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How is your passive income from Crypto going in 2020? So far I have made around $11k plus from approximately 13 or so sources. Details below.
I remember in 2017 there were epic stories of people making fortunes from free crypto-giveaways – for example, the nano faucet gave people fantastic wealth if they held on all year. Then there were things like the various bitcoin forks – great if you cashed in. Now in 2020 there seems to be another uptrend in terms of the ability to get “free crypto” – in various ways. Overtime this can build up to quite a lot. This year I have:
Coinbase earn – I’ve done almost all of these and have had a few referrals. I think I earned maybe $200 or so all up, cashed in BTC, and that BTC is probably around $400
Reddit moons – I have earned 3100 moons, sold for roughly $220
Uniswap – My free 400 tokens are still held, so they are worth maybe $1200
Binance Coin – lots of staking and lottery compensation payments here – for example, I recently sold my Flamingo, Venus and Alpha tokens – maybe $30;
Hex – Yes I know it’s a scam, but I think I bit have a decent little payout in a month when my 90% locked tokens open (won’t say how much as that will reveal my BTC wallet holdings);
Swissborg – A fun little “guess the bitcoin app” that has $50 worth of tokens in it now;
Brave Browser – I’ve earned like $20 from that this year (insert: “Its not much but its honest work gif”);
Uniswap Pools etc – Hard to calculate this one but I’m earning some really great fees and Uni from pooling WBTC and WETH – about 0.5% return a week. Was also previously staking Uni / ETH - I made $1000 in fees but mostly gobbled up by impermanent loss.
Honeyswap – Every 48 hours, I log-in to get free honey from the faucet – around $40 or so;
Survey – I did a phone survey for a local project and got given $100 of free tokens;
Livepeer – No idea what this is but I sold two airdrops for around $20;
Nexus Mutual – Probably the king here. Invested $1200 worth. Received a 58% dividend on the first day of staking (say $700) which I reinvested. That $700 is now $8000 or something ridiculous (and itself earning rewards), plus another 13 NXM (So another $416 on top).
And then lots of rats and mice rewards from things like staking Celsius, staking Tezos referral rewards etc. I even have 3000 of that damn Pi coin thing but don’t know where that is going.
And to top it off a free ledger nano for participation in a private group on FB
(EDIT: I forgot to mention I am currently winning a "pick four" crypto competition that I entered in January where you pick four cryptos and the winner takes the pot. I picked BTC, FTX, SNX and CEL - so that might be another $200 to add to my collection!)
So in all, that is an entire bitcoin just for doing a bunch of crazy stuff. Who said it was difficult to join the 21 million club? So for some people that might be considered a decent pay package for a full time job! What other opportunities do you guys have where you have passive income coming from crypto? Am I missing any obvious ones here?
Usually, bull markets attract a lot of new investors - although speculators should be the right word here - and as usual, a lot of them are going to be crushed a way or another. First, before putting a single dollar, euro or whatever in the market, you should read a lot to know exactly what you're looking for. Are you here for the tech and/or the cypherpunk ethos ? Great, there's lot of resources out there (my links are cleaned but as always, do your due diligence) :
The Bitcoin Whitepaper, the one and only : bitcoin.org/bitcoin.pdf Since I'm linking to bitcoin.org, friendly reminder to avoid bitcoin.com, owned by a former supporter now con-artist Roger Ver.
Andreas Antonopoulos website : https://aantonop.com Andreas is one of best guys able to educate on bitcoin and its properties, for free, which helps.
Jameson Lopp website : lopp.net Jameson is a member of Bitcoin Core, cypherpunk, also able to educate a lot. His website is full of free resources and other links. You'll have a lot to read.
Hal Finney : he's unfortunately dead but I would advise to read about Hal Finney, the first to receive bitcoin Satoshi. A great cryptographer, the inventor of the first reusable PoW and one of the first bitcoin supporters. You'll be able to find his messages on this old forum Bitcoin Talk, by the way you'll be able to find the first chats about bitcoin on this forum bitcointalk.org
Monero website : getmonero.org Yep, I know it's gonna be controversial to post an altcoin link but personally, I think that Monero (aka XMR) is the only other coin with a big cypherpunk community, decentralized, and able to help newcomers with a great sense of responsibility, since the ethos here is to save privacy.
What Bitcoin Did : of course, Peter is controversial but I love him and I find his former blog and his podcasts very needed because he doesn't oversell himself. Pete knows that he's not a tech guy (like many of us) and just wants to spread the word, I think he does a good job with this.
Now, you've read and you want to put some skin in the game. Several exchanges are acceptable, a lot of aren't, be careful and assume that none really are (know that I won't post any ref links) :
to me, the best, although it's UI is quite old : Kraken €/$/pound/swiss franc on-off ramp
Coinbase and Coinbase Pro Difficult not to mention Coinbase, although I can't stand Brian Armstrong and the way they are doing their best to support scams currently. You should rather use Coinbase Pro if you have to since the fees are much lower.
Binance Binance came later than the previous ones but has managed to take most of the market. Now, you should remember what I said about being careful.
Huobi The biggest chinese exchange and they work closely with chinese official. Again, careful.
Bittrex Once at the top, now somewhere in the limbs.
A lot of new comers came recently like btse, ftx, feel free to try them while always keeping in mind that once your money is on exchanges, it's not yours anymore.
This was for centralized exchanges aka CEX. Talking about custodial, you'll need wallets to store your (bit)coins. Always try to use non-custodial wallets, which means wallets that give you your private keys. This way, if the software goes down, you can always retreive your money. Now, I won't link to all the existing wallets but will advise you to buy hardware wallets (trezor or ledger but there are others) or to create (on off-gap computers) paper wallets you're able to store safely (against all risks, not only robbery but housefire). You also could use your memory with brain wallets but, my gosh, I wouldn't trust myself. For Bitcoin (or even Litecoin), Electrum software can do a good job (but save your keys). AGAIN, DON'T KEEP YOUR SAVINGS ON AN EXCHANGE Now, about trading : it's been repeated and repeated but don't chase pumps and altcoins. Yep, it's probably the fastest way to make money. It's also the fastest to lose it. I won't lie : I made good money during the 2017-bullrun and I took profits but I also forgot to sell some shitcoins thinking it would keep going up, now I'm still holding these bags (although I don't really care). I know that a lot forgot to take profits. Take profits, always take profits, whatever your strategy is. Don't fall for people trying to sell you their bags, for ICOs trying to sell you a product which isn't released yet and obviously, don't fall for people asking for your private key. Also, know that there's two endgames : accumulating bitcoin or fiat. I'm rather in the first team but whatever your strategy is, take profits. (Yes, I know, some will say accumulating ethereum or something else). It's true that a lot of ethereum holders made a lot of money during the last bullrun (ethereum helped me make money too) but I'm really biased in favor of bitcoin (and monero). So, pick your coin but again, do your due diligence. A lot of people here or there will talk about the best tech, the fact that bitcoin is old and slow. I would need another post to go further on this point but know that a lof of air flight systems are old too but reliable. Trustless and reliable is the point here. This is the post from someone who bought bitcoin seven or six years ago, who lost part of them, who spent part of them (but don't regret this at all), who is still learning and I hope it will help others, although it would need a book to be complete.
Crypto Banking Wars: Can Non-Custodial Crypto Wallets Ever Replace Banks?
Can they overcome the product limitations of blockchain and deliver the world-class experience that consumers expect? https://reddit.com/link/i8ewbx/video/ojkc6c9a1lg51/player This is the second part ofCrypto Banking Wars— a new series that examines what crypto-native company is most likely to become thebank of the future. Who is best positioned toreach mainstream adoptionin consumer finance? --- While crypto allows the world to get rid of banks, a bank will still very much be necessary for this verypowerfultechnology to reach the masses. As we laid out in our previous series, Crypto-Powered, we believe companies that build with blockchain at their core will have the best shot at winning the broader consumer finance market. We hope it will be us at Genesis Block, but we aren’t the only game in town. So this series explores the entire crypto landscape and tries to answer the question, which crypto company is most likely to become the bank of the future? In our last episode, we offered an in-depth analysis of big crypto exchanges like Coinbase & Binance. Today we’re analyzing non-custodial crypto wallets. These are products where only the user can touch or move funds. Not even the company or developer who built the application can access, control, or stop funds from being moved. These apps allow users to truly become their own bank. We’ve talked a little about this before. This group of companies is nowhere near the same level of threat as the biggest crypto exchanges. However, this group really understands DeFi and the magic it can bring. This class of products is heavily engineer-driven and at the bleeding-edge of DeFi innovation. These products are certainly worth discussing. Okay, let’s dive in.
Users & Audience
These non-custodial crypto wallets are especially popular among the most hardcore blockchain nerds and crypto cypherpunks.
“Not your keys, not your coins.”
This meme is endlessly repeated among longtime crypto hodlers. If you’re not in complete control of your crypto (i.e. using non-custodial wallets), then it’s not really your crypto. There has always been a close connection between libertarianism & cryptocurrency. This type of user wants to be in absolute control of their money and become their own bank. In addition to the experienced crypto geeks, for some people, these products will mean the difference between life and death. Imagine a refugee family that wants to safely protect their years of hard work — their life savings — as they travel across borders. Carrying cash could put their safety or money at risk. A few years ago I spent time in Greece at refugee camps — I know first-hand this is a real use-case. https://preview.redd.it/vigqlmgg1lg51.png?width=800&format=png&auto=webp&s=0a5d48a63ce7a637749bbbc03d62c51cc3f75613 Or imagine a family living under an authoritarian regime — afraid that their corrupt or oppressive government will seize their assets (or devalue their savings via hyperinflation). Citizens in these countries cannot risk putting their money in centralized banks or under their mattresses. They must become their own bank. These are the common use-cases and users for non-custodial wallets.
Let’s take a look at some of the strengths with non-custodial products.
Regulatory arbitrage Because these products are “non-custodial”, they are able to avoid the regulatory burdens that centralized, custodial products must deal with (KYC/AML/MTL/etc). This is a strong practical benefit for a bootstrapped startup/buildedeveloper. Though it’s unclear how long this advantage lasts as products reach wider audiences and increased scrutiny.
User Privacy Because of the regulatory arbitrage mentioned above, users do not need to complete onerous KYC requirements. For example, there’s no friction around selfies, government-issued IDs, SSNs, etc. Users can preserve much of their privacy and they don’t need to worry about their sensitive information being hacked, compromised, or leaked.
Absolute control & custody This is really one of the great promises of crypto — users can become their own bank. Users can be in full control of their money. And they don’t need to bury it underground or hide it under a mattress. No dependence, reliance or trust in any third parties. Only the user herself can access and unlock the money.
Now let’s examine some of the weaknesses.
Knowledge & Education Most non-custodial products do not abstract away any of the blockchain complexity. In fact, they often expose more of it because the most loyal users are crypto geeks. Imagine how an average, non-crypto user feels when she starts seeing words like seed phrases, public & private keys, gas limits, transaction fees, blockchain explorers, hex addresses, and confirmation times. There is a lot for a user to learn and become educated on. That’s friction. The learning curve is very high and will always be a major blocker for adoption. We’ve talked about this in our Spreading Crypto series — to reach the masses, the crypto stuff needs to be in the background.
User Experience It is currently impossible to create a smooth and performant user experience in non-custodial wallets or decentralized applications. Any interaction that requires a blockchain transaction will feel sluggish and slow. We built a messaging app on Ethereum and presented it at DevCon3 in Cancun. The technical constraints of blockchain technology were crushing to the user experience. We simply couldn’t create the real-time, modern messaging experience that users have come to expect from similar apps like Slack or WhatsApp. Until blockchains are closer in speed to web servers (which will be difficult given their decentralized nature), dApps will never be able to create the smooth user experience that the masses expect.
Product Limitations Most non-custodial wallets today are based on Ethereum smart contracts. That means they are severely limited with the assets that they can support (only erc-20 tokens). Unless through synthetic assets (similar to Abra), these wallets cannot support massively popular assets like Bitcoin, XRP, Cardano, Litecoin, EOS, Tezos, Stellar, Cosmos, or countless others. There are exciting projects like tBTC trying to bring Bitcoin to Ethereum — but these experiments are still very, very early. Ethereum-based smart contract wallets are missing a huge part of the crypto-asset universe.
Technical Complexity While developers are able to avoid a lot of regulatory complexity (see Strengths above), they are replacing it with increased technical complexity. Most non-custodial wallets are entirely dependent on smart contract technology which is still very experimental and early in development (see Insurance section of this DeFi use-cases post). Major bugs and major hacks do happen. Even recently, it was discovered that Argent had a “high severity vulnerability.” Fortunately, Argent fixed it and their users didn’t lose funds. The tools, frameworks, and best practices around smart contract technology are all still being established. Things can still easily go wrong, and they do.
Loss of Funds Risk Beyond the technical risks mentioned above, with non-custodial wallets, it’s very easy for users to make mistakes. There is no “Forgot Password.” There is no customer support agent you can ping. There is no company behind it that can make you whole if you make a mistake and lose your money. You are on your own, just as CZ suggests. One wrong move and your money is all gone. If you lose your private key, there is no way to recover your funds. There are some new developments around social recovery, but that’s all still very experimental. This just isn’t the type of customer support experience people are used to. And it’s not a risk that most are willing to take.
Integration with Fiat & Traditional Finance In today’s world, it’s still very hard to use crypto for daily spending (see Payments in our DeFi use-cases post). Hopefully, that will all change someday. In the meantime, if any of these non-custodial products hope to win in the broader consumer finance market, they will undoubtedly need to integrate with the legacy financial world — they need onramps (fiat-to-crypto deposit methods) and offramps (crypto-to-fiat withdraw/spend methods). As much as crypto-fanatics hate hearing it, you can’t expect people to jump headfirst into the new world unless there is a smooth transition, unless there are bridge technologies that help them arrive. This is why these fiat integrations are so important. Examples might be allowing ACH/Wire deposits (eg. via Plaid) or launching a debit card program for spend/withdraw. These fiat integrations are essential if the aim is to become the bank of the future. Doing any of this compliantly will require strong KYC/AML. So to achieve this use-case — integrating with traditional finance —all of the Strengths we mentioned above are nullified. There are no longer regulatory benefits. There are no longer privacy benefits (users need to upload KYC documents, etc). And users are no longer in complete control of their money.
One of the great powers of crypto is that we no longer depend on banks. Anyone can store their wealth and have absolute control of their money. That’s made possible with these non-custodial wallets. It’s a wonderful thing. I believe that the most knowledgeable and experienced crypto people (including myself) will always be active users of these applications. And as mentioned in this post, there will certainly be circumstances where these apps will be essential & even life-saving.
However, I do not believe this category of product is a major threat to Genesis Block to becoming the bank of the future.
They won’t win in the broader consumer finance market — mostly because I don’t believe that’s their target audience. These applications simply cannot produce the type of product experience that the masses require, want, or expect. The Weaknesses I’ve outlined above are just too overwhelming. The friction for mass-market consumers is just too much. https://preview.redd.it/lp8dzxeh1lg51.png?width=800&format=png&auto=webp&s=03acdce545cd032f7e82b6665b001d7a06839557 The winning bank will be focused on solving real user problems and meeting user needs. Not slowed down by rigid idealism like censorship-resistance and absolute decentralization, as it is with most non-custodial wallets. The winning bank will be a world-class product that’s smooth, performant, and accessible. Not sluggish and slow, as it is with most non-custodial wallets. The winning bank will be one where blockchain & crypto is mostly invisible to end-users. Not front-and-center as it is with non-custodial wallets. The winning bank will be one managed and run by professionals who know exactly what they’re doing. Not DIY (Do It Yourself), as it is with non-custodial wallets. So are these non-custodial wallets a threat to Genesis Block in winning the broader consumer finance market, and becoming the bank of the future? No. They are designed for a very different audience. ------ Other Ways to Consume Today's Episode:
Spreading Crypto: In Search of the Killer Application
This is the second post of ourSpreading Cryptoseries where we take a deep dive into what it’ll take to help this technology reach broader adoption. Mick exploring the state of apps in crypto Our previous post explored the history of protocols and how they only become widely adopted when a compelling application makes them more accessible and easier to use. Crypto will be no different. Blockchain technology today is mostly all low-level protocols. As with the numerous protocols that came before, these new, decentralized protocols need killer applications. So, how’s that going? Where is crypto’s killer application? What’s the state of application development within our industry? Today we’ll try to answer those questions. We’ll also take a close look at decentralized applications — as that’s where a lot of the developer energy and focus currently is. Let’s dive in.
Beyond the fact that the most popular crypto applications are all used for speculation, another common thread is that they are all centralized.
A centralized application means that ultimate power and control rests with a centralized party (the company who built it). For example, if Coinbase or Binance wants to block you from withdrawing your funds for whatever reason (maybe for suspicious activity or fraud), they can do that. They have control of their servers so they have control of your funds. Most popular applications that we all use daily are centralized (Netflix, Facebook, Youtube, etc). That’s the standard for modern, world-class applications today.
Even though the most popular crypto applications are all centralized, most of the developer energy and focus in our industry is with decentralized applications (dApps) and non-custodial products. These are products where only the user can touch or move funds. Not even the company or developer who built the application can access or control or stop funds from being moved. Only the user has control.
These applications allow users to truly become their own bank and have absolute control of their money.
If the most popular applications tend to be centralized (inside and out of crypto), why is so much of our community focused on building decentralized applications (dApps)? For the casual observer, that’s a reasonable, valid question.
“Not your keys, not your coins.”
This meme is endlessly repeated among longtime crypto hodlers. If you’re not in complete control of your crypto (i.e. using non-custodial wallets or dApps), then it’s not really your crypto. Engrained in the early culture of Bitcoin has always been a strong distrust for centralized authority and power — including the too-big-to-fail government-backed financial system. In the midst of the Financial Crisis, Satoshi Nakamoto included this headline in Bitcoin’s genesis block: “Chancellor on brink of second bailout for banks.” There has always been a close connection between libertarianism & cryptocurrency. So it’s no surprise that much of the crypto developer community is spending their time building applications that are non-custodial or decentralized. It’s part of the DNA, the soul, the essence of our community. https://preview.redd.it/fy33zhkvdh551.png?width=1600&format=png&auto=webp&s=386c741f13e9119ecfcfffe1c781d09ce58704ed
When I was at Mainframe, we built Mainframe OS — a platform that developers use to build and launch decentralized applications (dApps). I’m deeply familiar with what’s possible and what’s not in the world of dApps. I have the battle scars and gray hair to prove it. We’ve hosted panels around the various challenges. We’ve even produced videos poking fun at how complicated it is for end-users to interact with.
After having spent three years in the trenches of this non-custodial world, I no longer believe that decentralized applications are capable of bringing crypto to the masses.
While I totally understand and appreciate the ethos of self-sovereignty, independence, and liberty… I think it’s a terrible mistake that as a community we are spending most of our time in this area of application development. Decentralized applications will not take crypto to the masses. Mainframe OS
The user friction that comes with decentralized applications is just too overwhelming. Let’s go through a few of the bigger points:
Knowledge & Education: Most non-custodial products do not abstract away any of the blockchain complexity. In fact, they often expose more of it because the most loyal users are crypto nerds. Imagine how a normie n00b feels when she starts seeing words like seed phrases, public & private keys, gas limits, transaction fees, blockchain explorers, hex addresses, and confirmation times. There is a lot for a user to learn and become educated on. That’s friction. The learning curve on this is just too damn high.
User Experience: It is currently impossible to create a smooth and performant user experience in non-custodial wallets or decentralized applications. Any interaction that requires a blockchain transaction will feel sluggish and slow. We built a messaging app on Ethereum and presented it at DevCon3 in Cancun. The technical constraints of blockchain technology were crushing to the user experience. We simply couldn’t create the real-time, modern messaging experience that users have come to expect from similar apps like Slack or WhatsApp. Until blockchains are closer in speed to web servers (which will be difficult given their decentralized nature), dApps will never be able to create the smooth user experience that the masses expect.
Loss of Funds Risk: There is no “Forgot Password” functionality when storing your own crypto in a non-custodial wallet. There is no customer support agent you can ping. There is no company behind it that can make you whole if you make a mistake and lose your money. You are on your own. One wrong move and your money is all gone. If you lose your private key, there is no way to recover your funds. This just isn’t the type of customer support experience people want or are used to.
Decentralized applications will always have a place in the market — especially among the most hardcore crypto people and parts of the world where these tools are essential. I’m personally an active user of many non-custodial products. I’m a blockchain early-adopter, I like to hold my own money, and I’m very forgiving of suboptimal UX.
However, I’m not afraid to say the poop stinks. Decentralized applications simply cannot produce the type of product experience that mainstream consumers expect.
If the goal is growth and adoption, as a community I believe we’re barking up the wrong tree. We are trying to make fetch happen. It isn’t gonna happen. Our Netscape Moment is unlikely to arrive as long as we’re focused on decentralized applications. \"Mean Girls\" movie There’s a reason why the most popular consumer applications are centralized (Spotify, Amazon, Instagram, etc). There’s a reason why the most popular crypto applications are centralized (Coinbase, Binance, etc). The frameworks, tooling, infrastructure, and services to support these modern, centralized applications are mature and well-established. It’s easier to build apps that are fast & performant. It’s easier to launch apps that are convenient and on all form-factors (especially mobile). It’s easier to distribute and promote via all the major app store channels (iOS/Android). It’s easier to patch, update, and upgrade. It’s easier to experiment and iterate.
It’s easier to design, build, and launch a world-class application when it is centralized! It is why we’ve chosen this path for Genesis Block.
We have a lot more content coming. Be sure to follow our channels: https://genesisblock.com/follow/ Have you already downloaded the app? We're Genesis Block, a new digital bank that's powered by crypto & decentralized protocols. The app is live in the App Store (iOS & Android). Get the link to download at https://genesisblock.com/download
Bought a few hundred today on coinbase with a credit card
I bought some coin on coinbase recently and I got a little confused. I figured it was important to keep my coins in cold storage. I sent my bitcoin to a wallet which has a Bitcoin address but I forgot to specify that my Bitcoin address was also on coinbase. I thought I'd send my bitcoins from my own wallet but I was not able to. I've had bitcoin before but never actually had it in my account. I then used Binance to transfer the BTC to my cold storage wallet which holds the coins. I then sent the bitcoins back back to my wallet. I've now sent in my ID to Binance so they can verify it's me. Thanks a lot for your support, I will keep it safe.
Electrum-ltc, Today I found out Two thousand three hundred ninety nine Litecoins were stolen from my wallet on April 12, 2018. Here is what I did that day: 1- On the morning of April 12, I decided to reset Windows 10 using the recovery option. and wipe out all files, which I had already backed-up on another drive. 2- After installing Windows office, Chrome and Adobe Reader, I then decided to download the Electrum Litecoin wallet from . 3- I downloaded the "Windows installer" version, typed in my seed during the setup and next a message indicating an error popped-up. The message said something about not being able to connect to the server. 4- I tried once again and the same thing happened. I quickly goggle for an answer but couldn't find a simple one. 5- I then downloaded the "Standalone Executable" version, typed my seed during the setup and the wallet opened. I don't remember checking the balance, but I do remember deciding to give it a few minutes to update. So, I then went to install other wallets and programs, etc. and totally forgot about the wallet. 6- Then, I restarted my computer after some windows updates or something, got carried away with work, and didn't check my Litecoin wallet. 7- Today, April 17, 2018, I decided to check my wallet and I found out my wallet had been emptied. 8- After trying to figure out how I had been hacked I found out that my wallet was emptied seconds after I installed the wallet on April 12. The hack didn't just stop there, my seed was also used to claim and take my Litecoin Cash. Because the hack happened exactly at the moment of the Electrum Litecoin wallet was installed and seems like it was an automatic process, I suspect the hack came through the wallet downloaded web page electrumltc.org. New information/ Add 4/24/2018 6:26 pm East time Through the Bing search, we typed electrum ltc, and the false page appeared. Electrumltc.org I had the windows wallets from that site analysed by a programmer. We discovered that it sends the seeds 12 words to this address ip 220.127.116.11. I beg the community for any help . We will be very attentive .. We have been studying how the Litecoins have moved in the Blockchain, and we notice that they were sent to some wallets that, according to Chainz's explorer. belong to Bitfinex and Binance. In the end, the coins arrived to Wallet LTU2cds4aSdXFip9sV4gXphnhxGQjgfjmg. I would like to ask you from my heart to help from the whole community, to publish this information, in hopes that Binance and Bitfinex, recognize the Litecoins as stolen and take actions. From our wallet the coin passed through their systems. I remember when I started in the world of cryptocurrencies, Bitfinex was hacked for an amount of 60million dollars equivalent in Bitcoin, at that moment ...time flies. We are following the Litecoin and organizing all the information to let the cryptocurrency community know about the stolen 2,449 LTC (first 2,399 LTC and then 50 LTC). In the following direction, a whole discussion on the subject was started ... and there are images related to the theft: https://github.com/pooleelectrum-ltc/issues/176
Just spent about 12 hours figuring out my tax liabilities with bitcoin.tax. Here is how it went...
I have been reading more lately about all the US tax liabilities that can come into play in the crypto world and have started worrying about how much I would owe for 2017. I was starting to lose some sleep on the matter and finally decided to organize all of my activity once and for all. I figured I'd write this post for other people who might want to find out what I have learned in this process. I am filing in the US, but some of this might apply to people in other countries as well. If you have just bought and HODL'd then it will probably be much simpler for you. But if you have done ICOs and any trading and are worried about this stuff, don't worry too much. Its totally possible to get yourself organized with a little bit of work. Background Bought my first ETH in Feb '17 from Coinbase and since then:
Have traded probably 50 different tokens on 10 different exchanges
Have participated in 21 ICOs
Have received Airdropped tokens
Have sold some and withdrawn profits to my bank account
The Tools The best place to get started is bitcoin.tax Referral Link Normal Link I signed up for the 1 year plan for $19.95 (they also accept crypto) and believe me its worth every penny. You can use it for free, but are limited to 100 items (I ended up having > 1500). It really does almost everything for you, so you don't have to worry about figuring out the cost basis yourself. The only time USD was involved was buying via coinbase, everything else was handled as a token to token trade. Microsoft Excel or Google Sheets is a must if you are doing any trading on the non-supported exchanges because you might have to massage the data into the correct format. Etherscan Unfortunately, for some trades and the ICOs, I had to go directly to Etherscan to track down the data. DeltaBalances This is a lifesaver for tracking trades made on ED. I wasn't able to get the export feature working, but copy/pasting the table into Excel was fine. Html Table to CSV If you are having trouble copy/pasting table data this comes in handy. You can just copy the raw table HTML from Chrome Dev Tools and get a nice CSV. Exchanges I am only going to list the exchanges I use and how I was able to get the data into bitcoin.tax. But regardless of the method, make sure you verify all the data that was imported. The system did a bad import on my Bitfinex data and I had to wipe it and reimport because it was missing a bunch of rows. All the importing is done on the trading tab of bitcoin.tax. Some exchanges require you to download a .csv file from the exchange website, and some have direct API access. Just follow the tutorials on bitcoin.tax for each exchange. The Easy Ones Bitcoin.tax supports API data pulls for these exchanges: Bitfinex, Coinbase, GDAX, Kraken. For these, I still recommend going to the exchanges and downloading a copy of your history for your personal records. You need to login to the exchange and download trade history and then use bitcoin.tax's import tool for these: Binance, Bittrex, Poloniex The Tough Ones Trades made on Etherdelta present a bit of a challenge. There is no direct import into bitcoin.tax so you will have to manually compile a CSV and import it to their system. They give you a template to follow with the required data and it will require a bit of "massaging" to get the ED data to the correct format. For this is it extremely helpful to use DeltaBalances. For each wallet you use you will need to check the trade history and go back a sufficient number of days to cover your trading history. Warning, it might take a long time for this process to finish and it isn't 100% reliable. When I ran it, it needed to download > 200MB worth of data for the 260 days I went back. My suggestion is to run it a few times to validate the results. You will need to run it for each wallet you use to trade on ED. Once you get the results, you can try copy/paste the table into Excel and then format the columns to match. Liqui was the biggest pain in the ass of them all. If you traded a lot on Liqui, be prepared for some pain because they have no export and only show you the history of 1 pair at a time (and only the last 30 trades!). Liqui has over 250 trading pairs so if you forgot what you traded, you will tediously have to go through each pair to check. I couldn't bear this, so I ended up coding a custom script to query all 250 trading pairs and dump out the data for me, then I had to import that into Excel and format it to match the bitcoin.tax template. Kucoin wasn't too bad. They don't have an export function, but you can copy paste the tables into Excel and massage the data there. I did a few trades with OasisDEX but when I went there it didn't have any of my history, so I had to manually cobble that together from looking at Etherscan. Luckily it was only a few trades or else this would have been very tedious. ICOs Like I mentioned, I participated in something like 20 ICOs this last year. Unfortunately I have no records of any of them. In bitcoin.tax I handled these as just another trade. In order to track down the ICOs I participated in, I was forced to use Etherscan and go through my whole transaction history looking for them. In order to add the trades manually in bitcoin.tax you need the Date, the # of ETH you spent and the # of tokens you received. It's not super difficult, but just very tedious. One that threw me for a curve ball was RedPulse. This was a NEO ICO, but adding a trade manually doesn't yet support NEO as a currency. The workaround for this is putting it into a CSV and importing it that way. In fact, if I was to do this again, I would have built a CSV for all the ICOs and just imported it that way rather than inputting them one-by-one. Airdrops I treated airdrops as "Gifts/Tips" under the income tab. I had to find these through Etherscan. Verifying the data In order to verify that all seemed right and there are no problems, there are two things that I was working toward:
No unmatched trades -- On the reports tab, you can filter by "unmatched trades". Ideally you won't have any of these. If there are some, you may need to do some more digging to see why
Closing position report -- On the reports tab, your closing position report should match as closely as possible to your current holdings in Blockfolio.
Conclusion Overall, although there was some tedious parts, this was a really good exercise. Going through my entire history gave me some great insight on how my strategies played out (ICOs were great / I suck at trading). As far as the taxes themselves, it turned out to be a lot more than I was expecting, but considering the gains I am not too sad. Going into this next year I am going to make some changes. First of all, I will probably stop trading as much. It just wasn't that successful for me and created a lot of work and taxes on top of that. Secondly, I really want to try and stay away from exchanges that don't (or don't plan to) offer history exports. Third, I will probably hold most of my unsold ICOs for at least a year so as not to be liable for short term gains. Lastly, I will keep better records as I go along so I don't have to do so much digging for next tax season. I hope this can help some of you guys figure this out and I would love to hear any additional tips from those of you who have gone through this. Edit: A couple other hiccups that I just remembered. Some tokens change their symbol, this can cause some havoc, I had done some trades in MyriadCoin as MYR then it changed to something else and it got all wacky. Updating the old token symbol to the new one seemed to do the trick. Also, to add to the Liqui woes, I had bought some BCAP way back in the day, but it got delisted so there is no way I found through the UI to get that information. The only way I found out I had actually done that trade was that the script I coded iterated through every possible trading pair and only then it was uncovered. Edit #2: I got a request for the liqui ruby script
Last January my cousin turned me onto Chainlink and I bought some and put it on my Ledger Nano S along with a few other coins i had purchased. I kinda forgot about it until recently when my wife and i decided to buy some more Bitcoin so I decided i wanted to unload it and the small weekly buy i have out of my coinbase account and onto the Ledger. It had been a long time since i turned my Ledger on so there were a few updates and memory refreshers i had to iron out but i was able to access all my coins except my ChainLink. I went onto MyEtherWallet.com and plugged in my ledger and when it opened up, I just got a bunch of random empty wallet addresses. I could look through all of them but the list seemed endless. and they were all empty as far as i could tell. So i retraced my steps and went to my Binance account where I found the address the tokens were sent to and the transaction ID. I then looked up the address on Ethplorer.io and it is showing my Chainlink and my transaction from that day and nothing else. No other transactions and the Chainlink is there. But i cant access this address anywhere on my Ledger. I cant find it or seem to find a way to search via address name. Just a whole lot of empty ETH wallets with different addresses. I tried the vintage MEW and the new one and I kept getting the same results. So this was a long time ago, I was buying a bunch of random coins and I'm a regular "trees" guy so my memory may be failing me, but I am 99.9 percent sure that that address was to a wallet on my Ledger. The reason i say that is because I am a hodler. And believe me, I am currently hodling onto way worse coins than this ChainLink. The only reason i would have moved this Chainlink from my Binance account would have been to either store it or cash it out. But i couldn't have cashed it out because the wallet is still showing the balance of the tokens. Am i missing something here? Is there something on the Ledger i am forgetting to switch the setting on for it to show my balance? I recall doing this process before but i must be missing something. Or is there a way for me to verify that this address is actually on my Ledger? I am pretty sure it is, but i could be wrong. I could have put them in a placeholder somewhere but i dont think i would have done that because i have never done that before lol but now i am questioning everything. I agree I am probably sounding like a stupid noob, because boy do i feel stupid. But as far as i can tell, all I can prove is that last year i sent some ChainLink from my Binance wallet to another wallet and it is still there. Am i wrong about that too? If i am not wrong, then i am pretty confident that wallet is on my Ledger and i am just unable to access it for some reason. Is there something i am doing wrong on the technical side? Why cant i see it? Thanks guys
Dev meeting? Would say so, yes The people are still exhausted from the payment ID meeting :) Guess we could ping some people vtnerd, moneromooo, hyc, gingeropolous, TheCharlatan, sarang, suraeNoether, jtgrassie Anyone up for a meeting? Yep I'm here Here o/ Perhaps we should just start and people will eventually hop in? oof sorry guys, I'm working on the new FFS and I forgot all about this. Got a couple of new volunteers. This literally might be able to launch tomorrow. I know that. It's called "flow" :) I could run if you're out of time? go for it dEBRUYNE you guys are going to like this new FFS. We're like 99% done. Hi rehrar: someone else do the milestone thing already? All right, jtgrassie, perhaps you'd to start w/ briefly describing your most recent PR? https://github.com/monero-project/monero/pull/5091 oneiric, xiphon did everything like....everything As far as I can see, it allows the user to push his transaction over I2P, thereby masking the origin IP of the sendeuser great And it hooks into vtnerd's PR right? Sure. It basically just builds on vtnerds Tor stuff. sorry dEBRUYNE Really not much added. I have it running and tested. From the perspective of the user, what needs to be configured exactly? Nice Assuming the PR is included in the release binaries I'm using knacccs i2p-zero duirng testing but will of course work with any i2p setup sorry dEBRUYNE <= Np Looks a little like dams breaking, now that we have some dark clouds over Kovri and people take matters into their own hands ... User needs to run i2p, expose a socks service and and inbound tunnel. Basically same as Tor Okay, so should be reasonable as long as we write proper documentation for it (e.g. an elaborate guide) rbrunner, yes, knaccc credit for jumping on i2p-zero really dEBRUYNE: documentation monero side is kindof done. i2p side is very much implementation specific. I suppose we could write some guides for the most popular implementations? e.g. i2p-zero aims to be zero conf, but i2pd or Kovri would be differnet. I see, great vtnerd___: Do you want to add anything? could amend the current kovri guide for monero use from --exclusive-peer to the new proxy support Now I have i2p-zero running and tested with the #5091, I plan to jump back over to helping knaccc on getting that polished. I added support for socks proxy in the basic wallets ^ excellent Yes vtnerd___ I havent tested it yet but looks sweet. So connections to `monerod` over Toi2p are possible within wallet cli and wallet rpc Awesome This also implies auth+encryption even if ssl is not in use (when using an onion or i2p address) All right moneromooo: are you here? If so, could you perhaps share what you've been working on? I am. I revived the SSL PR, more stuff on multi sender txes, an implementation of ArticMine's new block size algorithm. I presume a multi sender tx works similar to multisig insofar as the senders have to exchange data before the transaction can be performed right? Yes. There are 2 SSL PRs. What's the diff? Theoretically this would also allow the sender to provide an output right? Which would be kind of similar to Bitcoin's P2EP The second one adds some things like selecting a cert by fingerprint. Yes. (for the first sentence) All right, awesome For anyone reading, this breaks the assumption of the inputs belonging to a single sender, which makes analysis more difficult Nice side-effect. Much work coming for the various wallets to support that rbrunner: Anything you'd like to share in the meeting btw? Yes, just a little info I have started to seriously investigate what it would mean to integrate Monero into OpenBazaar I have already talked with 2 of their devs, was very interesting In maybe 2 or 3 weeks I intend to write a report Too early to tell much more :) Soon^tm I guess :) Yep Currently wrestling with Go debugging whole new world moneromooo: Has pony recently shared any insights regarding the upcoming 0.14 release btw? No. All right I would love to see the tor & i2p PR's merged sooner rather than later so we can get more testing done. ^ +1 Isn't that famous early code freeze already on the horizon? fluffypony, luigi1111 ^ I suppose I could provide a little update regarding the GUI btw As always, lots of bug fixes and improvements :-P selsta has recently added a feature to support multi accounts dsc_ has revamped the wizard and will now start working on implementing the different modes and a white theme dsc_ is working fulltime on the GUI already? yes :) dsc_ is bae In light of the recent payment ID discussion, we've also, by default, disabled the option to add a payment ID unless the user explicitely activates the option on the settings page rehrar ^ nice I spoke about this yesterday at the coffee chat, this is not a good decision. How does it handle integrated addresses? The same way? rehrar ? For the next many months, we are still stuck with PAyment IDs in the ecosystem. Making it harder for people to access them will make Monero suck so hard to use for the average person for many months. i agree with rehrar Remove the option of Payment IDs when we remove Payment IDs rehrar: The new GUI release won't be live until probably mid march though Which is a few weeks in advance of the scheduled protocol upgrade Payment ID removal comes in October right, but Payment IDs are not removed in March Did we not have loose consensus on removing the old, unencrypted payment IDs in march? they are removed in October We had discussed a deprecation in March and a ban in October ok, then if we are going to do that, we have to commit to it and contact the exchanges like Binance that use them and get rid of them in the next few months (of unencrypted) Binance is huge, and if they still use them, then people will be very upset that they can't deposit or use Payment IDs easily I'm just speaking from a UX perspective. I thought it was unencrypted in April and possibly encrypted in October Yes I do agree Timeline and notes: https://github.com/monero-project/meta/issues/299 impossible to remove them for march, many exchanges still use them We can defer it to the 0.15 release if needed Well, that wasn't the impression for them log that I just read today This was all discussed in the earlier meeting linked above We have to force the ecosystem off of Payment IDs before we remove them from the UI, is all I'm saying Remove != make difficult to use ... or make them more difficult there, right? ping sgp_ sarang, I understand, and I agreed with you during that meeting. But then I started thinking of it as a UX person, which I am. And that huge massive problem leapt out at me i think making them difficult to generate is a good idea but making them difficult to consume and use is a bad idea well, maybe not a good idea, but a better idea ^ If we defer the decision to depriciate long payment IDs to october, won't we have the same issue then? The UI can gave an expandable payment ID field like MyMonero and we can still call it deprecated It is foolhardy to remove an option that the ecosystem uses. So I suggest we keep the Payment ID in the UI until October when they are completely banned. no dEBRYUNE, because they will be banned via consensus sgp_ imo it may be a misdirection of dev resources to add that since things are proceeding in the short term rather than long term but this is a relatively minor point Nothing matters til exchanges change All right The issue is that consensus will still have them in April, and exchanges won't upgrade because they are still allowed. Thus they must still be in the UI. endogenic these changes are already merged in the GUI to hide it like you do ok But when they are banned, exchanges are forced to upgrade or stop using Monero, so we can remove them safely because they won't be in use rehrar: that's a strong assumption sarang that they will upgrade? yes if they don't, then they can't use Monero If exchanges require pid, users need a way to set a pid. Making it hard for the user in the interim is just going to be a nightmare. we have decided to take our "stand" in October A way that is not too hard, then To be clear, we still intend to deprecate long encrypted payment IDs in April right? But no enforcement until October the term "deprecated" doesn't mean much if it's still allowed, and used in popular places yes, as far as I understand it jtgrassie, exactly True I suppose dEBRUYNE: we need to be more specific when talking about deprecation the person who suffers is the user There are two proposals for GUI deprecation: 1. Hide it in the send screen with a simple option to expand (currently merged iirc) 2. Hide it completely in the send screen unless users enable the field in advanced settings (PR'd but not merged yet iirc) What are the arguments for 2? Both are poor options, but 1 is better than 2 by a long shot Well the people who need to be made to "suffer" are the exchanges. And I don't see a way to make exchanges "suffer" other than by having their suffering customers complain to them constantly that they need to update. ^ CLI has something similar where users need to set a manual payment ID transfer mode. Not sure if it's merged yet the way to make the exchanges suffer is when we ban PIDs. They either upgrade or don't use Monero. exact;y Agree with rerahr here have exchanges been provided with clear, practical, sufficient technical upgrade plans for supporting what they're doing with PIDs but with subaddrs? Both are poor options, but 1 is better than 2 by a long shot <= I wouldn't call 1. a poor option. Have you actually checked how it looks? Because it states "Payment ID" and a user has to click on the + to expand the field endogenic: yes the email when out. Blog post coming soon, but contains the same info as the email also the exhcnages' users are often using wallets that don't support subaddresses ok great as well, it should be noted that the timeline for exchanges to upgrade is September, not October when the fork is. Which wallets are that? Rehrar: I don't see option 1. causing any issues/confusion i guess it doesnt matter too much if withdrawing as a personal user the main address should suffice Because September is when the new versions will be coming out without PIDs in the UI If there's opposition to 2, 1 is fine. We can still call it deprecated which is the optics we need anyway exchange users are often just using other exchanges lol. No wallets involved. dsc_ dEBRUYNE, ok, I trust you guys here then rbrunner: i was thinking mymonero last i heard Ok pigeons: rbrunner yes receiving on subaddresses won't be supported yet sending to them has been possible though and yes as learnandlurkin says often they withdraw to other systems like exhcnages that also dont yet support subaddresses I really can't come up with any good argument for 2. right now endogenic: seems not much of an issue then. Exchanges will typically support withdrawals to both subaddresses and plain addresses (especially if we are going to force them to use subaddresses) For deposits, MyMonero works properly if the user sends to a subaddress Actually the second solution was already merged: https://github.com/monero-project/monero-gui/pull/1866 Maybe not enough eyes watching :) The important thing is to have done something to justify having a big "DEPRECATED IN APRIL" stamp on PIDs to spook exchanges in the interim This was for solution 1: https://github.com/monero-project/monero-gui/pull/1855 The Monero Community Workgroup will start making noise everywhere we can to exchanges, and everywhere else that will listen. Try to get on those garbage news sites also. So everyone knows that deprecated in April, and banned in September Hey, for solution 1, write "Payment ID (optional, deprecated)" or similar there rbrunner: noted rehrar: probably wait until the blog post, but it should only be a few days Maybe a Reddit sticky post would be useful? With the blog post If people are over freaking out about the hashrate or terabyte blockchain :) sigh Any questions for the MRL side? Is someone checking ArticMine's block size changes for weird behaviour in some cases etc ? How would such testing work? Private blockchain?