My Road to Investing in Cryptocurrency/Coins to Watch

My life changed about a year ago when a nice family from back east randomly found me online. They were living and working downtown, and had been looking all over Los Angeles for a place to finally call home. Trying to get a feel for the diverse areas in which they could settle, they landed on Manhattan Beach as a possibility. We hit it off instantly upon first meeting. I showed them around the area, did my spiel about why I loved the South Bay so much and how Manhattan was one of the most ideal spots in LA County, and they got excited. After a few showing and as we were homing in on their wish list, they said, “Oh, by the way, we want to pay for it in Bitcoin.”

The road to crypto is paved with good intentions.

As a hungry Realtor with a can-do attitude I naturally said, “Sure, we can do that!” not knowing **WTF** I was doing or how I was going to do it. Maybe they were kidding? No. They weren’t.

I called my go-to lenders to see what they knew about this Bitcoin thing. Not much. One said he bought one just for experimentation purposes, but the best thing for my buyer to do was to exchange it for USD and let it season for a couple of months. Nope. We found the house they wanted, they were sick and tired of living out of suitcases and needed to move NOW. So, years were lost off my life getting the deal done but we GOT IT DONE, and went on to do three more transactions this year. I’ll bore you with the details in another blog post someday.

All this to say at the time, when we were standing in the house they had decided was theirs, my buyer showed me his digital wallet. Holyfreakinmoly. One BTC was around $760. I thought that was insane. Who would want to invest in a digital currency at that rate?? Um, yeah. Fast-forward to one year later, and at the time of this writing, it’s at $7,750 and has been flirting with $8,000. I expect it to be there by next week, barring any manipulating statements from China or JP Morgan (who bought the dips, but again I’ll save the rage for another post).

I’m not proud to say I’ve done some dumb things in the past with stocks, like sell my Apple shares and invest in the “next eBay” upon advice of a friend (ever heard of AuctionCities? Didn’t think so. It’s sitting there in my portfolio at $0 with its middle finger in the air). But after a couple of more real estate transactions using Bitcoin, I decided to finally take the plunge at (gulp) $1,800. I lost sleep that night. Then I saw it go up. And up. Then bought at $2,200, $4,000 and just bought the dip when they announced the SegWit2x fork had been cancelled. I’m not to most savvy trader in the world. Although it’s become an obsession of mine, I don’t day trade or sit at my computer waiting to see what’s going on so that I can cash in. Since last this time last year, BTC is up 919%. That’s not a freaking typo. And because of my crazy journey in the past year I have met fascinating people in this new world of cryptocurrency. They watch the coins, they know when to buy and sell, and then they tell me. Unlike my awesome stock portfolio that gains 10-12% on a good day, here are the coins that I’m vested in (Note: I AM NOT A FINANCIAL ADVISOR, just a chick who likes this stuff and hoping you will too):

NEO (up 27,023% from $0.17 Dec. 2016 to $46.11 Nov. 2017)

Ethereum (up 3,421% from $9.57 Dec. 2016 to $337.98 Nov. 2017)

Litecoin (up 1,162% from $3.95 Dec. 2016 to $68.44 Nov. 2017)

EOS (up 84% from July 2017 to $1.94 Nov. 2017) – one to watch. Trust me on this one.

Monero (up 1,612% from $7.86 Dec. 2016 to $134.63 Nov. 2017)

Walton (up 396% form $1.04 Aug. 2017 to $5.16 Nov. 2017)

OmiseGo (up 1,432% from July 2017 to $8.12 Nov. 2017)

Other coins to keep watching: SALT, ChainLink and KyberNetwork. Do I wish I had bought into these a year ago? You bet! You’re probably thinking it’s too late to get in the game, but it’s not. I tell everyone to get in now, even if it’s ¼ of a Bitcoin or any of the above coins. In another year, you’ll most likely stand to make more than this year’s best performing stocks (According to SeekingAlpha.com as of October 2017):

Dynavax Technologies (DVAX - healthcare) – up 444%

Straight Path Communications (STRP – telecommunications) – up 432%

The following seven are in the healthcare sector as well (!!!):

Sangamo Therapeutics (SGMO) – up 391%

Calithera Biosciences (CALA) – up 384%

Pieris Pharmaceuticals (PIRS) – up $309%

Kite Pharma (KITE) – up 301%

Esperion Therapeutics (ESPR) – up 300%

Puma Biotechnology (PBYI) – up 290%

Immunomedics (IMMU) – up 280%

Of course, this could all go to hell by the time this is published. Just like traditional fiat hedge funds, there have been numerous crypto hedge funds popping up. Some good, some bad, but my favorite so far is MT Digital Assets –  they cater to the beginner, intermediate and savvy crypto investors, and go over and above to make sure you have a diverse portfolio that fits YOU, plus they’re just super cool guys.

Once you’ve made your fortune in crypto investments, call me to park it in some real estate. ?

 

 

Forks 101: What Every Investor Should Know

If you’re a crypto investor, you should most certainly know about blockchain forks and their impact on the crypto market. Just like news of changes happening in any random stock traded on Wall Street, news of an impending fork can cause a bit of a raucous in the crypto world (see, I used “raucous” because I’m a Gen-Xer and can get away with it…sort of).

First off, there are two types of forks: A soft fork and a hard fork. A soft fork is backward-compatible software change that follows new rules set forth while still adhering to the old (Confused yet? Just wait). A hard fork is an entirely NEW set of rules implemented that requires all users to upgrade to the latest version. Kind of like Apple forcing you to upgrade to the newest iOS – few are happy about it, and you must make a choice between annoying notifications and getting used to the unnecessary changes those Apple f*ckers who take pleasure in gaslighting made (okay, it’s really not that bad and yes, I’m a little bitter about the last one).

When a fork is executed, a new coin is created out of the “new rules” stemming from the updates. Throughout history, there have been MANY forks in the Bitcoin blockchain, creating several hundred coins throughout the years, most recently Bitcoin Cash and Bitcoin Gold. Depending on the buzz, Bitcoin will usually spike, then dip during the fork adjustment period, but then increase in significant value over time. Why dip? Fear of the unknown, but as Omar from Crypt0sNews was so nice to explain to me, Bitcoin is based on mathematical equations and history shows each dip is followed by a surge in price once the fervor subsides and traders’ confidence is up again (which doesn’t take long).

So the next biggie to look out for at the time of this writing: SegWit2x Hard Fork (around November 16th). I know, sounds like a name of a horrible video game at best. The first SegWit (short for Segregated Witness) was implemented back in August of this year, creating Bitcoin Cash. In short, Bitcoin Core developers felt the need for the software updates due to congestion on the blockchain, slowing down transaction times. This *kind of* helped, but the size of the blocks on the blockchain remained at their original size of 1MB, which was fine at Bitcoin’s inception but not unlike LA freeways, more and more traffic demands larger lanes, so SegWit2x is promising to fix that problem by doubling the block size (now if there could only be an LA freeway upgrade…).

Since the blockchain is a decentralized, distributed ledger that is always in play and never shuts down, think of airplane maintenance in mid-flight. Critics say the fork is coming too soon after SegWit implementation, but again, only time will tell. The main concern is that there will be yet another coin split – Bitcoin Core (or the Legacy Bitcoin) and the SegWit2x version, and there may be confusion as to which is the authentic Bitcoin. The best thing to do to according to CoinTelegraph.com is to transfer your BTC onto your own private key like a Trezor or Ledger Nano until the storm passes.

Crypto, Real Estate, and Capital Gains

Capital Gains: Taxes on profits from the sale of certain types of investments by a company or individual.

Another frequent question we are asked about is the question of capital gains, and the answer is YES. If you are a savvy investor, whether it’s property or other investments, you can always expect that the IRS will have their hands in your pockets (or at least die trying…wait, who am I kidding? The IRS will be the only thing left besides Keith Richards after the apocalypse).

A great article in thebalance.com goes into detail as to how Uncle Sam views crypto and BTC. Essentially, the IRS views cryptocurrency as property, and taxes it based on the capital gains formulas. Long-term holds (more than one year) aren’t taxed if you fall into the 10-15% tax bracket, but taxpayers in the 25, 28, 33 & 35% tax brackets are subject to 15% CGT. Short-term capital gains rates are taxed at the same rate as ordinary income (20%) and a 3.8% tax on net investment income for single taxpayers with an average income greater than $200K (more on taxpolicycenter.com). I don’t know about you, but it makes my head hurt already.

Now, what if you’re using crypto to buy real estate? It all depends on what you plan to do with it. Hopefully you’ve held onto your Bitcoin long enough to avoid the aforementioned happy fun times and now you’re ready to convert some of your investments into tangible assets (insert shameless plug here). So, if you DO fall within the long-term and lower tax bracket guidelines, you’re good on the BTC capital gains and according to bankrate.com, you’re also able to avoid CGT if you follow these guidelines:

  • You must be selling your principle residence.
  • You must have lived in it for at least two of the five years before you sell.

Of course, there are separate rules for married couples (those guys always get the breaks) and special rules for military personnel. Technically, you could repeat this cycle every two years. This, of course, doesn’t apply to second homes or investment properties.

Other ways to avoid are of course the old 1031 Exchanges, charitable donations, tax shelters, but my advice would be to find one of those rare CPAs who specialize in crypto anyway (and if you find one, let us know and we’ll add them to our preferred vendors!).

 

Cryptocurrency Myths, Red Flags & Scams

Our main goal in starting The Crypto Realty Group has been to connect the public with real-world applications of cryptocurrency, particularly in real estate. But, in talking to people who are genuinely interested in crypto but are a little timid because of the barrage of mixed news that surfaces daily, I wanted to help you guys understand the truth as well as the pitfalls of investing.

I won’t lie. Crypto is volatile, but the returns can be very gratifying if you have the stomach to stick with it. Even with the events in China and the JPMorgan goofball, Bitcoin is still up 84% at the time of this writing than last year, and the Dow Jones is only up a little over 12%. And despite the drama, it’s beginning to rally again.

The biggest question I get asked from newbies is “Isn’t it illegal?” The answer is OF COURSE NOT. I wouldn’t risk my real estate license on ANY kind illegal activity, let alone create a startup, Facebook pages and Instagram profiles based on real estate and crypto trading (I mean, really?). I remember my first transaction involving Bitcoin: We went through hell trying to connect the dots with banks, escrow, and the seller’s side only to have the listing agent ask me the day before we were supposed to close, “Are you sure this isn’t a scam?” Sigh. No, dude. Three companies and 10 people aren’t in on a scam to buy a house in Manhattan Beach (although I’m sure there are some out there who have tried).

The Netflix documentary, Banking on Bitcoin, is a wonderful beginning to your quest for Bitcoin education, although it highlights some of the key people who DID end up going to jail because of illegal use. Criminals have been committing crimes with USD and every other fiat known to man since its inception, but that doesn’t make USD illegal. I could commit some serious crime using a pencil and a Hello Kitty eraser, but it’s not Hello Kitty’s fault, now is it? You get the point.

Crypto may have taken a tumble this week due to some recent news, but it’s not going to stay there. So, I can’t emphasize enough for you to get out there and buy, but here ARE some things to look out for in your pursuit of riches and anonymity:

MYTH: Crypto isn’t backed by anything and therefore is worthless.

No. It’s worth what we say it’s worth, just like USD. USD used to be backed by gold, but USD and gold had a tumultuous relationship over the years and finally in 1970s, Nixon well, nixed the idea. So, USD is much like crypto in that WE, the traders, place value on the currency, but unlike USD, Bitcoin has a market cap (16M in circulation and 5M in reserve) and will only increase in value over time.

MYTH: I can’t spend my Bitcoin anywhere.

Nope. More and more retailers are accepting Bitcoin. In fact, I just bought a cute pair of flats and some earrings from Overstock.com. Japan has MALLS full of vendors who accept Bitcoin. Here is a list of some current merchants who accept Bitcoin according to 99Bitcoins.com:

Microsoft

Reddit

Wikipedia

Dish Network

Overstock

Virgin Galactic

Steam

Mint.com

Subway

Expedia

Etsy Vendors

Inuit

Microsoft

Newegg

PizzaForCoins.com

Lionsgate Films

MYTH: Tupac is alive.

No, man. I miss him too. Get over it.

Red Flags

I’ve met people who have bought a few Ether and now they’re blasting all over Social Media about their expertise. There are also “startups” out there touting that they’re the ones who can help you get rich. If you see a profile pic from The Wolf of Wall Street with some dude’s head photoshopped onto DiCaprio’s telling you to give him money to invest in crypto, RUN AWAY. 

Okay, these are the obvious ones. If you’re new to crypto and want to buy, take the time to do your own research. Blockgeeks.com is an amazing website for beginners as well as pros. Know the difference between Coinbase and Gemini, Kraken and Bittrex, Blockchain and Trezor. just to name a few. Hell, there’s even a Bitcoin for Dummies book. There are about 900 coins out there with new ones added all the time – unless you have an amazing memory I don’t expect you to know all of them, but just familiarize yourself with the top few.

When you become a little more savvy, you can begin to diversify. My buddies at MT Digital Assets are a completely legit crypto hedge fund worth checking out. They’re knowledgeable and watch the market just like any good portfolio managers do (and should).

Scams

You bet they’re out there. Just as the great Nigerian scam artists popping up in your inbox or calling you posing as the IRS claiming your account is in violation and they need your info asap (my response was, “You’re the IRS, you should already have my personal information.” And the nice man on the other end replied, “Have a nice day, bitch.” – yeah, that happened).

The biggest hurdle in buying real estate with crypto is producing proof of funds. To me, if a buyer has no problem using a third party to verify they have X amount of crypto equaling the purchase price, then we’re good to go. If they give any pushback or are unable to verify for whatever reason(s), then there’s a big problem (see Red Flags).

Here are some known scams to look out for:

  1. Anyone cold calling you. Police in London just shut down a ring back in August in which the scammers were calling investors to put money in cryptocurrencies that didn’t exist. Bad.
  2. Ponzi Schemes. According to com, the LFC Coins & the Centurion Coin are all about that. This goes back to doing your homework if you get a “hot tip” on a new ICO (Initial Coin Offering). Ponzi Schemes are prevalent in the altcoin world because there is no bank account needed and no products sold other than the altcoin itself.
  3. Pump and Dump. Gosh, sounds familiar, doesn’t it? #WallStreet Just in August the SEC issued a warning on ICO scams by public companies. With much hype, investors pump millions of dollars into the “next big ICO” on crypto platforms inflating the price, then sell off at the peak.

For more information, please feel free to contact me at piper@thecryptorealtors.com or follow us on Facebook.