Cryptocurrency tax is a hot topic these days. With the rise of Bitcoin and other digital currencies, the IRS has been paying close attention to crypto transactions. Here's what you need to know about how cryptocurrency tax works.nnFor starters, it's important to note that cryptocurrency is treated as property for tax purposes. That means that any gains or losses from selling or trading crypto are subject to capital gains tax. The good news is that long-term capital gains are taxed at a lower rate than short-term gains. So if you hold onto your crypto for more than a year before selling, you'll pay a lower tax rate on the sale.nnAnother thing to keep in mind is that you're only taxed on the gain from a sale, not on the entire amount of the sale. So if you buy one Bitcoin for £10,000 and then sell it later for £20,000, you'll only be taxed on the £10,000 gain. This is true even if you use some of the Bitcoin to buy goods or services - you're only taxed on the gain when you sell it. Lastly, it's important to keep good records of all your cryptocurrency transactions.