Cryptocurrencies in the Netherlands
Key points
- Bitcoin was the first decentralised cryptocurrency.
- How should cryptocurrencies be classified in annual accounts of businesses that use them?
- The Netherlands classified them as intangible fixed assets, inventory or other investment.
- The intent or object of the user governs which classification to use.
A cryptocurrency is a digital or virtual money that uses encryption techniques to secure and verify its transactions, to control the generation (mining) of additional currency units, and to verify the transfer of funds and thus operate independently from a centralised bank. Cryptography itself describes the practice and study of techniques for secure communication in the presence of third parties. In contrast to traditional forms of fiat money that are controlled using centralised banking systems – national currencies whose value is not tied to a commodity such as gold – cryptocurrencies use decentralised control.
Blockchain
The decentralised control of a cryptocurrency works through a blockchain. This lists records or entries, called blocks, that are linked using cryptography. In terms of accounting principles, it can be compared with a general ledger updated and accounted for by each participant (or node) though connected to a larger network, creating what is referred to as the distributed ledger. Every single node on the network processes every transaction, coming to its own conclusions, on the basis of the underlying cryptography, and then voting on those conclusions to make certain the majority agrees with the conclusions.
Once there is this consensus, the distributed
You can read the full article on the following platforms:
https://www.accountancydaily.co/cryptocurrency-and-taxation-netherlands
https://www.taxation.co.uk/Articles/cryptocurrencies-in-the-netherlands
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