What to know about cryptocurrency
Cryptocurrency is not like having a safe or a bank where you store your money. This is a new paradigm. You do not have anyone that you can call if you make a mistake with your cryptocurrency, because you do not understand the dangers to loss. Here is what you need to know before you get started buying or selling cryptocurrency.
Never invest more than you can afford to lose. Know that you can lose all of your money with cryptocurrency.
We will begin with how people lose cryptocurrency.
How do you lose cryptocurrency?
People lose their in cryptocurrency in these four ways:
- Leaving cryptocurrency sitting in an exchange vault not a wallet
- Riding trends for Bitcoin by mortgaging houses to get in at 20,000 to see it lose value to 4,000
- Clicking on ad link to exchange that was a phishing site to take crypto. Never ever click on a link that says ad on it at the top of a search engine result.
- Sending crypto to a wallet address that was not fully copied or wrong address thinking it was right.
WHEN YOU DO ANY OF THESE YOUR CRYPTOCURRENCY CAN BE A RISK OR YOU CAN LOSE YOUR CRYPTOCURRENCY.
How do you protect your cryptocurrency?
These are some ways to keep crypotocurrency secure from risk:
Step # 1: Never invest what you cannot afford to lose.
Step # 2: Choose and stick to the amount you can afford to invest in cryptocurrency.
Step # 3: Never Invest in what you do not understand. Please learn about how to use wallets, exchanges and volatility to protect your money. You must know how to use the platforms that you use for cryptocurrency.
Errors can cost you all of your cryptocurrency in one click of a mouse by making a mistake that you cannot take back. I am not a licensed professional and this is only for informational purposes not advice. These are some things to know before you invest in cryptocurrency.
It is said that the trend is your friend. I say that a trend can be the end of your money. When you find out about a trend it is already too late.
You will get in at the high and they will sell at the high. It will go low and you will lose your money. There is only one thing Buffet ever said that I agree with.
When people run to a stock that everyone is in, then it is too late. When everyone is running away from a stock, then you run to that stock.
Stocks go up and down in a side way pattern at the same rate. People ride that volatility or trade based on volume of trading.
Knowledge to understand
Stocks and cryptocurrency markets are manipulated by huge amounts of money in single trades. Cryptocurrency is not regulated by government, but they are talking about definitions for regulation. For example:
Countries are defining it in four ways: cryptocurrency is a security, money, asset and etc. There needs to be a single definition of what it is for every one to be on the same page. More about manipulation.
They make more trades than there are actually stocks or cryptocurrencies available. This is why you must put cryptocurrency in a wallet. If it is your wallet, then you take ownership of it. If on exchange, then it is not in your ownership.
The best way to protect your cryptocurrency is to know what you are buying by researching the technology and hold it long term for critical mass adoption as a strategy for wealth. The value of a coin is based on communities that own it now and the technology to keep it around for critical mass adoption to raise value of the cryptocurrency or technology.
Hacking and phishing websites
Hacking your cryptocurrency happens when you do a search for coinbase for example. You go to the top of the search results and click the coinbase website, but it is an ad that looks like the coinbase website. This is a phishing website that looks like the real website, but it is designed to get your username and password to access your account.
Never click a crytpocurrency ad. Hacking happens when you display your private wallet key instead of your public wallet key. Private wallet keys allow anyone to steal your cryptocurrency.
Keep private keys private. Public keys allow you to receive cryptocurrency in your wallet. Access to your phone or email address can get people access to your cryptocurrency.
Your back up restore words can allow people to get a new wallet like yours and use those words to restore a new wallet to steal your cryptocurrency. Keep your information private about your wallets.
Step # 1: You should type the website address directly into web browser.
Step # 2: Bookmark the website by clicking on the star for your web browser favorites.
Step # 3: Always go back to the website using your favorites to avoid any accidents that could result in a phishing site to get your information to steal your cryptocurrency or passwords.
What you should do before you buy cryptocurrency?
1.) Notebook with paper
2.) Section it out with Crypto accounts like exchanges, wallets, backup codes for wallets, passwords and other crypto related accounts. Write instructions as will for your successors.
3.) Do not mix up your public and private wallet codes. Public codes are to shift crypto around and for people to send you crypto. Private keys should be private or someone can take your crypto.
4.) You want to use strong passwords that are strong
5.) Secure your computer from malware. Microsoft security essentials for windows or Malwarebytes for mac
6.) Secure sim card on cell phone with a pin code to change it. Get Google 2 factor authentication.
Things to know before buying cryptocurrency?
There are a few things that you need to know to get started. We cover it here:
How to buy/sell Crypto Currency?
Money To Coin
You will need to exchange your USD or other Fiat Currency into an exchange that can buy cryptocurrency. You can do this on an exchange like Coinbase. There are limits to amounts that can be transferred from Dollars to Cryptocurrency.
They are different depending on using a credit card or bank wire. The time frame is different as well. Credit card are available when processed, but using your checking account can be a couple of days. This varies.
What to know about the exchanges?
Not all exchanges carry all of the coins. The main three cryptocurrencies are Bitcoin, Etherium and Lite coin. These are on all of the exchange except Litecoin.
You may need to go to another exchange to buy less common coins known as alternative coins. You can purchase altcoins using Bitcoin, Etherium or Litecoin from Coinbase to get other coins. Coinbase carries a lot of coins.
What to know about taxes and cryptocurrency?
Every transaction of cryptocurrency is a taxable event. One of the reasons for cryptocurrencies was to have freedom from taxes and fiat currency. The Bitcoin was to be a privacy coin.
However, The IRS passed the law at the end of 2017 to pay taxes. Coin base is one of the known exchanges that the IRS told to get accounts of $20,000 after the law was passed.
People think that the law was for accounts of this amount, but it is for any amount. People think that they can still use privacy coins to game the system. There is one problem.
The IRS has created a blockchain tracker that traces every transaction to purchases for the purpose of identifying the cryptocurrency owners. Here is one thing to show you a similar way that Etherium transactions are tracked, but the IRS tracker will likely be advanced with other options: https://etherscan.io.
There is a tool that will track your transactions for your taxes: https://cointracking.info
BUY COINS (Private/PUBLIC) WAYS
How to buy privacy coins anonymously?
I strongly recommend against anonymously buying private coins to avoid taxes. Here is how people are buying private coins anonymously if you are bent on it.
1.) You can purchase the actual Bitcoin from someone in person, but should be in a public place with people around you for safety.
2.) Buy at a Bitcoin Kiosk to put on a paper wallet
3.) Another way is to sign up for https://protonmail.com for encrypted email to use to sign up for https://virwox.com. Use a visa gift card to add funds to Virwox and then purchase one of the privacy coins like Bitcoin, Zcash, Manero or Dash. Put Bitcoin on a paper wallet, Exodus Wallet (Exodus uses Shapeshift to exchange from coin to coin without leaving your wallet) or a hardware wallet like Nano ledger.
How to buy crypto currency the public way? (Verification is necessary)
Sign up for https://protonmail.com. You will need to respond to a text with code for website. Use this email address to sign up for Coinbase with our step by step tutorial: Walkthrough setting up a Coinbase account. You will need to take a picture of the front and back of your license and send it to coin base for approval. It can take hours, 3 days or up to 2 weeks. You will need to link your account, PayPal or credit card. You will need the last four of your Social Security Number to sign up for the account. You will need a wallet.