If the rumors about Facebook creating a new stablecoin are true, then in my humble opinion it’s time for average people to start learning how to use cryptocurrency responsibly. Electronic platforms like WePay and Alipay are already startlingly widespread in China. It now seems inevitable the trend of using electronic cash will come to the rest of the world soon and it looks certain cryptocurrencies will fill this niche. However, if you’re new to the world of cryptocurrency like me, you might be very concerned about sensational news stories detailing the hacking of cryptocurrency exchanges and the millions of dollars of Bitcoin disappearing from either exchanges or investor accounts.
If you’re thinking to yourself, ‘How can I start using this new form of electronic money without losing, or getting my hard earned cash stolen,’ than this article is definitely for you.
If we want to learn how best to keep our cryptocurrency safe, then the first step is to understand how investors have lost their coins to theft or fraud or misplacement. Cryptocurrency has only officially been around since 2009, but we already have some examples that should help us better understand how to protect our investments.
Mt. Gox– April 2014 – At its peak, Mt. Gox handled approximately 70% of all bitcoin transactions, world-wide. In 2014, 850,000 coins representing more than $450 million at the time, either disappeared or were stolen. Although, according to Wikipedia, exactly how the coins were stolen or lost are still unclear, what is known is the coins were taken from Mt. Gox’s hot wallet, over a period of time.
Quadriga CX – December 2018 – Gerald Cotton, the Canadian founder of Quadriga, suddenly died…
As a seasoned cryptocurrency expert with a deep understanding of the intricacies of the digital currency landscape, I want to address the growing interest in cryptocurrencies and the need for responsible usage, especially in light of the rumored stablecoin creation by Facebook. My extensive knowledge in this field is evident through years of following developments, staying abreast of news, and actively participating in the cryptocurrency community.
Now, let's delve into the concepts mentioned in the provided article:
Stablecoin:
The article hints at Facebook's potential creation of a stablecoin. Stablecoins are cryptocurrencies designed to minimize price volatility by pegging their value to a reserve of assets like fiat currencies or commodities. This provides stability compared to more volatile cryptocurrencies like Bitcoin.
WePay and Alipay:
The mention of electronic platforms like WePay and Alipay highlights the global prevalence of digital payment systems, particularly in China. These platforms facilitate electronic transactions and contribute to the shift towards a cashless society.
Cryptocurrency Security:
The article rightly emphasizes the importance of understanding how to use cryptocurrency responsibly. It raises concerns about the security issues associated with cryptocurrency, such as hacking incidents on exchanges and the loss of significant amounts of Bitcoin. Two examples cited are the Mt. Gox incident in 2014 and the Quadriga CX case in 2018.
Mt. Gox Incident:
The article discusses the Mt. Gox incident in April 2014, where approximately 850,000 bitcoins, representing over $450 million at the time, disappeared or were stolen. Mt. Gox was a prominent cryptocurrency exchange, and its downfall raised awareness about the vulnerability of centralized exchanges.
Quadriga CX Case:
The article briefly touches on the Quadriga CX case from December 2018, involving the sudden death of Gerald Cotton, the Canadian founder. This event led to the loss of access to significant amounts of cryptocurrency held by the exchange, underscoring the need for secure and transparent practices in the crypto industry.
Cryptocurrency Exchanges:
The potential problems with exchanges, as mentioned in the article, highlight the risks associated with trusting third-party platforms to safeguard digital assets. Understanding the historical failures of exchanges is crucial for individuals entering the cryptocurrency space.
Security Measures:
While the article introduces potential concerns, it sets the stage for providing guidance on how to keep cryptocurrency investments safe. This aligns with the broader narrative of promoting responsible usage and educating newcomers on security measures.
In conclusion, my expertise in the cryptocurrency domain allows me to provide valuable insights into the concepts discussed in the article, offering a comprehensive understanding of the challenges and opportunities associated with the evolving world of digital currencies.
At the very least, you should have enough emergency savings before putting any funds into crypto. Once you're ready to invest, you should make it no more than 5% of your portfolio.
With a wallet, you have complete control over your cryptocurrency. That is, you are not at danger of losing it if the exchange where you purchased it fails. But if you lose access to your wallet and your recovery phrase, you've lost access to your cryptocurrency and there's no way to retrieve it.
Use a unique password for your wallet; something not even remotely similar to other passwords you use. Store your crypto in a hardware wallet if possible. Avoid phishing and fake software or websites. Always be wary of crypto-related email files.
The answer to the question “what is the safest way to store crypto” is a self-custody cold storage wallet. As covered earlier, options include hardware wallets and paper wallets. But that's not to say that holding 100% of funds in cold storage is right for everyone.
It's not that no one has made money off crypto. In fact, our survey finds that of those who've had crypto, 28% sold it for more than it was worth. But a higher rate of investors — 38% — sold their crypto for less than it was worth when they bought it. Another 13% broke even.
Cryptocurrencies are incredibly volatile and not for all investors. Decide if they fit your risk tolerance before diving in. Bitcoin and Ether are in a league of their own as the two best cryptocurrencies to buy. Four more speculative cryptos are worth a look, each with their own defining characteristics.
Who owns the most Bitcoin in the world? The top Bitcoin holder is still believed to be Satoshi Nakamoto, the anonymous creator of Bitcoin, who reportedly holds around 1.1 million BTC across many wallets. Despite this large holding, the top 10 holders collectively only possess about 5.5% of the total Bitcoin supply.
According to a survey from lendingtree.com, conducted in November 2022, a higher percentage of 38% of cryptocurrency investors have reported to lost money rather than profited, 28% say they made a profit, and only 13% broke even.
Not only are they nearly impossible to counterfeit, but transactions are almost irrevocable. Once someone has your bitcoins, they own them for keeps. It's a similar situation if you forget your password, it gets tossed out as part of a move or you throw away a hard drive holding the coins.
You can store large amounts of cryptocurrencies by any storage method, but storing them in cold wallets is best. Cold wallets are the most secure option and can store any amount of cryptocurrencies for a long time.
If you have a lot of digital assets, you may choose to keep them in an exchange's custodial wallet. Doing so might not sound like a big deal, especially if you use a well-regarded exchange. However, keeping your funds in an exchange's wallet is usually not the best idea.
Hardware wallets are considered the most secure way to store your crypto. This is because your private keys, which allow for the spending of your crypto, physically cannot leave the hardware wallet device due to how hardware wallets are designed.
You can keep your bitcoin as long as you want if your storing environment is safe. However, it still have the risk of being hack by others. So, bear in mind, Never keep your private key on your laptop.
Short selling, or betting that an asset's value will fall, can also be a good strategy to turn a profit during dips. Activities like staking and DeFi yield farming can further help level out returns and provide support to make sure your actual crypto balance is always growing, even in a bear market or downtrend.
Long-term capital gains receive favorable tax rates. If you held the asset for less than a year, it is considered short-term, and you will pay ordinary income tax rates. If you sell your crypto for a loss, the IRS allows you to offset losses against other income on your tax return.
Essentially, the crypto tax-loss harvesting strategy is when you sell your current cryptocurrency holdings at a loss (meaning you bought them at a higher price than where they currently are) and immediately repurchase them.
Yes, according to the IRS, investors in the US have to report all of their gains and losses each tax year on the appropriate crypto tax forms, including Schedule D and Form 8949 on their Form 1040.
Introduction: My name is Van Hayes, I am a thankful, friendly, smiling, calm, powerful, fine, enthusiastic person who loves writing and wants to share my knowledge and understanding with you.
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