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The cryptocurrency market has had an immense growth worldwide despite the many hiccups like the Bitcoin crash of 2017. More tokens are being launched, more exchanges are being opened, and more ICOs are being started. Big tech companies like Amazon, Facebook, Google, and IBM are working on their own blockchain projects. Banks and Wall Street firms are beginning to trade in cryptocurrency. All in all, things are going pretty well.
Unfortunately, the banks and big tech firms are not the only actors who have noticed the rise of cryptocurrency and want to get in on the action. Hackers and scammers have also begun ramping up their attacks in tandem with the rising popularity of cryptocurrency. This has resulted in several cryptocurrency exchanges being hacked, and many traders losing their tokens. The value of several tokens has also taken a hit as a result of the bad publicity. But now the insurance industry is coming to the rescue.
Insurance for cryptocurrencies
Bloomberg has reported that several insurance companies are creating policies specifically for cryptocurrency traders and businesses. The only concern many have is the volatility of the cryptocurrency market. This volatility has led several insurance companies to charge up to five times as much for cryptocurrency insurance policies than other policies. However, this is bound to even out as more and more insurance companies enter the market. Competition between the companies will drive prices down to reasonable levels.
Who are the main insurance companies?
A spokesman for Allianz has expressed that the insurance giant sees cryptocurrency as a big opportunity. Allianz began offering solutions last year, and their services included covering the theft of cryptocurrency. Allianz sees that cryptocurrency is becoming increasingly relevant, and an integral part of the global economy. For this reason, they are only looking to expand their portfolio of insurance products.
American International Group is another insurance provider that has begun to include cryptocurrency assets in their standard policy forms. The oldest insurance market, Lloyd’s of London, has also published a statement that advises their agents on how to deal with cryptocurrency insurance. Lloyd’s have, however, advised their agents to proceed with caution, given the risks associated with the market.
Aon and Marsh & McLennan are two prominent insurance brokers that help individuals and businesses shop around for the best deals on insurance products. They both report seeing a large growth on the horizon. Marsh & McLennan has even created a dedicated team to deal with cryptocurrency startups that have launched their own ICOs. Meanwhile, Aon report that they have half of the cryptocurrency market covered.
No payouts just yet
Because the concept of cryptocurrency insurance is still brand new, there has not been any instances of payouts yet. However, this is set to change this year, as hacks are predicted to be ramping up. Not all insurance policies are equal either. Some include loss of tokens due to technical errors in a blockchain service but exclude the theft of cryptocurrencies. Cryptocurrency exchanges like Coinbase, however, have secured great insurance policies in order to protect the traders.
Are you thinking of taking out a cryptocurrency insurance? Let us know in the comments!
If you’re into trading with cryptocurrencies, then you probably have a hardware wallet to store them in. For the uninitiated, however, the market for hardware wallets can be difficult to navigate. In this article we’ll take a look at four of the most popular hardware wallets on the market right now, and look at the features of each one.
Coolwallet S
The Coolwallet S is a fascinating invention. As opposed to most other hardware wallets, it has been designed to be thin and small enough to fit in your actual wallet next to your credit cards. It also comes with an e-paper display (like the first Kindle e-readers) that allows you to view your balance and make transfers when you are out and about. The wallet supports the most popular cryptocurrencies, including Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Ripple. The best part about the Coolwallet S is that you don’t even need a computer to use it. Simply download the Coolbitx app for your phone, and you can connect to the wallet via Bluetooth.
Ledger Nano S
If you are looking for a hardware wallet that can hold the largest number of different cryptocurrency tokens, then you should check out the Ledger Nano S. Ledger, the French company behind the wallet, are constantly adding support for new cryptocurrencies. They add new tokens so often that they have even made a hashtag to go with the regular expansions. #FirstTuesdayCrypto is used on the first Tuesday of every month when Ledger adds support for new tokens. The first expansion under this hashtag included rather obscure tokens like RSK, Kowala, Ontology, Vechain, Icon, PoA, Wanchain, and Particl. Naturally, all the most popular tokens like Bitcoin and Ethereum are covered. What’s more, all ERC20 tokens are covered as well. This means that the Ledger Nano S can hold most tokens created by ICOs. There has been some criticism of the software, but it has not stopped the wallet from gaining in popularity.
Keepkey
A lot of people want to get into cryptocurrency, but feel like they are lacking the technical knowledge to understand it properly. Keepkey is a hardware wallet that is designed with those people in mind. It works straight out of the box, and is durable enough to withstand being dropped and thrown around. It is not as practical as the Coolwallet S and can’t hold as many different kind of tokens as the Ledger Nano S, but it’s simplicity is a strong selling point. More importantly, however, there is no issues with connectivity like there is with the Ledger Nano S. Keepkey supports the most popular cryptocurrencies like Bitcon, Ethereum, Litecoin, Dogecoin, and Dashcoin. Like the Ledger Nano S, Keepkey also supports ERC20 tokens, so you can use it to hold most ICO generated tokens. The parent company of the Keepkey manufacturer is Shapeshift, so the wallet is also integrated with their software.
Trezor Model T
The Model T from Trezor is perhaps the best cryptocurrency wallet if you are concerned about safety. The Trezor Model T has a wide range of security features that will put your mind at ease. Some of the featured includes a bootloader that is write protected, and that verifies all firmware signatures. It also supports BIP39 passphrases.
As cryptocurrencies become an increasingly more integrated part of everyday life, many traders and tax professionals are asking themselves how to deal with the tax questions. Starbucks will begin to trail the acceptance of cryptocurrency payments in November this year, so there will definitely have to be some hard and fast rules put in place soon. However, the US tax authorities have not yet made any official statements to address the questions on cryptocurrency and taxes. Fortunately, there are already a few answers to be found from those who have taken the time to look into the matter.
A quick summary
For the uninitiated, the world of cryptocurrency can still seem slightly confusing. So if you have been hesitant to get into the crypto-trading game, then a bit of background might be helpful. Cryptocurrency was created in the wake of the 2008 financial crisis and gained in popularity due to the loss of trust in the mainstream banking system. Some of the earliest cryptocurrency tokens were Bitcoin and Ethereum. Since then, a multitude of different tokens like Litecoin, Ripple, Monero, and others have come into circulation. There are currently over 1,500 tokens on the market. Given that the market cap of the most popular tokens like Bitcoin is in the billions of dollars, questions about the taxation of trading in them will naturally emerge.
Cryptocurrency is currently treated as property
The term cryptocurrency is at the moment a bit misleading for tax purposes. The reason for this is that it is in fact considered to be property rather than currency. In other words, trading in cryptocurrency is more akin to trading in assets and real estate than it is to foreign exchange of fiat money.
Transactions are taxable
Any transactions made with cryptocurrency are taxable events and must be recorded in the same manner as other transactions. All receipts must be kept and included in the taxable income for the year. One can wonder if this means that businesses are able to expense business related transactions with cryptocurrency as well?
Taxes depend on the nature of the token
Whether or not the exchange of cryptocurrencies is taxable depends on what the given token means to the holder and taxpayer. For some, this can be a capital asset. For others, it can be property or inventory.
Cryptocurrency mining is taxable
Cryptocurrency mining is the process of validations cryptocurrency transaction in exchange for a proportional amount of that cryptocurrency token. Given that this is essentially providing a service in exchange for payment, it is considered a taxable income if you make a profit. In order to report these profits to the tax office properly, the fair market value of the cryptocurrency token needs to be added to your gross income. Whether or not you perform your mining activities as self-employed or as part of an organization needs to be reported as well.
Salaries and one-off payments can be taxable
If you are working for someone on a freelance or permanent basis and get paid in cryptocurrency, these payments could also be taxable. If the payment amounts to more than $600, then it should be reported to the IRS.
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Today we are going to bust some myths about cryptocurrency. Many people are under the impression that it is either too late to invest, too dangerous to invest, too difficult to invest, or that the market is about to collapse. None of the myths are of course true, but let us have a look at four of them to make sure.
The logo of Bitcoin (virtual currency) is pictured on a door in an illustration picture taken at La Maison du Bitcoin in Paris July 11, 2014. REUTERS/Benoit Tessier
Is it too late to invest?
The value of different cryptocurrency tokens has been going up and down for quite a while now. Many of the most popular tokens, like Bitcoin and Ethereum, have been on a steady incline overall. This has led many to believe that they have missed to the chance to invest, as the tokens are worth too much now. However, we just need to look at the rise of Bitcoin to almost $20,000 in December 2017, just for it to crash and burn. Now it is has climbed back up from $6,000 to around $8,000. Had you invested in early 2018, you would have many a good profit. Even if the most popular tokens are too expensive to invest in, there are 1,500 different cryptocurrency tokens out there — and counting. There is ample opportunity to invest in many new and exciting opportunities.
It technical knowledge required?
There is a common misconception that in-depth technical knowledge is required in order to invest in cryptocurrency. Of course, in order to be able to work as a developer on a blockchain project, you would need this kind of knowledge. But in order to trade in the tokens themselves, this level of knowledge is not required. Just like you are able to confidently trade in Google shares without understanding their search engine algorithm, you are able to trade in cryptocurrency without understanding cryptography. This does not mean that you can enter the market with a blindfold. It is still important to read up on different tokens and keep an eye on the market movements.
Is the market about to collapse?
Many people in the current financial establishment have said bad things about cryptocurrency. The CEO of JPMorgan has for example called Bitcoin a fraud last year. This year, the very same JPMorgan was very enthusiastic about blockchain technology. The facts about cryptocurrency have not changed, but the opinions of many people have. Of course, there have been scammers and criminals in the cryptocurrency space, just like there are in any other industry. But since governments around the world have begun to impose regulations, they have more or less been weeded out. And as more sector, like health care, are beginning to explore blockchain, it will only become a more popular phenomenon.
Is cryptocurrency dangerous?
As mentioned, there have been some scandals involving the hacking of cryptocurrency exchanges. This has put some people off of trading due to security concerns. Again, these securities have already been addressed. It is not very difficult for traders to protect their assets if they ensure that no one else has access to the key to their digital wallet. It is very much like keeping the PIN number for your credit card safe, to use an analogy. Even if people are concerned about the safety of using a digital wallet, there is always the option of cold store their cryptocurrency tokens on an offline hard drive.