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Should you invest in Bitcoin? Four things you need to know

edited 30 November -1 at 1:00AM in Martin's Blogs & Appearances & MoneySavingExpert in the News
31 replies 25.6K views
MSE_LukeMSE_Luke MSE Staff
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This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.




Please click 'post reply' to discuss below.
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  • rtho782rtho782 Forumite
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    No, you shouldn't buy BTC, you should mine it...

    beo2M3J.png
    Deposit Saved since 01/12/15: [STRIKE]£13,000 / £15,000[/STRIKE] House Bought!

    Debt Cleared since 01/12/15: £6,000 / £7,500
  • isingh1isingh1 Forumite
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    rtho782 wrote: »
    No, you shouldn't buy BTC, you should mine it...

    beo2M3J.png

    What's the best way to do that?
  • edited 6 December 2017 at 2:25AM
    expeditionistexpeditionist Forumite
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    edited 6 December 2017 at 2:25AM
    That was quite a well-considered article from MSE given all of the Bitcoin bashing currently in the press.


    Here’s an excerpt from Capital & Conflict today:


    [FONT=&quot]‘Bitcoin is up more than 1,000% this year.[/FONT]
    [FONT=&quot]Its value has surpassed the market cap of Boeing.[/FONT]
    [FONT=&quot]And the GDP of New Zealand![/FONT]
    [FONT=&quot]Has all the money been made? Is the party over?[/FONT]
    [FONT=&quot]Not by a long shot![/FONT]
    [FONT=&quot]Billionaire hedge fund legend Mike Novogratz believes it will “easily reach” a price of $40,000 in 2018.[/FONT]
    [FONT=&quot]PayPal director Wences Casares is even bolder, stating that “bitcoin could hit $1m in 5-10 years.[/FONT]
    [FONT=&quot]Internet security pioneer John McAfee agrees, stating his belief that bitcoin will hit $1m by 2020. Way back in 2013, McAfee was quoted saying “you can’t stop things like bitcoin… it’s like trying to stop gunpowder.” ‘…………..[/FONT]

    [FONT=&quot]There are so many reasons why they might be correct and there are lots of very smart, wealthy and influential people who agree.[/FONT]
    [FONT=&quot]
    [/FONT]

    [FONT=&quot]On the other hand there are just as many who disagree and Bitcoin has been the fast growing [/FONT][FONT=&quot]market eruption of the last 400 years. It’s on track to beat out every boom, bubble and bull the modern financial market has ever seen. See: [/FONT][FONT=&quot]https://pbs.twimg.com/media/DOHka7iWsAAsU4Q.jpg[/FONT][FONT=&quot]
    [/FONT]


    If you do your research you will find that Bitcoin has had lots of heavy price corrections but it always bounces back (so far), so if you’re going to buy, buy on a dip: https://bitcoinaverage.com/en/bitcoin-price/btc-to-usd


    And none of us have a crystal ball so you must decide if you’re willing to take the risk or not, it could make you a huge amount of money, or you could lose the lot.


    Spare a thought for James Howells who threw away a laptop hard drive with Bitcoin on it now worth 80 million! Or Laszlo Hanyecz who paid 10000 Bitcoin for 2 pizzas in 2010, now worth $115 million! Google them.


    If you like my reply then please feel free to use my referral link to Coinbase, considered the safest place to buy, you’ll get $10 free and I’ll get $10 free, every penny helps! https://www.coinbase.com/join/5949799a042a280d6295466a

  • welshblobwelshblob Forumite
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    I'd be interested in understanding the tax situation. On the facebook quick replies one user notes that HMRC recognise bitcoins as assets and are therefore subject to capital gains tax.
    A friend of mine (no really a friend, not me) who has "invested" asked his accountant who said that if you are day trading and converting back into a fiat currency the this would be classed as income and taxed accordingly. If treating it as a long term investment then subject to capital gains. Of course where that line is drawn is typically vauge in tax terms and it's not clear if you day trade but keep it in non fiat crypto currency whether the same rules apply.
    Of course I have no idea whether this view is correct and would like to understand this in more detail and also what is the most tax efficient way to "invest"
  • fun4everyonefun4everyone Forumite
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    MSE_Luke wrote: »

    A good, fair and balanced article from Martin imo. It needed to be written because as soon as anyone asks or tries to have a legitimate discussion about bitcoin in the investment forum they get shouted down and dismissed by the clueless, leaving it impossible to have an informed thread.
  • welshblobwelshblob Forumite
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    rtho782 wrote: »
    No, you shouldn't buy BTC, you should mine it...

    beo2M3J.png

    I'd be interested in your rig setup to get that income. I had a dabble along with some colleagues in work during the summer. My $5 I made mining on one old gfx card is now worth $26! Our view generally was that when "investing" in crypto currencies was to spread your risk i.e. buy outright, mine, provide periphery services etc. Mining was seen as a lower risk option as you'd still have tangible assets (mining rig) if the currency dropped in value. Although at the time the return on investment time was looking to be too long (6 months ish) and it was expected the difficulty would increase during that time so it could be longer. Of course none of us thought about the scenario of BTC quadrupling in value!
    At this point with the gains as they have been then we see it as probably better to just buy direct although there is no guarantee the price won't crash. Fya in the summer we were looking at getting 1080ti cards and have been recently thinking about Vega 64. Any advice and experience would be appreciated.
  • fun4everyonefun4everyone Forumite
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    I am no expert in mining but I believe nowadays with bitcoin you will probably spend more on electricity doing it than you earn from the coins you receive. Even with the rapidly increasing price. You might want to look at some of the altcoins but I think making any sort of decent money mining in the UK is a bit of a pipe dream.
  • welshblobwelshblob Forumite
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    I am no expert in mining but I believe nowadays with bitcoin you will probably spend more on electricity doing it than you earn from the coins you receive. Even with the rapidly increasing price. You might want to look at some of the altcoins but I think making any sort of decent money mining in the UK is a bit of a pipe dream.

    Yes sorry my post above was mining for everything other than BTC but getting paid in BTC for it. It was using nicehash which is very slick and wrappers all the mining complexity, auto selecting the most profitable currency to mine at that time for the hardware you have. I doubt its the most profitable way to do this but its very easy and takes the pain out of it which is what you are paying for.
  • edited 6 December 2017 at 7:21PM
    expeditionistexpeditionist Forumite
    86 Posts
    edited 6 December 2017 at 7:21PM
    welshblob wrote: »
    I'd be interested in understanding the tax situation. On the facebook quick replies one user notes that HMRC recognise bitcoins as assets and are therefore subject to capital gains tax.
    A friend of mine (no really a friend, not me) who has "invested" asked his accountant who said that if you are day trading and converting back into a fiat currency the this would be classed as income and taxed accordingly. If treating it as a long term investment then subject to capital gains. Of course where that line is drawn is typically vauge in tax terms and it's not clear if you day trade but keep it in non fiat crypto currency whether the same rules apply.
    Of course I have no idea whether this view is correct and would like to understand this in more detail and also what is the most tax efficient way to "invest"

    Yes, I'd have the same tax questions, I think the tax authorities need to clarify the situation.

    I'm inclined to find a good stable or in vogue altcoin and trade Bitcoin in and out of that to keep my capital out of fiat at all times to avoid these taxation issues on day trades. Dash and Bitcoin Cash seemed to have had an inverse correlation for a while, but that has changed, there's always something holding up well though.

    It's very easy to never convert your capital back in to fiat if you're building a long term pot and don't require any income. That way you'll only pay CGT when you finally cash out to fiat. Keep good records though because the anti money laundering laws could prove a headache in the future if you build a big pot and can't prove how you got it.

    Alternatively, some people spend their pot via TenX or Monaco or Centra or SpectroCoin crypto linked debit cards or even via Amazon vouchers, there are ways to spend crypto under the radar, not that I recommend doing that of course.



    If you like my content then please feel free to use my referral link to Coinbase, considered the safest place to buy, you’ll get $10 free and I’ll get $10 free, every penny helps! https://www.coinbase.com/join/5949799a042a280d6295466a

  • welshblobwelshblob Forumite
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    Nicehash has bee hacked! It's really like the wild west.
This discussion has been closed.