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Top 9 Risks of Anonymous Bitcoin and Crypto Buying and Selling
The emergence of cryptocurrency launched a brave new world of financial independence without the control of centralgovernments and their supervisory agencies. People, for so long subject to the rules of using physical cash, are now able to adopt virtual currencies, especially bitcoin, as a medium of exchange and a store of value.
With great rewards come great risks, however, and buying and selling crypto anonymously is no exception. Although decentralization and anonymity are the main selling points of bitcoin and other cryptocurrencies, they also increase the risks associated with buying and selling crypto without ID.
Being able to buy digital currencies and hold them is great. Being able to trade them or use them to buy real-world goods and services is also great. Being scammed out of your crypto and not being able to do anything about it? Not great at all. Unfortunately, this is one of the things that can happen when buying and selling crypto without verification.
Governments all over the world are slowly waking up and beginning to tighten regulations around digital currency trading in their domains and this isn't necessarily a bad thing. Even though privacy and anonymity are the foundations of the crypto industry, it also makes cryptocurrencies vulnerable to various risks, some of which the individual crypto enthusiast might be powerless to defend against.
With that in mind, here are the top 9 risks associated with decentralization. This might interest you if you buy and sell crypto anonymously and want to know the pitfalls to watch out for.
Risk 1: Illegal Activities
"Bitcoin is great, but if it's not private, it's not safe," said Edward Snowden and crypto traders weren't the only ones paying attention. The anonymous nature of bitcoin has made it the medium of choice for money launderers and criminals to move their ill-gotten wealth around.
Because anonymous exchanges allow you to buy and sell crypto without ID and do not ask any questions, cybercriminals find it easy to convert their criminal loot to bitcoin or USDT and use an exchange or peer-to-peer network to convert it back to cash in another jurisdiction where they cannot be caught spending the money.
Earlier in June, the UK's security agencies confiscated almost $160 million in a money laundering operation but that's just one successful detection in an ocean of evasion tactics that criminals use to ferry money from under the noses of the police by using exchanges and crypto brokers.
For day-to-day traders, this means potentially using the same services as cyberthieves, ransom collectors and terrorists, which can be deeply unsettling. From this perspective, using a trusted crypto exchange that accepts KYC, instead of one of the myriad sites that allow you to buy and sell crypto with no ID, is not such a bad idea. All you're doing is exchanging a little privacy for better security and a safer trading environment.
Quick Guide: AML and KYC
AML is short for Anti-Money Laundering and it is one of the reasons that many exchanges these days require a completed Know-Your-Customer (KYC) form as part of the onboarding process.
AML encompasses the measures, laws and regulations put in place to prevent criminals from passing off stolen loot as legitimate income. AML deterrence, monitoring and compliance measures make it harder for criminals to get away with their crimes.
Because the cryptocurrency industry is particularly receptive to money laundering, governments have broadened AML measures to cover that industry as well. Many countries require that any exchange operating within their borders must be registered and the identity of its users verified. This is where KYC comes in.
A lot of exchanges now ask users to pass the various KYC stages before being granted full access. A verified account is less likely to be used for criminal activities because the system can red-flag unusual behavior. That's why crypto criminals tend to flock to anonymous exchanges where they can buy and sell crypto without verification.
Risk 2: Limited Number of Crypto Tokens
Cryptocurrency is an industry that embraces the slogan of "the more the merrier". The availability of thousands of coins that can be bought from hundreds of different places means that everyone, whether a beginner or professional, whale or small fish, trader or holder, always has multiple options when it comes to their next move.
However, this is only true up to a point. These days, the newest quality crypto projects tend to conduct pre-sales on exchanges and DEXes that require some form of verification for those participating in the offers.
Partly, this arose out of a desire to minimize the risk that all the coins on offer get bought by bots. Partly, it is a desire to vet participants and make sure that only people from eligible countries and no criminal record get to buy the tokens.
Either way, if you're trading solely on anonymous exchanges, you're probably missing out on these high-value new coins with huge potential and interesting use cases. Furthermore, when a serious coin first gets officially listed, it's likely to be on an exchange with some form of verification. This means that you might miss out on a chance to quickly cash out during a pump.
Quick Guide: Shitcoins
Shitcoin is an informal term that is used to describe cryptocurrencies that have little or no purpose or value or both. A shitcoin is a shitcoin because its value is… shit.
Shitcoin and memecoin are often used interchangeably but they are not the same. While a meme coin is based on a theme, a shitcoin is usually created purely as a speculative instrument.
Those who create shitcoins and the first traders to jump on its bandwagon hope to increase their holdings as others begin to come on board, often because of sustained marketing and false promises. Eventually, a lot of the initial buyers dump the coins and move on with their profits.
A shitcoin has no practical value and simply exists for its own sake. The vast majority of existing cryptocurrencies don't have a viable premise and can thus be considered shitcoins.
Risk 3: Lack of Customer Service
Imagine that you paid for some goods on Amazon but your order wasn't completed and the seller wasn't cooperative when contacted. You're likely going to contact Amazon customer service to fix the issue. But what if you're transacting crypto on a completely anonymous platform and something goes awry. Who do you contact then?
If you're trading on a centralized exchange and something goes awry, you can quickly reach out to customer support for help. All exchanges that require some form of verification have dedicated help desks on social media platforms like Twitter and Facebook and you can also reach out through email and perhaps phone calls, depending on the country.
With an anonymous crypto exchange, the story is often different. Often, there's no dedicated helpline or public customer relations outlet to request help from. For example, PancakeSwap is an anonymous DEX that operates on the BSC blockchain. The company specifically states that it does not have customer support and refers users to their local Telegram group for assistance.
When using an unregulated exchange, your funds can just vanish irrecoverably due to your mistake or fraud at the other end of the transaction with no hope of being helped by the crypto platform. Still, many people rush into using these platforms without being aware of the dangers like this one and this can come back to bite them in the arse.
Risk 4: P2P Can Be Unreliable
P2P or peer-to-peer is a fast way to cash out crypto anonymously but it's also fraught with dangers. Because you have no idea who the person on the other end is or what their motives are, you're essentially carrying out the transaction based on nothing but blind faith.
With P2P, you connect with another user that has the coins you want to buy and exchange either your fiat for their coin or your own coins for theirs, based on an agreed rate. Usually, several traders list their offers on the peer-to-peer platform and you choose the one that suits you.
When dealing with someone via P2P, you have no way to verify their identity or the source of the money they're using for the transaction. Hence, it's possible that you're making payments to support terrorism or money laundering, which can put you at risk.
There's also the potential for you to get scammed over a P2P platform when the person you're transacting with doesn't release the funds or coins after you've made payment. Many exchanges have put measures in place to prevent this type of fraud but the practice still goes on unabated on some anonymous exchanges.
Risk 5: Loss of Wallet Access
Cryptocurrencies are stored in a digital wallet with a private key or passphrase that controls access to the wallet. Having a wallet can enable you to buy and sell crypto with no verification. You simply connect the wallet to an anonymous crypto platform and start trading.
However, it's absolutely essential that the private key or passphrase is kept securely at all times. Losing this code can and usually does lock the user permanently out of their wallets, preventing them from retrieving all the coins stored within.
Anonymous crypto platforms generally act as a middleman between crypto traders, meaning that your funds stay in your own wallets. So, if you lose your passphrase, your goose is well and truly cooked as the platform might not be able to recover it for you.
On the other hand, digital currencies traded on a centralized exchange are held in exchange wallets and your means of access are your credentials (email, phone number, Google authenticator, PIN, fingerprint, etc.) any of which is more easily recoverable after a loss or theft of your trading device.
Risk 6: Lack of Consumer Protection
Buying and selling crypto anonymously means using a crypto platform that lets users trade with absolute privacy. It also means there's likely to be no oversight which can cause less experienced users to suffer avoidable losses.
There's a lot of potential and success stories in the crypto space and everyone wants to buy lambo with their little investment. This can lead to risky actions like overleveraging and investing in fake currencies. More often than not, dangerous plays like this end up not coming off.
Due to pressure from regulators, centralized exchanges are now putting mechanisms in place to limit the level of risk that users can take. Anonymous crypto exchanges, on the other hand, are still lagging behind in this respect.
Although it can be said that anyone who engages in crypto does so at their own risk and cannot blame a platform for making a bad decision, some well-meaning restrictions can lead to a better experience in the long run. Anonymous platforms are notoriously slow to implement protective measures like this and thus the level of risk on these platforms remains high.
Quick Guide: Buy Crypto Without ID or SSN
If anyone ask you the question: "Can I buy bitcoin without ID?" Tell them yes. Not only that, you can buy XRP without ID and the same goes for the other popular cryptocurrencies around.
Although increased regulatory pressure has made buying crypto anonymously harder than before, there are still some ways around it. You can use a P2P service like ShapeShift or LocalBitcoins to anonymously exchange crypto without creating an account.
To do this, you'll need the following:
- A bitcoin wallet or one that can hold the cryptocurrency you wish to buy
- A payment method
If you're in the United States, you can buy Ethereum without SSN (Social Security Number) using the same method.
You need to find a crypto service that only conducts a "swap" and doesn't hold your coins. Browse the offers and match with one that you like. The service acts as an escrow and releases the coin to your wallet when the other party confirms payment.
Risk 7: Security Vulnerabilities and Hacking
The biggest risk in the cryptocurrency space is hacking and no platform is 100% safe from exploitation by cyber thieves. However, the risks are magnified on anonymous crypto platforms.
Anonymous platforms, by definition, are designed to minimize interference in the activities of users. Thus, they tend to largely take a hands-off approach to everything, including platform security.
Moreover, these platforms do not have the financial muscle that popular centralized exchanges do. Hence, they're less likely to deploy the robus security structures and sophisticated anti-hacking software that the largest crypto platforms use to combat online fraud and other criminal crypto activities.
Quick Guide: Bitcoin ATMs and Credit Cards
When looking for how to spend bitcoin anonymously, Bitcoin ATM machines can come to your rescue. Just like you visit a regular ATM to withdraw cash, you can visit a BTC ATM to withdraw bitcoin.
In the case of the regular ATM, you insert your credit card and get cash. With a Bitcoin ATM, you insert cash and withdraw bitcoin to your digital wallet.
Finding an ATM that dispenses bitcoin is easy. Just consult an online Bitcoin ATM finder to locate the one nearest to you.
However, as these are private machines, you won't be using them for free. Although you get both convenience and privacy, you need to pay a price. Withdrawals with these machines cost more than it would if you buy directly from an exchange. The markup is often up to 10% or more.
Some BTC machines only let you get the coin after producing an ID while others don't require it. If you'd rather not show any verification, you can search for machines that don't need an ID.
Another way to spend bitcoin is with an anonymous bitcoin debit card. Companies like VISA and MasterCard have partnered with various crypto platforms to diversify digital payments with crypto credit cards that function like traditional payment cards.
With a crypto credit card, you can pay for goods and services with your crypto on any supported platform and earn rewards while doing so.
Risk 8: Rugpulls or Exit Scams
Decentralized finance (DeFi) and decentralized exchange (DEX) are the best places to be if you want to anonymously trade in bitcoin on a crypto exchange without KYC. But they're also where to find one of the most traumatic of crypto experiences: a rugpull.
A rugpull is an exit scam orchestrated by scammers who capitalize on the enthusiasm of investors to entice users to a crypto project. Sometimes, they pay a variety of online influencers to promote the coin and blanket the ecosystem with hype and ads which attract even more liquidity to the project.
When there's a lot of money in the project, backed by an expanded user base, the developers sell off their holdings at the high price, abandoning the project and leaving everyone else with extreme losses.
This is one of the risks involved in buying and selling crypto anonymously in 2021 because these kinds of scam projects are more likely to be found on unregulated exchanges where users can freely trade digital coins without supervision.
Risk 9: Carding
Carding is a type of identify theft that involves stealing working credit card numbers and using them to pay for goods and services on various platforms. In terms of crypto, carding poses a risk when an hacker gains access to a crypto site's credit card processing system and either sells the credit card information or uses it to make purchases directly.
Many crypto enthusiasts have fallen victim to cyber criminals who buy bitcoin with stolen card details. There are several methods of carding bitcoin and not all of them rely on credit card information.
Increasingly, credit card thieves have been using the stolen information to buy BTC and other cryptocurrencies through third-party peer-to-peer platforms like PayPal and CashApp. After stealing credit card information, hackers can use it to buy bitcoin with PayPal. They create a new account on PayPal, link the stolen card, and then buy bitcoin with it.
Hackers can also gain access into a registered crypto account on a crypto platform, change the login details and then sell the account to a third-party. If you look hard enough, you will find somewhere on the web where you can see a verified Coinbase account for sale, to mention just one example.
Conclusion
Decentralization is cryptocurrency's main selling point and also distinguishes it from fiat money. While the freedom to carry out borderless transactions in a host of digital tokens is no doubt appealing, it cannot be denied that the anonymity and privacy built into crypto technology encourages crime, abuse and manipulation.
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Crypto Trading Pairs Made Easy: Understanding BTC/USD vs. BTC/USDT
If you're new to cryptocurrency, you might be scratching your head over terms like BTC/USD and BTC/USDT. Don't worry; they're simpler than they seem! Think of them as little price tags for Bitcoin. Let's break down what they mean and why they're important.
What's the Deal with Trading Pairs?
Trading pairs are like the language of cryptocurrency markets. They tell you how much of one thing you can get for another. It's the same idea as exchanging Euros for US dollars – you've got a pair! BTC/USD and BTC/USDT simply show the exchange rate between Bitcoin and another asset.
BTCUSD: The Classic Bitcoin Price Tag
BTC/USD is the most basic way to see how much Bitcoin is worth in US dollars. If BTC/USD is at $20,000, it means you'll need 20 grand to buy one Bitcoin. This pairing is like your classic price tag, making it easy to compare Bitcoin's value against the most common currency in the world. Just remember, like any currency, the price of Bitcoin goes up and down based on how much people want to buy or sell it.
BTCUSDT: Meet the Stablecoin
BTCUSDT tells you the value of Bitcoin in Tether (USDT). So, what's Tether? Well, it's what we call a "stablecoin." Stablecoins are special cryptocurrencies designed to hold a steady value – think of them as the less-jumpy cousins of regular crypto. One USDT is supposed to always be worth one US dollar.
So, if the price of BTC/USDT is $20,000, it still means one Bitcoin equals $20,000. The difference is that you're looking at the price through the lens of a stablecoin.
Why Bother with Stablecoins?
Here's where stablecoins get cool:
- Taking a Break from the Rollercoaster: Crypto prices can be super bouncy. Stablecoins are like safe havens. If things get too wild, traders can swap their Bitcoin for USDT to keep the same dollar value without cashing out completely.
- Trading Made Smoother: Stablecoins make it easier and faster to switch between different cryptocurrencies. Think of USDT like the universal translator of the crypto world.
BTC USD vs. BTC USDT: The Lowdown
Okay, now you get the tickers, but how are they really different? Here's the simple version:
- BTC/USD is the rollercoaster. It shows Bitcoin's price against the US dollar, which changes all the time thanks to the crazy world of finance. BTC/USDT is pegged to the dollar, so it's less bumpy.
- BTC/USD is for ups and downs. It pairs two things that change in value constantly. BTC USDT is more chill (usually) because Tether is designed to stick to $1.
- BTCUSDT is for crypto adventurers. It makes switching between different cryptocurrencies a breeze, no need to mess with regular dollars. BTC/USD is better for folks who just want to trade Bitcoin the old-fashioned way.
- BTC/USD is dollars and cents. Simple and clear. BTC USDT is more like a roundabout way of showing the same thing.
- BTC USDT is where the action is. Because of the stablecoin magic, you'll usually find more people trading with BTC/USDT on the big exchanges.
- BTC/USD is for classic investors. If you care about the dollar value and want to day trade, stick with this.
Both are super important ways to trade Bitcoin. Which one is right for you depends on whether you like a smooth ride or the thrill of the market!
BTCUSDT vs. BTCUSD: Usually the Same, Sometimes Not
If you check out the price charts, you'll see that BTC/USD and BTC/USDT prices usually move in sync. Makes sense, since Tether is meant to mirror the US dollar. But here's the thing – things can get a little weird sometimes.
When the crypto market goes totally nuts, Tether can sometimes get knocked off its $1 peg. It might dip below a dollar or even spike above it. That's when you get a difference between the two charts… and a chance for quick-thinking traders to make a profit fixing things.
But don't worry, over the long run, the charts for BTC/USD and BTC/USDT tend to stay pretty close. After all, they're both tracking Bitcoin's value against the dollar, just in slightly different ways.
BTC/USDT: The Crypto Crowd Favorite
We mentioned that BTC/USDT usually sees way more trading action than BTC/USD. Well, the numbers really back this up. A recent study showed that BTC/USDT trading volume was more than 7 times higher than BTC/USD over the past year. Plus, way more exchanges offer BTC/USDT trading.
This tells us that crypto traders definitely lean towards using Tether. It's also interesting that BTC/USDT trading is spread out across exchanges, while BTC/USD is clumped up on a few big ones like Coinbase. This likely means it's easier for exchanges to set up Tether trading, while dealing with actual dollars has more hoops to jump through.
The Takeaway
Okay, so BTC/USD and BTC/USDT both track Bitcoin's value against the dollar, but they do it differently:
- BTC/USD: The raw deal. It shows you Bitcoin's price against the dollar, no tricks. This price goes up and down based on how much people want Bitcoin at that moment.
- BTC/USDT: The smoother option. It shows you Bitcoin's worth in Tether, which is meant to stay around $1. This can help shield you from the crypto market's crazy price swings.
Why it matters:
- BTC/USD: Straight-up reality check. This is the best way to see Bitcoin's actual value in the 'real world'.
- BTC/USDT: The crypto trader's tool. If you're always swapping between cryptocurrencies, Tether makes things easier since you don't have to mess with regular dollars as much.
Both BTC/USD and BTC/USDT are important tools for understanding Bitcoin's price and trading in the crypto world. Whether you're into long-term holding or fast-paced crypto action, knowing how these pairs work will help you navigate the market with confidence.
6min reads
The Story of DOGE: How a Meme Became a Leading Cryptocurrency
Dogecoin (DOGE) is one of the most well-known and widely-used cryptocurrencies today. But unlike Bitcoin and Ethereum, which were created with serious intentions, Dogecoin has much humbler origins—as an internet meme that took on a life of its own. This is the story of how a joke became a multi-billion-dollar cryptocurrency.
The Birth of DOGE
In 2013, software engineers Billy Markus and Jackson Palmer launched Dogecoin as a satirical take on the sudden hype surrounding cryptocurrencies. They branded the coin's logo using a popular internet meme at the time featuring a Shiba Inu dog accompanied by broken English phrases like "wow" and "such coin."
Markus has said Dogecoin was created "to poke fun at the wild speculation going on in cryptocurrencies." The lighthearted approach was meant to encourage more casual participation since Bitcoin was perceived as too serious and inaccessible to the average person.
Going Viral: DOGE Takes Off
Though created as a parody, Dogecoin quickly took off and developed an online community. The low Dogecoin price and unlimited force made it popular on social media.
In December 2013, the Dogecoin community raised $30,000 worth of DOGE coins to send the Jamaican bobsled platoon to the Sochi Winter Olympics when they couldn't go. This and other high-profile charity fundraising campaigns associated with Dogecoin generated media attention and goodwill.
By early 2014, Dogecoin's market cap had reached over $60 million. Its community on Reddit boasted over 85,000 subscribers. DOGE established itself as a prominent altcoin and proved that a cryptocurrency didn't need to be serious or technically groundbreaking to gain significant attention.
The Power of Memes: DOGE in Pop Culture
A major factor in Dogecoin's continued fashionability has been its use in internet memes and viral content. The meme-friendly coin represents a confluence between cryptocurrency and internet culture.
On Reddit, Twitter, and other social platforms, Shiba Inu memes featuring expressions like "1 DOGE = 1 DOGE" and" To the moon!" have kept Dogecoin circulating in online exchanges. This grassroots marketing, amplified by memes, has propelled DOGE's brand recognition.
Celebrity signatures have also given Dogecoin periodic boosts. In 2020, Elon Musk posted memes about DOGE on Twitter, leading to a sharp Dogecoin price increase. Mark Cuban and Snoop Dogg have also shown support for the meme coin. DOGE thrives on its pop culture applicability.
Serious Growth in 2021
In early 2021, Dogecoin endured a gradual rise fueled by growing interest on social media and from institutional investors. In January, the r/WallStreetBets subreddit that boosted GameStop stock began encouraging investments in Dogecoin. Dallas Lions proprietor Mark Cuban even blazoned that his organization would accept DOGE for wares and ticket deals.
In May 2021, DOGE hit an all-time high of $0.7376 shortly after Elon Musk appeared on Saturday Night Live and called Dogecoin the" future of currency." The coin's market cap reached over $80 billion. This period demonstrated that Dogecoin had progressed far beyond its meme-rooted origins. Major companies and investors were now treating DOGE as a legit digital asset.
The DOGE Community
A crucial part of Dogecoin's identity and success has been its vibrant online community. On Reddit, Twitter, and Discord groups, Dogecoin backers organize fundraising drives, create memes, and spread enthusiasm for the coin.
Unlike some cryptocurrency groups, which are exclusive and specialized, the Dogecoin community prides itself on being accessible to beginners. It embraces DOGE's roots as an approachable, unconcerned coin for the internet legions rather than solely a serious investment vehicle. This grassroots energy and fidelity have helped drive the Dogecoin euro price surge and given it a distinctive appeal.
Criticisms of the Dogecoin Price Model
Some critics argue that Dogecoin's lack of genuine invention or usefulness makes it a bad cryptocurrency compared to blockchain innovations like Ethereum. Its unlimited supply and the low Dogecoin euro price also mean the cryptocurrency is super volatile and easily manipulated.
Others contend that Dogecoin derives its value purely from jokes and marketing hype rather than mileage. They see the coin as a pump-and-dump scheme centered around online hype rather than fundamentals.
Proponents argue that the Dogecoin blockchain is still growing and already faster compared to Bitcoin. They point to DOGE's growing number of fans, users and developers as proof that is has segued into something meaningful beyond just internet hype.
DOGE Milestones
Despite the naysaying in certain quarters, Dogecoin has achieved several milestones that demonstrate its progression into a mature cryptocurrency.
- In 2014, Dogecoin innovated the use of merged mining with Litecoin, allowing miners of both coins to partake in calculating power for increased effectiveness. This was an early, specialized use case for DOGE.
- Major brands like Slim Jim have run marketing campaigns centered around Dogecoin and memes. This indicates commercial interest in tapping into the DOGE phenomenon.
- The nonprofit Dogecoin Foundation was revived in 2021 after a period of dormancy. The renewed interest in supporting the coin's open-source development reflects its growing mainstream appeal.
- DOGE is now supported by most major cryptocurrency exchanges and trading and payment apps like Robinhood and Coinbase. Availability for investors and consumers has improved significantly.
The Future of DOGE
As crypto tokens go, Dogecoin is one of the major and most recognizable. People have grown to rely upon it as a cultural touchstone for cryptocurrency humour and Old Internet jokes alike. That being said, what exactly does the future hold for DOGE; after it has shaken off its meme-derived roots and become a more mature technology?
Some see Dogecoin as a means of payment that is faster and cheaper than ever before. Others feel it is essential for DOGE to make inroads into decentralized finance (DeFi) solutions and the NFT space.
Still, for Dogecoin to advance to the next level, critics say it needs to continue developing its burgeoning technology for real-world usage. More serious investment in development and mainstream partnerships is needed for DOGE to thrive in the long term.
But if its history has shown anything, it's that coins like Dogecoin shouldn't be underestimated. DOGE has once already defied disbelievers and cemented its place in cryptocurrency lore. The vibrant community of Dogecoin is its X factor, something that many coins hardly have.
As a joke coin, Dogecoin has already realized remarkable successes. One hopes for its future, but this meme coin-cum-bitcoin continues to show that internet culture must not be overlooked when evaluating the future potentials of crypto.
The Technology Behind DOGE
While created as a meme coin, Dogecoin operates on a real blockchain and cryptocurrency network. Understanding the technical rudiments provides insight into its functionality.
The Blockchain
The Dogecoin blockchain is predicated on Luckycoin, which itself derives from Litecoin. It uses a decentralized proof-of-work system where miners compete to solve mathematical problems and produce new blocks. This secures the network and provides the foundation for DOGE as a cryptocurrency.
Mining Dogecoin
Dogecoin mining uses the Scrypt algorithm, which is less complex than Bitcoin's SHA-256. Scrypt mining can be performed with even basic PCs rather than the precious ASIC equipment demanded for Bitcoin mining. This makes the Dogecoin network more accessible.
Transaction Speed
Dogecoin's 1 minute block time makes DOGE 10 times faster compared to Bitcoin's 10-minute finality time. This speed enhances Dogecoin's suitability for point-of-trade purchases, micropayments, and other transactional uses.
Unlimited Supply
A crucial difference from Bitcoin is Dogecoin's emission rate. 10,000 DOGE are mined per block, with no limit on the total number created. This provides an inflationary counterpoise to Bitcoin's fixed supply. If there is anything that can pause or even reverse the long-term Dogecoin price momentum, it is this inflationary aspect of its tokenomics.
Keeping Dogecoin Relevant
DOGE might have been the best success story of the crypto memecoin craze, successfully fending off fierce competition from Shiba Inu and the array of new challengers from the Solana space. However, nothing lasts forever—success will eventually dissipate if not sustained and Dogecoin is no exception. Over the years, the community has rolled out a few things to make sure that the cryptocurrency retains its spot in the limelight.
Current Developments
The original core developers of DOGE have long sailed into the sunset. However, a new group of dedicated developers have taken up the mantle and continue to maintain the Dogecoin codebase. There are even plans underway to upgrade the network with special features and advancements that will keep it relevant in the digital currency space.
Major DOGE Events
Dogecoin has long moved past sole reliance on viral moments and meme to gain traction. Now an established behemoth in its own right, the network continues to make its mark through major events and fundraisers. Here are some noteworthy instances:
- 2014 Winter Olympics: The Dogecoin community raised $30,000 worth of DOGE coins so the Jamaican bobsled platoon could attend the Sochi games. This put DOGE in the media spotlight for the first time.
- Doge4Water: In 2014, the Dogecoin community bestowed over $50,000 worth of DOGE to fund the creation of clean water wells in Kenya. This remarkable feat was one of the very first demonstrations of crypto’s transformative impact on charity.
- Doge4NASCAR: The community sponsored NASCAR motorist Josh Wise to the tune of over $55,000 in DOGE coins. The DOGE logo on his car and jumpsuit brought Dogecoin's name into mainstream sports.
- DOGE-1 Satellite: In 2021, Dogecoin funded the DOGE-1 satellite set to launch through SpaceX. It'll be the first crypto-funded project in space and collect lunar data.
These caption-grabbing moments have shaped Dogecoin's story and shown that it's more than just an internet meme.
How to Buy DOGE and Check Dogecoin Price
For those interested in this notorious memecoin, it's easy to buy Dogecoin. There are many options.
- Exchanges: Major crypto exchanges like Kyrrex, allow direct DOGE purchases with fiat or crypto. This is the most straightforward buying method.
- Trading Apps: Apps like Robinhood and Webull offer quick signup and the capability to buy Dogecoin without actually holding the coin itself.
- Wallets: Software and hardware wallets like Trust Wallet or Ledger let users buy DOGE directly and store it securely. Some of them also allow spending DOGE at merchandisers accepting the coin.
- Mining: Users can mine DOGE by joining a Dogecoin mining pool and contributing calculating power. Still, single mining isn't very practical for average users.
- P2P Trading: Websites like LocalDogecoins connect buyers and sellers directly for DOGE trading without a central exchange. This allows for fast deals.
What Can You DO With Dogecoin?
While frequently treated as a joke or memecoin, Dogecoin can still be used for serious purposes.
- Paying for Goods and Services: A number of crypto businesses now accept DOGE as a payment method. The picture is less rosy outside the crypto space but you can still find a few online markets that either already accept the token or may do so in the future.
- Tip Jar for Content Generators: DOGE is one of the favorite tipping methods online. Bitcoin and ETH used to be more popular tipping methods. But now that they are both super pricey, coins like DOGE have stepped into the gap.
- Trading and Investment: Punters and investors trade DOGE with the end goal of profiting from the Dogecoin price volatility.
- Money Transfer: DOGE offers a fast way to transfer value digitally due to its speed and low costs.
- Donations/Fundraising: As demonstrated by its early moves in the charity space, Dogecoin can be—and indeed has been—used for both single large donations and community fundraising.
Conclusion
Dogecoin is an intriguing intersection between cryptographic technology and internet culture. Born of a meme joke, it has become a major cryptocurrency with billions of dollars in real-world value and a devoted community.
Nevertheless, questions about the likelihood of DOGE becoming a blockchain with more advanced capabilities and real-world use cases continue to linger. Perhaps, it will remain as chiefly an entertainment tool and an avenue for daring speculators to realize their dreams.
Dogecoin is, at the very least, an educational case study. It is a testament to the power of online communities and how far enthusiasm and devotion can achieve. Whatever happens, the DOGE currency has already accomplished more than its creators ever anticipated.
7min reads
UK Crypto Tax: Full Guide to Regulations and Taxations 2024
Cryptocurrency investment has seen a rise in popularity in the UK! However understanding the tax implications of crypto can be daunting for newcomers. This guide aims to simplify the concept of UK crypto tax so that you can grasp your obligations as an investor.
Here's what we'll discuss;
·The fundamental principles of crypto taxation
·Instances where you are required to pay Income Tax on activities like mining or staking
- How to calculate your Income Tax liability
- When Capital Gains Tax is applicable when selling crypto for a profit
- Steps to determine your Capital Gains Tax obligation
- Tax allowances that may lower your tax bill
- Guidelines on reporting transactions to HMRC
- Essential records you should maintain
- Utilizing tax software to streamline the process
- Seeking professional tax assistance if needed
Our aim is to demystify UK crypto tax, empowering you to invest confidently! We will walk you through all the regulations and procedures in a simple manner.
Cryptocurrency can be both thrilling and perplexing. Lets shed some light on cryptocurrency taxes in the UK so that you can unwind and enjoy the journey! Keep reading to become well informed about UK crypto taxation.
The UK government (HMRC) categorizes cryptocurrencies like Bitcoin as assets or property and not actual currency. This means that crypto falls under existing UK tax legislation. It does not have its own “crypto tax" category.
Categories of UK Crypto Tax
For folks looking to invest they'll mainly have to deal with Capital Gains Tax and Income Tax.
- Capital Gains Tax: The Capital Gains Tax is charged on any sale or disposal of cryptocurrency worth more than what was originally paid for it. That can include trading for fiat currency or other cryptocurrencies; goods or services; gifts, etc.
- Income Tax: If you earn cryptocurrency by doing things like mining, staking, peer-to-peer lending, airdrops etc., you may have to pay income tax on it. HMRC sees this kind of crypto as miscellaneous income: that is, taxable.
But don't worry—you only have to pay tax on your profits or earnings when they outweigh the tax-free allowances given to you, and these are generous by traditional standards. For most people who invest in crypto only occasionally, there's no tax bill at all. It's frequent traders and those making larger investments who might find themselves owing taxes.
In a nutshell, HMRC doesn't regard crypto as money but rather as taxable property. Capital Gains Tax and Income Tax, following the existing UK tax law, are the main taxes that apply to crypto. But for occasional or small-scale crypto investors, that's unlikely to make any difference at all to their tax situation.
Income Tax: Paying Taxes on Your Crypto Earnings
Receiving cryptocurrency through certain activities is considered by the HMRC as taxable income. There are some ways people earn crypto-pounds which would be subject to Income Tax:
- Being paid by an employer in crypto - Whether your employer gives you part or all of your salary this way, it's just normal income to HMRC.
- Successfully mining coins - Your computer mines for you and makes new tokens, so that counts as taxable income.
- Staking coins to validate transactions - The crypto you earn from staking is taxable.
- Earning interest on crypto loans - All interest you receive would be taxable.
- Receiving free coins through an airdrop - Airdropped coins count as a taxable income even though they're free to receive.
- Yield farming, or offering liquidity - If you receive tokens this way, they are taxable.
- Receiving coins from a hard fork - Forked coins you received for free are an income event.
In most cases, cryptocurrency earnings are seen as "miscellaneous income" for tax purposes. The only exception is employer-paid crypto wages.
The good news is that you only owe Income Tax on cryptocurrency if your total income exceeds the £12,570 tax-free allowance for 2023-24. If you stay under that threshold, then your crypto earnings are tax free!
Determining Your Cryptocurrency Tax Liability
If your total earnings are more than the UK Personal Allowance, then follow these steps to work out how much income tax is payable on gains from cryptocurrency.
- First, you must establish the exchange rate on the date that each of your taxable dividends was paid in crypto and convert into sterling. Previous exchange rates can be used.
- Next, add together all the pound sterling values for your taxable crypto income from the tax year.
- Add this total of crypto-incomes to other emoluments from employment, self-employment, property, interest and all other sources.
- Use the standard Personal Allowance of £12,570 as a deduction from this figure to find your total taxable income.
- Use income tax bands to work out which rate - 20%, 40% or 45% (the additional rate) - you should apply to the total of your taxable income.
- Now multiply your total taxable income from cryptocurrency and all other sources of earnings by the relevant tax rate.
The Income Tax amount calculated should be paid to HMRC on or before the due date for payments.
Capital Gains Tax: When the Taxman Comes for Your Crypto Gains
Let's be real - no one enjoys paying taxes. But if you profit from crypto, HMRC will want a slice of the action. As far as the UK taxman is concerned, crypto assets like Bitcoin are property. Just like if you flipped houses or traded stocks for a profit. So they slap on Capital Gains Tax for any crypto gains you realize.
Brace yourself to owe Capital Gains Tax if you:
- Cash out your crypto for pounds and come out ahead
- Swap one crypto for another and make a profit on the exchange
- Use crypto to buy stuff and the value rose since you bought it
- Gift crypto to someone besides your spouse and it gains value
- Get free crypto from an airdrop then sell or swap it later at a higher price
Now the positive spin - you only pay tax on gains above the tax-free allowance, which is a relatively meagre £3000 this tax year. (Don’t look at us like that—blame Jeremy Hunt.) So smaller crypto players often dodge Capital Gains Tax.
And married couples get double - you both have your own separate £3000 allowance. So between you, that's £6000 in tax-free crypto profits in the 2024-25 reporting year. The bottom line - HMRC will come collecting on any big crypto windfalls you have. However modest investors can often avoid Capital Gains Tax.
How to Calculate Your Crypto Tax UK Capital Gains Tax
Hit a jackpot with your crypto and go beyond what the taxman lets you keep tax-free. Let's break down how you can figure out the Capital Gains Tax that's coming out of your pocket:
- Calculate what you've put in. This means ringing up the initial price and any extra costs for each crypto piece you've let go of.
- Chase down what you got for it
- Look for the British Pound value on the actual day you waved goodbye to your crypto.
- Do the math: selling price minus what you spent
- Take what it cost you and subtract it from what you pocketed to find out your profit.
- Put all your wins together
- Gather all the profits from each time you cashed out on crypto within the tax year.
- Remember your tax break
- Subtract the £3000 you don't have to pay taxes on to see what's left.
- Figure out the tax bite
- If you're in the basic tax bracket, put aside 10%. Those in the higher bracket, get ready to hand over 20%.
- Whip out the UK crypto tax calculator for the last step
With that tax rate in mind, analyze the taxable gains and see how much damage your bank balance is likely to take.
Figuring out your crypto taxes just seems to be a treasure hunt--for ancient transactions. Calculating precisely how much money you’re giving the government doesn’t sound even the tiniest bit fun. This is why intelligent investors use tax software to sort everything out instead.
Reduce Your Crypto Tax Bill with Tax-Free Allowances
Besides the regular Personal and Capital Gains Allowances, you can use additional generous tax-free reliefs for crypto income:
- Gift tax-free up to £3,000 of crypto each year through the Annual Exempt Amount for Gifts.
- Transfer assets tax-free between spouses. This can be used to bypass crypto UK tax.
- Reduce the tax you owe by offsetting losses against total Capital Gains.
- The first £1,000 of miscellaneous trading income can be earned tax-free. This is called the Trading Allowance.
- Donate to registered charities tax-free. Donating crypto means not just Income Tax but also Capital Gains Tax are excluded.
- Place crypto in an Individual Savings Account (ISA) wrapper to shelter it from tax.
- Contribute crypto to your pension plan and in this way reduce your taxable income.
When you calculate your ultimate crypto tax bill, factor in these allowances and exemptions you can utilize. Thorough record-keeping enables you to successfully claim any allowances you are entitled to.
How to Report Crypto Taxes to HMRC
Each year you must complete a self-assessment tax return in order to officially report and pay any Income Tax or Capital Gains Tax due on your crypto trades. The self-assessment deadline is 31 January of the next year. Therefore, online returns must be filed by 31 Jan 2025 for the 2023-24 tax year.
When completing your return, you'll report:
- Crypto income on the foreign income section
- Crypto capital gains on the capital gains summary
On the basis of your Self-assessment, HMRC works out your total tax bill for the year including allowances. Any tax due must be paid on 31 January, as well.
If you miss the deadline for reporting or payment, you can expect financial penalties from HMRC. Therefore, get into the habit of preparing well in advance for your crypto taxes.
How to Keep Records for Crypto Taxes
Good record-keeping is the key to getting your tax return right and reducing your crypto tax bill. For each transaction potentially liable to tax you should record:
- Date Acquired
- Acquisition cost in GBP
- Date of disposal
- Disposal value in GBP
- Fees incurred
- Nature of transaction
It's best to keep track of all this as you go along, making it easy to pull together at tax time. If you use only a few trading platforms, their account history may suffice for your tax preparation. However, if you trade across many different platforms, manually compiling transaction data can be extremely difficult. At such times tax software is essential.
Use Crypto Tax Software
Crypto tax preparation is fraught with difficulties, so most investors turn to specialized tax software for help. Leading providers such as CoinLedger, Koinly, CoinTracking can:
- Import your transaction data automatically from exchanges using API connections
- Interface with wallets and block explorers to capture full transaction records
- Match and synchronize data from across all of your accounts
- Calculate your capital gains and losses
- Generate the necessary tax reports for filing
This means you no longer have to collect your wallet addresses and do the math yourself. Every top crypto tax UK calculator also syncs directly to reputable tax filing suites like TurboTax. However, you must ensure that whatever software you use for handling crypto tax also meets the reporting requirements of Self-assessment to HMRC.
Get Professional Tax Advice
If you are heavily involved in crypto investing, it could well be worth consulting a professional accountant with expertise in crypto taxes.
A crypto accountant UK specialist can help you:
- Correctly classify your crypto transactions
- Benefit from exemptions and relief
- Arrange your holdings in a tax-efficient manner
- Keep complete records of all payments in compliance with the latest HMRC regulations
This specific advice comes at a cost. But the reduction in taxation likely more than compensates for this.
Key Takeaways of UK Crypto tax Regulations
With crypto investing on the rise, an understanding of UK crypto tax rules is vital. By following the guidance in this article, UK crypto holders can remain compliant, minimize their tax bills, and avoid issues with HMRC.
- UK tax laws view crypto as an asset, not a currency
- Income Tax must be paid on crypto derived from activities such as mining and staking
- Capital Gains Tax is payable when crypto is disposed of at a profit
- You'll only be charged tax on crypto profits/income over any applicable tax-free allowances
- Thorough records are essential to accurately estimate the taxes due for crypto
- Transaction data gathering and tax work can be automated using accounting software
- If your crypto dealings are substantial or complex, seek professional tax assistance
With much current interest in investing in cryptocurrencies, a knowledge of UK crypto tax regulations is necessary. By following the advice in this article, UK taxpayers can stay compliant. While remaining within the law they are better able to minimize their tax bills and lessen their chance of having problems with HM Revenue & Customs.
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