Cryptocurrency (or "What the hell is a bitcoin?")

I thought that due to the most recent bitcoin bubble, it might be nice to have a thread to discuss such things.

I threw a small amount into each of the 3 currencies on Coinbase, which seems to be the largest place where doing so is possible.

So far I am up a few bucks in each overall and it is fun to watch, but boy that barrier to entry is not nice. To my knowledge there is no way to directly buy these things and storing them is something I don't understand much at all. This is why I am only playing with amounts where loss won't be a big deal.

I only looked into bitcoin and only a small bit of it. Unfortunately it seems to be to expensive to get into now.

Copy/pasting to both contribute & tag the thread.

WipEout wrote:
manta173 wrote:

Is there a cryptocurrency thread?

I have a lot of academic curiosity and as such threw a few bucks in a few of them. Anyone else riding the hype train?

I've been really curious about it myself, lately. I haven't been able to throw any money at it, mainly due to finances but also in large part due to the fact that I can't hardly figure out where to begin.

A buddy of mine just recently told me that he basically plays all the different cryptocurrencies like a casino-- put $10 here, $10 there, gambling on super-low-value currencies that he thinks may begin trending. He made almost $10k on Bitcoin just as it spiked earlier this year and got bit by the bug since then. I kind of like the idea of throwing a few bucks here and there and seeing what might pick up.

I bought $100 of Bitcoin at Coinbase a few months ago to see what it was all about. I'm still not clear on the whole thing as it seems complicated to spend or convert back to dollars. <-- That might be a coinbase issue and not Bitcoin itself. Anyways, I was just planning on letting it sit and see what happens.

I did 100 bitcoin and 20 each of litecoin and etherium. I figure if I get to double in any of those I pull out my initial contribution and go from there. It's really just a watch and see kind of thing. I wish I had followed my gut and got in at 10k.

I don't think it is too late to get into bitcoin, but we might be rounding the too early corner. I figure there will be a boom after Christmas like there was after Thanksgiving as family members tell others what is going on. Also all the articles about how to buy bitcoin being on the google top ten search lists... but then it will drop again. I am guessing it will come back up after a bit of time, but this whole thing is guess work.

All the volatility of non-state currencies with no market behind them, no guarantors for the "banks", and no regulations. What could go wrong?

I debated, with friends, buying a system to mine bitcoin back in 2009 or so. I had it all planned. When I heard about Mt. Gox, I knew that was where I'd put any coins I got. I simply waited to see where things were going in 2010, and eventually lost interest in that the investment in electricity and hardware was not really worth it at the time for the return.

But I can confidently say that I'd have lost nearly five years of bitcoin in the Mt. Gox fiasco if I'd gotten in as planned. So... Lesson learned. Risky currencies are risky. Je ne regrette pas rien.

I work in Finance and a lot of us have been sitting around trying to wrap our ends around bitcoin. We're all dumbfounded at the entire process, valuation and how the marketplace interacts with it.

As if that weren't enough to ponder, a co-worker introduced me to the new craze called - cryptokitties, which is a platform where people buy Etherium (e currency) with USD and then buy digital cats for several thousand dollars a piece. Some going for over $100k a piece and there has been something like $12 MILLION in transactions in a month. Mind = blown.

Cryptokitties Explained

This man has made more money trading cryptokitties than investing in his IRA

EvilDead wrote:

I'm still not clear on the whole thing as it seems complicated to spend or convert back to dollars.

I bet you have to convert them into tulips first.

Or spices in the South Seas.

93_confirmed wrote:

As if that weren't enough to ponder, a co-worker introduced me to the new craze called - crytokitties, which is a platform where people buy Etherium (e currency) with USD and then buy 2D digital cats for several thousand dollars a piece.

Don't store them in a box where you can't see them.

-BEP

I wanted to try out mining, but with a purpose... I got in Gridcoin.

It is nice, working with Boinc, like [email protected], or WCG.

I'll never do a fortune, but can let you see the basic I guess.

One general observation I have about speculation of this type: it's almost never a good idea to pay more for something than anyone else ever has, especially for a non-productive asset like gold or bitcoins. The risk of a speculative investment is directly related to the price; the more it costs, the more risk of loss you run.

If bitcoin is indeed in a bubble, and it certainly looks that way to me, you can expect it to lose about 90% of the value from its peak. Once that happens, it may be safer to buy some. It definitely has *some* inherent value; the ability to transfer itself basically anywhere that you can get a stream of arbitrary bytes makes it a lot more convenient than many physical assets. I would think it would be particularly interesting for denizens of places with severe local currency abuses and/or foreign currency controls, like Venezuela. It's also of interest to entities that the US government doesn't like: its tentacles are deeply into the global banking system, and they can basically shut almost anyone out if they declare them persona non grata. But they can't shut out bitcoin, so that alone gives the system some value.

If you really insist on paying more for it than anyone in history, make sure you can afford to lose that money.

Right, so this is so my jam. I've been following crypto-currencies for ages. I hold no currency. I only sort of speak the language. It's basically replaced my following of Eve Null-space politics. I have friends who have made life changing amounts of money, but I am too much of a value investor to be be comfortable speculating (a man's got to know his limitations).

First off I can't recommend enough you read the original bitcoin white paper (PDF), it's an extremely easy read and does provide a load of context for why things were set up the way they are. Spoiler the problem they were trying to solve is "fees make micro-transactions unfeasible on the internet".

My favourite single piece of commentary on bitcoin is this piece by Professor Damodaran of NYU. The tl;dr is that Bitcoin is a young currency, not a commodity, collectible or cash generating asset. It can be priced, not valued. Thus you can speculate on it but not invest in it, and that's alright if you're a trader.

I don't think it's a ponzi scheme. But it might be something else. This is a great piece on what the theoretical "Nakamoto Scheme" characteristics by English solicitor, also why it might be more lucrative for fraudsters at less risk than a ponzi scheme.

So agreeing that it is a currency, I think Bitcoin is a terrible currency. It's deflationary foundation encourage hording. I've read far too much Keynes, so I tend to look at the velocity of money as being the primary sign of a healthy economy.

As medium of exchange, it appears that it's main utility is in circumventing currency controls in countries like Venezuela and People's Republic of China and in circumventing the current payment processors who refuse to process illegal activity. We're seeing that functioning governments (China and South Korea) being to clamp down on the bitcoin hole in their currency controls. On the black market goods, the current volatility of BTC makes it hard to use on the exchanges, I'm hearing rumors that alternative coins are becoming more popular for drugs purchases. Recently steam (one of the few markets I go to) dropped it's support for payments in BTC. If you take the view that currency speculation is making a claim to the future health of that currency's economy, then BTC's internal economy doesn't look all that rosy.

As a store of value, I don't think the arguments for digital gold hold up. BTC is by definition backed by trust in the network. That at some point you will be able to exchange the BTC for something of value, at the moment I can't see any evidence that that something of value isn't other people's fiat money. If that's all we have then the Greater Fool theory applies.

It's super interesting to watch. If you have a punt, don't play with your rent money. I think it's a bubble but I can't predict the bursting point.

Each time BTC is abused, trust drops. Over time, as speculators come in and raise the price again, it rises, only to be abused again. This was the problem even with metallic currencies in the 16th-19th centuries, and resulted in massive swings in value, which affected the holders severely.

I view BTC no differently than the speculative currencies popular in the early-mid-19th century, prone to wild swings in value and sudden crashes and bubbles. It's not going to be fit for purpose until and unless it's adopted into regulation regimes by governments, and why would they do that at this time? Catch-22 - it's designed to get around regulations, but it has all the flaws and dangers of unregulated currency, which seem to me to outweigh the benefits, again at this time.

I too have been following the Bitcoin story for the last few years. And I'm still not persuaded that any of these crypto-currencies is actually a currency (i.e. a generally accepted medium of exchange/trade (usually issued by a government)).

First, because Bitcoins, for example, are not "generally accepted" (like Porsche's air-cooled GT cars)
And second, because Bitcoins (and other currencies) don't seem to be a medium of exchange at the moment. They're being bought and hoarded by speculators (like Porsche's air-cooled GT cars).

I was struck by DoveBrown's reference to Eve Online. Part of me has wondered for a while whether this entire thing isn't just a very long Eve-style con. Certainly, the MtGox theft had all the hallmarks of a long con (as have subsequent notable Bitcoin 'disappearances').

If the desire for unearned rewards is part of human nature, then it is inevitable that people will seek to exploit this and that every generation will be visited with a con appropriate to its times. From where I sit, crypto-currencies are our (and Generation Y's) con, and - when the con is finally executed, the money stolen and the conned have thrown themselves from their windows - we will look back, misty-eyed, at the simple pyramid schemes of more innocent times past.

EDIT: I do have one question though: what is the current cost of mining one Bitcoin? And what's the ratio between that cost and Bitcoin's current price?

Most of the cost of bitcoin mining is from the electricity, so the price is going to vary greatly depending on your equipment and the cost of electricity to that equipment.

Someone did some math here, based on the average price of electricity in the US: https://www.quora.com/How-much-does-... (it is easy to see why most bitcoin mining does not happen in the US these days). That doesn't include the cost of data center space, which will generally also be cheaper outside of the US.

detroit20 wrote:

Part of me has wondered for a while whether this entire thing isn't just a very long Eve-style con.

This is about where I'm at.

I hope you'll all forgive me for a bit while I don my tin-foil hat and spout some (overly) paranoid ramblings that may or may not be relevant. If I've made an incorrect assumption and/or am wildly off-base, I would appreciate being corrected -- don't hold back.

1) I accept that Bitcoin is a currency, in that it's a (virtual) object that has no intrinsic value other than what the community decides they are willing to pay in exchange for them. Bitcoin, as I understand it, has a hard limit of 21 million coins that will ever exist; we're currently at about 16 million coins in circulation, and currently growing at the rate of 12.5 coins every ~10 minutes. Therefore, at current USD exchange rates, approximately $200k worth of bitcoin is added to the world every ~10 minutes -- $28 million per day of brand-new bitcoins, freely awarded to the miners.

2) Fiat currencies are governmentally-enforced to be legal tender everywhere within the country, right? And aside from (some) banks which are willing to exchange one currency for another, foreign fiat currencies are generally not accepted as legal tender. I know that USD is often accepted outside the US, but I think you'd be hard-pressed to find a Starbucks in the US that accepts Euros (as an example) -- but Bitcoins somehow are ok?

3) Bitcoin mining operations these days seem to be done at a more macro scale than originally, whereby miners register themselves with a mining group and contribute their computing power to the group in exchange for a fixed small-fraction-of-a-Bitcoin on a regular basis. This is nice for the miner, because it's a steady stream of income, without relying on the luck of winning the hashing lottery and getting a huge payout. But is the full bitcoin award being evenly distributed among all of the hashing participants in the group, or are the original organizers of the group getting the lion's share -- even if they're no longer even running any miners? This seems Ponzi-ish, if true.

Disclosures: These ramblings are my own personal opinion. I currently own no cryptocurrencies, but I did run a software miner years ago, for about 2 minutes before deciding that it was stupid and was just going to burn my PC out faster (actually, I originally believed that the "mining software" was just a trojan horse to sucker people into volunteer their PCs to be part of a botnet).

So, some caveats first:

1. I'm a bitcoin miner, and have been for years - since shortly before dedicated ASIC miners became common. If you need technical questions answered, I can answer them.

2. DO NOT invest anything into any cryptocurrency unless you are willing and able to lose it all. Cryptocurrencies aren't even ten years old, and they are both a) entirely new, and b) very, very experimental. You have been warned - here there be dragons.

manta173 wrote:

To my knowledge there is no way to directly buy these things and storing them is something I don't understand much at all.

Actual bitcoins are just values assigned to addresses (public keys) on the blockchain, which is a public ledger. Assuming you have the private key, you can see what you own in the standard bitcoin client, which is cross-platform and open source. The downside to running the standard bitcoin client is that you need to get the entire blockchain, which is approximately 160GB of data at the moment and it can take days to sync the full dataset from the network.

To buy them, you have to go through an exchange, similar to any other currency. The most basic transaction is that you pay an exchange money, and they transfer the appropriate amount of bitcoins to the blockchain address you give them. That isn't always the case, however. Due to reasons I'll go into in a minute, the exchanges often do transactions outside the blockchain, and thus your balance on the exchange may or may not reflect reality. This is how Mt. Gox (and others) were able to string people along long enough to defraud them, and it remains a fundamental vulnerability of exchanges. This vulnerability results in two rules of thumb: go with an exchange that has a proven track record of being trustworthy, and keep your holdings out of the exchanges unless you're actually making a trade. You can do this by either transferring the funds to an address you create in the standard client, or using one of the many available trustworthy wallets - I recommend blockchain.info. It's even possible to have an offline, physically printed "wallet", essentially a hardcopy private key.

The current major problem with bitcoin is the transaction rate. Bitcoin currently has a fixed transaction block size, about 1 megabyte. The protocol itself is designed to process a block roughly every ten minutes, and thus there is a hard cap on how many transactions can be processed per second. This means that as bitcoin became more popular, the transaction queue (mempool) can grow very large and it takes longer for any given transaction to be processed. This in turn leads to higher transaction fees as people tried to get their transactions through more quickly. This isn't necessarily a bad thing, but it does have several critical effects - for example, it provides a greater financial incentive for the exchanges to perform more off-chain transactions.

Changing this isn't easy, as the article notes, and it has affected the usability of the currency as shown by Steam suspending BTC transactions. There's been a debate in the bitcoin community for years about exactly how to do this, and it remains unresolved. (Bitcoin Cash is an attempt change the block size to 8 megabytes via a fork in the blockchain - I can go into the specifics if anyone is interested.)

DoveBrown wrote:

So agreeing that it is a currency, I think Bitcoin is a terrible currency. It's deflationary foundation encourage hording. I've read far too much Keynes, so I tend to look at the velocity of money as being the primary sign of a healthy economy.

Suffice it to say that the creators of bitcoin were not fans of Keynes. Bitcoin is designed to prevent the opposite problem - deliberate inflation, which benefits the currency suppliers (governments) at the expense of the currency holders (usually the poor and middle class, as rich people mostly own assets). Inflation is a very real and very dangerous societal problem. Since there's never been a perfectly fungible, deflationary currency, one of the really interesting things about bitcoin will be watching this play out.

Bitcoin also has pretty significant user advantages over other currencies. It is easy to spend, hard to stop, ignores international boundaries, and is a very low cost transaction system, even now. Its growth and use in Venezuela is a pretty good example of how bitcoin provides a good, working currency for people who have no other viable option.

absurddoctor wrote:

Someone did some math here, based on the average price of electricity in the US: https://www.quora.com/How-much-does-... (it is easy to see why most bitcoin mining does not happen in the US these days). That doesn't include the cost of data center space, which will generally also be cheaper outside of the US.

That math is ... well, wildly inaccurate. Further, question itself is moot because the cost isn't directly related to the creation of bitcoin. The entire purpose of mining is to secure the transaction records - the creation of new bitcoins is a side effect intended to attract more people to the business of mining, or transaction verification and validation. And it's a side effect that will disappear in a few years.

A more valid comparison is this: how much does it cost Visa to process a transaction? Is that transaction secure? How much is a more secure monetary transaction system worth?

merphle wrote:

Therefore, at current USD exchange rates, approximately $200k worth of bitcoin is added to the world every ~10 minutes -- $28 million per day of brand-new bitcoins, freely awarded to the miners.

Mining is most emphatically not free, which is the explicit reason for mining rewards. This is a deliberate design feature, intended to attract enough computing power to provide security for the blockchain. One might argue that it is succeeding a little too well, but it is succeeding for the moment.

merphle wrote:

But is the full bitcoin award being evenly distributed among all of the hashing participants in the group, or are the original organizers of the group getting the lion's share -- even if they're no longer even running any miners? This seems Ponzi-ish, if true.

It's not. Unsurprisingly, miners are pretty touchy about this sort of thing and will quickly switch pools if they feel they are being treated unfairly. There are a number of different schemes in place for distributing the proceeds of mining, and new ones are attempted on a regular basis. Usually, the proceeds are distributed according to the work you put in, minus a small percentage for the pool organizers. The pools play a significant role, because it's their software that keeps miners from duplicating effort and keeps track of how much work everyone is contributing - the mining hardware itself is pretty dumb.

Aetius wrote:

A more valid comparison is this: how much does it cost Visa to process a transaction? Is that transaction secure? How much is a more secure monetary transaction system worth?

35 cents + ~2% per transaction, generally paid by the recipient. How are Bitcoin transactions more secure than a Visa transaction, and why should I care?

Ok, so the current number of transactions per block is about 2,000. A reasonably accurate estimate of per-transaction costs puts the current bitcoin transaction cost at less than a dollar, which is pretty much in line with Visa. And if the block size is increased in the future - say, to 8mb - that number drops by the same factor of eight to a range of less than 10 cents per transaction.

Why is bitcoin more secure? First, bitcoin requires the control of the private key that matches the address in question in order to submit a transaction. It's not out of the question for the private key to be stolen (or confiscated), but that simple requirement is VASTLY more secure than modern credit card transactions, which essentially require no authentication at all. (Note that Visa and the other credit card companies *could* easily integrate public/private keypairs into their system, they just don't. One of the critical legal protections these companies have is that they are permitted to externalize the costs of system failure onto merchants and consumers.)

Second, bitcoin transactions are public, and require a significant amount of computation to fake or subvert. (This is where the miners and their computational power fit in.) This means that once a transaction is in the blockchain, it is permanent - there are no chargebacks, and everyone can see it and confirm that the transaction happened. This money can't be frozen, confiscated at will by an unhappy or greedy government, or otherwise compromised by a third party.

So why should you care? If you're a merchant, it will save you a significant amount of money - credit card fraud accounts for nearly $200 billion per year in the United States alone, and the vast majority of that is carried by merchants. It's no secret that merchants are pretty unhappy with how the credit card companies operate, but given the network effects and legal protections there were few alternatives. Bitcoin provides one. As a consumer, this will result in lower prices for you, and make it significantly harder to use identity theft to steal your money.

Aetius, I very much appreciate all of your responses to my completely ignorant questions.

As a consumer, for as long as Visa/MC continue to offer consumer protection of fraudulent purchases, I still feel that I'm more "secure" using those facilities for making purchases -- not in the sense of actual cryptographic security, but in the sense of my bank account being kept whole. Sure, keypair authentication is significantly more digitally secure than merely holding a physical credit card, but at the end of the day, it's still a (virtual) object that can be stolen.

I can't possibly imagine that any retailer would voluntarily reduce prices of their product for someone paying in Bitcoin. The only way I see Bitcoin as being a viable long-term currency is if retailers & service-providers start only accepting Bitcoin as currency, and pricing their products accordingly; otherwise, it'll still be a currency-exchange game, with the local fiat used as the nominal valuation.

Thanks Aetius for being around to answer questions. It's always great to get the insiders perspective.

So it's a bit weird to talk about bitcoin transaction fees as a percentage since as far as I understand it, when you submit a transaction to the pool of pending transactions you can (not sure if you have to) add a bounty on transaction so a miner will prioritise adding it to their current block. This fee is a flat fee which is great if you're transferring a large amount, but not so great for small transactions. Am I understanding this correctly?

If I'm transferring say $1,000,000 and I put a $100 fee on it, I'd expect it be added fairly quickly (percentage of 0.01%) where as transferring $50 and I put a $1 fee on it, then it might never get out of the pool (percentage of 2%). Going off the current (according to https://bitinfocharts.com/comparison...) transaction which it has as $21 average ($14 mean) for a transaction. Do all transactions require the same amount of effort for the miner? Is there any mechanism to ensure a transaction actually gets onto the blockchain other than changing the fees?

So the miner than mines the block gets any reward bitcoin from the network, and they collect the fees from all the transactions on the block. Is there any feel for how much the miner is collecting in transaction fees vs new mined bitcoins? I'm imagine that as the number of generated bitcoins goes down, the network sustains itself through transaction fees. Have we reached a tipping point where miners would mine even without new bitcoin generation?

So I've gotten into cryptocurrency a bit lately. I used Coinbase to puchase Ethereum and then moved that onto Binance where I then traded for some other cryptocurrency that's fairly new but seems to have good plans moving forward. Like people said above, I went into it like I was going to a casino. I didn't put any money in that I wasn't ready to lose completely. The swings have been pretty crazy. I'm not in any rush right now, it will be a couple of years before things get moving. Reddit (of course) has a significant area for crypto stuff, including subreddits for each of the currencies. It's a good place to check out if you are curious.

DoveBrown wrote:

So it's a bit weird to talk about bitcoin transaction fees as a percentage since as far as I understand it, when you submit a transaction to the pool of pending transactions you can (not sure if you have to) add a bounty on transaction so a miner will prioritise adding it to their current block. This fee is a flat fee which is great if you're transferring a large amount, but not so great for small transactions. Am I understanding this correctly?

Yes, for the most part. It's possible to submit a transaction with a zero transaction fee, but it's unlikely that any miner will process it and it'll eventually time out. The fee can be anything the user sets. Worse, whether or not a fee is acceptable is affected how full the mempool queue is, so it's possible that a transaction with a reasonable fee will still time out and fail. The current rule of thumb is a flat fee that corresponds to "whatever the minimum is to get it processed", with adjustments for priority.

The amount of work it takes to actually handle the transaction is based on transaction size (in bytes), which is not something that's immediately obvious to the casual user - it has to do with the details of how many bitcoins from various addresses are being merged together to make the payment. There is only a very loose correlation between value size (in dollars/BTC) and transaction size (in bytes), and it does currently make more valuable transfers cheaper by percentage.

Fortunately, this is all public information, and blockchain.info has a great chart showing their recommendations for the current transaction fees based on live data, in Satoshis per byte:

https://blockchain.info/charts/mempo...

Do all transactions require the same amount of effort for the miner?

Not exactly. Larger transactions (in bytes) take up more space in the block, and thus lower the overall number of transactions per block. This creates an expectation of a higher transaction fee to offset the lost opportunity. The work is still going to get done (and because the block size is fixed, it doesn't vary based on the number of transactions), but larger transactions are less efficient. Clear as mud?

Is there any feel for how much the miner is collecting in transaction fees vs new mined bitcoins?

There's not only a feel, but since the blockchain is public we have precise data, and it can even be broken down by mining pool in most cases. Right now it varies wildly per day - for example, on December 13th it was roughly 645BTC, versus roughly 1800 BTC from rewards.

I'm imagine that as the number of generated bitcoins goes down, the network sustains itself through transaction fees.

That's the goal, yes. Whether or not it'll actually happen is unknown. This is probably THE long-term systemic risk of bitcoin.

Have we reached a tipping point where miners would mine even without new bitcoin generation?

I think we're well past that point. What would happen if the rewards disappeared is that the miners would increase transaction fees to compensate (given the hefty investments, it's unlikely people would simply give up). However, as I noted above, we don't know whether that would result in a viable system or not, for the same reasons we don't know how things are going to finally shake out when the rewards end at the scheduled time.

A lot of my friends at work have been going on about this, but I'm a little skeptical about the whole sending ID through coinbase, as I'm a bit fearful of ID fraud. The whole thing is secure, right? Are there any extra precautions I could take to safeguard against this?

Clusks wrote:

A lot of my friends at work have been going on about this, but I'm a little skeptical about the whole sending ID through coinbase, as I'm a bit fearful of ID fraud. The whole thing is secure, right? Are there any extra precautions I could take to safeguard against this?

Just get a fake ID and send that to CoinBase. #sh*ttyLifeProTip

I ended up setting up a CoinBase account a couple of weeks ago -- including sending a copy of my state driver's license to them. I haven't had my identity stolen yet, but I'm keeping an eye out.

Same here. Coinbase has a giant userbase so it is a big target, but I also believe they have the most to lose by hacking of any of these services. The whole crytocurrency world knows hacking is a big concern... in theory coinbase is covering their asses.

I just sold off some etherium (I made 10 bucks off of my 20...) I was planning to wait until I doubled my money, but wanted to bank this little victory as everything else is still down from when I bought it.

manta173 wrote:

Same here. Coinbase has a giant userbase so it is a big target, but I also believe they have the most to lose by hacking of any of these services. The whole crytocurrency world knows hacking is a big concern... in theory coinbase is covering their asses.

I just sold off some etherium (I made 10 bucks off of my 20...) I was planning to wait until I doubled my money, but wanted to bank this little victory as everything else is still down from when I bought it.

Just a general reminder to people that any profit made from selling cyrptocurrencies is required to be reported on your taxes. The IRS considers it property, so if you've held it less than 1 year, it's a short term gain and treated as ordinary income for tax purposes. If you've held it for more than 1 year it's considered a long-term gain and taxed at a lower rate. Coinbase or other exchanges aren't likely to send you any forms stating what your gains are, so it's up to you to figure it out. The IRS just recently successfully sued Coinbase for info on users buying, selling, or transferring more than $20,000 worth of bitcoin between 2013 and 2015, and with how huge the bubble was (and is still) you know they'll be asking for user info again.

Stengah wrote:
manta173 wrote:

Same here. Coinbase has a giant userbase so it is a big target, but I also believe they have the most to lose by hacking of any of these services. The whole crytocurrency world knows hacking is a big concern... in theory coinbase is covering their asses.

I just sold off some etherium (I made 10 bucks off of my 20...) I was planning to wait until I doubled my money, but wanted to bank this little victory as everything else is still down from when I bought it.

Just a general reminder to people that any profit made from selling cyrptocurrencies is required to be reported on your taxes. The IRS considers it property, so if you've held it less than 1 year, it's a short term gain and treated as ordinary income for tax purposes. If you've held it for more than 1 year it's considered a long-term gain and taxed at a lower rate. Coinbase or other exchanges aren't likely to send you any forms stating what your gains are, so it's up to you to figure it out. The IRS just recently successfully sued Coinbase for info on users buying, selling, or transferring more than $20,000 worth of bitcoin between 2013 and 2015, and with how huge the bubble was (and is still) you know they'll be asking for user info again.

That's a great reminder. Coinbase just recently released a "beta" report generation tool to help determine tax cost basis, but it has some disclaimers about not being actual legal or tax advice.

I sure hope everyone who already cashed out has retained some for ol' Uncle Sam in April.