*It can be an inflation hedge. History has shown numerous examples of centrally administered fiat currencies losing their value resulting in the loss of purchasing power, which is why BTC's creators capped its supply. Inflation has not been an issue in developed countries until only relatively recently, as of 2022. More time will be needed to see if inflation lingers and whether BTC's role as an inflation hedge is as viable as originally envisioned. If you need cash urgently, using your digital assets as collateral for loans can be a reasonable solution. When you sell Bitcoin to cover expenses, you forego potential gains, especially if the current price is low. But if you borrow cash against Bitcoin, you get fiat for your everyday needs and keep the potential of your crypto holdings. A8. Your basis also known as your “cost basis” is the amount you spent to acquire the virtual currency, including fees, commissions and other acquisition costs in U.S. dollars. Your adjusted basis is your basis increased by certain expenditures and decreased by certain deductions or credits in U.S. dollars. For more information on basis, see Publication 551, Basis of Assets.