The price of Bitcoin next week? Nomics might have a clue
The price of bitcoin goes up and down, and where it will be tomorrow nobody knows. But Boston-based Nomics is fine-tuning its price predictions—with machine learning.
The company, which provides cryptocurrency market cap and pricing data, today added seven-day price predictions to its website and market data API. The data aggregator generates cryptocurrency price predictions using machine learning.
Retail investors can access the price predictions on the firm’s website for free. Nomics charges a fee to users—primarily institutions, funds, exchanges, and fin-tech apps—who access its data programmatically. But CEO Clay Collins cautioned that the predictions are not intended as investment advice.
“We are not saying buy or sell,” he told Decrypt. “We are simply showing what our machine learning models predict it will be. And they should be used as one of several factors to inform opinions about future price movements.”
As Collins explained, there are many factors the model can’t account for. For example, there could be some catastrophic or bullish event, such as if a large exchange were to get hacked or the security of a popular blockchain were to get compromised, he said.
That’s why the company includes a 30-day mean error in its price predictions, so a user can see how close or far off the predictions have been in the preceding weeks. “There are times when we are on, and times when we are off,” Collins said. “We just wanted to be totally transparent, and people should take that into consideration.”
Machine learning is a breed of artificial intelligence that allows computers to learn without explicitly being programmed. Specifically, Nomics uses a type of model known as long short-term memory, or LSTM.
The model is trained with data from the Nomics’s API, which pulls in granular historic trading data from a number of cryptocurrency exchanges. Once the model returns predictions, those are fed to the Nomics.com platform along with historical error data. The goal is for models to become more accurate over time. “The more data we feed the model, the more time elapses, the better these models get,” said Collins.
Nomics, which launched in late 2018, is backed by notable investors such as Coinbase Ventures and Digital Currency Group. It has $3 million in funding to date.
Six people are currently working at the company, and “I’m the only one who is not a developer,” Collins said. “We did hire a consultant to take a look at what we were doing. But at the end of the day, the judge of the performance is the historical performance.”
Collins believes machine learning will increasingly be layered on top of crypto market data, and financial data in general, to spot fake volume, wash trading, and to make informed predictions about the future. “Today, we’re taking our first step towards using machine learning to elucidate crypto data trends,” he said.
Author: Decrypt / Amy Castor
Council Post: Did You Receive A 1099 From Your Cryptocurrency Exchange? Here’s Why It’s Useless
Some of the most prominent cryptocurrency exchanges issue a specific type of 1099, known as form 1099-K, to qualifying customers. If you’re an active cryptocurrency investor, you may have received one of these in the mail or electronically. A 1099-K is very different from the customary 1099-B you would receive from a typical stock brokerage detailing your investing activity. In my work as the co-founder of a cryptocurrency tax platform, I’ve found that from a tax reporting perspective, 1099-K is useless. This is because it does not help the taxpayer report their capital gains and losses from cryptocurrency investing activity.
What’s the purpose of a 1099?
All 1099 forms serve the same general purpose: to report certain types of nonemployment-related income to the IRS. Form 1099-K is no different in this regard, and cryptocurrency exchanges send out two copies of the form: one to the qualifying customer, and one to the IRS. This gives the IRS information on who has cryptocurrency-related income that should be getting reported on their tax return.
So what’s the problem?
The fundamental problem is 1099-K does not report gains and losses to the customer; it only reports gross proceeds. The gross proceeds figure is the total amount you have transacted on an exchange in U.S. dollars. However, when it comes to completing your taxes, gross proceeds do not matter — gains and losses do.
In other words, a 1099-K form will not help you with your cryptocurrency capital gains and losses tax reporting. But yes, it will alert the government that you have crypto-related income that needs to be reported.
Why can’t my exchange give me a 1099-B instead?
This would definitely make tax reporting easier for consumers. Unfortunately, exchanges fundamentally do not have the ability to give their users complete and accurate 1099-B forms.
Why is this? Simply put, cryptocurrency exchanges do not always have the cost basis information for your cryptocurrency transactions (buys, sells, trades). Your cost basis is simply the amount it cost you to acquire the asset. If you paid $5,000 for 1 bitcoin, your cost basis in that bitcoin is $5,000. Cost basis information is needed to issue a complete 1099-B. Cryptocurrency exchanges, and all crypto-native companies, can’t report cost basis information because of the transferability that exists with cryptocurrencies like bitcoin.
For example, I can send my bitcoin that I bought on one exchange to a different wallet for storage. From that wallet, I can send it to a different cryptocurrency exchange to sell any time I want. These types of transfers happen all the time, and they make it impossible for any single crypto exchange or company to know the cost basis of a user’s assets at any given time.
This is the fundamental reason crypto exchanges struggle to give out 1099-Bs: They don’t have the complete cost basis information. This is also why cryptocurrency exchanges are fundamentally different from typical stock brokerages, which usually have all cost basis information on hand.
What’s the solution?
The solution to this capital gains and losses tax reporting problem is for crypto investors to simply aggregate their transactions from all of their cryptocurrency exchanges and platforms into one unit of record. When the data from all platforms is in one location, cost basis information can be tracked — even in spite of the transfers.
These market dynamics have fueled entrepreneurs to develop cryptocurrency tax software companies in an effort to tackle and solve this problem. Cryptocurrency investors can choose from a variety of tax software options and then leverage their chosen software to import all of their transactions across all of the platforms where they buy, sell and store crypto. They can then generate necessary capital gains and losses tax reports based on this data.
Will future 1099 requirements be passed by the IRS?
There is little doubt that the IRS will be passing future 1099 information reporting requirements. Cryptocurrency exchanges will be forced to adhere to these future requirements if they wish to continue operating within the U.S. market. It is my hope that the IRS will take its time to truly understand how the fundamentals of cryptocurrency work before it passes any legislation.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
Author: David Kemmerer
Bitcoin Cryptocurrency Exchange News | BestBitcoinExchange
Tether isn’t used in pumping the price of Bitcoin (BTC) and other cryptocurrencies, a new research claims. A much-publicized paper released in 2018 had sparked controversy and heated debate over the use of Tether (USDT) and its correlation to Bitcoin price pumps. According to John Griffin of the University of Texas and Amin Shams of more info…
Crypto markets are in the red as global stocks look to recover following a historic drop in oil prices. U.S. oil prices are picking an upside Tuesday after they sank below $0 on Monday. It left crude futures holders staring at unprecedented losses. Earlier, prices changed nearly $40 to spell some hope. But a slight more info…
Ethereum (ETH) has seen its daily value transfer figures equal Bitcoin (BTC)’s, analytics data shows. Ethereum’s daily value transfer has risen significantly in 2020. As per blockchain research and analytics firm Messari, the top altcoin established parity with Bitcoin on April 12. Daily average transactions on the leading altcoin’s platform reached about $1.5 billion, figures more info…
Bitcoin halving is one of the most highly anticipated events in the Bitcoin (BTC) calendar. According to Google Trends, search queries for the term “bitcoin halving” has spiked tremendously over the last couple of months. Analytic data from the website available April 14 shows that community interest has surged, 16% higher than witnessed in the more info…
Fidelity Digital Assets’ customers to benefit from ErisX’s spot market Fidelity Digital Assets has boosted its crypto trading product, tapping the ErisX exchange to improve its liquidity. The two platforms confirmed the move on Thursday, with Fidelity Digital Assets tweeting that the collaboration expands access to digital assets. “Our trading capabilities and breadth of liquidity more info…
Twitter CEO Jack Dorsey has donated $1 billion to be used in the fight against the COVID-19 pandemic. Dorsey, also the founder of payments platform Square, said the money is to come from his shares in Square. As per a tweet he posted Tuesday, the $1 billion amounts to about 28% of his wealth. Explaining more info…
Investing is speculative. When investing your capital is at risk. This site is not intended for use in jurisdictions in which the trading or investments described are prohibited and should only be used by such persons and in such ways as are legally permitted. Your investment may not qualify for investor protection in your country or state of residence, so please conduct your own due diligence. This website is free for you to use but we may receive commission from the companies we feature on this site. Click here for more information.