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dhanson865
Well-Known Member
Pkmmte
Le meow
I'd say sell your bitcoins now, because once the bubble bursts it's all over, and will probably happen so fast you won't have time to get out. The way it's gone up lately, I'd be happy to take a 10% transaction-fee hit to take the profit and run. Assuming I had any bitcoins.
Not sure. Is this meant to express mistrust of the FDIC? When banks fail (and a bunch did in '08) the FDIC pays off the account holders up to a quarter of a million dollars per depositor. (Married couples can have a quarter million separately in each of their names, plus another quarter million in a joint account, and the feds will reimburse it all if the bank fails.)
Investments in securities (and legally bitcoin is a security) are not insured.
Not sure. Is this meant to express mistrust of the FDIC? When banks fail (and a bunch did in '08) the FDIC pays off the account holders up to a quarter of a million dollars per depositor. (Married couples can have a quarter million separately in each of their names, plus another quarter million in a joint account, and the feds will reimburse it all if the bank fails.)
Investments in securities (and legally bitcoin is a security) are not insured.
dhanson865
Well-Known Member
My goal back when it was $2,000 a coin was to sell about half of it to gain utility of the funds and hedge my bets in case it dropped in value instead of rising like it has. As the price increased I considered the risk higher as there was more to lose. So I've kept at it and continued to sell, but it's not the easiest thing to do. It's surprisingly harder to do in a safe manner than I imagined starting out.
Maybe easier if you use an exchange and transfer directly to a checking account. But I didn't want to send coins overseas or to a third party I didn't trust.
End result as I've slowly transferred small chunks the price has risen from the $2,000 level to the $17,000 level. Not the worst possible outcome. I've already pulled more out in USD over time than it would have been worth if I cleared it all out in one chunk at the $2,000 level. I've sold about half of what I started out to get rid of as I learned about tx fees and watched the world turn. I'll continue to lighten the load but I'm not looking to do anything risky to get rid of it.
you are quite wise. since ether has been quite flat i think alot of people lost little bit faith in it. its day in the sun is coming. its at $750 as i write this...
Jeff4155
Member
I jumped on the Bitcoin and Ethereum train about two weeks ago, nothing big, I see it as play money, at the end of the day it's a big gamble, so weather I loose it all or gain something, I won't loose any sleep over it.
I deposited the exact same amount into Ethereum as in Bitcoin and sold the amount of Ether when it reached the amount I put into it.
The Bitcoin has gone up by say 20% but nothing major, so in the case of Ether if I lose it all I haven't lost anything really.
On the other hand Steinhoff which was one of SA's top 40 shares on the JSE a "safe" bet lost a lot of people a lot of money this past week, just goes to show that there isn't anything like a safe bet, even the big ones go down now and a gain.
Interesting, that getting out of Bitcoin is "risky." I.e. (according to your post) would involve sending coins to someone you don't know and maybe can't trust. When I decide to sell a stock, bond, or mutual fund, I just put in a "sell" order and it's done, the money goes into my checking account. The only risk is the ever-present risk of a change in the price, as with any investment.
Again, interesting, and telling, that the precise attribute that any currency needs to be really useful, and to be adopted as currency, which is to say a stable value, is regarded as undesirable in a crypto-currency. This strongly suggests that people are not using crypto-currencies as money, to be earned and spent, but rather as speculative securities (the FTC regards crypto-currencies as securities) in the hope that the value will rise. That sets a big red flag for me. These are not truly alternative currencies, they are artificial speculative securities with nothing behind them but some computer code.
Contrast that with stocks, which are ownership in a company that produces goods or provides services; or bonds, which are loans to a company with a promise to pay interest on the loan. Really the only difference between crypto-money and "fiat" money is that the latter has a government behind it, and in the case of the major democratic, industrial nations, exercising responsible regulation over the money supply. With no regulation, crypto-currencies fluctuate wildly in value, making them impractical for the buying and selling of goods, but great for high-risk gambling, and great for their founders to fleece their adherents.
dhanson865
Well-Known Member
I've held bitcoin since 2011. Turns out I declare it as long term capital gains and it isn't taxed. 0% tax rate. Woohoo.
on the flip side it means me selling bitcoin isn't a way to trigger tax liability for the EV credit. Oh well.
dhanson865
Well-Known Member
You do that in stocks by selling them through a broker or stock trader of some kind and essentially are trusting them to send the money to your checking account. Stock traders and brokerages have existed in the US for hundreds of years. There is nothing new there. But you are taking a risk, however small.
Bitcoin brokers are new. The risk is in dealing with startup companies, not in the technology itself. As those companies age they will either be the defacto safe option or they will merge / be bought by traditional institutions.
I had a stock broker back in the day that did $3 trades, then $5, then $7. Somewhere along the way they were bought out by scottrade, scottrade is now being bought by TD Ameritrade. During the early online trader boom several online brokers screwed up, had goofy pricing, onerous fees that weren't obvious. It was possible to lose a small trading account just to picking the wrong broker and being eaten by the fees. I literally couldn't afford most broker fees back in the day, my savings were too small to deal with such.
It's all a matter of scale. If I make $5 million a year neither a stock broker or bitcoin exchange is a big risk. I don't make 7 figures, 6 figures, or even high 5 figures so any financial transaction I do with a firm not local to me is a risk that I take seriously. Don't let that cloud your understanding of the way money works.
Online transactions of any kind have a risk. Did you go to the correct URL for your bank or are you at a fake site that looks like your bank? Did you put in the correct account number or did you put in a typo and send money to someone at random?
Picking a new company and dealing with them adds to the existing risk of doing an online transaction because you don't know what normal is. You have less contextual clues to know if you just screwed up.
Thus as a matter of course I do small test transactions, do it in batches, I don't put all my money in one place. Call me paranoid if you will, won't hurt my feelings.
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An article recently, I think it was on Cnet, mentioned Steve Wozniak. He had 7 Bitcoins. He sold them to someone who paid with a credit card. Turned out the credit card was stolen, and the legitimate owner got the charge reversed. But there's no reversal of a Bitcoin transaction. Everything has some risk, but there are legal protections for other types of transactions, and if you deal with legitimate brokers you are extremely unlikely to get burned. Bitcoin is the wild west. There are more rustlers than cowboys. If the risk of using a legitimate broker is like raking your leaves, the risk of Bitcoin is like base-jumping. You can get injured doing either, but it's far more likely with the latter.
If your marginal tax rate is low enough (under 20% I think) then long-term capital gains are not taxed. (I am not a tax professional. Don't take my word when doing your own taxes. But for the sake of an internet discussion, yes, he might not have to pay taxes on the sale of those Bitcoins.)
dhanson865
Well-Known Member
You see tables like this 2017-2018 Capital Gains Tax Rates — and Avoiding a Big Bill - NerdWallet with 0% in the long term column but looking back at the 1040 taxact.com prepared it looks like normal income tax rates applied even though in other places it crowed about my savings due to it being long term.
I haven't efiled yet so I'll double check it in a bit but it'd either be 0% if you can believe the tables all over the internet or 15% if they are misstating the importance of the 0% number in the table (maybe it means 0% additional tax?).
Huh, I'll be damned. Granted I have separate thoughts on the appropriateness of buying new cars with income that low (unless the person is already wealthy), but in the end it's not my money so who am I to judge?
dhanson865
Well-Known Member
It skews things that I live in fly over country. I make twice the median income for my city and county but it's still low enough to be in the 15% tax bracket for my last dollar earned each year.
If the median income in some expensive California City is 100,000 a new iPhone at $600-$800 is negligible cost. If the median income in some fly over states medium size city is $30,000 then the same iPhone is a burdensome expense that people should buy on whim but often do.
So if you are used to thinking someone at 15% tax bracket can't afford a nice car, well you probably don't live in a fly over state.
Around here its more extremes, You might see someone pay out the wazoo for a phone (and be paying hundreds a month on a 2 year contract) while driving a clunker they can't afford to keep gas in. You might see someone like me drive a hybrid or EV to save money and buy a cheaper phone and have a cheaper cell provider, paying for my phone up front, paying $25 a month for data.
The reality is I pay cash for my cars instead of finance. I do have a home mortgage but that is it for "debt". I could buy a Model 3 without having to take out a loan if there wasn't a waiting list and the AWD and Short Range battery options were out.
For every luxury I consider now, I spent years in a Prius (ask McRat if that is torture), I spent years eating cheap, I spent years avoiding movie theater prices. I spent years driving slow, I spent years in a Leaf (better than the Prius but still has it's down sides).
Now this bitcoin thing tips the scales some but truth be told I was too conservative. I only took $7300 out of my bitcoin in 2017. I probably should have sold at least another $10,000 worth when it was around $19,000 a coin but I thought I'd let it ride. If it never goes back to $19,000 I lose my bet, if it goes back up I pull more out. Either way I'm ahead vs the computer, electricity, ISP costs that could be attributed to the mining I did in 2011.
If I had sold more bitcoin at the top I could have bought a Tesla using bitcoin. As is the majority of my Tesla money has to come from my day job.
dhanson865
Well-Known Member
OK, I tried 5-7 online tax preparers, several choked on capital gains (either just didn't offer the form I needed or had some stupid interface that wanted me to manually enter every transaction for my capital gains).
Two handled it well enough to give me prepared PDFs of completed returns and I could compare to see how they documented things and if they agreed.
Taxact did 99% of it but told me my AGI was barely over the limit of what they would do for free so they wanted $30 to file. Still they gave me the 9 pages of completed tax forms for free. I could literally fill out the refund portion and mail off snail mail at that point.
Taxslayer did 100% of it and gave me 16 pages of tax forms and instructions detailing the math behind some of the things Taxact didn't explain. Both services had the exact same numbers on every line of every form. No disagreement on anything. Just Taxslayer included worksheets that explain the whys for some things.
The key worksheet that explains why my capital gains didn't get taxed is called "Qualified Dividends and Capital Gain Tax Worksheet--Line 44". There is a bunch of what if math where the IRS bounces you through figuring out how much the tax would be if it is done at one rate vs another and comparing that to gross income limits and such. End result I make low enough that I do get to skip the tax on my capital gains.
My AGI would have to be $75901 or higher to get any taxes on my capital gains.
Uhhh it most certainly IS taxed, how do you figure 0%? I actually sold some BTC to purchase my Model 3 and got super lucky selling in December before the drop, but then had to pay short-term gains which was kinda painful.
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