outweigh the exports, it can use the currency devaluation as a buffer measure to balance the trade equation.
Generally speaking, a weak currency encourages people to buy more from the nation (win for exports) and discourages people buying from outside the nation (a loss for imports).
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Debt
Let’s say you owe me Indian Rupees 75,000, at the time of this writing, that would be around US$1000. Let’s say, India devalues its currency to 50%.
This means, I can still pay you back your Rs. 75,000 with $500.
While this strategy might not be great to service ‘outside’ debts that are denominated in foreign currency, it is a strategy used to service obligations within the country.
Devaluation of the USD in the wake of Yuan devaluation
The US is the number one importer in the world. It ranks number two as an exporter.
In theory, devaluation of its currency may help increase its export footprint.
However, due to recent devaluation of Chinese Yuan, the devaluation of the US dollar could work against the US, in the short term.
For one, devaluation of the US will simply equalize the impact of Chinese devaluation.
Two, it will make the imports more expensive thus might encourage demand for home products thus reducing the reliance on Chinese imports in the first place.
In addition, as things become more expensive in dollar denomination consumer demand could see a sharp decline which will further slow down the economic recovery.
Why should I be worried about devaluation?
Anyone holding their savings in the US dollars might have to pay attention to the possibility of devaluation of the US dollar.
If the US declares that it is devaluing its currency by 30% then your savings lose 30% value overnight.
In reality, the fear might set into the market and crash the valuation even further.
For example, if you were planning to retire with your $100,000 savings and the government devalues the currency by 30%, all of a sudden your $100,000 will only buy you goods and services worth $70,000.
That is a huge blow for people who have meticulously planned the mileage of their savings.
Can the US devalue its currency?
In theory, yes.
The United States has adopted a Strong Dollar policy for over 3 decades now and this gives it the status of global reserve.
If President Trump were to shock the markets to make a mark in global trade, he could order to devalue the US dollar.
If we know anything about Trump, he is all about shocking the world. So the realms of possibility of devaluing the US dollar are not out of the question.
Strategies to hedge against devaluation of currency
Lot of financial gurus and speculators are expecting the US government to use devaluation as a strategy to make good on its debt.
If this were to happen, you don’t want all of your life savings held up in the US dollar which could see a drop in its purchasing power.
Following assets have come to act as ‘hedge’ against any potential volatility in the US dollar value.
Real Estate
While the market is currently hyped up in real estate, it still could offer a safe haven in the event of devaluation of USD.
For instance, if you bought a property for $200,000 today with a fixed interest rate, in the event the US dollar is devalued to say 30%, then someone coming into the market will have to pay $260,000.
And because you have picked up the property for fixed interest, in theory, you could be paying lower interest compared to the rental costs in the post devaluation world.
This strategy may not work if the US undergoes a long recession as a result of devaluation and then falls into deflation (which will reverse the above strategy).
Bitcoin
Many financial veterans are turning to Bitcoin because of its deflationary supply and potential to change the financial markets forever.
Obviously, being a relatively new asset class, it is not a guaranteed safe-haven. Although many believe Bitcoin to be Gold 2.0.
A small stake in Bitcoin could turn into ZERO or a 10x of investment. No one knows which side the tide will turn.
Economic models based on demand and supply (and stock to flow ratio) suggest that Bitcoin has only one way to go: UP.
Bitcoin has a history of proving economic models wrong and shocking the world. Will it go upward into millions or crash and burn into oblivion?
Only time will tell.
Gold & Metals
While Bitcoin is considered money of the people and Gold has been regarded as the god’s money by Robert Kiyosaki.
Silver is considered an underdog at this point.
Between gold & silver, the metal duo has been long acting as a safe-haven for market volatilities.
Obviously, you cannot compare Gold and Silver trajectory to that of stock markets or bitcoin since these metals are designed to act as ‘hedge’ not as wealth multipliers.
Stocks
If looked at the stock market from a macro level, it has been on an upward trajectory, generally speaking.
Even with the occasional recessions and rare depressions, Stock market has in general kept an upward trend from a macro perspective.
Within the stock market, there are some up and coming industries where the returns could be extraordinarily high, like for example:
Blockchain industry: Companies involved with blockchain space could see a great momentum in the coming decade.
Cannabis industry: Cannabis industry is slowly spreading its claws and becoming
mainstream in the similar fashion how Liqor once did.
5G: Beyond the conspiracies surrounding 5G, we know that this is the next phase of the
internet evolution and
BioTech: Whether it is advancing surgeries, or reversing age with stemcell inventions or
simply decoding the DNA to make medicine more personal, BioTech is a place where the next level of innovation will take place.
Artificial Intelligence: We are clubbing Augmented Reality, Artificial Intelligence into one basket and I think this space could hand out handsome returns.
Just because we do not invest in stocks doesn’t mean they are not a viable investment vehicle. DYOR and see if you can find some gems.
Few things to remember
Do not over-correct
You do not want to find yourself in a situation where you invest 100% into any one type of asset and that asset tanks in value.
For instance, if you invest 100% of your fiat into Bitcoin, what happens if Bitcoin crashes?
If you invest 100% in real estate, what if we face deflation instead of inflation and the price tanks or paying mortgages becomes too expensive?
You will then be forced to service a loan that might be higher than the rent you receive.
Point is, you want to hedge into different asset classes so that you are not putting all of your life savings in one type.
Safety net
Whether we face extreme inflation or deflation, we all need cash on hand to meet our daily needs.
You cannot easily sell your gold or real estate if you need cash flow. Bitcoin’s volatility makes it a bad choice to be looking to liquidate in the time of emergency.
You always want to keep a certain amount of money in liquid fiat to meet your immediate needs while you secure your financial future with an appropriate hedging model.
In conclusion
The topic of devaluation of currency is one that we all need to be at least aware of.
Having an hedging plan to withstand any surprises introduced by market volatility is important so that you are not wiped away, financially speaking.
The above hedging tactics are based on what we are looking to do personally. We cannot tell you what to do.
Thank you for reading and sharing this article. We appreciate you.
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IMPORTANT DISCLAIMER
Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.
We do not endorse or guarantee the accuracy of the information and claims made.
All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.
Elrond(ERD) Token Review
Would the modern magic of internet work if we were still using dial ups? If you are from the generation that doesn’t know what a dial up means, it looks like this:
AOL Dial Up Internet Connection Sound + You’ve Got Mail (America Online) 90’s
Take a walk down memory lane and listen to the AOL (America Online) Dial-up internet connection sound and the famous You’ve Got Mail. Subscribe to Adventures…
Essentially, it would take you 30 seconds to 3 minutes to connect to the internet and open a text email.
If you were to load the YouTube website at the 56kbps speeds (considered good in those early internet days), it would take you probably 20 minutes.
We tried to load YouTube at 56 kbps speeds and after 7 minutes we were still waiting for the page to load. Compare that to the broadband that loads YouTube in a split second.
You can test what it feels to browse at 56kbps here.
While it is quite an extreme and dramatic example, I think that is the closest you can come when you try to explain what Elrond is in comparison to Ethereum.
At its current state, Ethereum processes 15 transactions. Compare that to Elrond which processed 35000 transactions during the test net run.
Obviously, the test environment is different compared to the real world.
Ethereum 2.0 could solve some of Ethereum 1.0’s flaws with claims of 100,000 to Million TPS. That is something we have to wait and see.
OK, what is Elrond?
There have been at least 100 Ethereum killers on the market since the birth of Ethereum. Ethereum (Classic) couldn’t kill Ethereum, so we are not sure others will.
Ethereum currently has serious scalability and TPS issues. Listen to this clip where Vitalik admits that Ethereum 1.0 cannot scale.
No Title
ICO prospectus: “Build scalable apps on Ethereum.” Mod: “Youre saying the concept of launching something that doesn’t scale then rebuilding it as something thats scalable was part of initial the plan.”Lubin: “We knew it wasn’t going to be scalable for sure.”Vitalik: *nods* pic.twitter.com/MBSFkQeugj
Ethereum 2.0 could be a whole another story. However, it is not a reality at the time of this writing.
Elrond on the other hand already delivers on what Ethereum 2.0 is ‘aiming’ to.
In a somewhat hyped elevator pitch, Beniamin Mincu, CEO of Elrond, said that Elrond is a 1000x improvement over other protocols in the blockchain space.
In a nutshell, Elrond offers a high throughput blockchain ecosystem that makes use of sharding that ‘scales’ (adapts) with the demand put on the network.
This adaptive sharding helps Elrond to be efficient, secure, scalable and provide a high rate of TPS.
This is why Elrond boasts itself as “A highly scalable, fast, and secure blockchain platform built for internet scale.”
What makes Elrond Special?
The strength of Elrond, in our opinion, is not in its novel or groundbreaking innovation.
It is in the simplicity of picking the ‘best’ of all the blockchain protocols that preceded and only solve the issues that these protocols failed to solve.
For instance, Elrond picks sharding from Zilliqa but makes it ‘adaptive’. It picks interoperability from Cosmos and implements it at Virtual Machine level.
Elrond says it as much in its whitepaper: “Elrond was designed upon and inspired by the ideas from Ethereum, Omniledger, Zilliqa, Algorand and ChainSpace.”
If we are to compare blockchain revolution to the internet, we have to assume that many companies will be replaced by newer solutions.
Whether Elrond is that ‘next generation’ blockchain or if it will be eaten away by another project is something we have to wait and see.
For now, let’s focus on what Elrond promises that makes it special.
“1000x improvement” over its predecessors
“Elrond is a new blockchain architecture that can bring 1000x cumulative improvement in scalability, throughput, transaction speed and transaction cost,” that is how Beniamin Mincu, CEO of Elrond, explains the project.
Scaling
Elrond promises to be able to ‘adapt’ to the scaling needs of the network. The project uses what is called ‘adaptive sharding’.
For the technically inclined, here an excerpt from the whitepaper:
“Elrond proposes a dynamically adaptive sharding mechanism that enables shard computation and reorganizing based on necessity and the number of active network nodes. The reassignment of nodes in the shards at the beginning of each epoch is progressive and nondeterministic, inducing no temporary liveness penalties.”
Sharding is the process of breaking down a big problem into small ones to solve it faster.
Security
Elrond uses a modified version of Algorand’s Secured Proof of Stake concept.
Secure Proof of Stake randomizes the ‘selection of a node’ so that security is not compromised through 51% brute force.
Elrond goes one step further on this sPoS model where it introduces ‘stake and rating’ criteria to be even eligible to be randomly picked as a node.
Adaptive sharding is the ability to scale up or down the number of shards depending on the transaction at hand.
Obviously, that is a dumbed down English explanation of it, as we understood it.
This makes selection of nodes ‘random’ while taking meritocracy into consideration.
The rating is dynamic and is recalculated at the end of each execution.
ERD Token
Many investors in the crypto space don’t care what the project does if the tokenomics are weak.
-
Transaction fees
Elrond’s utility is acting as the ‘native’ token on the network to pay for the transactions. The more transactions that take place on the network the more Elrond will gain in demand.
-
Staking
Elrond offers crazy returns on staking. This means, there is a probability that many tokens will be locked out of circulation which could boast the price.
-
DApp Deployment
Like any other blockchain network, Elrond token acts as the ‘utility’ on the DApps deployed on the network.
-
Validator reward
Validators are rewarded for their work and Elrond token is used in disbursing these rewards.
Team
Crypto space is excited about the team that is involved in the Elrond project.
Just looking at the profiles of CEO, COO and CIO showcases that you are not dealing with a group of wannabes.
The team brings in the right mix of technical prowess and business acumen.
Many blockchain projects either lack a strong technical forte or suck at running the business. Elrond may not have that problem due its ‘experience mix’.
Partnerships and Integrations
This is one project that is making a lot of buzz in the past two months, with continuous updates and partnerships. Here are a few:
ERD and Indacoin
Indacoin is a fiat gateway with over 500K users which allows users to buy crypto with Visa or Mastercard using USD, GBP, EUR and many other currencies.
ERD and dfinance
Elrond will work together with dfinance to enable users to build Elrond native assets as well as allow Elrond users to access DeFi platforms on dfinance.
ERD and LDV
ERD tokens are now available on LDV, a Romanian crypto exchange and a fiat gateway. ERD/EURO and RON/ERD pairs will be available on the platform.
ERD and Crypto.com
Users of Crypto.com can now buy ERD token on their app. Crypto.com is considered one of the easiest modes of buying and selling crypto. With deposits and withdrawals of erd token enabled on crypto.com, the token is now available for over 3 million users of crypto.com
ERD and Utrust
Elrond integrated with one of the leading payment gateway for ecommerce, Utrust.
ERD and Swipe
ERD is partnered and now available on swipe, a multi currency digital wallet. Swipe has over 500K users.
The other partnerships and integrations include Stateless Money, Staked, Moonpay, FinNexus, and many others.
Elrond is gaining traction fast and furious. Will it amass enough steam to surpass other blockchain protocols?
We have to let the time answer that question.
ERD Token Metrics
Source: Elrond
*These token metrics are about to change after the EGLD swap.
Some pump and dump chat
You will notice that Elrond is showcased on the Samsung official video introducing Samsung Blockchain.
First and foremost thing everyone is excited about is its mainnet launch.
We believe the rise in price is not just because of its mainnet launch, but also the high staking rewards that are expected to yield after the mainnet launch.
With over 5 Billion ERD tokens already staked during the testnet, it is possible that more users will stake their tokens for passive income.
Risk factors
Late to the party, not to the town!
There are a lot of blockchain platforms in the blockchain space. Many promise sun and the moon with 100K to a million transactions per second.
Most of these promises are just that as of now, promises.
Elrond is late to this TPS race, however, it could do what others have failed: Actually live up to its claims on the Main net.
In this sense, Elrond is late to the TPS party but it is not late to ‘make a mark’ for itself in the blockchain town.
More advanced projects in the space
What happens when Ethereum addresses its TPS issues, scalability aspects and makes it incredibly easy for people to launch DApps?
Ethereum already has a massive penetration in the space that it could leverage.
Beyond Ethereum, there are other projects like Zilliqa that could pose stiff competition to projects like Elrond.
And, do not forget Cardano, a project that is preparing its arsenal for a hostile takeover of the crypto space.
What is a head in Elrond’s Roadmap
Source: Elrond
Elrond Swap
ERD to eGLD
How to swap ERD
Pros of Elrond Token Swap
Cons of Elrond Token Swap
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IMPORTANT DISCLAIMER
Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.
We do not endorse or guarantee the accuracy of the information and claims made.
All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.
VIDT Review, use cases, future prediction
What follows is the byproduct of our research on whether or not V-ID is a good project.
We have a tendency to FOMO, so read everything with a grain of salt and always DYOR.
What is V-ID?
Anything digital can be altered. How then can you be confident about the authenticity of the digital files you are dealing with?
“V-ID is a blockchain powered document certification service. The VIDT API enables organisations to certify and secure their digital data against fraud and manipulation.”
You can tag digital files using V-ID and anyone around the world can verify its authenticity by simply using V-IDs free checker.
If any information is changed within the file, V-ID flags it.
This technology has an immediate use case in the real world to fight digital frauds. Especially in dealing with:
- Invoices
- Scientific papers
- Contracts
- Official documents
- Diplomas/certificates
- Data from Internet of Things
Watch this quick video to learn about V-ID.
Introduction to VIDT V-ID Blockchain Powered Validation
The V-ID validation service uses blockchain technology to end all document fraud. Our client base, with customers like Airbus Space & Defence, operates in va…
Take a simple example of purported crypto ‘recommendation reports’ that float on the internet. How do you know they are what subscribers were given?
How can you be sure that the document is not manipulated by someone to ‘alter the buy up to and sell at’ prices?
In this simple situation, using V-ID, one could verify the authenticity of the document.
In a world of Deep Fakes, a solution like V-ID can be a lifesaver.
How big is the problem that V-ID solves?
According to the Javelin Strategy report, Identity fraud cost $16.8 Billion dollars in 2019 alone.
Obviously this includes credit card and account takeover frauds. However, when a solution like V-ID becomes integrated, there is an opportunity to curb these identity thefts as well.
Fraud Detection and Prevention which was valued at $17.33 billion is expected to grow at an 18% (CAGR) rate from 2019 to 2025.
The more diverse our technology becomes with the advent of Internet of Things, Artificial Intelligence, Cloud Computing, Augmented Reality and reliance on smart mobile devices, the more we grow vulnerable to fraud.
In our opinion, the fraud space is only going to grow bigger and faster.
V-ID has an opportunity to place itself as a reliable solution by leveraging the blockchain’s resilience.
Source: V-ID
Using V-ID
Any solution’s success will depend on its ‘ease-of-use’. We tested the V-ID ‘certification’ to get a taste of the platform.
When we scanned the QR code of the document, it took us straight to the document where we could easily verify that it was indeed ‘authentic’.
The ease at which you can verify someone’s credentials, certifications, diplomas, etc., is simply awesome.
Users can verify the authenticity of other documents through their free online checker. Obviously, the company has to be signed up with V-ID for the documents to be ‘stamped’ on blockchain.
V-ID promises verification in 5 seconds. Here is a video that shows how the verification works.
VIDT V-ID verification live demo
The V-ID validation service uses blockchain technology to end all document fraud. Our client base, with customers like Airbus Space & Defence, operates in va…
All in all, the concept behind V-ID is quite simple and easy to use.
This ease of use accompanied by an amazing use case is what forms the basis for blockchain’s adoption. The tool makes you forget about the blockchain altogether.
Does V-ID need Blockchain?
Yes. We think V-ID has a blockchain use case.
When it comes to providing a hack-resistant environment and resiliency to the underlying system, blockchain really shines.
The V-ID makes use of blockchain the backend without inundating the end users with the intricacies of ‘how blockchain works’ is quite admirable.
“Currently V-ID offers anchoring in Ethereum, Bitcoin, IBM Hyperledger, Fantom, LTO Network, Digibyte and Binance Chain.”
For V-ID, in our opinion, Blockchain is not just a fancy jargon to allure people to the project but rather it is a smart technology choice to meet the business objectives.
Team
Source: VIDT
Marnix van den Berg, Founder & CEO, has over 17 years of experience. He is supported by 3 other Founders on the project.
Pim Voets is the Founder and Lead Concept Design, Ceciel van Helden is the Founder and Lead Programmer, Wico van Helden is one of the Founder.
The teams section of the website shows about 9 team members and 6 advisors, including Chris Robinson, Ex-CTO of American Express.
Just between the 4 founding members have a combined experience of over 70 years. Wico van Helden has hands-on experience in taking a company IPO.
Progress, Case-studies and traction
V-ID has been associated with many brands. They showcase few case studies on their website:
AMSPEC is using the V-ID technology to verify the authenticity of their inspection reports
How AmSpec protects data integrity with V-ID
Amspec has started to utilise V-ID blockchain validation technology to protect the authenticity of their inspection reports. This means that recipients of a …
V-ID made history by bringing 17th Century Rembrandt to the blockchain. This verification was made possible with CMS Law acting as notary, collaboration with Duowes Fine Arts and V-ID.
VIDT Rembrandt on chain - V-ID collaboration with Douwes Fine Art and CMS
For the first time, V-ID’s validation platform, known for securing digital files against manipulation, extends its activities into the physical world, by val…
V-ID is bringing certificates and diplomas onto the blockchain. To this end V-ID has collaborated with NYENRODE and HBO Drechtsteden.
V-ID successfully installed the first IBM Watson-connected IOE sensor with V-ID data anchoring.
IBM & V-ID install first IoE sensor on IBM NL headquarters’ roof
www.internetofenvironments.org
V-ID partners with Caltrix Consultancy to offer a tailored solution for any financial organisation to comply with KYC/AML challenges.
LTO Network and V-ID entered into a partnership by rolling out an immediately applicable, GDPR-compliant blockchain solution for companies and governments.
This alliance allows for any party to verify the authenticity of the diamond using the certificate, and the authenticity of the certificate using the V-ID service.
The brands with which V-ID has worked with and the diversity of the projects they have been involved in bring a lot of confidence in this project, in our opinion.
Price - Revenue Model
Companies need cash flow to sustain and grow. It is important to have a revenue plan for the company to thrive.
V-ID offers 3 different pricing options that you can see below.
Euro 2 per file may seem like a big deal but companies have the option to use the verification only for sensitive documents.
For example, on invoices or contracts, to ensure authenticity.
Challenges to consider
One of our favorite projects, ICON, also rolled out the Broof concept which helps organizations verify certification.
Blockchain projects, like ICON, with existing capabilities could potentially ‘extend’ their solutions in the verification arena. This could pose stiff competition.
The verification problem is so big that it can accommodate more than one player, however, the more players you have the more it dilutes the upside potential.
What Blockchain identity verification will not solve!
Demand for counterfeits
When all is said and done, counterfeits exist because they have market demand. Without demand a product doesn’t sustain long.
There are millions of people who want to experience luxury on budget, by choice or because of lack of choice.
The projects like V-ID cannot solve the counterfeit market for those who specifically seek them out.
However, the project does solve the ‘authenticity assurance’ demand for people who are paying the full price for the genuine product.
Market for ‘copies’
Digital products have an amazing advantage which is its major flaw and that is: it can be replicated without much effort.
If someone is deliberately seeking out for a pirated copy of something, there is so little you can do.
VIDT, Coinmarketcap and where to buy and sell?
V-ID Blockchain has its own native crypto with ticker symbol: VIDT.
We have to specify this because there is another project on coinmarketcap with VID symbol and we had few folks who seemed to be confused.
At the time of this writing, VIDT was ranked at 224.
At this time, you can buy and sell VIDT at KuCoin.
In conclusion
Blockchain finds a great ‘real-life’ business use case in V-ID.
The association of the project, even if indirectly, with big brands like IBM, AirBus and more is just a testament to the viability of this solution.
While it may be possible for other projects to try and emulate the V-ID solution, the focus and dedication of the V-ID team could put up a mighty fight, in our opinion.
Ultimately, the problem of fraud is quite big and could easily accommodate success of multiple players.
In the end, we are coming to the same opinion about V-ID that Chris Robinson, ex-CTO of American Express, did and that is “V-ID is a rare combination of 3 things — A great idea in a large and almost green space market. A company with a proven track record and real-world customers. And, finally, an exceptionally high quality team and advisors.“
Thank you for reading and sharing this article. Stay safe and healthy!
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IMPORTANT DISCLAIMER
Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.
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