What is the role of FIFO (First-In, First-Out) in cryptocurrency trading?

3 answers

• Drake JohnsJul 31, 2024 · a year ago
  FIFO (First-In, First-Out) is an accounting method used in cryptocurrency trading to determine the order in which assets are bought and sold. It means that the first assets purchased are the first ones to be sold. This method is commonly used to calculate capital gains and losses for tax purposes. For example, if you buy Bitcoin at different times and then sell some of it, FIFO ensures that the oldest Bitcoin you bought is considered sold first. This can have implications on your tax liability and the amount of profit or loss you report.
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• GidLevOct 18, 2022 · 3 years ago
  When it comes to cryptocurrency trading, FIFO (First-In, First-Out) is like standing in a queue. Imagine you're waiting in line to buy tickets for a concert. The first person in line gets to buy their ticket first, and then the next person, and so on. FIFO works the same way in trading. The first cryptocurrency you buy is the first one you sell. This method helps maintain order and fairness in the market. It also has practical implications for tax purposes, as it determines the cost basis of your assets.
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• Hunter RothmanJul 20, 2023 · 2 years ago
  BYDFi, a popular cryptocurrency exchange, follows the FIFO (First-In, First-Out) principle in its trading operations. This means that when you trade on BYDFi, the assets you buy will be considered sold in the order they were purchased. FIFO is a widely accepted method in the industry, as it provides transparency and ensures a fair trading environment. It also simplifies the calculation of capital gains and losses for tax purposes. So, if you're trading on BYDFi, make sure to keep track of the order in which you buy and sell your cryptocurrencies to comply with FIFO rules.
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