Is Bitcoin the Next Big Thing?

[Pepto]

How do you treat cap gains from sales of crypto currency? Same way as stocks and shares, and other investments? I imagine if you bought 10 Bitcoin a few years ago you'd be facing a hefty tax bill if you sold them today...

I think they are traded as "commodity" on major market sites

 

[ian]

How do you treat cap gains from sales of crypto currency? Same way as stocks and shares, and other investments? I imagine if you bought 10 Bitcoin a few years ago you'd be facing a hefty tax bill if you sold them today...

Taxed like interest, stocks and shares etc. Hence why you hear so many stories of coins being "stolen" (so they can hide, away from the tax man). Ultimately though, if you sell, but don't cash out back to fiat and retain on an exchange, it would still be considered invested

 

[ian]

@systereg I've been using an exchange to purchase crypto via a verified Paypal account, PM me if interested. It may be an alternative if you don't have household bills to scan etc

What's with the secrecy of the exchange? If it can't be disclosed, I'd question why.

Localbitcoins is a popular way to buy using your bank account, but similar to exchanges, some require proof of ID.

 

[ian]

That's the sort of thing I'd rather do, buy 10,000 coins like that at 5 cents and sell for 12 cents or hold for a bit longer to see if it goes higher, it's currently trading at $0.109811 on one site and $0.1162995 on another.

Will PM about the exchange PayPal thing.

Same as you, psychologically I'd rather buy thousands of an alt coin at fractions of a cent than the huge coins with 3, 4 or 5 figure dollar values. Having said that; they scale in the same way if successful so it makes no difference, but to be able to say "I own 10000 of them" is always nice.

Personally though, I wouldn't consider ADA a good buy.

 

[websaway]

Gob smacked. I would not have thought in my wildest imagination that Bitcoin would have reached this level. I did not consider the amount of Asian people that love a bet and would bet on two flies on a wall. Also the massive communication ability of social media to create something in 2 years that would have once taken 50 years. I congratulate , I think it was Doug, who put money in for his kids at about $250 dollars. You can imagine the type of people who are buying now and the people that are getting out with their profits only to come in again when it collapses. I'm not being cynical, if this is legal then it's the way of all investments. I've heard of very sophisticated investors who are now saying they have invested. Who was it that said " when the shoeshine boy Is investing in it, it's time to sell up" .

 

[Edwin]

Same as you, psychologically I'd rather buy thousands of an alt coin at fractions of a cent than the huge coins with 3, 4 or 5 figure dollar values. Having said that; they scale in the same way if successful so it makes no difference, but to be able to say "I own 10000 of them" is always nice.

Actually, isn't there a real difference? If you own $100 worth of Bitcoin you have 1/100th of a Bitcoin, but if you own $100 worth of a whatevercoin that's going for $0.01 you own 10,000 coins. So far, so obvious... But doesn't that 10,000 whatever coin stake represent a very significantly larger proportion of all available whatevercoin than that 1/100th of a Bitcoin does of all Bitcoin. In other words, are you controlling "more" of the whole market?

 

[Murray]

How do you treat cap gains from sales of crypto currency? Same way as stocks and shares, and other investments? I imagine if you bought 10 Bitcoin a few years ago you'd be facing a hefty tax bill if you sold them today...

You could use it to directly buy something like gold

You can trade a 1 oz gold coin in for cash at a lot of places without any questions

Hard to track

For the unscrupulous types of people of course

 

[ian]

Actually, isn't there a real difference? If you own $100 worth of Bitcoin you have 1/100th of a Bitcoin, but if you own $100 worth of a whatevercoin that's going for $0.01 you own 10,000 coins. So far, so obvious... But doesn't that 10,000 whatever coin stake represent a very significantly larger proportion of all available whatevercoin than that 1/100th of a Bitcoin does of all Bitcoin. In other words, are you controlling "more" of the whole market?

It would be most likely that a coin worth just $0.01 is because there are more 'shares/coins' in public release, therefore you would in theory only own the same stake in the market. It might seem likely that a low value coin will increase more in value as a percentage than lets say bitcoin, but in reality, it is entirely based on fundamentals with the amount released playing a big part. As I alluded to though, it is nice to invest in something "cheap", in the hope that one day you can say "I own 10000 of those", rather than "I own 0.00002324 bitcoins" but it is entirely a mindset . For balance though, I own coins such as Litecoin (more expensive) and small coins such as Stellar Lumens ($0.03 at the time). Which one will increase the most isn't a factor of current value.

 

[dee]

Mmmm..... that'll be the panic dump I was talking about earlier then !

 

[ian]

Yep, it is retracing a little. Hoping for a lot so I can buy more.

 

[dee]

Thankfully I got out on my xrp near top. Just bought it all back

 

[Edwin]

BTW, having been a paper millionnaire several times over just before the first dot-com crash (based on the valuation set by angel investors on a company I co-founded) only to have it all disappear when our funding ran out, I can only suggest that if you’re sitting on a life-changing pile of Bitcoin, don’t let the opportunity pass you by.

The price may rocket higher, stagnate, fall or plummet, who knows...

But what I do know is this: it is much much less painful to cry into your beer over what “might have been” if your bank account is already bulging than it would be if you tried and failed to catch a falling knife, and have little or nothing to show for it.

 

[dog]

Excellent advice Edwin.

BTW, having been a paper millionnaire several times over just before the first dot-com crash (based on the valuation set by angel investors on a company I co-founded) only to have it all disappear when our funding ran out, I can only suggest that if you’re sitting on a life-changing pile of Bitcoin, don’t let the opportunity pass you by.

The price may rocket higher, stagnate, fall or plummet, who knows...

But what I do know is this: it is much much less painful to cry into your beer over what “might have been” if your bank account is already bulging than it would be if you tried and failed, to catch a falling knife, and have little or nothing to show for it.

 

[Edwin]

Isn't it crazy that somewhere there's a single Bitcoin wallet with over a billion dollars in it? No matter how many times I tell myself not to, it's hard not to picture it as a physical wallet bulging with a stack of notes the size of the Earth...
https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html

Its owner must have taken triple platinum-plated diamond-encrusted security measures to protect the private key!

 

[ausername]

I think personally if I had a couple of million pounds in bitcoin I'd be liquidating enough into cash to ensure that I had a decent enough mortgage-free house and enough in pensions to make heating + eating likely (couple of hundred grand), once you've got that... what have you really got to lose? Keep the rest in crypto and enjoy the ride.

Anybody sitting there as a paper millionaire in bitcoin but still paying a mortgage at the start of a cycle of interest rate rises is doing things wrong. Ensuring that you will live mortgage free if the bubble bursts would appear to be the minimum one should do to mitigate risk.

 

[Edwin]

I think personally if I had a couple of million pounds in bitcoin I'd be liquidating enough into cash to ensure that I had a decent enough mortgage-free house and enough in pensions to make heating + eating likely (couple of hundred grand), once you've got that... what have you really got to lose? Keep the rest in crypto and enjoy the ride.

Anybody sitting there as a paper millionaire in bitcoin but still paying a mortgage at the start of a cycle of interest rate rises is doing things wrong. Ensuring that you will live mortgage free if the bubble bursts would appear to be the minimum one should do to mitigate risk.

Doesn't even have to be a million, or anything like that. Getting rid of your mortgage (assuming you have one) makes it much easier to change job, or quit and start your own business, because the monthly safety net (minimum you have to bring in to keep the lights on) goes down enormously when you're paying neither mortgage nor rent. So you're buying flexibility as well as financial freedom. Even paying down a meaningful lump sum can make a real difference to your outgoings.

Put another way, there was a massively long thread a while back about creating sites that make £1 a day. Well, if you pay off £10,000 of mortgage, that's very roughly going to be about £1/day less in mortgage interest you have to pay (it does vary a lot of course based on what you've got your mortgage pegged at).

 

[ausername]

People aren't going to want to sell all of their bitcoin if they have real belief that its going to $50,000 like the Winkelvoss twins.

Hence why my hypothetical example was that if somebody had a couple of million on paper, they should really be liquidating say half a million / 25% to and ensuring their security, then they don't have to worry too much about what happens to the remaining 75% of their coins (in that simplified example).

People are inherently greedy so they often go "all in" and only focus on the upside if all they see are dollar signs. It would be ludicrous to me to be worth £2m in bitcoin and have f*ck all in other assets.... but there will be people who are set up like that right about now.

Its also true of people who go "all in" on real estate and all sorts of other assets though, 2008/2009 saw a hell of a lot of buy to let investors go bust because they'd constantly be at the top of their borrowing limit to acquire more and more properties, and then they'd have to fold everything when their portfolio goes deep into negative equity.... including their own home in many cases.

Its not a new life lesson is it, not having everything in bitcoin.... diversification of assets and varying asset classes is literally 'personal finance 101' and has been since forever.

I literally only have property equity, pension funds and not particularly impressive savings. I do wish I had a little in crypto to be honest. I suppose domains and websites are also 'assets', although I don't have anything particularly impressive in that regard at the moment.... working hard at that though!

 

[ian]

Take profits at specific price points and stick to it. Clear all outstanding debts, mortgages etc. If you have a s&s pension etc, use that as your long term gamble which you can't withdraw money from.

 

[TinkyWinky]

BTW, having been a paper millionnaire several times over just before the first dot-com crash (based on the valuation set by angel investors on a company I co-founded) only to have it all disappear when our funding ran out, I can only suggest that if you’re sitting on a life-changing pile of Bitcoin, don’t let the opportunity pass you by.

The price may rocket higher, stagnate, fall or plummet, who knows...

But what I do know is this: it is much much less painful to cry into your beer over what “might have been” if your bank account is already bulging than it would be if you tried and failed to catch a falling knife, and have little or nothing to show for it.

Or you can use the 'foolproof' gambling option - bank 50% and then play with the rest - make more money and at a fixed amount - bank 50% and gamble with 50%.. that way you can see your rewards - but not miss out completely on any stellar performances...

 

[ausername]

Take profits at specific price points and stick to it. Clear all outstanding debts, mortgages etc. If you have a s&s pension etc, use that as your long term gamble which you can't withdraw money from.

There are people who literally believe that bitcoin is going to become the next currency, that fiat will die, and therefore they think that converting bitcoin to cash is the opposite to banking.... its sad, but there will be people lose literally everything to bitcoin if it pops.