The Before Times
Come tax season, most Bitcoin holders face the same nightmare. Whether it's hours spent hunting down transaction histories or wrestling with crypto platforms that just can't meet their needs, all while worrying if you've missed anything your accountant might care about.
Why is Bitcoin accounting so painful? Until recently, there were really only two options:
- Custom solution involving spreadsheets and scripts.
- Crypto accounting software.
For the privacy conscious or those with the technical chops, option 1, although laborious, is doable. But it's a lot of work and it doesn't scale well for complicated setups.
Option 2 is usually where most land, and they will choose a solution like Koinly or Bitwave. The first thing you'll notice with the crypto platforms is that they offer support for some 20,000 cryptocurrencies. There are fundamental differences between Bitcoin and other cryptocurrencies like Ethereum that make generic accounting software architecturally broken.
To start, Bitcoin has a UTXO model and Ethereum has an account model. For this reason, address reuse is common by Ethereum holders, whereas it is generally accepted in the Bitcoin community that address reuse is a bad idea for privacy reasons. Leading Bitcoin wallets like Sparrow will generate a new address for you when you want to receive. If you are an active user of Bitcoin, you will have a lot more addresses that you care about than someone that holds Ethereum. In summary, it's a real headache to locate and share all of these addresses just to find your cost basis.
With Clams, we took a radically different approach: build Bitcoin-only accounting software from the ground up. No compromises, no workarounds.
Clams is Fixing This
| Feature | Crypto Platforms | Clams |
|---|---|---|
| Onchain Support | Individual Addresses | Xpub auto-sync |
| Lightning Support | None/Basic | Native, full-featured |
| Transaction Limits | Capped at tier limits | Unlimited |
| Data Privacy | Stored on their servers | Stored on your device |
| Setup Time | Hours/days | Minutes |
| Offline Functionality | None | Excellent |
| Bitcoin Focus | 1 of 20,000+ coins | Bitcoin-only |
Onchain support
Coming from a first principles approach, Clams has native support for Extended Public Keys (Xpubs) and Descriptors. Practically speaking, you can simply "connect" your onchain wallets by pasting your Singlesig XPub and Multisig Descriptors into the app, and click sync. The app will derive your addresses, and automatically determine which have transaction history.
Here is how that looks for an Xpub connection:
This is markedly easier than locating and sharing all of your addresses across all of your wallets that have transaction history.
Lightning support
Lightning accounting problems are exactly where we first focused our efforts. As such, we have unrivaled support for LND and CLN, with more support planned for other implementations. If you run a node, you can simply generate some read-only credentials so that Clams can sync all of your transactions to your device where they will be converted to journal entries. Here is how that looks with LND:
The most popular layer two network for Bitcoin has effectively got zero support on all of the leading crypto platforms. Without proper treatment of Lightning Channels it's a non-starter.
Transaction Limits
Not only is our app built to handle millions of transactions on a beefy lightning node - it will do so with ease as all computation lives on your device. When you look at the pricing models for crypto platforms, they cap all of the tiers with transaction limits. This rules out many lightning nodes, especially those forwarding thousands of transactions.
Data Privacy
With Clams, all of your data remains private, stored locally on your device. You can opt to connect all of your wallets and generate values like cost basis and stop right there. Ultimately, you are in full control, you decide precisely what you want to share.
One of the main issues with the crypto platforms is that you have to share all of your wallet addresses, your balances, your transaction history. All of this data is now held on the servers of some company you know next to nothing about - and you have no idea if they plan to share it with anyone, monetize it or if they can protect it from being compromised in a hack. With crypto platforms, your financial data becomes their data asset. It's a privacy nightmare.
Setup Time
With Clams, once the connections are made, they are stored in the app. When you need to update your data set, just open the app and hit the sync button.
It is not uncommon to spend a weekend or more collecting all of your disparate Bitcoin data and getting it uploaded to the leading crypto platforms. This is true if you have multiple wallets and many transactions. But it is especially true of lightning node operators.
Offline Functionality
Clams is a native desktop application, and all of the data lives on your device, much of the functionality works even when you are offline. So you can do things like add labels to your transactions and generate reports, even when you do not have internet access. This is not the case with the crypto platforms, as they store all of your data on their servers. If you don't have internet, you don't have access.
Future Developments
We have thought long and hard about how to make your life easier as a Bitcoiner with respect to accounting. With a Bitcoin-only accounting approach, we are focused on giving Bitcoin the treatment it deserves.
Just as we have unrivaled support for lightning nodes, we are monitoring closely emerging payment protocols like Cashu (ecash) and Ark. We are building Clams to support any form that Bitcoin takes. We stand ready to implement dedicated support for any new payment protocol when there is significant demand for it from our users. By building for ourselves, we usually end up with what other Bitcoiners like us want too. Every decision we make prioritizes privacy, security, and performance.
Live in the Future
In many ways it is an apples to oranges comparison to compare Clams with the leading crypto accounting platforms. Clams is much more than just a tool you will log into once a year comes tax time. All of the foundations we are building will power a full suite of financial management tools. Whether it's tracking expenses with custom tags today, or potentially management of payroll in the future, we are ready to extend our feature set to meet your needs.
Download Clams today, give your Bitcoin the accounting treatment it deserves and help us out by sharing feedback.
Need help getting started? Join our Discord or reach out directly - hello@clams.tech