Best way to invest in crypto?

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Apr 2021
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I've invested in stocks before where I opened an investment account thru my bank,. funded it. then picked some stock to buy and I'm in.

Is there a similar way to invest in Digital Currency ?

I've been watching news stories about the different currencies and I like where Ethereum is at so I wanted to explore ways to get in

Any thoughts and advice would be appreciated
 

evo

Site Admin
Joined
Apr 2017
What country do you live in?

For most major countries, the easiest way is to signup for Coinbase and convert your fiat money to the crypto of your choice. This would allow you to buy Ethereum, or any other coin for that matter, and get you started towards investing in crypto.

You mentioned your background is stocks. In the stock market, you are buying stocks in whole number. With crypto, you can buy fractions of coins, allowing you to purchase any exact amount of any coin you want. And while the stock market has open market hours, the crypto market goes all day every day.

Let us know if you have anymore questions. Happy to help.
 
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Thanks! I'm in the US - so is Coinbase like an exchange?

Also, is there a way to hedge one's bet against loses by buying insurance or derivatives?

I don't have a lot of experience in stocks, but have enough to be fimiliar on how to go about buying them.

Just wanting to start getting up to speed on crypto currencies
 
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evo

Site Admin
Joined
Apr 2017
Coinbase is a centralized exchange. It’s secure, trustworthy, a good entry on-ramp for getting your money into crypto, and the easiest solution for US residents.

Buying insurance and derivatives will come as this space matures. No viable solutions this early in the space. You can buy into coins that want to solve these problems, but economic speculation is all you’re buying, not actual solutions. But this part of the crypto space is moving fast.

Welcome to the world of crypto!
 
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Sounds good, thanks!

I'm wondering if business insurance would cover losses if there were permanent losses.

I'll be doing this from my business and not from personal funds.
 

evo

Site Admin
Joined
Apr 2017
Business insurance would not cover your losses.

Buying crypto is the same as buying an asset. If you lose the funds, then you can write it off as a capital loss on your taxes. And if the asset goes up in value, then it’s capital gains. Of course, any loss or gain has to be realized, which is the moment you sell, thus creating a taxable event at that time.
 
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Thanks. Sounds like something my CPA would tell me and as such, any fees I'd have to pay can be written off as a business expense, or at least I'd hope it woulk work out that way.

I noticed that on Coinbase, it appears to be saying I can buy up to $250k in crypto currency and it will be FDIC Insured just like I had $250k in a federally insured bank - am I reading what Coinbase is saying correctly?

If so, can I open a separate account with Coinbase for each $250k kinda like I'd be able to go to different banks and open an account with $250k so all my funds are FDIC insured?

Also, is this just for Coinbase Pro?
 
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Can Stop-limit orders be setup in a regular Coinbase account, or can this only be done in a Coinbase Pro account?
 

evo

Site Admin
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Apr 2017
Coinbase is different from Coinbase Pro.

Coinbase can safely store your USD money, as fiat, and would be the only FDIC insured part. Not the crypto or stablecoin accounts. When you buy/sell coins on Coinbase, you are essentially putting in a market order (versus a limit order on Coinbase Pro) and the order price is executed immediately.

Coinbase Pro is an exchange, allowing limit or market orders. The fees here are cheaper, but this requires you to execute the orders on your own, which can be difficult for people new to using exchanges. It's fairly simple and straightforward, and since you have a stock background, you should be fine. And because Coinbase Pro is an exchange, you can put in stop-loss orders, etc.

Regarding your accounting, and the IRS for that matter, the same rules that apply to stock investing also apply to crypto investing. The IRS has taken the right approach and views crypto as an asset. For tax purposes, it's no different than stock. It doesn't matter if you buy x amount of Tesla stock or x amount of Apple stock or x amount of Bitcoin or x amount of Ethereum. It's all the same for accounting and tax purposes.
 
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OK, thanks for the overview. The few times I bought / sold stocks, it was thru an investment account with my bank and it look alot like regular Coinbase, not necessarily like Coinbase Pro so I may elect to just use regular Coinbase

At this point, I've read numerous articles about Ethereum saying it's pretty stable and is expected to go up now that some major financial institutions are starting to invest in it and the general opinion is that it's going to grow,

I was thinking of investing in Ethereum as a long term investment and let it ride for a couple of years since everyone seems to believe Ethereum isn't going anywhere and will eventually grow substantially
 

evo

Site Admin
Joined
Apr 2017
There are pros and cons to all these cryptos. I do think Ethereum has the most room to grow during this bull run, but based on your clearly stated goals, I would consider Bitcoin as the better hold for storage of value. Bitcoin is deflationary, and Ethereum is inflationary; although, the next big hard fork will make Ethereum partially deflationary, although still not as much as Bitcoin.

Since you're familiar with buying through an investment account, using Coinbase is fine. The fees are nominal, and they are only charged when you convert fiat to crypto (onramp) or crypto to fiat (offramp).

And when you have questions, feel free to post up a new thread on here. Happy to assist.

Cheers!
 
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I found a website that posts Cybersecurity Ratings - https://cer.live

There a few with higher security rating than Coinbase.

So, what's the scoop on me having to store my own encryption keys?

I'm hearing it's best to have an electronic wallet that keys are stored on and it's like an external hard drive that you disconnect from your computer after keys are put on it.

If buying thru Coinbase, don't they hold the keys securely?

And, what happens if they lose your keys - do they cover your losses?
 

evo

Site Admin
Joined
Apr 2017
In crypto, the idea is "not your keys, not your crypto" and this means you're responsible for safeguarding and protecting your crypto keys. If you lose your keys, then you've lost your crypto. There is absolutely zero room for error, hence this is decentralization.

If you're not technically inclined to setting up your own wallet or don't trust yourself, your only viable option is to make sure you store your crypto at centralized solutions. That said, for the United States, both Coinbase and Gemini are the top ones that I would trust.

And FYI... Coinbase does have an option that you can store the keys yourself, but again, there is no customer support if you lose your keys.
 
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So Coinbase, Binance and other major exchanges offer a way for them to store the keys for the coins I buy?

And, if a hacker gets in to their system and steals the keys for my coins the exchange is going to reimburse me right?

Just curious how it works if they are storing your keys and I lose my coins to a system being compromised.
 

evo

Site Admin
Joined
Apr 2017
If an exchange is hacked, your funds are lost. No insurance. This is why you should retain full custody of your crypto in a wallet you control, or make sure your crypto is stored at a centralized exchange that you trust. Period. No exceptions.

The good and the bad about crypto is decentralization. When you go to Bank of America or Wells Fargo to deposit your money, you are trusting a centralized system that is fully regulated with FDIC insurance. The beautiful thing about crypto is decentralization, however this means there is absolutely zero recourse if you make an error (sending funds to a wrong account number or losing control of your keys) or are hacked (make sure you are only storing crypto in accounts and wallets that you trust).
 

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