Category Archives: Cryptocurrency
Enlarge / Simplified figurative process of a Cryptocurrency transaction.
Researchers have defeated a key protection against cryptocurrency theft with a series of attacks that transmit private keys out of digital wallets that are physically separated from the Internet and other networks.
Like most of the other attacks developed by Ben-Gurion University professor Mordechai Guri and his colleagues, the currency wallet exploits start with the already significant assumption that a device has already been thoroughly compromised by malware. Still, the research is significant because it shows that even when devices are airgappedmeaning they aren’t connected to any other devices to prevent the leaking of highly sensitive dataattackers may still successfully exfiltrate the information. Past papers have defeated airgaps using a wide array of techniques, including electromagnetic emissions from USB devices, radio signals from a computer’s video card, infrared capabilities in surveillance cameras, and sounds produced by hard drives.
On Monday, Guri published a new paper that applies the same exfiltration techniques to “cold wallets,” which are not stored on devices connected to the Internet. The most effective techniques take only seconds to siphon a 256-bit Bitcoin key from a wallet running on an infected computer, even though the computer isn’t connected to any network. Guri said the possibility of stealing keys that protect millions or billions of dollars is likely to take the covert exfiltration techniques out of the nation-state hacking realm they currently inhabit and possibly bring them into the mainstream.
“I think that the interesting issue is that the airgap attacks that were thought to be exotic issues for high-end attacks may become more widespread,” he wrote in an email. “While airgap covert channels might be considered somewhat slow for other types of information, they are very relevant for such brief amounts of information. I want to show the security of ‘cold wallet’ is not hermetic given the existing airgap covert channels.”
One technique can siphon private keys stored in a cold wallet running on a Raspberry Pi, which many security professionals say is one of the best ways to store private cryptocurrency keys. Even if the device became infected, the thinking goes, there’s no way for attackers to obtain the private keys because it remains physically isolated from the Internet or other devices. In such cases, users authorize a digital payment in the cold wallet and then use a USB stick or other external media to transfer a file to an online wallet. As the following video demonstrates, it takes only a few seconds for a nearby smartphone under the attacker’s control to covertly receive the secret key.
BeatCoin: Leaking bitcoin’s private keys from air-gapped wallets.
The technique works by using the Raspberry Pi’s general-purpose input/output pins to generate radio signals that transmit the key information. The headphones on the receiving smartphone act as an antenna to improve the radio-frequency signal quality, but in many cases they’re not necessary.
A second video defeats a cold wallet running on a computer. It transmits the key by using inaudible, ultrasonic signals. Such inaudible sounds are already being used to covertly track smartphone users as they move about cities. It wouldn’t be a stretch to see similar capabilities built into malware that’s designed to steal digital coins.
BeatCoin: Leaking bitcoin’s private keys from air-gapped wallets.
As already mentioned, the exfiltration techniques described in this post assume the device running the cold wallet is already infected by malware. Still, the widely repeated advice to use cold wallets is designed to protect people against this very scenario.
“We show that, despite the high degree of isolation of cold wallets, motivated attackers can steal the private keys out of the air-gapped wallets,” Guri wrote in the new paper. “With the private keys in hand, an attacker virtually owns all of the currency in the wallet.”
To protect keys, people should continue to store them in cold wallets whenever possible, but they should consider additional safeguards, including keeping cold wallets away from smartphones, cameras, and other receivers. They should also shield cold-wallet devices with metallic materials that prevent electromagnetic radiation from leaking. Of course, people should also prevent devices from becoming infected in the first place.
See the rest here:
New hacks siphon private cryptocurrency keys from …
By Tiana Laurence
Part of Blockchain For Dummies Cheat Sheet
Cryptocurrencies, sometimes called virtual currencies, digital money/cash, or tokens, are not really like U.S. dollars or British pounds. They live online and are not backed by a government. Theyre backed by their respective networks. Technically speaking, cryptocurrencies are restricted entries in a database. Specific conditions must be met to change these entries. Created with cryptography, the entries are secured with math, not people.
Restricted entries are published into a database, but its a special type of database that is shared by a peer-to-peer network. For example, when you send some Bitcoin to your friend Cara, youre creating and sending a restricted entry into the Bitcoin network. The network makes sure that you havent not the same entry twice; it does this with no central server or authority. Following the same example, the network is making sure that you didnt try to send your friend Cara and your other friend Alice the same Bitcoin.
The peer-to-peer network solves the double-spend problem (you sending the same Bitcoin to two people) in most cases by having every peer have a complete record of the history of all the entries made within the network. The entire history gives the balance of every account including yours. The innovation of cryptocurrency is to achieve agreement on what the history is without a central server or authority.
Entries are the representation of cryptocurrency.
Cryptocurrencies are generated by the network in most cases to incentivize the peers, also known as nodes and miners, to work to secure the network and check entries. Each network has a unique way of generating them and distributing them to the peers.
Bitcoin, for example, rewards peers (known as miners on the Bitcoin network) for solving the next block. A block is a group or entries. The solving is finding a hash that connects the new block with the old one. This is where the term blockchain came from. The block is the group of entries, and the chain is the hash. Hashes are a type of cryptologic puzzle. Think of them as Sudoku puzzles that the peers compete to connect the blocks.
Every cryptocurrency is a little different, but most of them share these basic characteristics:
What Is Cryptocurrency? – dummies
Throughout this week, as CCN reported, the cryptocurrency market has been eyeing a move towards the $350 billion region. Earlier today, on April 20, strong performances of major cryptocurrencies like bitcoin and Ethereum have led the valuation of the cryptocurrency market to surge to $365 billion.
Throughout 2018, amidst extreme volatility and recovery, investors inclined towards bitcoin as the safe haven asset. With the deepest liquidity and largest volume in the global market, bitcoin was able to sustain some stability while many cryptocurrencies recorded a free fall. Most assets declined by more than 80 percent from their all-time highs and struggled to record gains against bitcoin.
Over the past seven days, alternative cryptocurrencies (altcoins) and other major cryptocurrencies have consistently reported gains against the most dominant cryptocurrency in the market. The daily trading volume of the global cryptocurrency market crossed the $20 billion mark for the first time in April and the valuation of the market achieved a new monthly high.
In March and early April, investors were skeptical towards investing in cryptocurrencies other than bitcoin and Ethereum because they were uncertain about the short-term future of the cryptocurrency market. While altcoins tend to have intensified movements on the upside, it also has larger movements on the downside, and investors thought the risk was not worth taking.
Traders have started to take more risk than before by investing in cryptocurrencies like Ripple, Zilliqa, Nano, OmiseGo and others. As the volumes of altcoins across major exchanges surged, altcoins began to outperform bitcoin on a weekly basis, and it is possible that ERC20 tokens outperform major cryptocurrencies on a monthly basis by the end of April.
The next major target for the cryptocurrency market is the $400 billion mark and by surpassing that threshold, the cryptocurrency market would achieve a two-month high. At this juncture, it is safe to conclude that bitcoin has bottomed out at $6,000 and the market has begun a rapid recovery to its previous levels.
If the bitcoin price breaks the $9,500 level in the short-term, ideally within the next week, it is entirely possible that the cryptocurrency market surpasses $400 billion within April, in the next 10 days.
The Relative Strength Index (RSI) of bitcoin is in the 57 range and is signifying a neutral zone. Bitcoin is neither oversold or overbought based on current levels, as demonstrated by two momentum oscillators RSI and Williams Percent Range.
Both simple and exponential moving averages are indicating buy signals for bitcoin, as it continues to gain strong momentum. From this point, traders are expecting the bitcoin price to cross $8,500 and potentially make its way into the $9 billion region.
Non-ERC20 tokens like Ripple and Verge were the best performers on April 20, with solid 20 percent gains. Both Ripple and Verge have performed strong against bitcoin throughout April and they are continuing to build momentum against bitcoin and Ethereum.
Featured image from Shutterstock.
The post Cryptocurrency Market Surges to $365 Billion, Start of a Bull Rally? appeared first on CCN.
Category: Bitcoin, Commentary, News
A Singaporean citizen who orchestrated a robbery during a bitcoin sale is to be jailed, according to reports from local police on April 12, amidst a wave of crypto-related thefts occurring outside of the cybersphere. In recent times cryptocurrency-related crimes have been on a steady increase in tandem with the sudden surge in the value of bitcoin and the wider
Category: Business, Ethereum, News
Popular cryptocurrency exchange Coinbase has acquired Cipher Browser for an undisclosed amount. The announcement of the acquisition was made official on April 13, 2018. The company in question, Cipher, had once competed with Coinbase-developed Toshi Ethereum browser. This acquisition is the first instance in which Coinbase has shelled cash to buy out a smaller rival company. Cipher to Merge with
Each week BTCManager and JaketheCryptoKing are going to explore a new moonshot opportunity. We are in week 12 of this moonshot experiment! Markets just suffered a sharp correction providing the perfect opportunity for some moonshot shopping at discounted prices. The moonshot for the week beginning April 15, 2018, is; KMD. What is a Moonshot? A moonshot is an altcoin that
Category: Altcoins, Commentary, Finance, News
In an interview with CNBC, a senior executive of Ripple said the companys native XRP token is not a security. The statement comes after widespread speculation regarding the digital tokens listing on Coinbase, which follows strict guidelines and strives to remain legally compliant. Cryptocurrencies Are Securities, Says SEC According to the U.S. Securities and Exchange Commission (SEC), general security laws
Category: Bitcoin, Commentary, News
Craig Wright, the self-proclaimed Satoshi Nakamoto, has recently been accused of plagiarism. Apparently, Wright has already tried to steal an identity, this time, he stands accused of taking someone elses ideas and passing them off as his own. It all begins with a paper Wright released in July 2017. The Fallacy of Selfish Mining: A Mathematical Critique is a paper
Category: Bitcoin, Business, News, Tech
Coinsecure, one of the most popular bitcoin exchanges in India, announced it had 438.3186 bitcoin (BTC) around $3.6 million at current exchange rates stolen from the companys main wallet on Friday, April 13. To spice up the story even further, the exchange is accusing its own CSO, Dr. Amitabh Saxena, of the theft. Mohit Kalra, the CEO of
Category: ICO News
In a comprehensive solution to users ability to employ a cryptocurrency debit card, the HashCard project is offering a crypto-linked card that will enable traditional card payments but with digital currencies. With a prospective client base of millions of users, the HashCard ICO is an answer to the noted desire of many to enjoy traditional transactional methods when spending cryptocurrency.
Category: Altcoins, Business, Finance, News
After the recent tiff involving Alibabacoin and e-commerce giant Alibaba, wherein the latter sued Alibabacoin for misuse of their name, Taobao, a subsidiary of Alibaba, has banned all things crypto on its website. Taobao Bars Crypto Services Taobao has updated its list of goods and services that are barred from being sold on their platform, and it includes all services
Category: Bitcoin, Commentary, News
A new trend is spreading like wildfire among the growing crop of bitcoin millionaires, which is buying flashy Lamborghinis to showcase their cryptocurrency wealth. The craze has fueled the popular When Lambo? meme in cryptocurrency circles. When Lambo refers to the point at which a crypto holder has amassed enough bitcoin (BTC) to buy a Lamborghini, whose prices typically start
One of the hallmark qualities of cryptocurrency is its virtuality. Unlike most other forms of currency, crypto has no physical embodiment. You can’t get it as paper, coin, bar of gold or fancy bead. There’s no token that needs to be locked up in a bank vault or buried beneath a mattress.
But like anything valuable, cryptocurrency needs to be protected. It exists as a natively digital entity that requires an internet connection for any transaction — and that connectedness makes it vulnerable to hacking. In fact, despite its ethereal nature, it’s at least as susceptible to plunder as cash or gold. And with cryptocurrency, these violations are likely to come remotely.
Read: Bitcoin explained — everything you need to know
Many newcomers buy cryptocurrency from an exchange, such as Coinbase or BitFlyer, and leave their holdings in those sites’ “custodial” wallets. But like any other online entity, the exchanges are vulnerable to hacking — and as the crossroads for many billions of dollars of transactions every day, they make for particularly attractive targets. The cautionary tales of Mt. Gox, which “lost” 750,000 of its customers’ bitcoins in 2014;NiceHash, which was robbed of $60 million in December 2017; and a recent close call at Binanceshow the risks associated with leaving your coins in an exchange’s online wallet.
Conventional wisdom dictates that if you’ve got more virtual currency than you’d be comfortable carrying around on your person, or you intend to hold it as a long-term investment, you should keep it in “cold storage.” This could be a computer that’s disconnected from the internet or a specialized USB drive called a hardware wallet. (We’ll take a look at how those work in a future explainer.)
Dedicating a computer to store your cryptocurrency or shelling out for a hardware wallet isn’t an option for everyone, however. Well known devices such as the Trezor and Ledger cost between $75 and $100 and, by design, add complexity and a few extra steps to every transaction. Software wallets, by contrast, are usually free and easily accessed though, ultimately, less secure.
Now Playing: Watch this: What the heck is blockchain?
A cryptocurrency wallet’s primary function is to store the public and private keys you need to conduct a transaction on the blockchain. Many also offer features such as integrated currency swapping. There are three main kinds of software wallets — desktop, online and mobile — and each offers a different combination of convenience and security.
Desktop wallets are software you install on your computer. They give you lots of control over your assets but, if connected to the internet, remain vulnerable. A malware infection, the remote takeover of your computer or — even if you’re not online — a hard-drive failure could be a catastrophe.
Read:Blockchain Decoded on CNET
Online wallets are hosted on a website. This makes them convenient because they’re accessible from any internet-connected device. The downside: Your private keys are (theoretically) known to the website owner and, from a technical perspective, there’s not much to stop them from simply taking your coins.
Mobile app wallets are optimized for retail transactions — that is, paying for stuff with bitcoin or another cryptocurrency. But because your encryption keys are stored on your phone, you lose your coins if you lose your device. You thought it was a bummer to leave your phone in a taxi? Imagine how bad it will be if it has thousands of dollars of cryptocurrency locked on it.
Whether you choose a hardware, software or paper wallet to manage your passwords and private keys, there are a handful of things you can do to keep your stash safer. These include:
We’ll take a high-level view of some well known software wallets to provide an overview of the different features and tradeoffs to consider.
Note: There are many wallet options available, and we have not comprehensively tested any of these. As such, we cannot recommend any of them. As with everything related to cryptocurrency, you are advised to do your own research before making any decisions. Caveat emptor!
A versatile online wallet, Jaxx can be installed on a computer (Windows, Mac or Linux), added as an extension to the Chrome web browser, or downloaded as an app on an Android or Apple phone or tablet. In addition to helping you store dozens of cryptocurrencies, Jaxx’s support for the ShapeShift API makes it easy to swap coins — say, Litecoin for Ether — right inside the wallet. ShapeShift’s exchange rates aren’t always as low as what you’ll find on major exchanges and they do charge a transaction fee (or “miner fee”), which was about 40 cents on the Bitcoin to Ether transaction we priced out. Jaxx offers novices an easy pathway into alt-coins that aren’t yet supported by Coinbase or Bittrex.
Learn more: jaxx.io
Super simple to install and use, MetaMask is a specialist, supporting only ERC20 tokens — that is, any cryptocurrency built on the Ethereum platform. The good news: there are about 50,000 or so tokens (and projects) built on Ethereum, accounting for roughly 90 percent of the total cryptocurrency market cap, which was more than $200 billionat the time of writing, according to CoinMarketCap.com.
MetaMask can be used to send, receive and store Ethereum tokens and private keys. All of the data is encrypted and stored locally, making it difficult for the developers or anyone else to steal your keys or coins remotely. And, in addition to its storage and transactional capabilities, the MetaMask extension connects most web browsers (Chrome, Firefox, Opera and Brave) with the growing universe of decentralized applications, also known as dApps, being built on the Ethereum platform.
Learn more: metamask.io
The Exodus software wallet is a good entry-level wallet for cryptocurrency newcomers. It’s known for responsive customer support, copious user documentation and a refined design and interface. It accommodates dozens of coins (here’s a full list) and was the first wallet to support Shapeshift. There’s no mobile app yet, however, and Exodus doesn’t offer two-factor authentication or multisignature addressing, which gives you the power to require approval from multiple devices before finalizing a transaction. This could give security-minded coin owners pause.
Learn more: exodus.io
One of the first mobile wallets, Mycelium has since established a solid reputation as a secure and user-friendly way to store bitcoin (and, so far, only bitcoin). Like any credible wallet, it lets you generate a set of 12 “seed words” that will help you restore the wallet if you lose access to your private keys. There’s no desktop interface, but it can be used in tandem with a cold storage solution, managing your accounts on a hardware device like a Trezor or Ledger. (The company also produces a USB key that generates paper wallets; plug it into your printer and out comes a paper wallet without any need for a computer.)
Instead of using ShapeShifter, Mycelium runs its own reputation-based exchange platform, which helps coordinate bitcoin trades between buyers and sellers. Transactions incur a fee that ranges from about 70 cents to $8 depending on the priority you set — that is, how quickly you want it to be confirmed and added to the blockchain.
Learn more: wallet.mycelium.com
Remember: Do your own research before installing or using any of these wallet technologies — or trading or investing in any cryptocurrency.
Buying and selling bitcoin: A quick and dirty introduction to trading cryptocurrency.
Initial coin offerings, explained: How can this possibly be a legitimate way to raise money?
See the article here:
How to keep your cryptocurrency safe – CNET
You have two different income streams to consider.
When you mine the coins, you have income on the day the coin is “created” in your account at that day’s exchange value. You can report the income as a hobby or as self-employment. If you report as a hobby, you include the value of the coins as “other income” on line 21 of form 1040. Your ability to deduct any expenses is limited — expenses are itemized deductions subject to the 2% rule.
If you report as self-employment income (you are doing “work” with the intent of earning a profit) then you report the income on schedule C. You can fully deduct your expenses (if you can prove them) (see later). The net profit is subject to income tax and self-employment tax.
Your second income stream comes when you actually sell the coins to someone else for dollars or other currency. Then you have a capital gain (if they were worth more when you sold them than when you mined them) or you have a capital loss (if they are worth less when you sell them). And the gain or loss will be taxed differently if it is a short term gain (you held it one year or less) or long term (more than one year). You will need to keep track of each coin you create (date, value) and when you sell it (date and value).
And of course, if you immediately sell the coin for cash, then you only have income from the creation, you don’t also have a capital gain or loss.
Now, as far as expenses are concerned, if you are doing this as a schedule C business, you can take an expense deduction for computer equipment you buy (as depreciation, subject to all the rules) and your other expenses (mainly electricity, maybe a home office). But you need to be able to prove those expenses, such as with a separate electric meter or at least having your computer equipment plugged into a portable electric meter so you can tell how much of your electric bill was used in your business. Unless your expenses are very high, they won’t offset the extra self-employment tax, so you will probably pay less tax if you report the income as hobby income and forget about the expenses. (On the other hand, if you report it as self-employment and pay SE tax, that adds to your credits in the social security system which may allow you to qualify for a higher retirement benefit. Having self-employment income on schedule C also allow you to claim some tax deductions like an IRA that you can’t claim if all your income is hobby or “other” income. So there may be benefits to paying SE tax in the long run.)
If you earn more than a couple thousand dollars per year you will need to think about making estimated tax payments as well.
CloseWhy do you want to report this?
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If youre like me, you think you missed out on the boom of the cryptocurrency industry. Youve probably heard stories of Bitcoin millionaires – regular, working class people who turned one months paycheck into a fortune that will keep them from ever having to work again.
Im here to tell you that the industry is still booming and its not too late to turn your own profit.
This is The Definitive Guide to Trading Cryptocurrency in 2018. By no means is this a guide to becoming a millionaire overnight, but by the end, you will know everything you need to know to begin trading, as well as some of the techniques and strategies that have proven to provide consistent gains.
What Is a Cryptocurrency?
There Are Some Risks With Cryptocurrencies
Cryptocurrencies Are Taxable In Most Countries
There Are Other Ways To Invest In Bitcoin
Begin Your Path To Crypto Trading
Trading Techniques That Will Grow Your Investment
When To Buy and Sell?
Build a Strategy and Stick To It
Common Mistakes And How To Avoid Them
Pro Tips & Extra Resources
Before we jump right into trading, there are are a few things that we need to cover.
You should have a general understanding of what a cryptocurrency is because knowing the functional use of a coin can give you an edge when deciding your investments. There are hundreds of coins ranging from major players like Bitcoin (BTC) and Ethereum (ETH), to smaller coins that we refer to as altcoins. Each coin is unique and offers their own flunctional use cases. If youre feeling unclear about what a cryptocurrency is, check out some of the resources below. They give great explanations of Bitcoin and Ethereum, and blockchain, the underlying technology of which cryptocurrencies are built upon.
What is Bitcoin
How Bitcoin works
Explain Ethereum like Im five
TED Talk on blockchain
More technical view on how blockchain works
Huge collection of extra reading material on blockchain & Ethereum
Like any investment, you should be aware that there are risks with cryptocurrencies. Its going to take some work to protect your investment and some more work to grow it. Much about the direction that cryptocurrencies will take in the future is in turmoil, and this creates a very volatile market.
Trading is all about taking advantage of this volatility; the key is being smart about your investments, and patient enough to stick to your strategy.
The other major risk to be aware of is that hackers are always looking for vulnerabilities to exploit. One example is the more than $30 million worth of Tether coins that were stolen. The most surefire way to ensure the safety of your coins is by using a hardware wallet such as these by Ledger. Keep in mind that this will slow down your ability to trade those coins, as you will be transferring them between the device and your exchange accounts (more on wallets and exchanges soon).
If all of this sounds daunting, dont worry. As promised, well discuss more of what you need to know soon enough.
In 2014, the IRS declared cryptocurrencies a capital asset, thus making it subject to capital gains tax. This handy guide, breaks down how taxation works for each country.
With the booming industry that cryptocurrency has become, it is recommended to be aware of, and follow tax regulations.
As you know, the focus of this guide is all about trading cryptocurrencies, but there are other ways to get a hand in the pot. Some people choose to buy a cryptocurrency and forget about it, much like you would do with some stock in say, Amazon. Others are actually investing through the stock market via the Bitcoin Investment Trust (GBTC). If you are a firm believer in the future of Bitcoin, both are perfectly fine ways to go about it.
The advantage that trading has over these options is in the power of compounding.
In other words, our initial investments have the potential to grow exponentially, compared to those that sit on a flat amount of coins or stock.
Now that we have that stuff out of the way, lets work on making our first trade. The first things well need is to learn about are exchanges and wallets.
These are what allow us to buy and sell cryptocurrencies. There are a handful of popular crypto exchanges, some of them have advantages over others. For example, some exchanges dont allow us to deposit and withdraw using fiat currency like the U.S. dollar and euro; others arent available in certain countries. In this guide we will focus on two very popular exchanges, GDAX and Poloniex. GDAX gives us the ability to use our fiat currency to buy Bitcoin. Poloniex does not, but does give us a wide array of altcoins to trade. There, well be using major coins like Bitcoin and Ethereum to buy the altcoins, and vice versa. Other popular exchanges such as Kraken and Bittrex offer even more coins.
Keep in mind that keeping the number coins that you are trying to follow to a manageable amount is going to make trading a lot easier.
A manageable amount is obviously subjective and will vary for each person based on things such as time available to dedicate to trading. Feel free to do your own research to find the right exchange for you. I tend to value user experience of an exchange over the amount of coins on it. Ultimately, what exchanges you use is going to depend on your own personal preferences. GDAX and Poloniex will provide sufficient resources needed to be a successful trader, so they are definitely a good place to start.
No matter which you choose you will need to go through a verification process when signing up for your accounts. This sometimes involves submitting a picture of your id. All in all its usually a pretty straightforward process and shouldnt take more than a few minutes.
The next thing well need to do is deposit fiat currency into our account. The easiest way to do this is by adding a bank account. Once youve initiated the deposit, it will take 4 business days to appear in your account. Kind of a bummer, I know; but the idea is to only need to do this once, as well be growing this initial investment day by day with our trades.
When buying or selling on crypto exchanges, you have 3 different types of order at your disposal. You should be comfortable with each of them in order to be a successful trader.
Note that all orders have fees on them, though they are relatively small.
Market orders allow us to exchange any amount of coin right away at the current market price. Orders are filled using the best available price in the exchanges order book. For example, if you placed a market buy order for $100, it would buy from the lowest priced sell order(s) until you had used that $100. The advantage is that this transaction is always completed immediately; the disadvantage is that we dont know exactly what price we are going to get.
Limits orders allow us to place an order at a specific price. We can specify the amount of coin that we want to buy or sell, at the price that we want this to happen at. You may have noticed that the order book is always full of sell orders that are a little higher than the current price and buy orders that are a little lower. The advantage with limit orders is that we can do do the same with our orders. The disadvantage is that our transaction likely will not be filled immediately and will count on the market price to make its way towards us.
Stop limit orders are really only useful when selling coins. They allow us to set a condition: we specify a price, and if the price becomes less than or equal to that price, a market order is automatically placed for us. The advantage here is that if we need to step away and will not be able to watch the price, we have some protection if the market begins to plummet. The disadvantage is that we are counting on there being good buy orders available to fulfill our sells. If a massive amount of market sell orders were to be executed right before your stop is triggered, its technically possible to be left with the bottom of the barrel. This has happened before, but is not common.
I cant emphasize this enough: Trading cryptocurrencies is all about minimizing losses and maximizing gains. Were not going to win every time.
Well need to utilize all of these order types to do that to the fullest.
Once our GDAX account has been verified, and weve deposited some fiat currency we can finally make our first Bitcoin trade!
Here we are placing a market order. Notice that $100 would get us about 1% of a Bitcoin. Remember than with a market order, the amount of Bitcoin may differ slightly from the estimate here because the price of Bitcoin is constantly fluctuating.
Now imagine weve seen some indication that we are ready to sell.
A small loss, but perhaps the price was about to fall, in which case we got out just in time, minimizing our loss.
Weve made our first trade, simple as that!
We mentioned the various exchanges and now we need a way to transfer our Bitcoin between them. Wallets allow us to send and receive Bitcoins. If youre interested in a more technical explanation of wallets, you can check this out, but its certainly not required knowledge.
Creating accounts on GDAX and Poloniex gives us wallets that we can send Bitcoins between. Lets walk through sending Bitcoin from GDAX to Poloniex.
First, we need the deposit address of our Poloniex wallet. Find this by going to Balances, and then Deposits & Withdrawals:
Next well go to GDAX and initiate a withdrawal.
Fill in the amount of Bitcoin youll be transferring, and paste the address that you copied from your Poloniex wallet in as the destination.
Be careful to put the correct address because theres no getting your Bitcoin back if sent to the wrong address.
Once the transfer is initiated, it could take some time for it to be verified on the blockchain. Its not uncommon for it to take 15 minutes or more. Scaling and faster transaction speed is one of the major technical issues that Bitcoin and others are trying to solve.
There are several proven ways to make money trading cryptocurrencies. A lot of these techniques have been proven by their use on the traditional stock market. But the thing with traditional stocks is that youd be hardpressed to find the same kind of price swings as we see everyday with cryptocurrencies.
Consistent, significant price fluctuations mean more opportunities for us.
To use these techniques, we need to understand how to read charts.
If youve already opened up GDAX or some other exchange and you were overwhelmed at first, dont worry; you werent alone. Theyre called candlestick charts, and theres a quick video that explains the fundamentals really well.
Soon, well learn what you can do to perform a more technical analysis on these charts, and some things that you can look for to make informed decisions during your trading. For now lets go over some of those techniques we were talking about before.
Now that weve learned about bullish candlesticks in the chart reading video above, lets take a look at a bull run.
Trailing a bull run using stop orders is one of the most important techniques you can learn.
Lets do a case study. Here, Ive taken a 24 hour chart for Ethereum:
Notice the small bull run. Now imagine we had decided to buy Ethereum somewhere around that dotted line and just before 8pm. We saw it tick up after a string of bearish candles, and for whatever reason, thought it might continue its way upward. To minimize our losses (remember our goal is minimize losses and maximize gains), we set a stop order right away. Well set it near the bottom of those last couple bearish candles (about $474). Now as we watched the price work its way up, we would continue to raise our stop price. To do this, we would go to our open orders (every exchange will show this), and click cancel on the stop limit that we had just set. Shortly after 8pm, we mightve had a stop at $480 that wouldve been triggered. If youre stop limit is triggered and the signs point to the trend continuing youre able to buy back in with a profit already in your pocket.
We were protected, setting ourselves up for a quick profit, while at the same time being prepared for a huge profit if the price continued skyrocketing. This is the idea behind what can be a very powerful technique.
When buying cryptocurrencies, specifically altcoins, it is important to know a few details about them.
A major thing to note when evaluating a coin, are its functional use cases. Most coins will have some form of mission statement on their homepage. By understanding what purpose a coin serves in the real world, we will have a better idea of how to evaluate it further.
For example, there are cryptocurrencies, such as Litecoin, with the same goal as Bitcoin. In this case, it would be a good idea to compare its market capitalization with Bitcoin. This site ranks coins by market cap. Always be sure to check there when evaluating a new coin. If you notice a large shift in market cap on a certain date, it may be worth it to check for any news that day to see what may have caused it.
On the other hand, some coins serve a very unique function in the real world. For example, Power Ledger is a fairly new and interesting cryptocurrency. The goal of this project is to provide a system for consumers to trade electricity with one another. For a young project such as this, the best thing you can do is first decide whether you believe in the technology and the team behind it. The second thing you can do is read news surrounding the project. All of that information, along with a look at the coins market cap, is going to ultimately determine whether you think the technology might reach mainstream adoption, thus making an investment worth your while.
Now that we have an idea on how to get started evaluating a coin, we are better equipped to profit using another popular technique among traders.
ICOs, as you may have guessed, are much like IPOs. This is where coins are offered for the first time to the public. ICOs are not offered through exchanges, but rather you buy them directly from the creators of the project. Usually (its different for each project) you will send them Bitcoin or Ethereum that they will use to fund their project; in turn you receive a certain amount of their new coin.
One of the best resources for finding out about current or upcoming ICOs is here. If you see a coin that peaks your interest, be sure to be extra diligent when evaluating it. Since we have no historical data to gauge how the coin might perform, its very important to understand the real-world purpose of the coin. Another thing to note is whether the ICO is capped or not. Some ICOs will be capped at a certain number, meaning that people who are late to the part, will need to wait for the coin to be offered on exchanges.
Make sure to read up on all this information that you can find, including the coins white paper. Its common practice for coins to have one up on their site, explaining the technical details on how they plan to accomplish their goal. As you read it, see if you can determine whether you think those goals can be accomplished by the team or not.
The reason that we, as traders, would want to invest in these coins at their cheap initial price is simple: Once these coins do become available on exchanges, all of those people who missed out on the ICO, will want to buy in right away. This can lead to the price to skyrocket in a very short amount of time.
As traders, we will take a 10% quick profit any day of the week.
So far, everything weve discussed has involved taking a long position on a coin. That is, our focus has been buying a coin at a lower price than what we think we will be able to sell it at later. What if we have some indication that leads us to believe that the value of a coin is about to decrease? In this case, we could take a short position, which is the same technique that made some people boatloads of money during the 2008-2009 housing bubble.
To be able to take short positions, we need to understand margin trading. Trading on margin means we are trading with borrowed money. On exchanges like Poloniex, we can trade Bitcoin with a handful of coins (there are fewer coins offered for margin trading) with 2.5x leverage. That is, if we own 1 BTC, we can borrow up to 2.5 BTC to trade with. To be clear, this is not 2.5 BTC that we own. Now, on a trade that nets us 10% profit, we are bringing home .25 BTC instead of .1 BTC.
Like any other loan, this borrowed Bitcoin must be paid back with interest. On losses, you will need to pay back the loss and the interest. Poloniex offers up a great guide to margin trading that explains everything you need to know. Its worth reiterating that the estimated liquidation price is the price at which a forced exit from our position would occur, costing us all of the Bitcoin in our margin account so that it may be used to pay back the borrowed coin. Utilizing stop limits to avoid this is almost always a good idea.
It is NOT recommended to be taking long positions on a margin trade as an inexperienced trader.
So lets take our hypothetical 1 BTC from before and take a short position on Ethereum. We are able to borrow 2.5 BTC worth of ETH and sell it. 30 minutes later, the price of ETH has plummeted 10%. Now we can close our short position, buying back 2.5 BTC worth of ETH; except now, since the price has dropped, we are buying more ETH than what we sold. Our borrowed coin can be payed back and we take the rest as profit!
The idea here is simple: were going to buy a cryptocurrency on one exchange, and sell it on another. You may have noticed that the price of a cryptocurrency is often not the exact same on each exchange. How to take advantage of this is best described in this post.
Sure, it can be difficult to have a constant eye on the price of a coin on every exchange. Luckily traders have already built bots that can help and open sourced them for others to use.
Weve come a long ways in our path to becoming crypto traders, but there are still some very important things to learn. So far, weve learned how to do a fundamental analysis of a cryptocurrency, and that its important to do this so that we fully understand them before investing. But as traders, we need to understand what kinds of things tell us when should buy or sell. We need to understand technical analysis.
Technical analysis is the study of past price patterns. This will allow us to identify opportunities for profit. The cryptocurrency market, maybe more than any other market, has a herd mentality. The tendency, especially with inexperienced traders, is to buy when the price is raising, and sell when the price is dropping. We can take advantage of this with technical analysis.
This skill is much tougher to nail down that fundamental analysis. In todays world, everyone should be able to read up on a cryptocurrency and stay up to date with news because all the information is at our fingertips. To become a truly successful trader, we need to be using both fundamental and technical analysis all the time.
Bottom line: technical analysis is not a strategy. It is one of the tools we will use to help execute our strategy.
Identifying an opportunity does not mean you should dump 100% of your funds into a coin.
Coinigy is an incredibly powerful tool for anyone who is serious about crypto trading. This video from their team explains exactly what it can do for you, but to put it in laymans terms: It makes technical analysis a breeze and really simplifies the process of trading across several exchanges. It costs $15 a month and is at least worth trying out the the free 1 month trial to see how you like it.
TradingView offers the best chart reading software there is. Its also free (with ads that will go away with a paid plan). It helps out a ton with technical analysis, but does not connect with your exchange accounts to allow trading like Coinigy.
Remember those candlestick charts we see on every exchange? By studying them, we can find indicators, and understanding what these indicators mean can help us better predict the future price of the chart. There are tons of indicators and they can take some practice to become adept at identifying. You may find it easier to focus on practicing to identify them one by one until you become comfortable with them, slowly building your repertoire until you feel youre ready to go full boar with your trading career.
Read more from the original source:
Trading Cryptocurrency in 2018: The Definitive Guide
Please notice questions 12 through 14 in the FAQs of the notice. Of particular note are questions 13 and 14:
Q-12: Is a payment made using virtual currency subject to information reporting?
A-12: A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property. For example, a person who in the course of a trade or business makes a payment of fixed and determinable income using virtual currency with a value of $600 or more to a U.S. non-exempt recipient in a taxable year is required to report the payment to the IRS and to the payee. Examples of payments of fixed and determinable income include rent, salaries, wages, premiums, annuities, and compensation.
Q-13: Is a person who in the course of a trade or business makes a payment using virtual currency worth $600 or more to an independent contractor for performing services required to file an information return with the IRS?
A-13: Generally, a person who in the course of a trade or business makes a payment of $600 or more in a taxable year to an independent contractor for the performance of services is required to report that payment to the IRS and to the payee on Form 1099-MISC, Miscellaneous Income. Payments of virtual currency required to be reported on Form 1099-MISC should be reported using the fair market value of the virtual currency in U.S. dollars as of the date of payment. The payment recipient may have income even if the recipient does not receive a Form 1099-MISC. See the Instructions to Form 1099-MISC and the General Instructions for Certain Information Returns for more information. For payments to non-U.S. persons, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. (Bolding Added)
Q-14: Are payments made using virtual currency subject to backup withholding?
A-14: Payments made using virtual currency are subject to backup withholding to the same extent as other payments made in property. Therefore, payors making reportable payments using virtual currency must solicit a taxpayer identification number (TIN) from the payee. The payor must backup withhold from the payment if a TIN is not obtained prior to payment or if the payor receives notification from the IRS that backup withholding is required. See Publication 1281, Backup Withholding for Missing and Incorrect Name/TINs, for more information. (Bolding added)
If you are going to operate a mine pool, you will want to carefully review the publications mentioned above to make sure of reporting. For any miners you will supply, you will want to get their SSN, ITIN, or EIN through a W-9. If they are a foreign entity, see Pub 515 about those requirements. If any individual/entity refuses to provide you with their information, take note of the Backup Withholding requirement mentioned in Publication 1281 because the IRS will hold you responsible for these taxes. It is entirely possible that an individual/entity does not give you accurate information. When this happens, the IRS will advise you that their reportable income amounts are subject to backup witholding (28% of their reportable income amounts).
There’s obviously more to this, but hopefully this overview provides guidance for you so you can plan your endeavor.
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How would one operate a Cryptocurrency Mining Pool and …
A Bitcoin logo is seen on a cryptocurrency ATM in Santa Monica Thomson Reuters
Coinbase, the cryptocurrency trading platform, announced Tuesday the launch of an index fund which will allow investors to put money into a basket of four of the largest cryptocurrencies.
The so-called Coinbase Index Fund will give investors access to the digital currencies listed on GDAX, the exchange operated by Coinbase. It will be weighted by market capitalization and will adjust when new coins are added to the exchange.
The breakdown of the fund is as follows: 62% bitcoin, 27% ethereum, 7% bitcoin cash, and 4% litecoin. Investors can start signing up for the product, but it won’t be live for a couple of months, according to a spokesperson for Coinbase.
The index fund wouldn’t be the first one to hit the market. Bitwise Asset Management, for instance, operates a crypto index fund, holding ten cryptocurrencies weighted by market capitalization.
Coinbase Coinbase product manager Reuben Bramanathan told Business Insider in a phone interview that the product reflects the growing demand on the part of institutional investors and high-net-worth individuals looking to dive into the market for digital coins, which stands at about $500 billion in value.
“We are seeing new investors coming to the market because they see an asset that is not correlated and outperforms, but they don’t know which ones to buy,” Bramanathan said.
At this point, the product is open to only accredited investors because the company wants to wait on more clarity from the Securities and Exchange Commission on bitcoin-linked financial products, which the SEC pumped the brakes on.
In a letter signed by Dalia Blass, the SEC’s director of the division of investment management, the agency said: “There are a number of significant investor protection issues that need to be examined before sponsors begin offering these funds to investors.”
Bramanathan expects there is strong retail demand for an index fund product.
The move is a slight departure from Coinbase’s main business of facilitating trading in the cryptocurrency market.
But the company’s general manager Dan Romero told Business Insider’s Becky Peterson that he is trying to build Coinbase into the Google of cryptocurrency. As Peterson pointed out recently, if there is one thing we know about Google, it is that they are always gate-crashing new markets.
Read more here:
Coinbase cryptocurrency index fund – Business Insider