The recent ascent of bitcoin and other cryptocurrencies has enriched early investors with returns more akin to the lottery than your typical bread-and-butter investment. After all, a $10,000 investment at $100 per bitcoin would currently be worth an estimated $5 million.
Of course, when an asset experiences exponential growth, it can invite some problems by way of tax exposure. Bitcoin has been called a lot of things, but the IRS views it property and not currency and taxes it accordingly. That means that all profits will be subject to short-term or long-term capital gains taxes.