Photo by Hitesh Choudhary/Unsplash
It's no lie that investing in cryptocurrency like Bitcoin (BTC) can be life-changing. I paid off my house in early 2018, just halfway through the loan with proceeds from a few hundred dollar investment after BTC skyrocketed in 2017.
How It All Began
In late 2013, I wrote a small how to book for a client about Bitcoin and other altcoins for new investors. As I researched for the publication, I learned how to invest in cryptocurrency, so I began by finding a place to purchase Bitcoin, moving money into an account, and making the purchase.
As time went by, I heard about new coins and tokens, and I occasionally bought some if I thought the blockchain technology it was built on had potential. I never invested more than a few dollars in most of them. I also did a minimal amount of mining for different digital currencies, earning some that way, but ultimately, mining wasn't a financially viable way for me to procure digital currency.
Taking advantage of things like airdrops and other giveaways, I slowly built up an amount that I used to trade. When a coin became profitable, I sold it and used the proceeds to buy more on a dip or put the money into other cryptocurrencies.
ICOs Changed My Life
Now there are regulations on Initial Coin Offerings (ICO). However, in 2016 they weren't highly regulated in the United States. I chose about five that seemed like they had good technology and backers. I invested a few hundred worth of BTC in them. A few ended up being complete scams, and I lost my relatively small money.
However, one of the ICOs I chose to put an entire BTC in was Antshares, which is now known as Neo. At the time, one Bitcoin cost a bit over $600. With that several hundred dollar investment, as BTC rose, so did Neo, and I ended up selling 75 percent of my holdings for a total of $125,000 while keeping about 500 Neo for the future.
At the time, I owed $99,000 on my home, which I'd refinanced into a 15-year mortgage a few years before. The sale was taxed as long-term gains in the U.S., and I saved about $25,000 for the inevitable tax bill. Two weeks after I turned 40 years old, I paid my 10-year-old home off in full on a Tuesday, and it was one of the best and proudest moments of my life.
Paying off my house has provided financial security. I've also been able to purchase a vehicle with cash because I do not have a monthly mortgage. It has also eased my worries amid the uncertainties brought about by the coronavirus pandemic.
Now ICOs are regulated in a different way, but it is still possible to invest in Bitcoin, Ethereum, Litecoin, Ripple, Neo, or others. I'm currently investing a specific amount each paycheck into BTC as the digital currency is poised to rise past its all-time high of just less than $20,000.
Considerations For Would-Be Investors
- Know your tax implications - each person's situation is different, but be aware of how the U.S. or your country of residence tax cryptocurrency. For those in the U.S., any digital currency is considered property and taxed either short-term or long-term gains.
- Know your risk level - figure out if you're interested in cashing out your life savings and risking it all, or if you'd feel comfortable using a few hundred dollars to learn how everything works and see how you feel.
- Keep meticulous records - for tax purposes, it is imperative to track every transaction for taxes. Plus, the wallet and private key information about BTC and altcoins is another aspect of the records that you must keep to keep track of your holdings.
- Decide how you want to invest and how much works for you, and create a plan for accomplishing it.
- Get started!