How We Built the World’s Most Easy-to-Use Cryptocurrency Tax Software
Hi there! Do you remember 2017? That year when we had the mega crypto bull run that caught everyone’s attention. Oh yeah, that year…
Today, three years later, it feels almost just like a flash from the past. It was the year when people were throwing their hard-earned money at every single new project or coin they would come across, making significant gains, and feeling invincible (myself included). It was indeed a lot of fun while it lasted, where some days you would wake up and see your $100 investment turned into $1,000, and sometimes even more, in the span of a few days.
The following year was not equally fun, though. Not only did people’s investments lose a lot of their value (including my own), but suddenly the tax man knocked on the door and required people to report and pay taxes on their crypto gains. Personally, I had thousands of transactions on multiple exchanges, invested in ICOs, and lost complete track of everywhere I had either spent or traded cryptocurrency. In fact, I didn’t even know where I had all my coins saved!
Even though the year following the 2017 bull run was in several ways very challenging, also something good came out of it: the idea for building Coinpanda.
Read on to learn more about our story and how we built Coinpanda, which today is loved by more than 7,500 crypto traders around the world, and also how we are continuously striving for being the world’s most easy-to-use cryptocurrency portfolio tracker and tax software.
How to Become an Excel Jedi
April 2018. The crypto bubble has burst, the price of bitcoin has fallen from $20,000 to nearly $6,000. My altcoin investments have lost even more value. The tax deadline is less than a month away, and I have no idea how much crypto I have sold, or even how to calculate my capital gains.
Then, from a lack of better options (and probably some desperation!), I turn to Excel and say to myself:
“Let’s just get done with this crypo tax stuff, how hard can it really be?”
Well, it turned out I could not be more wrong. A week later, my spreadsheets had so much data and complex formulas even I had trouble understanding them. Calculating and getting your crypto taxes done right is in fact very challenging, and I would argue almost impossible to do manually in a spreadsheet if you have more than a few transactions on a single exchange.
After realizing that using Excel would not be a long term solution for my crypto tax problem, I searched the Internet for other options. After spending days researching and talking to other crypto traders, and trying every single tax software for bitcoin and cryptocurrencies that already existed (not very many at that time), I came to the conclusion that there was actually no really good solution on the market.
Websites like Cointracking and Bitcoin tax provided a horrible user experience, and if you were missing some transactions these services gave basically no guidance or help to fix the problem. Even their support was not able to assist just a few weeks from the tax deadline! That was the moment I decided to develop a crypto portfolio tracker and tax software that was not only easier to use than the other websites but also enjoyable to use for both professional and casual crypto traders.
Building the First MVP
Later that year, I reached out to other people in the crypto industry to learn more about how to solve the tax problem for both traders and investors. After putting together a team of highly skilled developers with extensive knowledge and experience with cryptocurrencies, we wrote the first line of code towards the end of 2018, and launched a simple minimum viable product (MVP) in early 2019.
Our first users were ourselves and other friends for the 2019 tax season. We also posted a link to the website on some Facebook groups and forums to get any initial feedback from other users, and we were quite surprised to receive almost daily emails from people using the tool to figure out their crypto taxes in just a matter of days. This included, as expected, lots of bug reports and feature requests like integration with other exchanges, but we were also receiving lots of positive feedback from our earliest users!
Our motto has from the beginning been to deliver the most easy-to-use website and friendly user experience for tracking your crypto portfolio and generating tax reports. Here are our four core pillars which have been fundamental when building Coinpanda since day one:
- Automatic import and synchronization of transactions across ALL exchanges, wallets, and blockchains (read more about integrations)
- A user-friendly interface that everyone can understand how to use in under 10 minutes
- The most accurate and complete tax reports in the industry (read more about tax reports)
- Best-in-class support available through both email and Live Chat
We think personally that focusing on the user (yes, that’s you!) from the early beginning has been the main reason for our growth and positive feedback so far.
Since our early launch in 2019, we have been working hard every single day to improve the website and functionality, to make the overall user experience even better, and talk to our users. Our main goal is to hide the complexity of calculating capital gains, but at the same time ensuring the accuracy of the tax reports for our users so that you can spend time doing what you love instead of doing taxes (we get it, taxes are not fun!).
There are several other crypto portfolio trackers and tax solutions available today, so we have constantly a high focus on innovation and bringing new features first to the market. We think also that we have the best support team available today, and the feedback received and word-of-mouth confirms that we’re on the right track and are doing some things right.
Here are a few highlights from the Coinpanda application today:
1. Free portfolio tracker and tax preview
Our portfolio tracker is 100% free forever and lets you track your cryptocurrency portfolio performance over time and across all exchanges, and in your local currency (we support more than 50 fiat currencies). You can also see a free tax preview for each trade you ever made. Are you planning to make a trade and want to see the tax impact first? No problem!
2. Import transactions automatically from 350+ exchanges
Coinpanda has direct integration with and can import transactions automatically from more than 350+ exchanges, wallets, and blockchains today. New exchanges are added almost every week. Have you traded on an exchange or platform we don’t support yet? Send us a message in the Live Chat and we will normally add API-integration within 3-5 days.
3. Identifying internal transfers
If you have sent any cryptocurrency between two of your own exchanges or wallets (for example from Coinbase to Binance), Coinpanda will automatically detect this and show this as a single transfer instead of two separate transactions. This feature also helps you to identify missing transactions from other exchanges.
4. Correct handling of fees and costs
Did you know that you can reduce your capital gains (and therefore tax burden) by including any associated transaction costs in the cost basis? No one wants to pay more tax than they need to, that’s why we have ensured Coinpanda tracks this correctly.
5. Support for more than 65+ countries
Cryptocurrency is truly a global phenomenon, and that’s why we have built the software to be used by people from all over the world since the beginning. Tax rules differ in various countries, and so we have hired several tax experts to make sure our tax reports are according to local laws and regulations. We have support for special cost basis methods like Share Pooling (specific for United Kingdom) and Adjusted Cost Base (specific for Canada). Most other countries allow either FIFO, LIFO, HIFO, or ACB which we also support of course.
The Journey Continues
In the world of cryptocurrencies and blockchain, one day can sometimes feel like a whole month or even a year in the “normal” world. New technology, trends, and products are emerging at the speed of light, and this forces us to continue innovating every single day.
Today, our team has grown to more than 20+ people working from different parts of the world with a single goal in mind: provide crypto traders and investors with the best tool for tracking their portfolio and to ease the burden with tax reporting.
We are extremely passionate about what we are doing here at Coinpanda, and we try to make the product even better every single day. New updates and functionality are released on a weekly basis, and you can expect both relevant and educational content on our blog published regularly.
As of the time of writing this article (September 2020), it looks like we are just starting the next major bull run in the cryptocurrency world. We are extremely optimistic about the future of bitcoin, cryptocurrencies, and blockchain technology, and we look forward to all the challenges and opportunities that lie in front of us.
Any feedback (both good and bad!) is highly appreciated and can be emailed to us, or simply send us a message directly in the Live Chat.
Thank you for reading our story!
– William Carlsen, CEO and Founder
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