Let me start with a disclaimer: I am not a financial advisor and this is not investment or tax advice. This is a list of tools and information to share with my friends and family. Please invest responsibly, do your homework, and never invest more than you can afford to lose.
Like most things that require a disclaimer, the crypto market is risky and addicting. The technology is new, many theories unproven, values based on speculation, and none of it insured or backed by any government safety nets. However, the returns on investment have been insanely huge and insanely quick; thus far.
My interest in Bitcoin started about 4 years ago; when it was supposedly only used by criminals. The idea behind decentralized currency intrigued me. Really, decentralized everything is intriguing.
After doing a little buying and selling, with bitcoins value fairly flat, my interest got diverted to other things. Something caught my attention early last year and I started paying more attention and added a few more coins to my portfolio.
Having a front row seat to watch an industry and technology mature which will impact the rest of our lives is awesome. Making money while you sleep isn’t too bad either. So, I have spent the last 6 months learning as much as I can about the crypto world; investing in various coins and tokens. My portfolio has performed well and I believe it is positioned to continue to thrive in 2018.
My goal for these assets are to hodl (long term positions); not to day trade or get rich quick. I try to balance my portfolio across market sectors, be somewhat market cap weighted, and dollar cost average most positions.
Having had 4 years experience using the tools and learning about Bitcoin, friends and family often ask me questions about how to get started. While I can’t provide investment advice or act as broker, I am happy to share some of the tools and resources I have found useful.
Buy and Sell
Coinbase is the biggest, easiest, and most trusted way to get started in buying Bitcoin, Ethereum, Litecoin, and Bitcoin Cash with US Dollars. They do have a lot of hiccups with downtime as they are growing very quickly and they don’t have the lowest fees. However, if you use their exchange, GDAX, to make your deposits and then transfer to your Coinbase wallet it will save you from many of the fees. They have been very slow at verifying new accounts the last couple weeks due to the increased demand.
Binance is one of the fastest growing and most trusted exchanges in the world. It is a great place to get started in altcoins. However, you can’t purchase with fiat currencies on this exchange. You will need purchase Bitcoin or Ethereum on a different exchange and then send it to your Binance account to facilitate purchases. This week they have limited new account registrations to allow them to expand for increased demand. So, you might have to wait to start an account.
Kraken, Poloniex, and Bitstamp are other trusted exchanges. However, not all US states allow them to operate. This means when you go to verify your account you may get shutdown due to state laws.
Security is the only thing that keeps me up at night when thinking about my investments. I don’t worry much about market fluctuations, but do worry about potential data loss or hacking.
Coins can be held in either cold (offline) or hot (connected to the internet) wallets. Keeping your coins in your Coinbase account is an example of a hot wallet and subject to potential hacking. Coinbase does offer a “vault” option which adds an extra layer of confirmations and waiting period to withdraw but it is still internet connected.
Cold wallets are generally hardware devices which store information (like a thumb drive). They are encrypted with complex keys and very secure from hacking. However, they are subject to lost keys and lost hardware. This is still considered a more secure way to store your coins, but be sure to do your homework first on best practices.
I have the Ledger Nano S Cryptocurrency Hardware Wallet.
There are so many “experts” out there claiming to know everything about crypto. Many of them are not even old enough to buy alcohol yet have made a fortune on their investments. Some their successes are based on smarts and some on luck, but there is no shortage of opinions and advice (like this blog post).
Here are few people/channels I feel have level heads, good information, and similar philosophies to my own:
Crypto Bobby – This YouTube channel has daily videos which include some good news, information, and the live “happy hours” have good community involvement.
EverythingCrypto – This YouTube channel has good beginner information and solid videos with no BS or hype. Hopefully, she will continue to grow her library of videos in the future.
Thinking Crypto – This YouTube channel has some decent analysis. It is more than just chart analysis. He generally digs deeper into news and developments surrounding a coin. He also does a nice job citing his sources.
Philakone – This YouTube channel is for those looking to get started in day trading. He does a good job teaching methods for profitable day trading crypto. He also has videos with very detailed technical analysis for some of the major coins.
Fat Pig Signals Bitcoin – This YouTube channel shows a live trading stream with a few currencies. It has a lively community chat and nice background music.
Here are few websites for research and general information:
CoinMarketCap – This is the site I visit the most. It gives a simple and clear picture of market caps, price, and volume. The detailed page for each currency has useful links to social media, white papers, discussions, and more. It is great for research.
OnChainFX – Has great filters for getting rankings and other metrics. Excellent tool for research.
CryptoCurrency Calendar – This site shows potential future events which may impact value. It is useful for deciding a good time to buy or sell.
Bitcoin Ticker Widget – I like this app just for the alerts feature. Unlike many other apps, it allows you to set alerts based on percentage of price changes and it is doesn’t reset each time. It consistently pushes alerts each time the value changes
The IRS doesn’t classify cryptocurrencies as currencies. There are considered property(capital asset). This means short-term or long-term capital gains tax rates apply if gains are realized. Transferring between currencies is considered a sale and purchase, so any gains from that transaction must be reported.
If you do a lot of trading or buying/selling it can be confusing to keep track of your tax basis.
These two websites do a good job of keeping track of everything. However, both can take a while to get setup due to hiccups when importing from different exchanges. Once set up the reporting is what you or your account will need to report to the IRS.
Feel free to share in the comments below if you have any suggestions or tips.
Another Disclaimer: I may get affiliate commissions if you sign up for some of the above services. So, thanks in advance.