CRYPTO-ASSET INTRODUCTION FOR INVESTMENT PURPOSES as of 2018
A little over four years ago I followed my instincts and decided to purchase $500 of Bitcoin, believing not in the currency but in the idea that something was taking place that warranted investigation, and the simple act of placing $500 at risk would focus me on learning more about the world of Crypto-currencies. I had no idea at the time that a world far greater than one digital currency awaited me. Today I appreciate that there are over 3,000 different crypto-asset offerings, and the number keeps on expanding. Go to this site to see the array of different crypto-asset offerings that are trading on exchanges https://coincodex.com/ .
If you wish to invest in this sector, you have the choice of developing an understanding through taking that first small plunge and digging into the concepts and processes that govern engagement here, or you can seek out an investment manager to get you started on the journey. To help you think about taking that first small plunge rather than hiring an investment manager, here are my recommendations:
1. Open an account at Coinbase. Coinbase is the largest U.S. based exchange and is FDIC insured. Coinbase allows you to invest in certain Crypto-assets that recently numbered nine choices, with an additional choice that is a bundle of coins. They are Bitcoin, Ethereum, Ethereum Classic, LiteCoin, BitcoinCash, US Dollar token, Basic Attention token, Zcash, and 0X (Zero X). You will need to link your bank account to your Coinbase account to enable fiat currency transfers into Coinbase where you then can exchange fiat currency into any or all of the crypto-currency offerings. https://www.coinbase.com
2. Next, you should establish a digital wallet to store some of your Crypto-Assets. Bitcoin wallet at https://www.Blockchain.com for BTC or My Ether Wallet for the broad range of offerings that exist in the ETH market. https://www.blockchain.com/wallet#/home and https://www.myetherwallet.com/
3. Third, you should open an account at a broad based exchange that enables you to buy the crypto-assets you like. You will transfer either Bitcoin, Ethereum, BitcoinCash or another transactional based token into this exchange, and then use those to buy the Crypto-Assets you have an interest in. The best and largest exchange for this is Binance https://www.binance.com/ . I also like the exchange KuCoin. KuCoin pays you dividends in other crypto-assets which helps to diversify your portfolio.
The above would get you started within a safe arena of learning and will help you learn about the deeper and more complex aspects of this investment sector.
A couple of words of advice in addition to the above are as follows:
• Keep detailed records of every purchase, sale, and transfer. The IRS rules characterize all of these as taxable events, so an exchange of one crypto-asset for another is viewed by the IRS as a sale of the first and a purchase of the second, so gains or losses are to be recorded for each exchange.
• You will learn about ICOs, Initial Coin Offerings, and STOs, Security Token offerings, which give you the opportunity to invest in start-ups or tokenized securities of companies/assets. An ICO is a crypto-asset that is not yet traded on an exchange. You effectively are investing as a Venture Capitalist in a start-up with an ICO purchase. Any investment you make in an ICO MUST BE DONE THROUGH YOUR WALLET. Do not send Bitcoin, Ether, etc from any exchange to an ICO Address. You will lose your Bitcoin, Ether, etc. This is because the Exchange address is a pooled address owned by the Exchange, whereas the Wallet is your private address. The transaction between the Company and you must reflect each’s personal Address to accurately effect the transfer of ownership.
I think that about covers it from a get started perspective.