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What The Facebook Libra Means For Bitcoin Trading

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Facebook Libra

Many people were wondering whether or not bitcoin was on its way out as fast as it had made its appearance. The cryptocurrency fell below $4,000 for much of 2018. However, earlier this week, bitcoin rose over $14,000. All of this stemmed from Mark Zuckerberg’s announcement that his social media website would soon introduce its own cryptocurrency: the Facebook Libra.

About The Facebook Libra

That’s right – Facebook announced it would be dipping its toes in cryptocurrency. The Facebook Libra, as the currency will be called, will be used to send payment via Messenger, WhatsApp, and several other third-party apps.

This isn’t the first time Facebook has dabbled in digital payment. Folks in the United States have been able to send money through the Messenger app since 2015. Facebook in France and the United Kingdom began a similar service in 2017.  So, why develop Facebook Libra?

Facebook founder and CEO Mark Zuckerberg wants Facebook to expand this option on an international basis. With the Libra, you’ll be able to send money to anyone anywhere, even if they don’t have a bank account. Additionally, those advertising on the site will be able to sell items and collect payments directly through their ads.

Before you start converting to the Libra, you should know a few things.

  1. Facebook Libra is fairly stable. While bitcoin has been unstable, the Libra will be tied to bank accounts and government securities. As long as international currency remains stable, so will the Libra.
  2. The currency will not be controlled by Facebook. The social media site isn’t known for its security, and it knows that. So, the company has partnered with larger names in finance, like Visa, to make the Libra a success.
  3. It could be an easy way to pay (if it works). There is no telling if the Libra will actually work or take off. However, if it does, it could be one of the easiest, fastest ways to pay online.

Facebook Libra vs. Bitcoin

The Facebook Libra has not yet been released, but there are some pieces of information that allow us to compare it to other forms of digital currency. When it comes to the Libra vs. Bitcoin, these are the main differences…

  1. Facebook, WhatsApp, and other Facebook properties will be where you can use the digital currency at first. With bitcoin, you can pay for just about anything (just about anywhere). Libra payments may also be accepted at websites within the Libra Association (a group of companies working with Facebook on the Libra). That has not been confirmed yet though.
  2. Where the Libra is used is completely under the control of Facebook. On the other hand, bitcoin is deregulated. In some cases, it has been used to purchase black market items.
  3. Libra is also much more centralized, meaning more people have a say in what happens with it than bitcoin. The Libra Association is projected to grow to 100 members by the end of 2020 and each member will have a say in the currency’s evolution. In bitcoin blockchain, if you own 51% or more, you have the final say.

Facebook Libra

The Rise and Fall of Bitcoin

As mentioned above, bitcoin skyrocketed this week when the mention of the Facebook Libra was made. Many people were surprised by this because bitcoin has been called a “bubble” in the past, meaning eventually it would burst and longer carry any value.

Even though it did drop in value last year (hovering around $4,000), interest in digital currency seems to continue to drive bitcoin up. Not to mention, any time there is any mention of a trade war or other political issues that may cause a decline in value of a currency, people tend to look to bitcoin as a safety net.

The rise this week can be partially attributed to the announcement of the Libra but can be tied to other occurrences as well. China and the U.S. are also in the middle of a trade war. Bitcoin is an easy way to get money in and out of China during this time.

On top of that, the Democratic Party continues to suggest a wealth tax. Presidential candidate Elizabeth Warren has proposed a 2 percent wealth tax. This may increase the desire for having bitcoin in your wallet because cryptocurrency is able to be held outside the reach of tax authorities.

Consider Currency Risk Before Investing

Before you go converting your money to the Facebook Libra, bitcoin, or any other form of digital currency, be sure to do your research. There are a number of reasons to be skeptical about investing in bitcoin.

The most important of these reasons seems to be that none of the cryptocurrencies on the market are safe. Each of them carries some type of risk. As we’ve seen with Bitcoin, the value of the currency can swing drastically in one way or the other, losing you thousands of dollars. This is possible with Facebook Libra as well. If international currency rates drop, Libra owners could lose up to 10 percent.

The risk would only cease to be a factor if you did all of your transactions in Facebook Libra, bitcoin, or other cryptocurrencies. But to eliminate that risk, you’d have to get rid of every other type of currency, which just isn’t likely to happen.

Readers, what do you think about the Facebook Libra? Would you use it?

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When Do You Pay Taxes on Bitcoin and Other Cryptocurrency?

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pay taxes on bitcoin

Taxation of bitcoin and other cryptocurrencies is pretty similar to the way you pay taxes on any other type of investment. And regulators are slowly but surely making it harder and harder to evade this type of tax.

You pay capital gains taxes when you sell a cryptocurrency like Bitcoin, whether you harvest into dollars or any other currency.

If you had held the cryptocurrency for less than a year, the sale is taxable as income tax; hold it for more than a year before selling it, and you pay the capital gains tax rate, which is lower.

How to Pay Taxes on Bitcoin

The only thing related to cryptocurrency that you need to report to the Internal Revenue Service concerns sales of cryptocurrency into any other currency you get to declare a loss or gain.

(If you own any cryptocurrency funds and they paid dividends, you’d have to pay taxes on those dividends but it’s highly unlikely that a crypto fund would  be paying dividends anytime soon.)

You report this activity in Schedule D of your tax return. Input the difference between what you paid for the currency and what you sold it for. If you made money, it’s a capital gain. If you lost money, it’s a capital loss.

The IRS Always Knows

Like it or not, the IRS will eventually get wind of your crypto trading profits, as it is now privy to information from any U.S. exchange you might have transacted on; the agency essentially won the right to this data in court in November.

Spare yourself the interest and penalties you might end up owing from attempting to not report capital gains on cryptocurrencies. The IRS typically takes at least six months to catch up on nonpayments, so you’ll end up owing extra money as interest or penalties.

And even if you did a cryptocurrency transaction on a site that is not based in the U.S., and move the funds into a currency other than the dollar, these sites aren’t immune to the tax treaties that the IRS has already been brokering with foreign countries.

It might take longer for the IRS to obtain information on activities on foreign sites, but eventually, the prevailing trend in the IRS’ fact-finding will play out here as well.

Although cryptocurrencies’ origins included a lack of real taxation on them — and policies to support that — slowly but surely regulators around the world are making it harder for people to dodge this type of tax.

For more information on how the IRS handles cryptocurrencies, click here.

Readers, are you still confused about whether there are taxes on bitcoin or other cryptocurrencies?

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Will Bitcoin’s Rebound Return to Previous Heights?

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<img src="will bitcoin continue to rise.jpg" alt”numerousbitcoins">

Bitcoin is rallying again: Over the past few weeks, the value has risen from below $6,700 in April to just shy of the $10,000 mark. However, it still has a long way to go to reach the high of more than $19,000 reached in December. The question now is: Will Bitcoin continue to rise?

Will Bitcoin Continue to Rise?

To understand whether Bitcoin will continue to rise, you first need to know why it fell so dramatically in the first place.

Over the past year or so, the cryptocurrency landscape changed. Countries began exploring regulations, and banks began restricting the use of credit cards to purchase cryptocurrencies.

Overall, these developments harmed Bitcoin and other cryptocurrencies that are available today. But then things turned around more recently with some positive events that sent the value back up again.

Positive Developments

Among the more significant of them, Goldman Sachs stated it was working on setting up a desk for cryptocurrency trading.

Regulators have also required cryptocurrency exchanges to register with entities like the Securities Exchange Commission, which provides stability and increases confidence among investors.

Intercontinental Exchange, which owns the New York Stock Exchange, is also working on a trading platform for cryptocurrencies, representing a significant step forward for the industry.

Ultimately, Bitcoin’s value is a reflection of supply and demand. And when investors’ confidence in the currency goes up, that usually brings up demand too. If all of these trends continue, Bitcoin just return to its previous highs.

But Are Bitcoin Investments Safe?

Even though Bitcoin is recovering, that doesn’t take away any of the risks. Cryptocurrencies are still relatively new, and there’s a lot yet to be worked out. For example, further regulation changes could hurt the market.

Similarly, some other types of cryptocurrencies have turned out to be scams, and this hurts the overall perception of them, impacting demand for Bitcoin.

Additionally, it’s important to remember that Bitcoin and other cryptocurrencies still aren’t backed by a government or a physical commodity. Without that backing, if prices tumble and the cryptocurrency fails, you lose your money, and there’s no way to recover it.

In the end, Bitcoin is still a very high-risk investment.

So Is Now the Time to Invest in Bitcoin?

If you’re comfortable with the risk, then now may be a good time to invest in Bitcoin. However, it shouldn’t be the only thing you invest in.

Committing your entire retirement savings to cryptocurrencies would be incredibly dangerous. It wouldn’t be unlike taking all of that money and heading to a casino.

But, there is some potential. If you have a bit money to spare and aren’t afraid to lose it all, then you could have a lot to gain if Bitcoin keeps going up.

Just make sure to be smart about how much you invest, because it could all be gone in an instant.

Readers, have you been curious about investing in cryptocurrencies? Tell us about it in the comments section beneath this post.

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Can You Put Cryptocurrency in Your IRA? Study Shows Interest.

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Cryptocurrency And Retirement New Study Shows Interest in These Volatile New Investments

How’s your 401(k) or IRA doing? A typical 401(k) plan returns from 5% to 8% based on a portfolio of 60% stocks and 40% bonds and other conservative investments. If your retirement plan is not meeting expectations, you may be tempted by the high returns of cryptocurrencies like Bitcoin – but should you be wary of incorporating cryptocurrency into your account?

A recent survey by the retirement planning platform Auctus suggests that people are increasingly intrigued by cryptocurrencies.

While only 6% of respondents were willing to consider using cryptocurrencies in their retirement plans, another 14% were interested in the concept but not certain that Bitcoin or similar vehicles were right for them.

Roller Coaster Ride

Given the exceptional roller coaster ride of Bitcoin, who could blame investors for being interested? Consider that Bitcoin closed January 2017 at just below $1,000. By mid-December 2017, Bitcoin peaked over $19,300. By February 5, 2018, the price dropped below $7,000.

Few investments grow by a factor of 19 in less than a year. Not many investments lose over 60% of their value in two months’ time, either.

Retirement accounts are designed to balance returns and risk, with the balance shifting toward lower risk investments as you near retirement. Bitcoin and other cryptocurrencies are on the far end of the spectrum – high risk, high reward. Can you tolerate the potential risk?

Put Them in an IRA

Let’s assume you want to forge ahead with a cryptocurrency investment. Retirement account fund rules don’t allow you to purchase cryptocurrencies directly and transfer them to an IRA or 401(k) account.

You will either have to create a self-directed IRA that allows you to set up your own investment, or invest in the Bitcoin Investment Trust that owns Bitcoins on the behalf of its investors.

Both approaches come with hefty fees compared to other investments. In addition, most of the self-directed IRA custodians will require that you have another company make the cryptocurrency purchases for you or create a legal entity such as an LLC that allows you to invest directly. Consider these issues as you make your investment decision.

Existing Exchanges

You always have the option to buy and sell Bitcoin through the existing exchanges and keep it in a taxable account separate from your retirement accounts.

Since virtual currencies are considered to be property, they are taxed at the lower capital gains tax rate – so there can be tax advantages to this approach.

Cryptocurrencies in retirement funds may make sense in a few cases. If you are young and can afford to recover from any significant losses, why not try to take advantage of a sharp rise in Bitcoin or similar investment? Keep your purchases below 10% of your portfolio – less if you can’t deal with the potential risk.

Risk Factors

Meanwhile, if you are nearing retirement and can’t possibly catch up with a conventional portfolio, you can try for a “Hail Mary” with a Bitcoin investment – but understand that you will be in even worse shape if your purchase is mistimed. What are your retirement options if the investment fails?

Keep risk in perspective and fit any Bitcoin purchases into the small number of high-risk components of your portfolio.

If you are investing in one of the Bitcoin alternatives such as Ethereum, Litecoin, or Ripple, make sure you investigate the program just as you would any stock investment. Understand the risks and growth assumptions.

For most of us, cryptocurrencies are like a trip to a casino. Don’t invest any more in cryptocurrencies than you can afford to lose – and few of us can afford to lose retirement account funds.

Regardless of where you plan to retire, the number one factor in ensuring that you can retire on your terms is your 401(k).

This article was provided by our partners at moneytips.com. Photo ©iStockphoto.com/5432action

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Anonymous Crypto Exchanges

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anonymous cryptocurrency exchanges

Demand for decentralized crypto exchanges seems to be on the rise. Governments around the world are cracking down on centralized exchanges and demanding that they enforce anti-money laundering rules. Most exchanges feel threatened and some have already started closing down.

A lot of crypto traders are also against the idea of governments regulating exchanges, and they are looking for alternatives. Decentralized exchanges seem to be an ideal option for many traders who want to trade anonymously. However, there are also several centralized exchanges that require no registration or verification of any kind. Here is an overview of the most private crypto exchanges and how they operate.

Peer to Peer Exchanges- Buy in Cash

The easiest way to buy bitcoins anonymously is to use cash. Access a website like Localbitcoins.com and look for a customer willing to buy bitcoins in cash within your locality. Local Bitcoins holds the coins in an escrow account until the seller confirms they have received the payment. Since you will be using cash and trading with a stranger, none of your personal details will be used anywhere. However, keep in mind that buying or selling Bitcoins with cash has several limitations:

  • Safety- how much cash can you carry when meeting a stranger? Buying bitcoins is not safe, especially where large sums of money is involved
  • Liquidity- in most P2P exchanges, traders sell low amounts of coins. On Localbitcoins, for example, it’s hard to find someone willing to buy more than 50 Bitcoins
  • Trust-buying cryptos on P2P exchanges means you have to trust other traders to honor their side of the deal, and this doesn’t always happen

Centralized Anonymous Exchanges

Some cryptocurrency exchanges offer a great deal of anonymity when trading on them. Take ShapeShift, for example. The exchange is owned by Erik Voorhess, an American. ShapeShift works as an altcoin exchange that can be used as an API on a wallet, as an app or as a web-based exchange. ShapeShift offers one of the easiest ways to trade coins while keeping you anonymous.

To use the exchange:

  • Visit ShapeShift
  • Select the cryptocurrency in your wallet
  • Select the altcoin you want your cryptos exchanged to
  • Enter the amount of cryptos you need exchanges and appropriate wallet addresses
  • Visit your personal wallet and initiate the payment to an address provided by ShapeShift
  • Expect to receive your converted coins within hours

Flyp.me

Flyp.me is one of the most private exchanges. Like ShapeShift, this exchange is owned by someone. However, it’s designed in such a way that you control your trading activities. You hold your cryptos in a personal wallet and only use the exchange to buy and sell altcoins. You don’t need an account or verification of any kind.

Thanks to its focus on giving your privacy when trading, there is little chance of you losing cryptos to the exchange. Flpy.me can’t suspend your account because you don’t need one. In the unlikely case, the exchange gets hacked, you still wouldn’t lose your cryptos because they don’t store cryptos for you. The only issue you would have trading on the exchange is delayed payments, like when the Bitcoin blockchain is overloaded.

Changelly

Changelly and ShapeShift go hand in hand. They work in the same way, allowing you to exchange altcoins instantly with no verification needed. Like ShapeShift, Changelly can be accessed online, on apps or on their partnering crypto wallets and sites. The only difference between Changelly and ShapeShift is their owners. While Erik Voorhees own ShapeShift, Changelly is owned by MinerGate, a mining pool for Bitcoins.

Changelly also asks for registration; an email address where a password is sent to help you secure your account. Other than that, there is no verification required even when buying cryptos using fiat on the exchange. Using Changelly works in more or less the same way as on ShapeShift.

Decentralized Exchanges

In the spirit of decentralization, some exchanges allow traders to participate in managing the exchange through computer nodes installed in different parts of the world. This way, decentralized exchanges cannot be regulated or be required to enforce anti-money laundering rules. They don’t require users to create accounts or give in any form of personal information.

Traders on decentralized exchange trade with utmost anonymity. Despite this, however, decentralized exchanges have issues as well. Some exchanges are often criticized for poor management. Because the exchanges are still involved in the trading process, poor management of poorly programmed codes can affect efficient trading on the exchange.

BitShares

BitShares is a popular decentralized exchange built on a blockchain-graphene. The exchange requires users to create a simple account but no further verification is required. The exchange ranks 83rd on Coinmarketcap.com and has a daily trading volume of $7.7 million. BitShares lists a wide range of cryptos as well and allows trading with fiat currency. Keep in mind, however, that verification may be required when buying large amounts of Bitcoins using fiat.

Etherdelta

Etherdelta was among the most popular decentralized crypto exchanges in 2016 and 2017. The exchange was designed to cater for Ethereum and ERC-20 token traders. It’s built with smart contracts and the ethereum blockchain in mind. While Etherdelta allows you to make trades while remaining anonymous, it’s affected by all issues currently facing decentralized exchange.

  • Slow trades- Trades on decentralized exchanges have to go through blockchains, and this can take hours for a trade to be completed
  • Not user-friendly- many decentralized exchanges are not easy to use, at least not to beginners
  • Possibility to make mistakes- due to lack of ease of use to beginners, a lot of traders make mistakes when trading, often losing their funds
  • High Fees- most decentralized exchanges offer higher than average fees, which can be inconvenient to low-volume traders
  • Most decentralized exchanges are dependent on the Ethereum blockchain. If anything happens to Ethereum, it may affect a lot of trading on decentralized exchanges.
  • Low Liquidity- since decentralized exchanges are still a new thing, they have low liquidity compared to other types of trading platforms

What’s the Best Exchange with great anonymity? It’s difficult to decide the best exchange. If you want to trade cryptos anonymously, you have to research more and make the choice on your own. However, keep in mind that a centralized anonymous exchange like Binance or Flyp.me will be easier to use than a decentralized exchange.

The Cryptocurrency Business: Investment Option or the Next Bubble?

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cryptocurrency
The business of cryptocurrencies has been increasing during the last years, creating a universe around them, with a large number of products. There are different types of virtual currencies and they all start from different values. To this day, and studying their behavior, some experts consider them the currencies of the future.

What are cryptocurrencies?

It is a digital means of exchange. That is, buying and selling. The first of its kind was the Bitcoin that was born in 2009 and since then other virtual coins of different value have appeared.

How is the operation of cryptocurrencies?

This monetary system guarantees the security and integrity of the statement of accounts of its value through agents that verify it. These agents protect the value of a cryptocurrency to keep your rate high. Therefore, breaking the security of these currencies is practically impossible. The agents that protect them are professional IT professionals who work to maintain their security. For example, if someone wanted to break this barrier, they would need an operational capacity superior or similar to that of Google.

The cryptocurrency business allows you to save on intermediaries when you want to carry out an operation

There are notable differences between this type of currency and the payment through Paypal. While it is true that they all have their virtual environment in common there are also some differences. For example, the payment with Paypal requires that the process is done through private networks of banks. In contrast, payments with cryptocurrencies do not need intermediaries. Your income goes directly from the buyer to the seller.

The benefits of the operation of cryptocurrencies are:

– Reduce transaction costs.
– Reduce management time. The settlements are made automatically.
– It does not require a financial agent to review the good conduct of the operations.

Bitcoin, the best-known one

Bitcoin is the best-known electronic currency so far. It is a coin without owners. Acts in a decentralized manner it is a cryptocurrency that is produced by people and companies that are dedicated to mining resources (the famous “cryptocurrency miners”, who are not humans but machines). The agents that work to create them use a security system that makes their forgery impossible.

Other characteristics of bitcoin are that its transactions are irreversible and that in its realization the identity is not made public, therefore it can be operated while maintaining privacy.

The cryptocurrency market never stops. The price of its value is in constant movement so specific traders are needed to control its value. If you are someone who wants to take risks in price fluctuations of a commodity then bitcoin (or other cryptocurrencies) is an area that suits you.

You need to know the best cryptocurrency exchanges before joining the business world of cryptocurrency. Maybe you should spend a lot of time researching but you will get a good result then. But if you do not pay investment time before investing in cryptocurrency then you might be stuck in the wrong investment.