Cost basis

Cost basis is the original value assigned to an asset for tax purposes, typically what was paid to acquire it, including certain fees. For crypto, cost basis is used to work out gains or losses when the asset is later sold, exchanged, or spent. Different accounting methods, such as first-in-first-out, can produce different results, and rules vary by jurisdiction.

A common misconception is that cost basis only matters when converting to fiat; in many places, trading one crypto asset for another can also be a taxable event requiring cost-basis tracking. This entry is educational and not tax advice.