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I agree if it’s part of your investment portfolio. The profit part comes when you cash it back into your default currency in order to use it or to realize the gains.

If you bought btc, used it to buy goods, and never cashed it back to usd then I think it is a currency.

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You realize gains when you use another currency to buy something. So if you exchange USD for Euro and then the price of Euro goes up by 5% then when you buy a sandwhich with that money you have to pay taxes on 5% of the price of that sandwhich. Unless you convert your USD to Euro at the time of the transaction buying things with euro can turn into a tax nightmare since you have to keep track of the exact time you purchase something to know the exact exchange rate.

If this wasn't the case you could just avoid capital gains by buying something with eulos and reselling it for usd with no profit.

In the US the taxable event generally occurs when one currency is converted back to USD, not when a non-USD currency is spent. Real-time conversions do occur and you are absolutely correct it can turn into a tax nightmare when traveling :(

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