While the cryptocurrency market is entering somewhat of a bearish period at the moment, you’d be hard-pressed to find a credible analyst that believes crypto is on the way out.
With the latest round of hype dying down, the crypto industry now has the opportunity to work out the kinks and growing pains and continue to transition toward something more secure, accessible and mainstream.
In this fourth and final part of our crypto and tax series, we asked CryptoTaxCalculator co-founder Shane Brunette to offer his insight into the crypto industry and how to go about creating a successful business within it.
In this article:
Buying and selling tokens for profit is probably the first thing that springs to mind when discussing crypto-related business, but trading the market is certainly not the only option.
The crypto industry requires a plethora of secondary frameworks to function, including everything from the servers the exchanges run on, decentralised ledgers recording blockchain transactions and payment providers, to the e-commerce marketplaces and social media platforms crypto holders trade and communicate through.
The CryptoTaxCalculator is an example of one such business – while there is no direct trading or even holding of crypto by the company, it’s directly servicing the industry and the consumers within it.
Some crypto-related business options are:
- Crypto exchange
- Technology solutions provider
- Payment processor
- Digital security
- Marketing and PR
- Crypto-based marketplace
- Trade and/or index tracker
- Asset management
- Crypto ATMs
- Crypto gaming/apps
Each of these options requires different skills, knowledge and credentials to be lucrative. While this may seem overwhelming, the flipside is that just about any skillset can be tailored for the crypto space and directly trading tokens is just one of many options.
Starting any business is generally a complicated and fraught endeavour, but crypto adds layers of extra complexity.
Before you truly begin, you’ll need to ensure your conceptual company falls within the legal parameters of a crypto business, whether that be token trading, a marketplace, payment provider or gaming platform.
It’s a good idea to get legal advice on this count – many crypto investors accidentally cross over into other types of crypto trading and there can be heavy tax consequences for failing to meet your obligations.
Decide on your business model, including which web3 and blockchain technologies you wish to leverage, how you’ll create and manage liquidity on the platform and what services and products you’re going to offer.
From there you need to establish a legal business entity, with requisite registrations, accounts, permits, insurance and licences.
That’s the legal side of things. Creating a successful business requires more.
“First and foremost, you have to fully understand the crypto space and preferably have a passion for the industry,” Brunette explained.
“Obviously, this would be a plus for starting a business in any domain, but particularly in the crypto world where consumer behaviour is so different from the traditional experience.
“I think if you approach building a crypto business as you would any other, you’ll find that your strategies fall flat with your target audiences.”
The crypto industry is also rife with cutting-edge technology, complex algorithms, confusing jargon and more amateur ‘experts’ than you can throw a dogecoin at.
Cutting through the technobabble and grandstanding is a difficult task for all but the most well-informed and its knowledge you will need to run a prosperous business in the industry.
It’s a good idea to invest first and foremost in either your education or finding the right people to do the heavy lifting for you.
“You’ll need to source some good web3 developers and engineers,” Brunette advised.
“These are people who can build smart contracts from scratch, which would shape the direction of your platform’s systems design by defining high-level architecture, principles and standards.
“Essentially, without these employees, you won’t be able to build a functional product in the crypto space.”
From there, it’s important to set your business apart from the grifters and the scammers.
“It’ll take time for the industry as a whole to be viewed as legitimate but I do think we’re already partially there,” Brunette acknowledges.
“Now that crypto companies are sponsoring sporting teams, buying out national television ads, etc, the perception has started to shift.
“If you want to avoid your crypto business not being taken seriously, it’ll take both time and demonstrative effort. Outline your business offerings, deliver on your promises and listen to your users.”
So, you have your basic idea, a good understanding of where you sit legally and within the industry, the right people to get the job done and a firm grasp on what you’re promising and who you’re promising it to … but where will the industry be in five or 10 years?
While this is a question none can answer with any great certainty, there are indications crypto will continue to grow and build on its current (if volatile) success and break through to mainstream life much like the internet and e-commerce have.
“I see the whole industry growing as cryptocurrencies become more and more embedded in everyday life,” Brunette predicted when asked about the future of crypto.
“Exchanges, marketplaces, payment vendors and the like will all become more developed and easier to use, which will make the crypto onboarding process for a regular person so much more accessible.”
The idea is that as crypto becomes more ubiquitous – 28.8% of Australians already own some form of crypto as of 2021 – and integrates with more traditional business models, the anxiety associated with buying and selling blockchain tokens will fall, allowing the average household or business to take advantage of the technology for their own benefit.
“I envisage a future where people don’t see crypto as this alternative, intimidating concept – it’ll become part of everyday life, just as the internet did, just as PayPal has.
“I think most people will have some sort of cryptocurrency wallet that they use to make either real life or web3 purchases and I think many more people will be dipping their toes into the market to try to make some sort of gains.
“As traditional financial sectors continue to see instability, inflation growth and more, people are going to want to take their financial matters into their own hands and crypto is one way to do so.
“Obviously, this highlights the importance of understanding one’s tax liabilities, as crypto activity becomes more and more prevalent.
“We’ll be working hard to make sure that any cryptocurrency user can stay tax-compliant, no matter their activity.”
About Shane Brunette
A software engineer by trade, Shane Brunette created CryptoTaxCalculator after experiencing the pain of doing his taxes during the 2017 crypto boom. He holds a Master in Artificial Intelligence, as well as a double degree in Psychology and Economics.
CryptoTaxCalculator makes understanding tax obligations simple and straightforward. Its signature tools help to identify, track and organise personal crypto activity across hundreds of exchanges and blockchains, with both ease and accuracy.
CryptoTaxCalculator generates reports with added transparency, saving time and stress. It is helping investors, traders and accountants by providing clear and secure records of crypto activity.
CryptoTaxCalculator was co-founded by brothers Shane and Tim Brunette in 2018 and is headquartered in Sydney, Australia. For more information visit cryptotaxcalculator.io