That is If you can time the start and end of bull market, and that’s a big if. The 2017 bull run had seven 30-40% corrections. Nobody knows for certain if the next 40% drawdown is not a bull market correction, but the start of bear market. And if bitcoin is down 40%, your favourite altcoin could easily be much more down. You may suddenly find yourself in the middle of bear market and too late to switch your altcoin to stable coins. And it’s certainly isn’t advisable to wait on an altcoin through the bear market because you don’t know if your altcoin will even bounce back in the next bull, with all the disruption that is happening in the space. If you study prices across cycles, most altcoins lose money against bitcoin. As such, unless you can time the market accurately, you are better off just hodling bitcoin across the cycles.
Couple of questions
What is your view on CoinDCX vs WazirX - Cost / Risk / Features etc
How much one can hold in exchange and what are key risks
Have you used ledgerNano … Your feedback in case you have used it
Are you treating Crypto as business income or capital gains in Income tax returns
Haven’t used CoinDCX. WaxirX is a good platform and has the option for peer to peer trading.
Bitcoin is made with the philosophy of trust minimization. By holding your bitcoin on exchange, you bring back the need for the trusted third party. Bitcoin is a unique digital asset that you can hold without the need for any trusted counterparty. You should make use of this feature to completely eliminate the risk of having to trust an exchange.
You should hold bitcoin on exchange if
- It is a small amount which does not justify transaction fees. At current price, you need to pay ~40 INR to get the transaction confirmed in roughly a hour.
- You intend to trade.
No. I use Bluewallet app to turn my old smartphone into an offline storage. It also gives the capability to sign and broadcast transactions by communicating, via QR codes, with my online phone.
Neither. I am a hodler.
Bitcoin is not a commodity. It is a currency. You can lend your bitcoins on exchanges to earn more bitcoin. You can trade bitcoin denominated derivates to make your bitcoin earn more bitcoin. You can also use bitcoin to directly purchase goods or services without ever converting it back into fiat. How do you expect the government to tax it?
The most practical solution for the government is to introduce a transaction tax on regulated exchanges. People may still need regulated escrow services for high value transactions in bitcoin, like purchasing real estate. The government can have a transaction tax implemented with these escrow services. These taxes make logical sense, as in return, government provides legal redressal to the users of exchanges and escrows.
But if Bitcoin is successful, we will have an unregulated economy where people make bitcoin transactions in exchange for goods or services, and an unregulated finance sector based on Bitcoin which could work perfectly without the need of any trusted third part like government. How do you expect the government to tax it?
If you are a libertarian, this should excite you, and you are right in making an investment in realizing such a future.
It’s possible you are horrified by this, but you see such a future as inevitable, in which case, bitcoin is still a right investment for you.
If you think governments will not let go of the power they enjoy today, and will come together to kill this innovation before it matures, then you have made a case for not investing in bitcoin for yourself.
Would it still apply if I never convert my Crypto to Fiat? Imagine I made 0.3 ETH as profit whose value was 100$ during bear Market and 1000$ now in Bull Market, what would I pay tax on?
Using Decentralized exchanges like Pankcakeswap/Uniswap doesn’t even bring taxes in the equation.
Thanks
As I understand you shift your holding from Warirx to Bluewallet whenever you buy Bitcoin and you incur Rs 40 per transaction irrespective of transaction value . Is it right as I understand it
Yes, that is the net effect, though my setup is a little more nuanced. The cost of directly transferring bitcoin from Wazirx or similar exchanges is around 10 times higher than the bitcoin blockchain transaction cost. It is also a privacy hazard as the exchange can see what you are doing with your bitcoins on the blockchain. Instead I use the privacy coin monero, whose withdrawal fees is almost negligible, and use a non-kyc exchange like fixedfloat to convert my monero to bitcoins, and sent to my Bluewallet, at 1/10th cost.
Which exchange allows you to transfer at such low prices? Most Indian exchanges charge 0.0005 BTC per transaction.
check my reply above
You don’t have to withdraw bitcoin from indian exchange. You can withdraw some cheaper alternative like Monero. If Wazirx still does not allow monero withdrawl, you can withdraw from Binance (Wazirx’s parent), with the internal transfer from Wazirx to Binance being free of cost. You can then send your monero to any international exchange for conversion into bitcoin, and may get better withdrawl rate for bitcoin. You can also use lighning integrated exchange like okcoin to make it very cheap. If you want on-chain withdrawl, you may want to check using atomic swap from monero to bitcoin which cuts down the need to have any exchange as intermediary.
There’s no escaping Bitcoin network fees. Even if you want to use Lightning network you will need some Bitcoin on-chain to get started.
No wonder Bitcoin dominance is falling yoy.
Talking about the taxation for crypto:
Indian government may allow crypto as a commodity for use cases, including payments, investments and utility
# India’s Crypto Economy | Regulating Crypto As A Commodity
Latest usage report on indian exchanges:
@StonePitbull Would like to know your thoughts on liquidity mining / yield farming since you mentioned about Uniswap and do you think its attractive
Hi Prem. I haven’t participated in yield farming yet. I was tempted to take part in PancakeSwap yield farms around March this year, did some basic reading but for the tokens they pay for yield, I had no interest in them. Also yield farming is a zero sum game, another reason I’ve stayed away.
Staking is more of my thing.
Good debate on Bitcoin’s security model and security budget. Justin Drake explains how Bitcoin’s 21M hard cap will threaten the network security as block rewards become negligible in the next decade.
Cryptocurrencies are limited in supply, they are easy to trace with blockchain, easy & fast conversion and acceptance across globe makes them attractive option to transfer money without trace anywhere.
But isn’t it like Hawala transaction where some bank/exchequer is losing on currency conversion fees? When I buy a cryptocurrency in India, my Indian bank account will be debited of some INR and if those coins are sold by someone from other country his account will be credited with his currency, right? Will the exchange convert the money from INR to some foreign currency and pay currency conversion fees?
Simply put Crypto is here to kill remittances industry. Say Goodbye to Western Union, when I can transfer any amount to any country with zero fees using Nano and near zero fees with CryptoCurrencies like Stellar and Algorand. No more free lunch for middlemen.
Banks if they don’t adopt Crypto in some form will be the biggest losers. No wonder Big Banks have already started apeing in some form.
Bitcoin is limited in supply, not cryptocurrencies. Anyone can start a new cryptocurrency as there is no entry barrier.
privacy coins like monero are untraceable.
Remittance is indeed emerging as the most obvious use case for crypto, but the most important application is in its ability to store value across time, to ensure that its purchasing power is retained, if not increased over long periods of time. Not having a sound money, there is a gap for such store of value in markets, which also explains the unreal valuations for quality stocks as people have started treating them as store of value.
Do you see a future where people will buy everything using such global currencies (Cryptocurrencies) only? No need to show any income to government, pay any taxes? Fiat currencies will end and there will be free trade? How governments will work if that happens?
Like what China did, why other governments cannot ban this cryptocurrency altogether?
There are two things to consider here -
i - Will you (or anyone as an common end user) be willing to go completely off-grid? meaning, you just do not enter the standard economy with your crypto component. All buy/sells /transaction on dark web based platforms (or equivalent). I personally would not be comfortable doing so. There are highly skilled professionals who have lived their lives in the dark web, you or me will be small fry and easy prey to any sort of illegal scams and fraudsters, and if scammed you have no recourse to any support whatsoever. Note also that this is exactly the set of operations which the governments cannot ban. Note that this is also why cryptocurrencies are here to stay since, by banning them, you cannot wipe them out, all you are doing is yielding more power to this alternate ecosystem, and cutting yourself off from it. As a friend of mine put it - you cant ban crypto, you can ban yourself from crypto.
ii.- So as a government, If do not want to yield entire control of this new age, still not-very-well-understood asset class to this off radar ecosystem, the next best thing I can do is control the official gates. Say like coindcx. Every cryptocurrency you buy on coindcx can be traced to you, and taxed, and transactions traced and so forth. As an end user, I am ok with that. Gives me some degree of legal and structural comfort, while not cutting me out of the entire ecosystem. I do not want to go illegal, I just want to grow my money.
I am pretty confident that, current knee jerk reactions aside, all sensible governments and regulatory structures will, sooner or later, come around to this second conclusion. Logically speaking, all other options seem to be variations of the ‘cutting off your leg to spite your foot’ theme.
Historically, governments used to work perfectly fine without any income taxes. They used to tax land ownership, and had small budgets with minimal control over economy.
The present day large governments will become unsustainable. The money printing that supports ever increasing budgets, the increasing concentration of wealth into the hands of privileged who get early access to freshly printed fiat is unsustainable, with or without the existence of Bitcoin. These unsustainable financial imbalances will eventually resolve. The question is when and how.
Without Bitcoin, the future seems very bleak. There is possibility that big governments will not give up power by introducing reforms, and instead force the population to live with hyperinflation like the present day Venezuela. Generations may descend into dark ages, and the only way out for people will be an armed uprising.
Fortunately we now have a peaceful path of taking away money printing power from the hands of governments. That is Bitcoin.
They can. The current situation is like prisoner’s dilemma for governments. All have to cooperate together in banning bitcoin in order to preserve status quo. But if even a few major countries decide to accumulate and accept bitcoin, they will prosper at the expense of those that have banned it. The situation will be very much like what India and China faced in 18th century by remaining on silver standard while the rest of the world moved to gold standard, a harder money than silver.
Huge news Dogecoin fans! As we work to accept online crypto payments, now you can buy @AMCTheatres digital gift cards (up to $200 per day) with Dogecoin and other cryptocurrency using a BitPay Wallet. Accepted on our web site, mobile app, and in theatres. https://bitpay.com/directory/gift-cards pic.twitter.com/dra7e23tc8
— Adam Aron (@CEOAdam) October 5, 2021