CoinTracker tracks taxes for cryptocurrencies — and correlations between crypto holdings

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CoinTracker started out as a portfolio & tax manager for cryptocurrency investors, and now it has published aggregated data across its 50,000 connected crypto exchange accounts and $300 million worth of tracked cryptoassets. The company recently raised $1.5 million.

The Y Combinator-backed company grew up with the Bitcoin and Ethereum crazes, as the company learned how to calculate taxes for investors who had gains — and probably losses this year — and created a quick-look dashboard where investors could see their crypto portfolios all at once.

Jon Lerner and Chandan Lodha, who previously worked at Google, started the company in September 2017. In partnership with data visualization shop Stamen, CoinTracker has aggregated data across all its users to highlight the correlations between each pair of top 100 coins.

“We have a coin correlation matrix for each of top 100 coins,” Lodha said in an interview with VentureBeat. “If you own coin x, what is the probability you own coin y? We can calculate that.”

CoinTracker’s tax product is for anyone who has had a taxable crypto event and needs to file. Most exchanges don’t even provide basic tax information, and the few that do can’t accurately tell consumers this information unless they have a holistic view of all transactions across all wallets and exchanges, Lodha said.

CoinTracker solves this problem, often saving users tens or even hundreds of hours of manual spreadsheet reconciliation.

“For your crypto holdings, you can put them all into a unified dashboard,” Lodha said. “We give you visualizations. It’s all free. You can see how your portfolio looks. If we calculate your taxes, that is a paid product. We take your unified ledger and calculates your capital gains and print out the IRS 8949 capital gains form.”

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The product supports more than 2,500 coins, and it auto-syncs for 17 of the top exchanges. CoinTracker has also previously raised $1.5 million led by Initialized Capital, which was the first seed investor in Coinbase, and other investors including Juan Benet, CEO of Protocol Labs.

Above: CoinTracker’s correlations between various cryptocurrencies.

Image Credit: CoinTracker

Lerner cofounded and was chief technology officer of TextNow, while Lodha was a product manager at Google, most recently working on Project Loon at Google.

As hobbyist crypto investors, they found themselves with several coins in multiple wallets, but they had no idea how their performance fared, let what their cost basis and capital gains were.

They started building a spreadsheet system, until this got more and more complex with Google apps scripts and API calls to various coin aggregators. Eventually, it was taking two minutes to load the actual spreadsheet page. They built a simple minimum viable product and launched it in a few early crypto communities online. That simple version grew into what became CoinTracker, with more full-fledged auto-syncing across exchanges.

“We think the world will be a better place with an open financial system. Blockchains and cryptocurrencies are already beginning to pave this path, and we want to help accelerate that change,” Lodha said. “We can’t have an open financial system if it is too difficult to use, or restricted to certain groups. Therefore, we have a simple mission: make crypto accessible.”

Other investors include Kindred Ventures, Signature Fund, Ryan Shea (cofounder, Blockstack), Zach Peret (cofounder and CEO, Plaid), William Hockey (cofounder and CTO, Plaid), and Brenden Mulligan (cofounder, LaunchKit), and a few others. This is in addition to Y Combinator.

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“CoinTracker is one of the smartest teams we’ve met focused on making cryptocurrencies accessible to everyone,” said Garry Tan, a managing partner at Initialized Capital, in a statement. “The No. 1 challenge in the space is user experience, so it’s always great to meet folks who have the deep empathy to bring a technology to millions of people.”

CoinTracker syncs crypto transactions and balances from the top exchanges and wallets to deliver a unified dashboard of your cryptocurrency portfolio performance. CoinTracker also help users calculate their cryptocurrency taxes in the United States, Australia, Canada, and the United Kingdom.

Lodha said that individual user data is kept private on CoinTracker. But the company has gleaned trends from aggregate anonymized data from 40,000 users on its platform.

Among the trends, Lodha said users choose to bet on multiple projects in the same space. If a user bets on the smaller project (by market cap), then they are much more likely to also have bet on the larger protocol as well. This intuitively makes sense as larger market cap projects typically have more visibility, lower perceived risk, and therefore more holders. For instance, 25 percent of Bitcoin holders also own Bitcoin cash, while 86 percent of Bitcoin cash holders also hold Bitcoin.

Source: VentureBeat

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