Topic: Newbie Please Help (Read 138 times)

Regarding the latest tax changes, my understanding is that every transaction is a taxable event. From BTC to ETH or to X, it is not only when converting back to USD's.

Example: I purchase 1 BTC for 10,000
12 hours later I exchange the entire BTC for ETH
At the time of the exchange, BTC was 10,500
The 500 is taxable and needs to be claimed as a gain on the 2018 tax filing

One of the problems is when you take the same scenario and purchase 1 ETH, you'll need to calculate the amount of BTC used and the capital gains you had on that amount.

Regarding US exchanges, you can look into Gemini as well as you can transfer USD's from your bank account and trade that for BTC or ETH. (Gemini is registered in New York)

Get yourself a Trezor or Ledger (Blue or Nano S) hard wallet if you plan to hodL the cryptos for long term.

Nope, you will need something like Coinbase, https://www.coinbase.com/ to deposit USD, and then transfer it ( the bitcoin) ( Or instead of bitcoin use something like litecoin/ethereum to reduce the fees.) to poloniex or bittrex. You can't directly deposit USD into these two exchanges.

Thank you for all the information you shared. I looked up some of the alt trading sites you posted such as bitfinex and binance. I noticed Bitfinex is no longer allowing US Citizens to use their trading platform. Do you know if Bittrex or poloniex allows you to deposit USD?

As I'm not a U.S. citizen so I'll try to answer the best I can :
For trading USD into BTC/ETH/LTC/BCH, beginners usually use Coinbase.  For U.S. citizens I've heard that it may be better to use GDAX - it's created by the same people as Coinbase but charge much lower fees to trade.  For alt coin trading Bittrex was pretty popular. Binance seems to be getting more popular these days with fast interface and a good selection of new coins added all the time.


It seems that the main change is that prior to this it was generally believed you only incurred taxes if you converted crypto back to fiat - you'd claim capital gain / loss.  With the new tax plan, you now incur taxes on your crypto to crypto trading as well.  Say if you traded BTC into an Alt coin, or vice versa, there would be a gain/loss in that trade that you'd need to report now as well.  So now you need to keep track of all of your trades.  How much you bought / sold what into what.  Some people say they keep a spreadsheet of all that. Not sure if there are any good software / online services that help you do that.   It sounds like a lot of headache.


Heard Bitmex allows shorting as well as leverage up to x100 times.  I'm sure you know this, but just wanted to say please be really really careful with shorting and leverage.  Don't go against the market trend where the big trend is going up.  And please don't use leverage unless you're experienced in trading and are comfortable with doing that.


Be worried.  As Andreas Antonopoulos said in one of his videos, exchanges get hacked - not a matter of "if" but a matter of "When".  If you actively trade a lot and leave funds on exchanges, make sure to periodically take them out.  If you need to keep some funds for active trading, instead of leaving on exchanges, another option is "hot wallets" like myetherwallet  (for ETH and ERC20 tokens), or mobile wallets like samurai wallet (for BTC) where you are in charge of your private keys.  But for the funds you're hodling / for long term investment, definitely keep them in cold wallets / hardware wallets.

Good luck!  

1. Many exchanges do not allow US citizens to purchase Bitcoin, but there are some major players that do, such as Coinbase, GDAX, Coinmama, Bitstamp, Kraken and LocalBitcoins. These are all as reputable as you’ll find in the crypto industry. Check out this list for more options: https://www.buybitcoinworldwide.com/united-states/

2. I’m not familiar with a “new” tax plan that was passed related to crypto currency, but the IRS views crypto as a property (not a currency), which means that you would have to pay capital gains taxes on the value of your crypto transfers, every time you sell or exchange your crypto into fiat. Think of it as real estate when it comes to reporting your crypto sales..

3. Each of the major exchanges have their own advantages. For example, Coinbase has the best rates if you use your bank account directly to purchase crypto. But this requires allowing them to access your bank account, by way of logging into your bank’s online portal via Coinbase. As for as short trading, your options are much better on other TRADING exchanges, such as bitfinex, binance, bittrex, poloniex, etc. as they support much more altcoin options for trading. Each has their own restrictions, and most of their support teams are overwhelmed at the moment, so if you encounter any issues, you’ll unfortunately be stuck with that issue for much longer than you’ll anticipate. They also require verification, for the most part, so anonymity is out of the question as an American. It doesn’t sound like you’re worried about anonymity, though.

4. Yes. Worry about it. Google “Mt Gox” to see what’s happened in the past with millions of dollars worth of Bitcoin. There is always a risk of an exchange shutting down at any moment, regardless of how reputable they have been in the past. Cold storage is among the safest options for storing your crypto. I personally never leave anymore value in any exchanges more than I’m willing to lose in case something goes awry.

5. You’ll learn on your own, as you continue playing around and short trading. Coinmarketcap.com will become your homepage. You’ll find a lot of articles about the best way short the markets, but one thing I hope you take away from my post is this: DO NOT EVER JOIN AUTOTRADING SERVICES or buy any “bots” that auto trade. They claim to be able to read signals and use your own stop orders to guarantee a return, but these are all ponzis. They rely on new customer sales to support and payback the “promise of return”. In fact, stay away from ANY site that guarantees any form of ROI. If their services were legitimately profitable, they wouldn’t have to rely on newbies in order to make money.

Welcome to crypto, and hope you enjoy it!

1) Depends on where you're from. I know New york city has stricter regulations and thus you would not be able to trade on sites such as poloniex.com, see https://www.inverse.com/article/40144-binance-bitlicense-bitcoin-cryptocurrency-exchange-new-york-city

2) I don't know enough about this, but i don't think anything major about the regulations  of cryptocurrency has changed following his bill.
It seems that there might have been some changes, http://fortune.com/2017/12/21/bitcoin-tax/, but i'm not sure if this even went through.

3) Yes. Poloniex allows you to short with a few markets, it's called margin trading. https://poloniex.com/marginTrading I don't think coinbase nor bittrex offer this, but someone could correct me if i'm wrong.

4) If you want absolutely security and control over your funds, yes, you should. The exchange could be hacked  ( mtgox), or your account.

I have a few questions that I would appreciate if anyone could help answer.
1- Being a United States Citizen, what market places for investing and trading crypto currency would you recommend me being in and are there only certain market places I am allowed to use?
2-From research I have done, I have read different things in different places, does anyone know about how the new US tax plan that was just passed effects how crypto currency is taxed? I am want to know so I can keep all of my records up to date.
3-What are the advantages / disadvantages for each market place and do any allow you to short? For example poloniex, Coinbase, and bittrex? Is
4- Do I need to worry about leaving coins in a market place account or should I be trading and moving right into cold storage?
5- Is there anything else you think I should know? Because while I have kept up with and done a ton of research on lots of different coins I still will be a newbie when it comes to trading and investing. So all advice will be greatly appreciated.