cryptocurrency

Will Bitcoin’s Rebound Return to Previous Heights?

May 14, 2018 By Tamila McDonald Leave a Comment

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.

Looking for more articles about Bitcoin? Give these a try:

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

May 2, 2018 By Jeff Hoyt Leave a Comment

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

April 23, 2018 By Susan Paige Leave a Comment

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?

March 10, 2018 By Susan Paige Leave a Comment

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.

When Do You Pay Taxes on Bitcoin and Other Cryptocurrency?

January 24, 2018 By Jackie Cohen 3 Comments

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, you pay the capital gains tax rate, which is lower.

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 a 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 cryto fund would be paying dividends anytime soon.)

You report this activity in Schedule D of your tax return; there you 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 and if you lose 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 privvy toinformation 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 even if you 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?

Bitcoin: Buy, Sell or Hold?

September 14, 2017 By Jackie Cohen 2 Comments

Cryptocurrency definition bitcoin buy sell hold watch Hold bitcoin from the day it began trading until now, you might have made a profit of $77,000 on an initial investment of just a dime. That’s 770,000% in seven years!

Except that by the time you read this article, the value of that profit might have moved a few grand in either direction. Or more, when you account for the fact that the currency split in two barely six weeks ago; and the still relatively new spinoff, bitcoin cash, moves all on its own — not neccessarily in any specific relationship to bitcoin.

A lot can happen to bitcoin and bitcoin cash’s value even while you sleep. Since bitcoin is a currency, it trades around the clock on weekdays. Foreign exchange traders transact on electronic networks across time zones.

But even while you’re awake, the exchange rate for bitcoin and bitcoin cash can fluctuate in value about ten times as much as the U.S. dollar does, according to Investopedia.

Why Is Bitcoin So Volatile?

Actually, volatility characterizes all cryptocurrencies — and there are now hundreds of them in existence. There’s an ironic chicken-and-egg aspect to this volatility: it limits the currencies’ appeal to investors, but relative dearth of investors in the currency keeps it volatile.

That’s not the only thing keeping it volatile, of course. Another very basic driver of the volatility has to do with the foundation of cryptocurrencies. Regulation of cryptocurrencies are a work in progress — so far, seven countries’ policymakers are on the case, and every new development in each of these countries impacts investors’ perceptions about the value of the currencies.

Another driver of the volatility: bad press coverage of the currency itself. Actually the pattern goes like this: the negative news happens, and investors trade down the value of bitcoin; the day afterward, speculators seize the oportunity to buy in at a discount.

The day this post was written was one of the latter days; the previous day, the bad news included stories about North Korea using bitcoin to evade enforcement of the U.N.’s trade sanctions, while also encouraging hacking of the bitcoins of South Koreans. Also that day, the CEO of JPMorganChase, Jamie Dimon, called the currency a fraud during a presentation at a Barclays conference. That sent bitcoin’s value plummeting, and it fell below $3,800 on Wednesday, just 24 hours after his statement.

But Isn’t It a Good Time to Buy Low?

Of course, if you have an appetitie for aggressive growth investing, you might see an opportunity to buy bitcoin at a low right now. The currency’s value is down as much as 25% from its all-time high of $5,013.91 set earlier this month.

Or you might want to keep watching and waiting for bitcoin to reach the bottom.

Today the cryptocurrency traded down 13.6% to $3,362 per dollar at 1:52 p.m. Eastern Time. Here’s what’s been sending it down today: One of the largest bitcoin exchange companies in China, BTCChina Exchange, announced this morning that it would discontinue trade at the end of September.

So, would the first day of October be a good time to buy bitcoin at a low? Perhaps — but how much appetite do you have for risk? Do you have any experience investing in options or other types of derivatives?

Indeed, the velocity that bitcoin moves at invokes comparisons with derivatives — like small-cap stock options.

One of the reasons why the value can plunge so quickly has to do with the relatively small size of cryptocurrency markets compared to other asset classes.

This is actually challenging for even professional investors to move around in. They find it difficult to take on a large position in markets of these size: Any move into or out of the currency is noticed by the rest of the market and they typically also move in the same direction. This has the result of amplifying the momentum of an upward or downward movement in the exchange rate, intensifying the volatility.

How About Buying a Small Stake and Holding?

All of this also makes cryptocurrencies challenging for novice investors to do anything other than perhaps try to make a long-term investment — or simply watch the market and learn from its development.

Otherwise, if you rush into bitcoin trading with the attitude of a day trader — intending to move around a lot — you might get hurt, or at least get vertigo.

Investing in bitcoin is not without risk. And what goes up quickly can also go down quickly. Investment professionals often compare the stock market to a casino, and the comparison also seems relevant to bitcoin. Just like there’s no way to predict where a spin of the roulette wheel will end, it’s impossible to time the market. Anyone who boasts that they can is either lying or destined to fall into the hands of regulators — although the regulators are still trying to reach an agreement on how they plan to handle cryptocurrencies.

Readers, are you curious to try your hand at investing in cryptocurrencies, or are you inclined to wait until they stabilize?