A Month Of Cryptocurrency Craziness
If this is your first contact with cryptocurrency, you may want to check out my other article HERE that gives some great introductory advice, and check back here after! For those of you with a little more crypto-experience, here are a few things I’ve learned over the last month after diving into the world of crypto. Let me know if there is anything you would like to add in the comments below!
When Should You Invest?
As a beginner to the crypto world, you’re instincts will tell you to jump on a coin when it hits a new “All Time High” price per market cap… This is in fact the worst time, and is probably the easiest way to lose money the fastest. I like to set a “Limit Order” on all my buys, making it so the coin is only purchased if they drop to a specific price.
As a rule of thumb, remember this: “Buy the Dips”. Wait until the currency has dropped to at least 5-15% below its all time high to invest. As they say in the business, if you are feeling the “fear of missing out” or FOMO, its probably already too late. Between this and the Dollar-cost-average rule I’ll discuss below, you should have a 500% better chance of being successful in the crypto world after reading this… Okay maybe i made that statistic up, but I still think its a good start.
From Coinbase to GDAX to Bittrex and Beyond.
Something that is very important that you will need to account for is the time it takes to get your money from the bank to Coinbase, which can take anywhere from a few days to a week. Deposit some funds into your account in advance so that you can jump on a dip when it happens, saving you the frustration. Seriously, like right now. Do it!
Then you can use that cash to buy one of the four coins currently listed on GDAX, and send that over to Binance if you are interested in buying “altcoins“. You can also make “instant” purchases on Coinbase using a debit or credit card, if you are willing to eat the fees. BE CAREFUL. I meant to buy with a card but it defaulted back to my bank account, stating i now had to wait 8 days to receive my ETH!
…The same goes for transferring currency to Bittrex or Binance. Once you submit your transfer, don’t freak out! It will probably take a while, especially if you are using Bitcoin. For this reason I would suggest you buy into another coin like Litecoin or Ethereum to trade with; which also tend to be less volatile. Doing all of this in advance can save you from ripping your hair out when a coin starts to moon.
Dollar Cost Averaging
This is one thing that separates the amateurs from the pros. If you aren’t using Dollar-Cost Averaging, you’re basically just gambling. It’s actually pretty simple: you the amount you intend to invest in a coin, and buy-in half today and half a week from now. This is supposed to help you to protect against volatility by allowing you to pay an average cost. For example: You invest $500 in Litecoin today and the price drops $250 next week, when you invest another $500. You now own $750 worth of Litecoin instead of $500 because you waited. It could also go the other way… but if you split it up to invest over a number of weeks or months, you are taking the average of the market and should come out on top.
If you are unsure about the stability of a volatile currency, like when Bitcoin drops from $17-12k in a week and back, DO NOT PANIC AND SELL ALL OF YOUR HOLDINGS! Instead, you should exchange for USDT, or US Dollar Tether. Basically, its like putting your money back USD, only you aren’t pulling it out of the system so you don’t need to pay the fees associated with cashing out.
Faucet + Mining Update
In my last crypto-article I talked a bit about faucets so I figured I’d add a quick update here. I have officially earned over 500 Dogecoin through about a week of constant faucet usage, and some clever arbitrage using Coinpot’s free Exchange feature. That currently translates to about $4 USD. The time/ effort ratio required makes this hard to justify continuing, but one thing I would say is that it can be quite difficult to get your hands on cryptocurrency at the moment so this is a great way to start! Coinbase told me I have to wait 8 days to receive the ETH I bought and I still haven’t received it, whereas the Dogecoin I transferred to my Freewallet arrived within a few hours.
Also, I found this Litecoin Cloud-Mining service that works pretty well, and you can mine 0.025 LTC per day for FREE without even signing up! You just add in your LTC wallet address and click “Start Mining”. Get started HERE! They also have an Ethereum Mining site HERE with even better payouts then the LTC site! Keep in mind that I am still in the trial process with both platforms and although it has let me withdraw 0.01 LTC for free so far, I have not invested in the paid service which has mixed reviews about its payouts and legitimacy. If you want a better solution for cloud mining more coins for free, check out Robot-Coin!
Avoiding The System
I have had a lot of people ask me about purchasing cryptocurrency lately without being tracked, given the decentralized movement behind cryptocurrency. To this I must first add a disclaimer ***I do not suggest or support anyone that anyone attempting to avoid the SEC or government in any way.
That being said, if you choose to ignore my warning I can’t stop you and it will be at your own risk. Coinmama is a service that just might meet your “Farm-to-table” cypto-needs. They allow you to buy up a reasonable amount of Bitcoin or Ethereum without having to give out your personal information. If you would like to purchase altcoins without ID verification as well, go with Binance 😉
My new favorite exchange happens to be Changelly, which lets you purchase crypto with a credit card (or Visa gift card for those of you looking to keep things low-key.)
Is it Too Late?
The truth is, anything could happen. Bitcoin could go to $100,000 or back down to below a $1. But now there is a huge interest and market created around the cryptocurrency world so If you are just getting started you should realize that unless you have massive amounts of money, you probably aren’t going to get rich investing in Bitcoin alone. New altcoins launch ICO’s (Initial Coin Offerings) and are added to Binance every day, creating exciting possibilities to catch the next “sleeper” coin.
Even if bitcoin were to lose 90% of its value today, it would still be recognized as the best investment in history, coming from 8 cents/ coin in 2010. I actually am writing this as BTC crashed from around $17,500 to $11,000 overnight, only to stabilize at $15,000. Stay in it for the long term. Do your research. HODL when the market drops. You’ll do alright.
For those of you looking to get rich on bitcoin, PLEASE keep reading. I have spent the last few weeks studying, experimenting with, and discussing the implications of this new and excitable revolution in currency and I want you to get the best information available to you. The result could make you the next bitcoin billionaire, or leave you flat broke.
Being that Bitcoin is getting so much attention right now and its an open source currency, its the perfect opportunity to lay some free knowledge on ya’ll this week! If this is your first experience with bitcoin or cryptocurrency, strap in! You’ve got some catching up to do!
Bitcoin was created by an anonymous cryptographer working under the name “Satoshi Nakimoto,” who originally posted his revolutionary idea surrounding “The Blockchain” to a forum on reddit. While there is speculation today about who that might be, it is still unclear whether we have discovered his true identity.
In a nutshell, the blockchain is the network of transactions recorded on digital ledgers much like a bank functions, only this network is made up of hundreds of thousands of computers completing “Hashes” or calculating tasks in order to encrypt each transaction. This makes every exchange seemingly impossible to hack, since the information is passing through thousands of computers instead of remaining in a centralized hub. It also makes purchases almost impossible to trace, leading us to one of Bitcoin’s biggest adversaries… the government!
Bitcoin got a lot of press in the beginning when the government decided to lock up a 26 year old entrepreneur named Charlie Shrem who had started the company BitInstant. At the time it took around three days to purchase bitcoin due to its Japanese roots and processing time, and he decided to buy a large quantity for himself to resell in the US instantaneously. Because of this, websites like Silk Road began to emerge allowing black market transactions to happen on a larger scale without repercussion. When SilkRoad was shut down by the FBI, they came after Shrem full force, holding him accountable for the crimes committed using bitcoin he had simply made more available. This is akin to a bank being held accountable for each person who cashes a check and proceeds to buy drugs with that money, yet not a single schezy banker has been held to this standard… not even during the housing market crash that left thousands of families homeless due to bankers encouraging them to buy into unstable mortgages.
What Smart People Are Saying
“Stay away from it, It’s a mirage, basically. [Bitcoin is] a very effective way of transmitting money, and you can do it anonymously and all that. A check is a way of transmitting money, too. Are checks worth a whole lot of money just because they can transmit money?” -Warren Buffet
“My opinion on Bitcoin is, I mean I think Bitcoin is probably a good thing. I think it’s primarily gonna be a means of doing illegal transactions. But that’s not necessarily entirely bad. You know, some things maybe shouldn’t be illegal.” – Elon Musk
“Bitcoin is exciting because it shows how cheap it can be. Bitcoin is better than currency in that you don’t have to be physically in the same place and, of course, for large transactions, currency can get pretty inconvenient.” – Bill Gates
Want free bitcoin and other cryptocurrency? Faucets are a way to earn small amounts of cryptocurrency by completing tiny, often monotonous tasks. They can include everything from watching ads to entering “Captchas”, and provides a slow but decent way to break into the market. These are the main faucets I have found which make it simple to get started, and give you killer bonuses! They all deposit into the same wallet at Coinpot. This is VERY useful as you can earn from the faucets listed below and convert each currency to the one you want to invest in without fees and instantly!
MoonBitcoin – Earn Free Bitcoin
MoonLitecoin – Earn Free Litecoin
MoonDash – Earn Free Dash
MoonDogecoin – Earn Free Dogecoin
BitFun – Play games, or just leave your browser open to earn bitcoin.
BonusBitcoin – This Bitcoin faucet pays well, but is a little ad heavy.
With Moon-Dash/ Doge/ Litecoin / Bitcoin you also get a “loyalty” bonus which can really ad up if you use the faucet at least once per day. In my opinion the two best are actually Freebitco.in and FreeDogeco.in. Their faucets are pretty decent although they have a small withdrawal fee, but you also earn reward points that can be exchanged for tons of things, and tickets into their bitcoin lottery system which I have seen give out over 2 BTC on average. Freebitco.in also have an app that makes things a little easier! Check them out HERE.
A very similar service offering a lottery system and faucet for Ripple (XRP) can also be found here at Faucetco.in.
Just like with any currency, you will need a secure place to store your funds. There are a few good free options out there like Freewallet, which let you store and send your currency securely through an ios/ android app… But its always a good idea to make a paper wallet for security!
CoinBase: This is the most famous wallet out there. They charge a small fee depending on how much you invest but allow you to use your bank account or cards to invest in cryptocurrency almost instantly. They’ve got some bad press in the past for security issues, but they seem to have made up for that with increased security are still the go-to choice for those looking to enter the world of cryptocurrency and as of December 2017 became the #1 app downloaded in the iTunes app store! Use this link to get $10 free when you invest your first $100 with Coinbase.
QoinPro: While they are still building this out to its full potential, it is a fully functional wallet that allows you to earn a free percentage of multiple cryptocurrencies daily just for signing up! They give you free Bitcoin, Neo, etc.. Its a great way to get started without any investment. Make an account and start racking up the rewards!
The best place to keep your cryptocurrency investments is actually in their intended desktop wallets. You can buy hardware wallets like the Ledger Nano S Cryptocurrency Hardware WalletS, but make sure you order directly from the manufacturer to ensure security.
There are only 21,000,000 Bitcoin that will ever be in existence. This is good, as it makes the currency a scarce resource, which can therefor be earned or “mined” with labor just like gold. Mining is the process that bitcoin runs on, where thousands of “miners” on the bitcoin network are confirming each transaction as valid before passing it on to the next and earning a small reward. This originally allowed anyone to use their hardware rig or computer to complete each ” hash within the block, allowing blockchain to function by validating each ledger. Complete enough hashing functions, and you are rewarded with “Satoshi” = a fractional amount of newly mined bitcoin. Because of the limited amount of bitcoin available combined with the volatility of the market, this amount fluctuates quite often.
You won’t get very far trying to mine on a normal computer these days, and the computing power needed and the same goes for your ipad/ iphone. Unless you have the cash to buy a decent mining rig and the knowledge to set it up, I wouldn’t suggest using this method… But if you want to give it a shot, Coinpot has a mining feature that works decently enough. All you have to do is hit the “start mining” button next to your coin of choice and you’re good to go.
Eobot – I have watched more than a few videos about this cloud mining platform and they all say something similar. Please do not use this platform to store or buy cryptocurrency. You might want to use your Coinpot Faucet earnings to transfer over some Dogecoin, buy up some GHS (cloud computing ability) and start mining bitcoin using cloud-based miners. ***For what its worth, I did find a comparison video that proved Bitcoin was the best currency to mine for the value on this site.
Cryptokitties – Cryptokitties launched late November and is one of the first collectable gaming platform of its kind. Based on the cryptocurrency Ether, you can basically buy “kitties” that with unique traits and breed them with others to make new kitties. All you have to do is install their wallet browser metamask, move over some etherium with coinbase, and buy yourself a kitty. Among their rare traits, kitties are ranked on how fast they can breed and their Generation number; higher generation numbers decrease in value as they deviate from the original line. While this is a new technology, there are already tons of people investing in cryptocurrency this way. Don’t believe me? Check this out. You’d be surprised to find some of these rare kitties are selling for well over $100,000!
Where To Buy CryptoCurrency
Here we are… the part you’ve probably been waiting for.
Instead of buying directly off of Coinbase (After your first $100 transaction to get your free $10 credit), I would recommend linking your Coinbase account to GDAX to buy and transfer your currency to avoid the Coinbase fees (GDAX fees of 0.25% may still apply). GDAX is essentially owned by Coinbase… so you are basically already using it if you have a Coinbase account. Only it allows you to buy Bitcoin, and many other alt-coins, without the Coinbase fees! Just hook up your bank account and you’re good to go. When you are ready to move into buying Altcoins, transfer your funds on over to Bittrex or my favorite trading platform, Binance!
Bitcoin And Taxes
As of December 2017, the US government is still trying to decide what regulations to put in place; as cryptocurrency evolves it will be interesting to see how this evolves. Currently the exchange of bitcoin is not defined by the IRS as a currency, but as an exchange of “property”… therefor they would like you to pay a capital gains tax on your earnings. While this completely goes against the decentralized mission of bitcoin, you can expect more attempts at regulation as the government scrambles to maintain some level of control over this economic revolution. My suggestion here would be to buy and hold, as the long term investments will have lower tax rates… I believe the requirements are one year and one day to qualify. It looks like they are scrambling to add new regulations with everything from trying to hit it with property taxes to taxing every transfer (such as from BTC to ETH) and beyond!
I would highly suggest you give the faucets a try and dip your toes in before taking the plunge. Don’t ignore the alt-coins! Think of each cryptocurrency as a solution to a different problem. While bitcoin is great, other currencies like Ripple are used for bridging the gap within the private sector and are starting to skyrocket in price as well. In fact while was writing this, the price of Litecoin jumped from $127 to over $340… so my $0.50 earned from a day of using the faucets above doubled overnight. I’ll be posting a followup post after the new year as well. If you have an experience to share or some knowledge to add please comment below. Good luck!
Fun Fact: If you would have invested $100 in bitcoin in 2010, it would be worth more than $72 Million today.