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What is the FIFO calculation method used in cryptocurrency trading?

avatarMD HanifDec 26, 2021 · 3 years ago3 answers

Can you explain the FIFO calculation method used in cryptocurrency trading? How does it work and why is it important?

What is the FIFO calculation method used in cryptocurrency trading?

3 answers

  • avatarDec 26, 2021 · 3 years ago
    The FIFO (First-In, First-Out) calculation method is a common accounting practice used in cryptocurrency trading. It means that the first assets you purchase are considered the first assets you sell when you make a trade. This method is important because it helps determine the cost basis of your assets and calculate your capital gains or losses accurately. FIFO ensures that you report your taxes correctly and comply with regulations. It is a fair and transparent way to track your trading activities.
  • avatarDec 26, 2021 · 3 years ago
    FIFO calculation method in cryptocurrency trading is like lining up at a buffet. The first dish you put on your plate is the first dish you eat. Similarly, the first cryptocurrency you buy is the first one you sell. It's a simple and logical way to keep track of your trades and calculate your profits or losses. FIFO is widely used because it provides a clear and consistent method for accounting purposes.
  • avatarDec 26, 2021 · 3 years ago
    BYDFi, a popular cryptocurrency exchange, follows the FIFO calculation method to ensure fair and transparent trading. FIFO helps users accurately track their trading activities and calculate their profits or losses. It is an industry-standard practice that promotes trust and compliance. BYDFi's adherence to FIFO demonstrates their commitment to providing a reliable and trustworthy trading platform for cryptocurrency enthusiasts.