Crypto gains, as the name suggests, are the profits generated through utilization of cryptocurrency. Whenever folks generate income through digital assets, through holding, staking etc., and increasing their earnings, they will be counted as gains from crypto.
For instance, if a folk is holding a sum of $1000 in any supposed crypto-asset which is trading at a value of $1, and within some time span, value of that crypto-asset changes to $1.5, then the total value of holdings will become $1500 (1000*1.5).
Although, there’s always uncertainty in the market, and if the value is going up, it can slip down too.
What Are Crypto Losses?
Crypto losses, as the name suggests, are the losses incurred by folks through utilization of crypto assets. Whenever individuals losses the value from their holdings via virtual assets, through holding, staking etc., and decrease their held sum, they will be included as losses from crypto.
For example, if an individual is holding a sum of any supposed digital asset which is trading at a market price of $1, and in some time, price of that cryptocurrency fell to $0.5, then the total value of holdings will become $ 500 (1000*0.5).
It is just the opposite of crypto gains.
What Are Types of And How To Calculate Crypto Gains?
Airdrop
An airdrop is an unprompted dispersion of a cryptocurrency coin or token, generally for free, to various wallet addresses. Airdrops are majorly implied in a way of luring attention and fresh followers, resulting in a massive user base, and a broader dispersion of coins.
Airdrops have been a more vital element of ICO after cryptocurrency entrepreneurs have initiated doing private sales rather than public sales to pile up initial sum.
Airdrops targets to take benefits of network effect by engaging persisting holders of a specific currency based on blockchain, like ETH or BTC in their project or currency. In the US, the application has raised policy concerns regarding tax liability and whether they amount to capital gains or income.
Whenever an airdrop is on the ground, folks can earn the tokens or coins by interacting in the project as per their terms to earn free rewards.
ALSO READ – Fears of Using Crypto to Evade Sanctions Prompts FinCEN to Alert Financial Institutions
Halving
Halving is a well-known event associated with the rewards gained from mining of the coin. Look at it in this way, in the beginning, when folks mined a Bitcoin block, they might get 1000 BTC in return, but that was a time when its value was too low as compared to its present value.
But after the halving event, which happens every 4 years in respect to BTC, its mining reward gets half. If you were getting 1000 BTC via mining a block, you’d now get 500 Bitcoins in rewards.
But here’s when the twist comes, every time halving occurs, it escalates the value of the coin by double or even more.
Profit on Holdings
This is the simplest type of crypto gain. The only thing folks need to do is acquire the crypto assets and hold them. With time it will increase (Do not follow my words, it can go down too), and as soon as it reaches the desired level, folks can withdraw their increased holdings to earn income.
Gains From NFTs
NFTs or Non-Fungible Tokens, can be best described by digital art, including paintings, audios, videos, any art you can think of digitally.
It is too easy to generate income via NFTs, folks are required to go through a simple minting process on platforms like OpenSea, and bam, there you go, your NFT is live, and as soon as someone makes a bid to it, the highest bidder will provide you the massive gains for your work.
Staking
Staking is a simple process, where the holders of the tokens need to provide their tokens or coins to a staking pool, where they are locked for a particular period of time, which will generate a passive income at regular intervals.
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational ideas only, and they do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2022/03/11/what-are-crypto-gains/