If you're buying other currencies in bitcoin and sell it back to bitcoin do you report it? I would think you only report gains and losses if you sell it back to US dollars.
May depend where you live. In Canada, and I believe in the US, you have to report the equivalent gains or losses in your fiat currency every time you sell for another cryptocurrency. It's ridiculous to me, as it means many will be forced to liquidate part of their portfolio just to pay taxes. If governments let high performance investors delay the taxes while their portfolio compounds, both the investor and the government would end up with much more money in the long run.
Instead, governments chizzle away at profits each year, dramatically reducing the effect of compound interest. I calculated that if taxes were delayed for 15 years (assuming Canadian tax laws and my expectations for Blockchain sector returns), and the government took a whopping 50% of everything after 15 years, both the investor and the government would end up with 5-15x more capital than if the government took capital gains tax every year.
