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Identities are valuable and we suck at managing them!

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Can Blockchain Rescue our Identity from the Digital Abyss?

Identities are valuable and we suck at managing them! Our modern identity management systems are currently in crisis and it seems this is really just the status quo, but does it need to be?

It doesn’t take a lot of digging online to quickly find reasons why identity safety is such a paramount issue. Tools like Have i been pwned? show a range of concerning examples of major institutional breaches that have leaked millions of personal data files. The centralization of identity databases, both physical and digital, is creating these inevitable fail points that are eroding the systemic value of our personal data.

There’s a clear problem facing identity that will only become worse as data management systems painfully try to scale to the demand. The good news is there’s hope blockchain can be of assistance. The unfortunate part is that it is still of course very early, making the problem substantially more clear than the solution.

Identities are valuable and we suck at managing them!

Why is identity management a problem?

To understand why identity security is a problem it seems vital to first understand why our identity has value. The value of identity can be seen in a number of ways in our lives, acting as the proof of membership to our various organizations or facilitating the creation of value while we sign on the dotted line opening a new gateway of credit. Our Identity has value because it holds the power to both create wealth and prove our membership, whether for good or not.

Identities are valuable and we suck at managing them.

The problem with identity security then is that this massively powerful asset is being left vulnerable around every corner; a problem for the individual and the institutions that serve us. Individually, we need better awareness and education on the value of our identities and especially how to protect ourselves as we move deeper into the digital world. Institutionally, centralized identity management systems are just not working. There’s a demand for identity infrastructure that can withstand the inevitable scaling of members while protecting against the more classic issues around itself like fungibility and centralizing points of failure.

On the shortlist banking, health care, social welfare programs, online services, land registry, credit scoring, immigration documentation, vehicle registrations, weapons licensing, hunting registries, voting eligibility and birth certification to name a few.

Centralizing identity hurts us all, but hurts some more than others

Among the mountains of issues and challenges facing identity management, there have been a couple of themes in particular that have percolated to the top. Firstly, you would likely have to been living under a rock to not be at least aware that our data isn’t safe anymore in the custody of other organizations. Shocking headlines are being written about substantial new hacks on a recurring basis and digital companies continue to build business models circulating around the collection and curation of customer data.

The centralization of our personal information is a problem for both the physical storage systems and their digital versions alike. For those systems still dependant on paper and ink, the obvious issues face them as natural disasters increase worldwide and ideological shifts create radical movements of populations. These paper system of identity are often warehoused and instituted from brick and mortar locations with few redundancies in place creating substantial vulnerabilities.

In addition to the issues surrounding the storage of our identities, the explosion of data collection and digital marketing has brought on new challenges to the topic. Data collection and the business models that are built around it create a demand for our personal identity on a level that far outpaced the analog data collection space previously.

The competition in the marketplace for high-quality personal information is fierce and the current trend is a profitable one. Many tech businesses are mining for our personal identities and their motives range from creating competitive advantages within their own products to bundling and leveraging the data into income. However, no matter the motivations, as the data pool of identity information grows, the competition in the market for this valuable resource will push their mining efforts deeper into our lives to better knows us intimately.

Despite the best efforts of those most interested, the infallibility of these storage systems tasked with the safety of our personal identities has remained unreachable. There is a need for infrastructure that can be built and managed which brings us closer to the pursuit of total security surrounding our identity.

It is likely unsurprising that those who are most affected by this issue are the populations and persons who are already most vulnerable for a suite of reasons; political, economic, natural, or otherwise. Strong identity systems are in high demand as we reach the highest point of human displacement on record and central points of authority are shaken with volatility

It is seemingly fair to say that the issues surrounding identity management affect everyone directly and otherwise. However, the weaknesses of centralized data storage and the volatility of identity security for vulnerable populations are two especially poignant themes that have potential to find some relief from the healing powers of the blockchain.

Can Blockchain solve this?

Fungibility and mutability: These two concepts, fungibility, and mutability are very much linked to the core meaning and value of identity. For identity to work and provide value it needs to be invulnerable to duplication and have no potential to be altered on either the individual level of the holder or on a collective scale where the data is stored and held.

To be non-fungible means that only one of its kind can exist; think of collectible cards like Magic the Gathering or O-Pee-Chee baseball cards. And like any other scarce valuable the individuality of it is important and is corrupted by imposters or duplications. Non-fungible identities could be a huge help in many areas that they act as a gatekeeper, for example, it would make it that much harder to access underage drinking when the duplicate I.D. market drys up on campuses everywhere. More seriously, the non-fungibility of identity could also help prevent issues on a higher level of passport fraud the and abuse of social services such as healthcare or education.

Similarly, the potential immutability of blockchain can be a massive asset for data storage and management. An identity on an immutable blockchain would mean it is safeguarded from malicious changes or even destruction, both retroactively and not. An identity which is unchangeable has a host of benefits which protect both the users from the system and the system from the user.

Decentralization doesn’t solve all the problems, but it’s a great start

The idea of decentralization as a security measure is pretty simple, it has no single point of failure. Identity has rarely, if ever, been afforded this feature of true longevity protected against all of the traditional ailments that are afflicting personal data storage presently. Decentralization returns the control and value of our identity back to the individual instead of predominantly benefiting the various custodians our information is housed by.

Civic is a great example of a use case which is providing blockchain solutions to both sides of the personal data swap market. Civic has leveraged blockchain to allow users to hold and retain ownership of their identity data and removes the need for companies and organizations to centralize and compromise our identities. To really unravel how and why tech like Civic is promising, dive into our beginner’s guide to blockchain identity verification.

In addition to creative solutions for the personal data marketplace, blockchain’s decentralized format is well suited to help foster new solutions to the crisis surrounding identity management in vulnerable populations. Recently, blockchain has found utility in refugee situations, like that in Jordan’s Zaatari refugee camp, where biometric technology linked with blockchain identity data management is being harnessed by the World Food Program and their Building Blocks initiative.

Building Blocks by the WFP aims to use “blockchain as a means of making cash transfers more efficient, transparent and secure” and in doing so, return the ownership of a refugees financial and personal identity back to them.

Blockchain projects circling around the better storage and management of identity are in their undeniable infancy. But the early signs seem to be pointing towards a positive and useful fit for blockchain as the demand continues to proliferate. Blockchain solutions to identity are going to be slow to roll out as merging and replacing legacy infrastructure is a tremendous task that currently has a little platform to launch from. Massive areas and vulnerable populations are not well positioned to be aided by a digital technology that relies so heavily on electricity and the internet.

Wrapping Up

The value of our identity is on a rise and currently, the storage systems that safeguard it are buckling as they attempt to scale. Furthermore, trusting our identity to others is quickly eroding and there is a palpable demand for new solutions to identity management that requires massive shifts in the way we think about identity and how we evaluate it. We can look to blockchain for hope but the truth is that it is still incredibly early to say how it can best help and where.

CoinCentral’s owners, writers, and/or guest post authors may or may not have a vested interest in any of the above projects and businesses. None of the content on CoinCentral is investment advice nor is it a replacement for advice from a certified financial planner.

Marshall Taylor

Marshall has had a colourful background in Sociology and Marketing Design where he worked for the last half decade energetically crafting and engineering the consumer decision process. His interest and drive for DLT is motivated by how it affects people and especially those who need it most.
This article is originally published at Coincentral.com

Cryptocurrency Tax in a Nutshell

A new year has arrived! For cryptocurrency investors, that means hope for another year of growth in virtual currency markets. Unfortunately, however, it also means we need to get ready to pay taxes on our cryptocurrency profits from 2017.

Most of us have made our resolutions and decided on our aspirations for 2018, but few of us are looking forward to filing our tax returns. But being prepared is half the battle, so now is the time to begin tax planning.

It’s always a good idea to consult with a Certified Public Accountant (“CPA”) when you’re preparing your tax returns. A good CPA can help you avoid tax liability by managing your assets in a smart way. However, your regular accountant probably isn’t up to speed on the evolving landscape of cryptocurrency tax policies. If you’ve invested in Bitcoin or other virtual currencies, contact a trained cryptocurrency accountant to make sure you’re prepared for tax season.

Bitcoin accepted at Brosda and Bentley Miami Realtors

Cryptocurrency Taxes 101: What to Know Come Tax Season

Cryptocurrencies may have started off on the fringes of the internet, but now it’s a pretty mainstream investment.  Bitcoin futures are traded on the Chicago exchanges, and large institutional investors are setting up virtual currency trading desks. As cryptocurrency has become more and more popular, the Internal Revenue Service (“IRS”) has refined the details of its policies regarding tax collection and reporting requirements.

The IRS treats Bitcoin and other virtual currencies as capital assets because they are convertible into cash. So, like other capital assets, cryptocurrencies are subject to the capital gains rules. These rules apply to taxpayers who buy and sell cryptocurrencies for investment purposes, as well as people who spend virtual currencies on goods and services.

Just like other capital assets, your tax rate depends on how long you held them before you sold them, as well as the price you bought in and the price you sold out. If your capital losses on your cryptocurrency investments exceed your capital gains, you can claim the loss as a deduction on your income tax returns up to $3,000.

When you’re figuring out how to properly report your cryptocurrency gains on your 2018 income tax return, start by finding out your cost basis. Your basis is the cost you actually paid for a virtual currency when you purchased it, adjusted for any related costs. This means you can deduct commissions related to the cryptocurrency purchase, such as the percentage that Coinbase takes out of every exchange. Notably, however the cost basis for your cryptocurrency investments does not include investment-related fees. Fees accrued for cryptocurrency trades in 2017 must be listed separately on a Schedule A form attached to your returns, assuming you itemize your deductions.

When you purchase a cryptocurrency, you’ve established your cost basis. However, the asset is not actually taxed until you sell it. This is when you “realize” your gains or losses on the investment. So, if you bought Bitcoin at $12,000 and sell it for $13,000, your realized gain is $1,000 even if it dips below your initial purchase price at some time in between. Sounds simple enough, right? Unfortunately not.

When it Comes to Cryptocurrency, Things Get Complicated Quickly

Unlike stocks, which are straightforward buy-and-sell transactions, pretty much any disposition of virtual currency assets is a taxable event. Tax liability is triggered when you trade your cryptocurrency for cash or other virtual currencies or whenever it’s used to purchase goods or services. Depending on your investment and spending habits, this can make things complicated.

Contrary to the popular belief – and wishful thinking – of many cryptocurrency investors, cashing out of your cryptocurrency investments isn’t the only taxable event in the lifespan of your investment. For example, if you make a purchase using Bitcoin on Overstock.com, this is a transaction subject to capital gains tax. Tax liability also arises when you trade one virtual currency for another, which is an almost daily occurrence among the more courageous cryptocurrency investors.

Also, because the IRS doesn’t impose the same third-party reporting requirements for virtual currencies as other more highly-regulated assets, you won’t get a Form 1099 from your exchange, client, or employer at the end of the year. This means you won’t get an official report of your cryptocurrency income. Rather, it’s your responsibility as the investor’s to properly report your virtual currency gains and losses. There is very little official guidance from the IRS on virtual currency reporting requirements, so consulting with a trained cryptocurrency accountant this tax season is a very wise choice.

Federal Tax Reform Impacts Cryptocurrency Taxes

If you ask any accountant about the impacts of the 2018 tax reforms, you will likely get an exasperated sigh in response. Cryptocurrency tax policy is pretty vague as is, and adding the complexities of major tax reform only makes things even more complicated. While the full impact of the federal tax reform remains to be seen, there are a few policies that definitely impact virtual currency investors.

The recent federal tax reform changed the rules of the game for many cryptocurrency investors. For example, starting in 2018, you can no longer include cryptocurrency-related fees in your itemized deductions on your personal income tax return. This deduction is still allowed for businesses, however. The 2018 tax reforms also change the capital gains tax rates, which may greatly impact your investment decisions. Holding on to your cryptocurrency assets for another few months may save you – or cost you –  thousands of dollars on your federal income tax returns.

A skilled cryptocurrency accountant can help you plan for the upcoming changes in the federal tax code, especially as they pertain to your virtual currency wallet. If you bought or sold cryptocurrencies in 2017 – or if you’ve thus far failed to report your cryptocurrency investments from prior rules – it’s a good idea to discuss your investments with a CPA that understands the ins-and-outs of cryptocurrency tax policies.

“This article is originally published at Coincentral.com

CoinCentral’s owners, writers, and/or guest post authors may or may not have a vested interest in any of the above projects and businesses. None of the content on CoinCentral is investment advice nor is it a replacement for advice from a certified financial planner.

Mario Costanz

Mario Costanz is a lifelong entrepreneur and has had built and sold a number of successful businesses in the internet, restaurant, real estate, and income tax preparation industry. He was named to the “One to Watch” section of Accounting Today’s 2017 Top 100 Most Influential in Accounting List. More information and contact can be found at https://CryptoTaxPrep.com and https://linkedin.com/in/mariocostanz.

How Miami Real Estate Will be Revolutionized on the Blockchain

Blockchain Real Estate Is Coming Sooner Than You Think

Blockchain real estate transactions, records, and marketplaces could radically change the way we think about property. Current systems for tracking and trading real estate are disjointed and inefficient. There’s an enormous opportunity for blockchain to standardize and secure real estate data. Land records, property listings, leases and mortgages, and government property tax offices could all benefit from a blockchain real estate revolution.

The challenge, of course, is that real estate is an enormous industry with many players including lenders, brokers, local governments, and private citizens. Changing to a blockchain-based real estate system isn’t as simple as flipping a switch. That said, various parties are experimenting with blockchain all along the real estate value chain to find ways to integrate the new technology.

Land Records

Land records are the foundation of real estate. Titles and deeds make it clear who owns what property. They power everything else that happens in real estate. However, they’re highly fragmented. Each individual local jurisdiction has its own rules regarding property records. Sometimes, these records aren’t even available online.

All that is changing. Chicago’s Cook County ran a pilot project for land records starting in 2016 that digitized all information and tested blockchain solutions. South Burlington, Vermont launched a similar pilot project in January 2018. Sweden recently implemented the second phase of its transition to blockchain land registry, using smart contracts on a private blockchain to facilitate transactions. That project will save Swedish taxpayers an estimated $100 million per year when it comes to full fruition.

Once we have property records listed and secured on the blockchain, it opens a lot of doors. Now, those records can easily change hands. We can use smart contracts to manage and trade those records as well.

Property Listings

Right now, if you want to sell a piece of property, your best bet is to list it with a local real estate agent. Sure, you could list the property for sale by owner, but you don’t have access to the multiple listing service (MLS) that real estate agents use to search for property when they have a new buyer.

The MLS is notoriously fragmented, walled off, and difficult to understand. Transferring property listings to the blockchain would mean opening up access to all available property for anyone to review. Along with the listing, you could include any terms or conditions that would need to be met for a successful sale. In the future, shopping for a home or an office space could be as simple as visiting an e-commerce website and adding the property to your shopping cart. Smart contracts behind the scenes could handle the rest of the transaction–transferring funds in exchange for the blockchain title to the property.

Smart Contract Property Management

One of the most exciting applications of blockchain real estate is smart contract management. Currently, any real estate transaction requires mountains of paperwork and hours of coordination between the bank, broker, seller, buyer, and local government. It’s possible to imagine a world where smart contracts handle most of that burden.

Not only that, but what if smart contracts handled rental agreements, commercial real estate tenancy, and other ongoing types of real estate transactions. Smart contracts could also help brokers automate due diligence on potential buyers/lessees. Blockchain real estate could create trust between parties on a level that doesn’t currently exist.

Crowd Ownership & Investing

Another exciting idea in blockchain real estate is crowd ownership of property. With blockchain governance models, a group of people could come together to purchase property and then vote on decisions about what to do with that property. Participants would essentially own a share of the property that they could then sell at any time.

Taken a step further, real estate investment trusts (REITs) and other real estate development investment vehicles could benefit from lower overhead as a result of blockchain.

What Happens to Realtors & Brokers?

The real estate industry is slow to change, and that won’t be any different with the blockchain transition. The truth is lenders, insurers, and other parties make a lot of money off the inefficiencies and challenges of navigating the current system. Blockchain poses a serious threat to these administrative and regulatory companies.

That said, there will always be a role for realtors and brokers in real estate. Even with blockchain real estate, people will want to see the homes or offices they’re considering purchasing. They’ll still need the help of an expert in the field to navigate such a large transaction and make sure the physical asset they’re purchasing is in good shape. Even if the transaction is much simpler and quicker, buyers will always need an expert guide.

Conclusion

Many trends in real estate are changing at the same time. Housing prices in cities are skyrocketing. Homeownership among young people is down. Brick and mortar retail is facing a threat from online shopping. Our neighborhoods are changing around us, and blockchain real estate is poised to become part of and accelerate that change.

CoinCentral’s owners, writers, and/or guest post authors may or may not have a vested interest in any of the above projects and businesses. None of the content on CoinCentral is investment advice nor is it a replacement for advice from a certified financial planner.

How Miami Real Estate Will be Revolutionized on the Blockchain

Bennett Garner

Bennett is an editor at Coin Central and technology writer specializing in blockchain, software development, and AI writing. Visit Bennett’s personal website to learn more about him and read more of his writing.

Katerina Brosda

Katerina Brosda
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