What are the differences between realized and unrealized gain/loss in the context of cryptocurrency?

3 answers

• Nov 24, 2021 · 3 years ago
  Realized gain/loss refers to the profit or loss that is actually incurred when a cryptocurrency is sold. It is the difference between the selling price and the purchase price of the asset. Unrealized gain/loss, on the other hand, represents the potential profit or loss that exists on paper but has not been realized through a sale. It is the difference between the current market value and the purchase price of the asset. In the context of cryptocurrency, these terms are used to assess the financial performance of investments and determine tax liabilities. It's important to note that unrealized gains are not subject to taxation until they are realized through a sale.
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• Nov 24, 2021 · 3 years ago
  When you sell a cryptocurrency and make a profit, that's a realized gain. It means you've actually made money from your investment. On the other hand, if the value of your cryptocurrency goes up but you haven't sold it yet, that's an unrealized gain. It's like having money in your pocket that you haven't spent. The key difference is that realized gains are concrete and can be used or reinvested, while unrealized gains are only on paper until you sell the asset. Both realized and unrealized gains are important to consider when evaluating the performance of your cryptocurrency investments.
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• Nov 24, 2021 · 3 years ago
  In the context of cryptocurrency, realized gain/loss refers to the profit or loss that is realized when you sell your cryptocurrency holdings. It is the actual gain or loss that you have made from your investment. On the other hand, unrealized gain/loss represents the potential profit or loss that you would make if you were to sell your cryptocurrency holdings at the current market price. It is important to understand the difference between realized and unrealized gain/loss as it can impact your investment strategy and tax obligations. For example, if you have realized a gain from selling your cryptocurrency, you may be subject to capital gains tax. However, if you have an unrealized gain, you are not required to pay taxes on it until you sell your holdings.
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