This week on NVTC’s blog, John Calanog of member company CohnReznick LLP  offers an overview of Bitcoin in the first of two blog posts on the subject.


Despite the fact that there are nearly 14 million Bitcoins in circulation, most people are not using this newest form of currency. In fact, the vast majority of the population has never even heard of Bitcoin. But that is changing – and changing quickly.

This article – the first of two on this subject – offers an overview of Bitcoin. The second article will analyze a number of U.S. tax implications related to the usage of Bitcoin.

Bitcoin: A Virtual Currency

Bitcoin is, quite simply, a virtual currency. It is a digital representation of money that can be used to purchase goods and services like cash. But Bitcoin differs from cash in that it is not backed by any bank or nation, is unregulated, and has no formal organizational structure behind it. Instead, Bitcoin is supported entirely by a peer-to-peer (“P2P”) network of individuals who manage balances and transactions on their own. Bitcoin functions as an online payment platform with reduced fees when compared to other online payment forms.

In the past few years, Bitcoin values have fluctuated $247 per Bitcoin to over $1,000. As of publication of this article, the 14 million Bitcoins in circulation are worth nearly $3.5 billion.

How Does Bitcoin Work?

To create a digital currency with no centralized organization backing the transactions, Bitcoin was designed so that its users verify and complete transactions. This is done through Bitcoin’s “blockchain,” which is essentially a chronological log of every confirmed transaction that occurs between Bitcoin addresses. Using cryptography, Bitcoin creates mathematical proofs and records to secure the blockchain and safeguard a user’s transaction. These proofs are verified by users who have software that processes (“mines”) the blocks that are part of the blockchain.

The Bitcoin system transmits transactions to the network almost immediately and verifies them within the hour. The mining process helps to create the ledger of payments with Bitcoins. This also helps to ensure that double spending, or a user’s attempt to send the same Bitcoins to two people simultaneously, is prevented.  In this way, users contribute directly to Bitcoin, supporting the currency’s well-being.

Bitcoin in the Marketplace

Because Bitcoin technology is extremely complex, use of Bitcoin was originally limited to those with software expertise and a unique interest in alternative currencies. As the currency has become more widely accepted, an ecosystem of service providers has developed to facilitate transactions. Now, just about anyone can participate, even those without a technical understanding of the currency.  The ecosystem is still evolving and now includes retailers, payment processors, banks, e-wallet companies, trading solutions, and currency exchanges.

Some very well-known companies are among those that support Bitcoins. They include Microsoft, Dell, Overstock.com, Virgin Galactic, Sacramento Kings of the NBA, Amazon.com, Reddit, Expedia.com, PayPal, eBay, Tesla, Etsy Vendors, and Time, Inc. Even some professional services firms, including law firms and accounting firms, now accept Bitcoin.

How Does a Business Do Business Using Bitcoins?

To accept Bitcoins as payment, a business sets up a merchant account with a Bitcoin exchange.  From there, the business can issue invoices and receive payments in Bitcoins, convert them to dollars (or local currency), and then transfer them to its bank account.

If the business is not interested in converting Bitcoins to local currency, it can hold on to its Bitcoins and trade them. The business can register for a free online e-wallet, such as Blockchain.info. It can then give anyone its Bitcoin e-wallet address, and customers can remit Bitcoins as payment. The business has the ability to send its Bitcoins to any other e-wallets across the globe.

Bitcoin Exchanges

There are numerous Bitcoin exchanges on the web. They enable customers to convert physical currency into Bitcoins and vice versa. Increasingly, exchanges are offering a greater number of services including a range of both fiat (i.e., face value currency) and crypto-currencies, as well as various trading tools.

Bitcoin exchanges have fallen under scrutiny as one of the world’s first Bitcoin exchanges, Mt. Gox, mysteriously lost 850,000 Bitcoins. This left the exchange insolvent and many customers out-of-pocket. Many Bitcoin traders have since become wary of these exchanges, yet the exchanges continue to thrive. Four of today’s major Bitcoin exchanges include Coinbase, Bitstamp, BTC-e and Cryptsy. In January of this year, Coinbase launched the first regulated Bitcoin Exchange in the U.S in an effort to add stability to the Bitcoin ecosystem.

Looking Ahead

It appears that Bitcoin is a real and lasting game-changer. It has globalized currency with capabilities beyond our current monetary system. CohnReznick looks forward to monitoring the future impact of Bitcoin, and other virtual currencies, on businesses and the financial markets.

_________________________________________________________________________________

The content of this article is intended to provide a general commentary on the subject.  Specialist advice should be sought about your specific circumstances.

John Calanog, CPA, is a Tax Manager with CohnReznick LLP and is a member of the Firm’s Technology Industry Practice.  John’s experiences over the last fifteen years include U.S. tax compliance and consulting for C Corporations, S Corporations, Partnerships, and high net worth individuals who operate businesses in a wide variety of industries and taxing jurisdictions.  Contact John at john.calanog@cohnreznick.com. Follow CohnReznick’s Technology Practice on Twitter via @CR_TechInd

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This week on NVTC’s blog, Jim McCarthy of member company AOC Key Solutions Jim McCarthy of member company AOC Key Solutions shares suggestions for not only surviving, but also thriving amidst the occasional dysfunction in government contracting.


When you win, government contracting is among the most satisfying of careers. Unfortunately, the crucible we call a Proposal Center can, at times, degenerate into a witches’ brew of dysfunction. One where there exists a dark confluence of long hours, suboptimal working conditions, relentless deadlines, hidden agendas, political infighting, rampant egos, intractable issues, morose review teams, cranky bosses, and cold pizza. No wonder proposals sometime magnify the worst in us. But, when handled correctly, dysfunction can also spark the finest in us. Here are suggestions for not only surviving, but thriving, amidst the occasional toxicity endemic to Government Contracting.

1. Be a Part of the Solution, Government Proposals are hard enough. Commit from day one not to be part of the problem. Be part of the solution—a breath of fresh air in the war room. Offer constructive suggestions.  Be a problem solver, not a problem compounder.

2. Regard It As an Opportunity to Learn. Get metaphysical. Discern why you are going through this time of adversity and testing. What lesson are you being taught? Be open.

3. Remember the Mission. Your company is bidding an important contract. By helping it win, you help your company help others. Take solace that you are part of something worthwhile that matters.

4. Focus on Positives, Not Negatives. Radiate enthusiasm. Don’t be a black hole absorbing all light and energy from the proposal. Count continuously the things going right.

5. Help a Colleague. Make it about others, not you. Volunteer. Help those sharing the foxhole with you. Look for another person—perhaps younger than you, and commit to making him or her a success. Helping others animates even the most grueling proposal.

6. Support Your Boss. Under pressure? Imagine what confronts your leader. Help ease the hard times squeezing the boss. Be loyal. Give the boss the benefit of the doubt. Speak highly of him or her.

7. Don’t Take It Personally. Problems are endemic to life, business, and proposals. Check your ego at the reception desk. Be objective rather than internalizing the dysfunction.

8. Examine Yourself First. Before playing the blame game, reflect on how you may be part of the problem. Anger, resentment, frustration, and finger-pointing are infectious. Often, we are most critical of others in the very areas where we are weakest.

9. Change What Is Under Your Control, Accept the Rest. Stress and worry contribute not one iota to solving anything. Fix what you can. Change how you think about everything else. Shifting one’s attitude typically brings about altered behavior.

10. Watch Your Mouth.  Don’t whine, gossip, backbite, nitpick, rumor monger, second-guess, engage in character assassination, question another’s motives, or utter any comments that erode the sense of the proposal team. Don’t pour gasoline on the fire. Bad karma in a proposal center eventually dooms your efforts.

11. Take the Pause That Refreshes. As you near a crescendo or breaking point, leave. Take a walk. Grab a cup of coffee. Sit in your car. Breathe. Use a quick break to center yourself. Once renewed, rejoin the fray and redouble your efforts.

12. Maintain Work Life Balance. You cannot perform your best when you feel your worst.  Diet, exercise, spirituality, family involvement, quiet time, hobbies, reading, healthy sleep habits—first take care of yourself. Only then are you equipped for the proposal grind.

13. Set a Good Example. People are watching you. You are either a good role model or a bad one.  It really does come down to the choice you make.

14. Sweat Not the Small Stuff. And, as author Richard Carlson says on occasions, “it’s all small stuff.”

15. Invoke Your Pressure Release Mechanism.  Tamp down on the valve to discharge steam when needed.  Keep your outlook positive, not pressurized. If you don’t have a release mechanism, find one.

16.  Act Gently and Cultivate Empathy. Never pile on. Don’t tread on those are already weighed down. Lighten another’s load. Observe your teammates, allies, critics, and rivals–you may think you know what they are going through, but you don’t. Like you, everyone is on a private journey with rocky patches. Everyone stumbles—if not today, then soon. Be an encourager.

By applying these suggestions, you emerge from adversity, stronger, more resilient, and better equipped to handle the next challenge. Surely, it will come—not if, but when.


Jim McCarthy is the Founder & Principal of AOC Key Solutions, a proposal consulting firm dedicated to helping companies win government contracts. Mr. McCarthy’s career spans over 30 years of proposal development, market strategy, and oral presentation coaching to federal contractors. Learn more at www.aockeysolutions.com

 

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This week on NVTC’s blog, J. Michael Schweder, president of AT&T Mid-Atlantic, shares information on HB 1386, a measure that gives businesses and employees the ability to focus on responding quickly and efficiently during a state of emergency. AT&T is an NVTC member company.


When disaster strikes, AT&T and other companies send resources and personnel from other states to affected areas on a temporary basis, expediting efforts to clean up, restore, and repair damaged buildings, equipment, and property.
In such situations, businesses and employees can be hampered by an often slow and burdensome process of ensuring that they are in compliance with the regulatory, tax, and licensing laws of the state that needs assistance.
During declared states of emergency, the primary focus for companies is keeping customers connected and to do so safely and efficiently. Gov. Terry McAuliffe recently signed HB 1386, a measure that eliminates these obstacles and gives businesses and employees the ability to focus on responding quickly and efficiently to the needs of the Commonwealth and its citizens.
The new law eliminates any requirement for an out-of-state business or employee to register, file, and/or remit state or local taxes, or be subject to any state licensing or registration requirements, for a set period of time. Businesses and employees still will be responsible for payment of state and local sales taxes on all purchases, including food and lodging, while in the Commonwealth to address the emergency. And, employees will be responsible for all taxes owed to their home states.
The bill was the result of a bi-partisan effort. Del. Lee Ware, the patron of the bill in the House, Senator Walter Stosch, and Delegate Terry Kilgore, were integral to the successful passage of this important measure.
Virginia is the 13th state in the nation to offer this kind of flexibility to employees and their companies who help a state recover from the effects of declared emergencies.

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10 Keys to Small Business Teaming

April 20th, 2015 | Posted by Sarah Jones in Guest Blogs - (Comments Off)

This week on NVTC’s blog, Jim McCarthy of member company AOC Key Solutions shares how small businesses can gain a market foothold, offset vulnerabilities, obtain site knowledge, open doors to a larger key personnel pool, or spread risks and bid costs through teaming. McCarthy provides ten keys to developing contracting relationships.


Instances of the “lone wolf” pursuit of a government contract by a single prime contractor are vanishing. Today, multi-company teaming arrangements are more the rule than the exception. Companies now team to gain a market foothold, offset vulnerabilities, obtain site knowledge, open doors to a larger key personnel pool, or spread risks and bid costs.

For small businesses (SBs) especially, a teaming arrangement may be the most viable strategy for growth and prosperity. Too often, however, despite best efforts, SBs fail to land on a team. Or worse perhaps, lacking leverage as they cut deals with the prime that are just empty promises. What is a SB to do?

Try these 10 keys to small business teaming:

  1. Isolate on a primary need of the agency. This requires diligent research and early market intelligence.
  2. Establish a relationship with the customer with the need. Persistence and patience are paramount to gain face time.
  3. Get smarter about the need than anyone. Invest time and energy to do your homework.
  4. Devise and package a solution to meet the need. Solve the problem. Provide the features of your plan, but be sure to focus on customer benefits. Test-drive your plan with the customer.
  5. Hit the streets to spark interest. Contact every potential prime interested in the opportunity. For bait, tell the prime that you alone have the solution to the customer’s pain.
  6. Set the hook. Forecast how you can earn the prime N number of evaluation points by solving the customer’s problem. Be bold yet credible.
  7. Gain leverage. Hint at your solution — but give details only in exchange for a place on the team. But not just any place. Insist on precise terms in writing — a set scope of work (“swim lane”) with a guaranteed level of effort contingent upon contract award to your prime. Be prepared to walk. If one prime will not play ball, go to another.
  8. Offer something else value-added. Deliver a subject matter expert to help with the proposal. At no cost, prepare 100 percent compliant proposal text for your swim lane. Cover your own B&P costs. Participate for free on color review teams. Offer a candidate key person for bidding. Fund your transition costs if the team is successful.
  9. Sign your deal. Not just a handshake, but get the terms and conditions in writing. Execute non-disclosure agreements and non-competes.
  10. Deliver. Don’t forget to circle back to your original customer to inform him/her that you will be delivering your solution as part of [name of prime contractor]‘s powerful team. Then meet your commitments just as you would expect the prime to meet its promises.

There is no free lunch. Give something of value to get something of value. Appeal to the best competitive instincts of the primes. Deliver what counts: as a team member present additional evaluation points that make the difference in winning. In so doing, not only do you meet a primary need of the government, but you earn (and deserve) a legitimate place at the team table.


Jim McCarthy is the founder and principal of AOC Key Solutions, a proposal consulting firm dedicated to helping companies win government contracts. Mr. McCarthy’s career spans over 30 years of proposal development, market strategy, and oral presentation coaching to federal contractors. Learn more at www.aockeysolutions.com

For more information on what NVTC has to offer for small businesses and entrepreneurs, check out the NVTC Small Business and Entrepreneur Committee. The committee hosts various programs, including a yearly teaming and contracting event for small companies interested in government contracting. At the event, small businesses can discuss partnering or subcontracting with large companies and meet with government agencies and their small business offices from the federal, state and local level about how to do business with them. 

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