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Cryptocurrencies

Bitcoin Cash Is Surging

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Bitcoin cash, the cryptocurrency that split off from bitcoin earlier this year, jumped against the dollar on Friday.

Bitcoin cash was up 30% against the dollar to $870.90 as of noon GMT (7 a.m. ET):

bitcoin cashMarkets Insider

Analysts say the surge is down to developers abandoning plans for SegWit2x, a planned upgrade to the software underpinning regular bitcoin that was designed to improve the speed of transactions on the network.

Joshua Raymond, a director at the foreign-exchange and CFD broker XTB, told Business Insider: “The delay to Segwit2x has damaged confidence amongst bitcoin investors concerning the much-needed resolution to speed up bitcoin’s slow processing speed.

“Everyone was hoping the Segwit2x would address this but unfortunately, the delay due to a lack of consensus on the mechanics has affected confidence. Confidence on transaction speed in Bitcoin has deteriorated significantly in recent months. As Bitcoin Cash enjoys much faster transaction speeds, we have started to see a recycling of positions out of Bitcoin into Bitcoin Cash as a consequence.”

Bitcoin cash was created in August by “forking” the blockchain record that underpins bitcoin, creating a parallel network. Bitcoin cash allows for bigger “blocks” of transaction to be processed, speeding up the network.

SegWit2x was intended to speed up transactions on bitcoin’s network, but not enough participants agreed on the proposal, and its implementation risked splitting the network again. As a result, the project was abandoned Wednesday.

Mati Greenspan, an analyst with the trading platform eToro, said: “After the 2x hard fork was called off, BCH is now being seen as a favourite to one day replace BTC. If the Bitcoin community doesn’t come to a consensus about how to scale the network soon, it may run into congestion, in which case people will need an alternative.”

Bitcoin fell to a five-day low Friday as people cycle into bitcoin cash. Bitcoin was down 3% against the dollar to $6,893.98 at 12.10 p.m. GMT (7.10 a.m. ET):bitcoinMarkets Insider

Get the latest Bitcoin price here.>>

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Cryptocurrencies

The 3 Best Bitcoin Stocks In 2017

When the calendar does finally flip to 2018, there’s a really good chance we’ll look back and refer to 2017 as the year of the cryptocurrency.

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When the calendar does finally flip to 2018, there’s a really good chance we’ll look back and refer to 2017 as the year of the cryptocurrency. At the beginning of the year, the aggregate market cap of all cryptocurrencies was a mere $17.65 billion. By Nov. 12, the 1,276 listed digital currencies had an aggregate market cap of $192 billion. You know, just your standard 988% return in 10 months and 12 days. By comparison, it’s taken the S&P 500 decades to deliver the same return for long-term investors.

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Leading the charge has been the crypto trio of bitcoin, bitcoin cash, and Ethereum. Bitcoin cash, which came into being just months ago after bitcoin’s soft fork, recently exploded higher by 300% in a matter of days, briefly surpassing the market cap of Ethereum. Speaking of which, Ethereum has seen its value increase by nearly 3,700% year to date, to a market cap of $29 billion. Meanwhile, bitcoin, while “underperforming” in a sense compared to its peers, has gained 485% this year (through Nov. 12) and has a market cap of $95 billion.

2017’s best bitcoin stocks
As you might imagine, the popularity of, and gains in, bitcoin have made it an attractive investment. Of course, decentralized cryptocurrency exchanges where bitcoin can be bought aren’t for everyone. Instead, investors have been eagerly looking for bitcoin exposure in the stock market. The following three equities, which have direct and/or indirect ties to bitcoin, have been the best bitcoin stocks of 2017.

Bitcoin Investment Trust: Up 623%
Perhaps unsurprisingly, the top bitcoin stock in 2017 has been Grayscale’s Bitcoin Investment Trust (NASDAQOTH: GBTC), which is up 623% through Nov. 12. The Bitcoin Investment Trust owns a relatively fixed amount of bitcoin, making it easy for investors to calculate its net asset value. Considering its listing on the over-the-counter boards, buying into the Bitcoin Investment Trust gives investors potentially improved liquidity, and perhaps a bit of extra transparency, over purchasing bitcoin directly on a decentralized exchange.

But there’s also a downside that’s pretty tough to overlook. Namely, its market cap has consistently ranged between 25% and 100% higher than its net asset value in recent months. In other words, investors have been willingly paying a huge premium to have a stake in an equity that holds bitcoin, rather than purchasing bitcoin from a decentralized exchange. Is added liquidity worth paying 25% or 50% more than the underlying value of the coins? I really don’t think so, which is why this could be the most dangerous bitcoin investment.

And should you need an added reason to keep your distance, the annual management fee for essentially sitting on bitcoin is a hearty 2% of your investment.

Overstock.com: Up 199%
Another company that’s caught the bitcoin bug is online retailer Overstock.com (Nasdaq: OSTK), which has gained 199% since the year began. But unlike the Bitcoin Investment Trust, bitcoin isn’t directly responsible for all of Overstock’s gains this year. Although Overstock is the very first major retailer to accept bitcoin (which it’s done since 2014), as well as Ethereum, bitcoin cash, LiteCoin, Dash, and Monero, it’s the company’s subsidiary, tZero, that’s drawing all of the attention.

For months, tZero has been building out the Medici t0 blockchain.  For those unfamiliar, blockchain is the technology that underlies most virtual currencies. It’s the digital and decentralized ledger that records transactions without the need for a financial intermediary like a bank. Best of all, since its usually open source, tampering with the logged data is practically impossible. Blockchain could very well be the future for the financial services industry.

With regard to Overstock, its Medici t0 will be a blockchain-based securities lending system that’ll go toe to toe with Wall Street firms. However, the Medici t0 blockchain is expected to do so more efficiently, securely, and for a lower cost than traditional Wall Street firms. There’s a lot of hype surrounding this blockchain project, which is a big reason Overstock has rallied so much. It remains to be seen if the hype can deliver tangible results.

NVIDIA: Up 102%
Graphics card manufacturer NVIDIA (Nasdaq: NVDA) is another top bitcoin stock, having mustered a gain of 102% since the beginning of the year. In years’ past, the high-powered graphics cards made by NVIDIA were used to mine bitcoin. Today, however, a more specialized chipset known as ASIC handles most bitcoin mining. Nonetheless, NVIDIA’s graphic cards remain a staple for mining a number of burgeoning cryptocurrencies.

But herein lies the dilemma for NVIDIA’s shareholders: The company doesn’t break out what percentage of its sales and sales growth is a direct result of digital currency mining. The company recently reported $1.56 billion in gaming revenue in the third quarter, which is 25% higher than the previous year, and the category where mining sales would be included. But there’s simply no further breakdown within the gaming category, which leaves Wall Street and investors to guess.

However, investors have been able to take advantage of NVIDIA’s growth in data centers and the cloud, which is where its true long-term foundation lies. In just the past seven quarters, data center sales have jumped from $97 million to $501 million. Because NVIDIA has this rapidly growing enterprise and gaming foundation, this is probably the most palatable investment of all stocks with cryptocurrency ties.

This article originally appeared on The Motley Fool.

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Cryptocurrencies

5 Tips For New Bitcoin Investors

Taking the plunge and entering the crypto space can be daunting. There is no centralized authority to hold your hand, and the rumors and stories circulating around digital currencies can be fear-inducing.

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Authored by Darryn Pollock via CoinTelegraph.com,

Taking the plunge and entering the crypto space can be daunting. There is no centralized authority to hold your hand, and the rumors and stories circulating around digital currencies can be fear-inducing.

However, with a few straightforward tips, negotiating that first Bitcoin transaction or trade can be a lot less stressful.

1. Do your homework

There is plenty of hype, rumor, success stories and tales of horror when it comes to Bitcoin and other digital currencies. Make sure you understand exactly what you’re getting into, and don’t risk more money than you could afford to lose.

Bitcoin is an exciting world to be in, but it is one that is complex and confusing if you only enter it on hype. Many people buy expensive cars, not knowing how the engine works, and that is fine because if it breaks there are mechanics and garages. In the cryptocurrency world, it is you against the world, it is decentralized and there is no one to hold your hand.



Pawel Kuskowski, CEO & co-founder of Coinfirm, gave this advice:

“The more you understand, the better off will be.”

Don’t simply speculate about the big money there is to be made, actually go out there and learn how Bitcoin and Blockchain work. Lucas Geiger, founder and CEO of Wireline, says:

“This may seem obvious, but I think the first thing is take time to understand the Blockchain. I say this strongly because few people will do this. If you don’t have a high-level understanding of how a Blockchain stores secure data (such as coins), then you are investing in the equivalent of tulip bulbs.”

A good place to start is the beginning – with Satoshi Nakamoto’s white paper. Crypto fund manager Jacob Eliosoff wrote:

“If you have any technical bent whatsoever, take 10 minutes to leaf through the original 2008 Satoshi white paper. It’s only eight pages, legible and an inspiring work of genius!”

The great thing about the cryptocurrency ecosystem though is that there is a lot of material and information out there. Loads of websites and resources are aiming at trying to make the technology easier to understand.

Even more than that, the investment world is also trying to simplify things by making Bitcoin more available to traditional investors. The introduction of things like futures will help people understand how Bitcoin works.


2. Be cautious

In any investment there will be risk, but that risk is somewhat magnified by Bitcoin’s newness and extreme volatility. Eliosoff emphasized:

“This is still an extremely high-risk space. Don’t invest money you can’t afford to lose!”

It is tempting to be bold and brazen, throwing money at Bitcoin after hearing the success stories, but especially as a first timer, caution is the better part of valor. There is no reason to look to become a millionaire overnight with Bitcoin, and by sinking huge amounts of capital in it from the start, you will be met with more problems than solutions.

Marshall Swatt, a serial entrepreneur, suggested:

“Start small and invest a small portion of your capital.”

Additionally, from Tim Enneking, managing director of Crypto Asset Management, advises:

“Don’t chase Bitcoin prices. Decide on a entry point and stick with it. With Bitcoin, you’re almost always right in terms of foreseeable price action – it’s your timing that might be off. So, be patient, and let the Bitcoin price come to you.”

There are a number of investing strategies that work really well with Bitcoin, and those that offer the most success are often the most cautious.

Things like ‘Dollar Cost Averaging’ – putting in the same amount of money into an investment at the same time each week or month – is great for Bitcoin as it helps you ride out the lows, as well as the highs.


3. Diversify effectively

Most new digital currency enthusiasts hear first about Bitcoin, but there are thousands of other cryptocurrencies out there, and some have grown much faster than even Bitcoin. Diversification is wise, particularly since many of these “altcoins” perform well when Bitcoin drops. Tech entrepreneur Oliver Isaacs writes:

“Hedge against volatility and don’t put all of your eggs in one basket. Much like investing in the stock market or FX, you should diversify your funds as a risk management technique.”

Famed stock picker Ronnie Moas is a strong believer in diversification. It is easy to become infatuated with one cryptocurrency, especially Bitcoin, but it is important to hedge your bets.

“Do not put all your Crypto money into Bitcoin,” Moas warns. “You must diversify across at least a dozen of the more than 1,000 names. Focus on names in the top 50.”



4. Keep coins off the exchanges

There is still a lot of hacking and thievery that goes on in the crypto space, and it is important to take precautions. It isn’t too hard to make hackers’ lives difficult. Use the exchanges for just that: exchanging. Once you have bought a currency, move the money off the exchange and into a wallet that only you control, such as a hardware wallet.

A lot of people have been burned on exchange hacks – none more so than the major Mt. Gox one – but even recently, things like BTC-e and the charges against their CEO would have caused many people to lose out on huge amounts of money.

Matthew Unger, founder and CEO of iComply Investor Services Inc. suggested:

“Just like you keep some cash in your wallet, some in your bank account and perhaps the really valuable stuff in a safe, you need to manage digital currencies in the same way.”

5. Get ready for a wild ride

Bitcoin is notorious for its volatility, so much so that many traditional investors are terrified of it. A massive drop in Bitcoin’s price does not spell permanent disaster, but it is hard to stay committed when you start heading into the red.

Diversification is a great strategy to help with that, but it takes some thought and effort. Of course, the most famous (and so far, successful) Bitcoin strategy of all is to ‘hodl’ – or hold onto –  your investment no matter the market volatility.

You can also buy and forget, as not keeping an eye on the market can help keep you from worrying about the dips and miss the volatility.


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Cryptocurrencies

Introducing Crypto-IRAs

Perhaps you’re looking for more diversification beyond those traditional investments that your custodian offers.

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Do you have an IRA with a major brokerage firm or online company?

If so, you probably own stocks, bonds, ETFs, CDs, or mutual funds in the account.

But perhaps you’re looking for more diversification beyond those traditional investments that your custodian offers.

For example, there’s a massive ranch just north of my house. It boasts thousands of acres of unspoiled nature. And over time, the value of undeveloped parcels there have just gone up and up.

So I’ve seriously considered buying one, but most of my investable assets are inside retirement accounts.

The last thing I want to do is withdraw the money and face taxes or penalties.

Enter self-directed IRAs …

I briefly mentioned these in a previous article about regular Individual Retirement Accounts.

Self-directed IRAs have the same contribution limits and tax benefits as traditional or Roth IRAs.

The big difference is that you can own a range of non-traditional investments inside self-directed IRAs, including everything from private companies to tax liens.

When it comes to holding real property in a self-directed IRA (anything from raw land to rental units), there are just some catches you need to know about.

Here are the most important ones:

  • You’ll lose all the regular tax benefits of owning investment real estate like depreciation since the property is held in a tax-deferred account. On top of that, if you borrow money to buy the property, you could trigger unrelated business taxable income.
  • You must also avoid self-dealing, which includes personal use of the property as well as other direct relatives. For example, you can’t purchase a beach house that you want to use for vacations or buy a condo for your child.
  • You are restricted when it comes to managing the property. For example, you can’t do improvements or perform maintenance yourself.
  • You also have to think about required minimum distributions (RMD) when you turn 70½. It’s pretty hard to liquidate a piece of a duplex.
  • And in the meantime, what if the building needs a major repair? You can’t use outside money to cover the expense. Same goes for property taxes or other expenses. So you’ll have to keep a solid cash reserve on hand inside the account.
  • Likewise, any income the property generates must stay inside the IRA if you want to defer taxes and avoid penalties.

In my personal opinion, raw land or simple rentals would be the most appropriate ways to hold real estate inside a self-directed IRA for some of the reasons cited above.

Of course, there are other possibilities, too … even something as progressive as bitcoin.

As you might know, bitcoin is an online currency that was created in 2009. And many people, including Bill Gates, see it as the future of money.

Since the IRS considers bitcoin a capital asset, any money invested in it is subject to capital gains taxes when sold at a profit.

So holding bitcoin in a tax-deferred account, like a self-directed IRA, would be a great move, too.

Full disclosure if you’re new to IRAs: There are things you cannot hold in your self-directed IRA?

Here are some prohibited items:

  • Life insurance
  • Collectibles such as artwork, rugs, antiques, or stamps
  • S-corporation shares
  • Metals – though some kinds of bullion are allowed (including very fine bars of gold and silver as well as some forms of platinum and palladium)
  • Coins – with certain exceptions (gold and silver American eagles, for example, are permitted)

How to set up a self-directed IRA

First, find an IRA custodian or administrator who focuses on these types of accounts.

You might want to ask your CPA or financial adviser for recommendations. Another source is the Retirement Industry Trust Association. Click here for a list of its members.

After you open the account, you’ll need to fund it by moving money from an existing IRA or making a new contribution to your self-directed IRA.

Then you’re ready to invest!

A final note of caution: Your custodian or administrator will not perform due diligence on your investments, nor are they responsible for any tax consequences. They only execute your instructions. So do your research before investing!

To a richer life,

Nilus Mattive

Nilus Mattive
Editor, The Rich Life Roadmap

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