It’s been a while since my last post, so I thought today would be a good time to share information on one of the projects that’s occupied a lot of our time over the past few months: our new accounting system.
As our US customers will know, we just recently passed the deadline for filing US income taxes. While BlockTrades itself is a Cayman Islands company which doesn’t get taxed, its shareholders do have to pay taxes, including taxes on profits from the company. To compute those profits as efficiently as possible, both now and in the future, we decided to create software capable of automating all the bookkeeping for our company as well as software for catching accounting problems and mistakes by third party vendors.
Unlike most companies, BlockTrades deals exclusively in cryptocurrency, not only with its customers, but also with its external contractors. BlockTrades doesn’t even maintain a bank account. In the cases where it does need to pay someone in a fiat currency, it works with an external payment agent that sells off the cryptocurrency for cash to make the final payment.
As a result, almost all incoming payments and expenses for BlockTrades are recorded in blockchain records that can be analyzed via software (except for deposits/withdrawals and trades on external exchanges, but these records can also be imported as computer records). This means that we don’t have to manually enter things like check payments into an accounting package: any payment we make or receive via any of our blockchain wallet is automatically accessible to our accounting system.
Steps to build a blockchain-based accounting system
In addition to the accounting research involved in developing our new accounting system, it also required a fair amount of software to be written. Here’s some of the software pieces we had to build:
Blockchain Scanners
The most difficult work was to develop the blockchain scanners. We needed a scanner for each blockchain we operate with in order to import transactions from the wallet into our common ledger format. This job was particularly challenging for graphene-based blockchains such as Steem and BitShares because of the large number of operations. For example, Steem not only supports payment transfers, but also author rewards, curation rewards, mining rewards, SBD to Steem conversions, and interest from SBD, just to name a few. The scanners also have to account for blockchain transaction fees. We already had partially-written scanners that are used by our trading system to recognize customer payments, but adding support for the all extra operations and converting the data to a common format was a lot of work.
Exchange record translators
A translator for each exchange we operate on, to import deposits/withdrawals and cryptocurrency trades. Different exchanges have different formats and they don’t always even supply the same data. One of the more difficult aspects of writing a translator for an exchange is to be sure you correctly account for the trading and withdrawal fees they charge.
Exchange cross-checking software
We developed software to cross-check transactions made on blockchains versus the import/deposit records from exchanges (for example, this code detects when an exchange failed to credit us for a deposit or debited us for a withdrawal that never really happened)
Code to compute balances in hot wallets for all coin types
Virtually every blockchain wallet can report the current balance in the wallet. But many blockchain wallets don’t report old balances, especially wallets that support more complex operations (e.g. BitShares, Ethereum, Steem) to name a few. But many financial calculations require the ability to report an account balance at any given time.
Mark-to-Market accounting software
Mark-to-market accounting is useful for computing trading income when you are doing large numbers of small trades like our web site performs daily. With mark-to-market accounting, instead of doing a capital gains calculation for each trade, you just compute the net value of your holdings at the beginning and ending period of time (offseting the result by any funds transferred in or out of the mark-to-market accounts). Our mark-to-market accounting code computes profit over a period by computing the value of each of the hot wallets connected to our trading site at the beginning and ending of the specified period (using the balance computation code described above to get the balance at each time point and historical pricing information for the coins) and subtracts inflows/outflows due to operating income and expenses.
Capital gains calculator
For our long term holdings, instead of doing mark-to-market accounting, we perform more traditional capital-gains based income calculations in order to defer the point at which we need to recognize income to the time at which we realize the gain by selling the asset. We developed a capital gains calculator that performs lot assignment on trades so as to minimize realized gains for trades made in our investment wallets. The capital gains calculator also computes the gains after the lot assignments are made and convert these gains into our “functional currency” for tax reporting purposes (US dollars).
Reports and Graphing code
We developed a web-based front-end to our accounting system that can show things like balances over time in coin amounts and equivalent USD value as well as daily income from different sources such as mining, delegation, etc.
Internal transaction cross-checking system
Finally, we wrote code to check all our trades from our web site versus the records in our blockchain wallets and to compute unrealized gains and cross-check our financial results against a fully mark-to-market based accounting.
Looking Forward
At this point, most of the work above is done, although we do have a few things to finish up when we get some time. It took us a long time to develop this system, but it gives us a tremendous amount of confidence in our financial reporting to have a robust system in place that’s not subject to the amount of human error involved in a standard accounting system. And while it’s not really appropriate for sale at this time since most companies still do most of their transactions via fiat payments, we will be keeping an eye out to see if there’s a point at which we may want to commercialize the software beyond our own internal usage.
I particularly admire the Exchange cross-checking software, this is because many times I've been a victim of being debited for a transaction that never really take place. My bank does this like a normal act. I even changed bank but the situation has not improved. I've had to go to the bank every now and then to submit application letters. WHAT you have done is a very ingenious act. Welldone
We actually found a few hundred thousand USD worth of crypto mistakes in favor of exchanges when we ran our accounting software over the data that we're now working on getting corrected.
The fact that you are working to get it corrected is amazing. I think facts like this build customers confidence in you. No wonder my friends have serially recommended you whenever I mention Crypto exchange.
Sincerely, with this level of transparency, you will continue to remain at the top as far as crypto is concerned , just watch.
So will people end up being refunded? Is that what you mean by working on getting corrected?
I mean our new system found outstanding transactions where we are owed funds by an exchange and we are working to get those funds paid to us.
WHat if by "people" she was asking if YOU were going to get refunded? Hah just kidding man :D you guys guyzsz at @blocktrades are the LARGEST active Steem account that actually TALKS to steem users, did you know that??? Look at the list on mysteemitfriends.online and youll see how small the list of people is and youre in the very top 10 and youre the ONLY one that really talks to people besides @thejohalfiles who is also great and talks to people directly and is even on https://steemspeak.com discord right now the oinly 24/7 steem discord with always someone on the voice chat
Click the Image Below to see the Video!
Thank you for clarifying! Awesome that you spotted the errors and will hopefully be reimbursed :)
Hey folks I executed a trade with you 17 hours ago and it has still not shown up. Any ideas?
ACTUALLY ME TOO
@blocktrades I transfered Transfer 211.344 SBD , a1d8270f-e274-4d39-a619-41a9443dbe0b . I got a failed transaction and SBD are still missing .
@penking , most informative. welldone
TRULY
TRULY, I WISH I UNDERSTAND THIS!!
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Great initiative! Your stakeholders including investors and potential auditors will be happy with the transparency in your records since it will be blockchain based. This demonstrates are great use case for blockchain based accounting applications for many other industries as well. Thanks for the information; I would love to know how this progresses as it is definitely an area of interest for me.
That's a great point: our ability to prove our finances from data on public ledgers is really a pretty radical idea in the current world where companies can easily generate opaque and outright deceptive accounting reports.
Ingenious how @blocktrades had managed to take a huge part in the steem economy. As a current SP lender, I'll be looking forward to your software updates :) Keep up the good work guys
This is great effort to produce all of it on previous month. No wonder that thr community loves using this exchange. I, myself, personally use this and recommend it to my friends. Excited to see your growth in the future. Great job @blocktrades
Seeing. This recommendation, I wish I have someone who can help me understand the flow and also assist me to grow.
I can assist you in selling STEEM or SBD but not in fiat withdrawals because it is different in every country.
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right bro
Breaking new ground in blockchain accounting. Congrats. These capabilities will become more valuable across industry verticals as blockchains begin to integrate with various systems (finance, logistics, supply tracking, ordering, asset transfer, etc.). Well done. Keep pushing the envelope.
Having previously helped write complex software for international investment banks, I am acutely aware of what it can be like to work on such projects and the amount of variables that need to be monitored and carefully processed. I attempted to use the available online tools to record my own accounts across various exchanges not so long ago and the results were not impressive at all - partially due to the same problems you highlighted in your post. Any software that carefully solves these challenges is a definite boost to the entire industry of cryptocurrency and I strongly suspect you will have a lot of potential buyers if you do offer the code as a product for wider use. :)
This is good news for blocktrades I think. It's good they're taking care of their client's tax issue as well. At least there will be no issues in the future. We know what happens when tax becomes nasty.
I got my steemit from blocktrades today lol it works! :))
Thank you for the update and providing this crucial information. Businesses looking to build with an emphasis on cryptographic assets will benefit tremendously from you blazing the trail ahead.
Wow I'm glad to have used your service with this type of strong accounting system. It's great to have this process automated because I can't calculate it myself. Let us be honest though, is the IRS really good at understanding how much crypto tax you owe? I feel there is such a grey area here.
What about your plans to add more cryptos currency
We're working on adding a new coin right now, I hope it will be available in the next week or two. We don't pre-announce the coin, however.
Not only do you provide such a simple interface and process of conducting transactions. But you are actually implementing what used to be "ideas" of how the blockchain can be used. First few steps involve communicating with and searching a blockchain seamlessly, but to actually be able to write in a process where the actual act of conducting a transaction automatically allocates taxes, dividends, expenses, obligations etc...what a time to profit and be a part of such a powerful industry.
Versión en español / Spanish version of this BlockTrades publication
https://steemit.com/blocktrades/@simnrodrguez/actualizacion-blocktrades-or-nueva-contabilidad-de-criptomonedas-steem
May I ask who blocktrades is? Are you a witness? If so what is the witness name to vote for?
As well why does it seem the exchange rate for Steem vs SBD seems a little off? Is there a certain way it is calculated at Blocktrades?
We are a witness. This is our witness account name (blocktrades).
We compute the exchange rate for SBD and Steem based on the market rate for both assets. SBD is worth over $3 USD at this moment, that could be the confusion point.
Hii today blocktrades not showing the steem in its sell option...
Are you aware of a new exchange that is about to lunch also bearing blocktrade? Blocktrade.com
It is formerly hedge. I guess this will lead to a confusion of a sort in the future especially as both of them are cryptoexchanges.
Thanks.
i used blocktrades for exchanging. blocktrades is a great projects. wish you all the best for your updates
It’s a great product. It would be nice if users could get thier blocktrades history by leaving thier username
I agree with you too.
Thank you for clarifying!
Thank you blocktrades!
So Exciting, KEEP UP THE GREAT WORK!!!
Very interesting project, BlockTrades.
good news for everybody and i still remeber that you upvote my first post , thank you for your sharing and always good luck to you and everybody.
@blocktrades its great that you are entirely fiat free. A dream goal for most of us. I really do enjoy using your exchange here on Steemit. To that end I was wondering what it would take for another cryptocurrency to be added to your list or pairs.
The coin in question is #smartcash, we have a #smartbot that tips anyone on steemit with smartcash. I have had 2 cases where the receiver had no clue how to get a #smartcash wallet (web, android and paper are available easy options).The number would be much higher when you consider the amount of smartcash tipping that happens on Steemit. I believe that if they could trade it directly for Steem or SBD there would be less chances of the help given not being useful to the end user. Thanks
I'd love to see this as a stand-alone product.
Like in my own case, I receive mining income, curation/author profits, buy into crypto from fiat, pay contractors, and rebalance my portfolio among multiple exchanges and wallets.
It's a mess from a basis perspective.
If I could input my addresses and have the cryptokeeper (you can use the name for an equity stake :)) program do all my crypto bookkeeping that would be fantastic.
What an outstanding service Blocktrades provides. .easy to use and so efficient
Thanks
This is fantastic. It actually makes for more reliable record keeping for companies. I never knew that BlockTrades was so advanced..
@blocktrades, what you guys have put together is simply amazing in it's scope. I believe you now have a software product that is going to set the standard for the future.
You didn't mention it, but does this new tool mean that you will be issuing 1099-DIV statements to your US customers? I noticed when I was putting this year's info together for my CPA that there was a question asking if I held any cryptocurrency. That was the first time I recall seeing that question.
Cheers!
this new software will make the blocktrades more transparent and safe to use, I have used many blocktrades and thank God I have never had a problem. Your service has always been fast, safe and transparent ..
Excellent work. This type of accounting and recording automation software could be extremely beneficial for business wishing to incorporate the blockchain into their systems. The Cross Checking software is definitely key to the success. I only hope the best for you.
I've been using and following to the progress of your site for a while now and it's great to see constant strides of improvement. Thanks for your dedication and time @blocktrades
Excellent. That must have taken a HUGE amount of patience and talent to get all that software created. So @blocktrades, I don't suppose you might consider checking out my Steemit community project would you? It's a good idea (I think)... I haven't tried appealing to whales 'til recently as I have been trying to get organic growth, but no luck yet. Been around Steemit for a year. Here's a link to The EN community's recent blog on Steemit: https://steemit.com/fitness/@the-en/the-en-main-exercise-center. Would really appreciate any help. Keep up your good work!
The part of Blockchain Scanners completely swept me off my feet. Like wow!!! How can just one system have all these awesomeness?
God knows that I'm in love with the word you used to describe this system: "robust". This is the very same way I'd describe it. Or how else would anyone describe such a system who has put in so much effort, strategy and finances to develop such 'checks' to ensure that all transactions carried out are safe and free from the limitations and error tendencies associated with human accounting systems?
Robust is really the right term for bloctrades and I urge you to continue with your fine works.
Recording all incoming payments and expenses in blockchain records makes blocktrades superior to any manually-operated accounting system. I think this is what has won you the respect and trust you currently enjoy in the crypto exchange market. Please keep up.
From a loyal customer
I admire the fact that you maintain no bank account yet you have never recorded any problem in funds management. This is extraordinary and trips me so much. It further butresses the already made point that blockchain technology is the best all the time.
More grease to your elbow
Good luck with the new project.
You are the engine that makes Steem and SBD move forward and I am pretty sure you will pass all these issues due to your hard work.
Keep it Up
I wish all exchanges would have this. Cudos to you and your team for having such a detailed and useful tool.
I am happy to transaction by @blocktrades. I hope your new update will be very good more. Thank your supports for us.
This post upvoted and resteem by @jareen61.
I hope your hard work will be success and you will get result very soon. This is new project.that is very good you are getting correct in account software.
All the best
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Just a thought -,
I stumbled onto you guys from a conversation i had helping @acidyo and @anomadsoul on an interface UI I am helping skin and revise for commercialization on the Steem Blockchain. After reading this post I’m quite taken by you guys. You seem to not only assist user comments and informative posts but truly take the time to respond personally and with detail, both of which helps curate organic responses that further grow this community and platform. That was my first take.
After reading through and always using the market dropdown to purchase STEEM Power instead of the “buy” after 4 months of being here i decided why am i NOT using the buy button through blocktrades and it dawned on me... as a UX / UI expert, i don’t use it because
All of these conclusions were user personas that “I” personally have felt.
Which brings me to my next ask! I have been asked by some of the developers and creators here to revise, audit and redesign improvements to their UI’s where onboarding and adoption may be lagging. I’ve been asked to help assist in improving the learning curve on interfaces and when it comes to processing terminals, encryption keys, and banking having worked for the top consultancies in the USA under The Boston Consultant Group and Deloitte building improved banking software and front end UI for their financial clients I’ve found some onboarding and adoption improvements here with blocktrades as well.
Just a thought!
Since you guys seem to be on top of things both community and organic i thought I’d offer my skill set to help rebuild the ux and ui ofyour interface to help improve the ones that are fearful to use the ui like me even.
Happy to help, and make this a 2-3 week project on the side if you guys see the value. Please reach out to me here or on discord. I’d be happy to help
There actually used to be a simpler interface to our backend api server in condenser, but it was disabled quite some time ago. I'm reasonably sure that the only way to make a simpler interface than what exists on the blocktrades web site today would be another direct integration into the steemit wallet (like the old one, but better). But we don't host condenser, so that's outside of our control at the moment.
I have considered hosting our own condenser at some point, but it's a reasonably intensive task at the moment to host a condenser if it sees a lot of traffic (which would be the whole point of hosting one of our own), so I'd prefer to wait until there's been some improvements in that area before we offer a customized version.
ah i would agree with your statement, but heres another response from that.
My intention was the just provide improved Look and Feel and better onboarding in the form of coach marks and messaging. I think If you guys let me provide a design series to help refine and redesign the existing without adjusting the functionality and just rearranging some of the layout of your interface while creating better instructions for users you'd get a much more improved engagement with your current. Im not asking to rebuild a condenser or even add fucntionality but to just overall adjust the layout you have now and improving the messaging
ive copied our conversation to your discord if youd like to take this offline to chat about etc. Honestly I might just do a reskin of your exisiting and provide you with the css doc as well just to help show you how new and improved the UI can look... IM avail all week 9-5pm pst on discord and will be at the Crypto Invest Summit in LA tomorrow if you guys are there as well.
Why Currently BLOCKTRADES.US Can not Open And Can not Swap Steem
Where Are The Obstacles @blocktrades
Thank you for the update would you considere adding other cryptos like siacoin, eos, digibyte, bitcoin gold .... for buying and selling steem, steem power or sbd !!
We're planning to add a new coin to our list in the next couple of weeks, stay tuned to this blog for an update.
Ok thank you for your effort :) this is a great news !
good information and keep going..
https://steemit.com/inspiration/@faisalina85/inspiration-today-18ab48ae135cc
Help upvote thanks
có vẻ bạn đã tính toán rất chu toàn và nhìn nhận một cách chính xác
nó giã giúp tôi hiểu được nhiều vấn đề
Well as an Accountant that I am, (Even if I publish about agriculture in steemit)
I think it's a phenomenal job that nobody has taken very seriously and with the sole fact of being taxed, that the US Government is receiving tax money from profits, and with that fact, is a great step to move to the next regulation stage of critical currency.
Well accounting, a point has struck me, in fact the ideal is to determine cut dates to pay taxes in this case a tax period that goes from January to December covering a full year,
about the different sources of information that are in critpomonedas, I think it would be like having many portfolios of coins together and what would reflect unrealized gains or losses and on that basis would not have to pay anything, for the long term as you say , but for those made there if you have to pay taxes.
an accounting system that regulates this, wow that if it is a big smoke, a sinigual development, imagine how many banks or financial institutions would like something like that, that will facilitate their internal controls, as well as how many central banks that are thinking about using Blockchain technology as a work tool for example, to carry out its operations in the Gross Settlement System in Real Time, which is its core, which could be very interested in acquiring its wonderful tool, I think you should be aiming towards that market niche , that until now there is no such tool as described, just skipped about 5 years of experience with that, so good luck and perfect it to create the potential is beautiful, and great especially for Central Banks and banking institutions in general, but also for large investment funds that will soon be eager for a tool like that.
I thought it was great.
As I say, I'm an accountant even though I have an agricultural blog, that's why I have dared to tell you about this tool that I thought was great. Imagine that you make the first financial statements about pure activity and clearly for operations of critpomonedas, that does not exist yet, or Maybe, but I still do not see it, this will be a marvel of evolution for registering a new accounting principle. You have to go to the FASB to start working in this new field of financial accounting.
Thanks for reading, sorry for the English but I use a translator I speak only Spanish.
a hug, best regard @galberto.
Greeting @blocktrades a struggle that takes a long time, and produce maximum results, this is a measure of success Cryptoccurency in the global market fore a future concept has been born global marketing world and this became a very strategic step to master the crypto market, for my incredible struggle to say to the entire team who have worked hard in preparing all the things that are most important to be enjoyed by the world community forward.
I want to ask whether SBD is the main target in Global Market Or steem to master global marketing later?
Greetings of Success to @blocktrades and all Companions
from Aceh Province Indonesia
Hi,
I just do an exchange from steem to steem dollars with a reference 00629091-df8d-4eac-b738-7b6f1d7f6d78 but i didn't receive the steem dollars.
May be you can help me to resolve this.
Thank you in advance.
If you didn't receive, please send a support request to [email protected].
already done, waiting for the response. thank you!
Without mincing words, this is one innovation that would set the crypto world ablaze.
I specifically admire the level of transparency employed in your operations. Cheers guys!
Very cute article:)