How do I know when to take a profit?
Knowing when to sell a cryptocurrency that has been profitable can be a little stressful. You could get out too early or get out too late. That’s where our CSI system comes in and helps you.
It is a simple red light / green light indicator. Red means that it is time to sell the cryptocurrency. It isn’t performing normally. Green means that the cryptocurrency is performing well. You know that you can safely hold onto it for a while longer – or even buy it if you don’t yet own it.
Will I buy and sell more often with cryptocurrencies given how volatile they are, or is it better to buy and hold these?
It is a bit of both. Our Volatility Quotient (VQ) analyzes each cryptocurrency for its custom level of volatility. The VQ will help you know when it is time to sell the cryptocurrency.
In some cases, the cryptocurrency may stay within its normal level of volatility for a long time, and you would hold it. In other cases, the cryptocurrency could bounce out of its normal level of volatility fairly quickly, and you could end up selling it soon after your initial purchase.
If I fall into the red zone on a given coin and wish to exit, and the pairing is to sell to BTC, what should I do if BTC is also in the red zone?
- There are a couple options for you when a coin goes into the red.
- If you’re thinking short-term, you could sell your coin for Tether. This works as a digital “cash” holding until you are ready to invest in a new coin.
- Your other option is to go back to cash for a time. This means that you could sell your coin for one of the main coins on Coinbase: Bitcoin, Litecoin, Ether, or Bitcoin Cash. From there, you could trade it for fiat currency.
Can BTC be destroyed?
Cryptocurrencies cannot be destroyed. A record of all the transactions a cryptocurrency has gone through gets recorded on the Blockchain. Transactions cannot be reversed. And, since anyone on the Blockchain can see the record of that cryptocurrency, its existence cannot be erased or destroyed.
Do I have to buy a whole bitcoin?
No. It’s possible to buy, sell, send and receive a half of a bitcoin, a quarter of a bitcoin or even a fraction of a percent of a bitcoin.
How can I purchase a coin on an exchange using all of my bitcoin without any leftover?
To purchase a coin on an exchange and use up all the bitcoin in an account is a technical improbability.
What’s left behind is called “Dust” in the community and is typically left on an exchange until more bitcoin is used or it is transferred/siphoned off with a larger withdrawal.
You can reduce this dust by using BNB, or Binance coins, as a way of splitting fees in half, but unless you’re really skilled with a calculator and have luck on your side, there will always be some leftovers.
Can blockchain be used outside of cryptocurrencies?
Yes! Many sectors and industries are beginning to utilize Blockchain to make their business run more efficiently.
Look at the example of the MediLedger in pharmaceuticals. This Blockchain, which has partners like Pfizer and Genentech, monitors a medicine’s supply chain. It allows those on the network to specifically track where, say, medicine has gone missing or if medicine has been tempered with. This increased level of accountability not only helps hospitals and doctors but also the end patient.
How does your service compliment other crypto newsletters?
Crypto by TradeSmith puts portfolio building tools in your hands. We have incorporated cryptocurrency newsletter subscriptions into our product and will continue to build upon it going forward.
At the end of the day, Crypto by TradeSmith will help you build your ultimate portfolio.
Can you explain the concept of security in owning a cold wallet?
In cold storage, you store your crypto’s public keys on a device separate from your online account. This device can be something like a CD or USB drive. When the CD or USB is not hooked into the exchange, there is no way that a hacker can take your cryptocurrencies. The only way to lose them would be if the device is damaged, you lose it, or it gets stolen.
What “wallet(s)” do I need, that will provide both maximum security and the ability to transact future TradeSmith recommendations?
The main types of wallets are hardware and software wallets.
Hardware wallets aren’t stored online or on files on your computer. They’re stored on devices that can be unplugged from your computer — like a USB drive. This protects you from would-be hackers. Then, the only way to lose your cryptocurrencies, is if you lose the device.
But, hardware wallets do tend to be a little less user-friendly. If you aren’t confident using the computer at a more advanced level, a software wallet might be better for you.
Software wallets are placed onto your computer and create an encrypted folder. They typically come with all the functions needed to transfer and receive supported currencies. They’re safe as long as you take proper precautions — such as using a unique email address for the wallet and employing multifactor authentication for your credentials.
However, software wallets can be hacked, as most of them are stored on known locations in computers. With the right hacking software, someone could get into your wallet if you haven’t encrypted your wallet.
How does mining for cryptocurrency differ from central banks creating fiat money?
The difference between the fiat currency and bitcoin creation is a bank will mandate that they will print ‘x’ amount of currency this week. There is nothing stopping them from doing this, asides a few regulations.
Mining, on the other hand, is a ‘proof of work’ model. Instead of thinking of it like printing money, think of it as earning a paycheck.
Miners approve transactions and are rewarded in bitcoin for their work. What happens when the block reward limit has been reached?
As you may know, the maximum number of bitcoin that can exist at any one time is 21M BTC. Once this limit has been reached, no new bitcoins can be created.
Miners, when they prove the legitimacy of a transaction, are rewarded with a set number of BTC. Without the miners, transactions could not be processed.
When the 21M BTC limit has been reached, the blockchain will change to a fee-based system. You will pay a fee to have your transaction processed. The miner will be rewarded the fee you paid.
Do I need to report anything to the IRS when I invest in cryptocurrencies? Can your service help me with that?
While the blockchain does allow you to remain anonymous when making transactions, your wallet knows who you are. It knows what profits you have taken from your transactions. And… the IRS wants you to report that.
My bank recently banned its users from using credit cards for crypto-transactions. What should I do?
We don’t know what your current banking situation is, but you have options if your bank has banned credit card crypto-transactions. You could always directly link your bank account to your crypto-account or you could link your debit card. Some crypto-accounts will even let you do a wire transfer.
My cell phone company warned me about “porting.” Should I be concerned?
Porting happens when someone tries to steal your cell phone number. If they gain access to it, they could potentially gain access to the accounts tied with your cell phone number.
A means to protect against this is by calling your cell phone company. Some, like T-Mobile, can add an extra PIN, so that only you can access your cell phone number and make changes to it.