Project Plan 1.2

So the new income stream which I got into just after lockdown and mostly when on holiday on my iPad was crypto. I being in the tech field had of course heard of Bitcoin and Ethereum but that had taken everyone by surprise and I’d not jumped onto that bandwagon. So that whole gold rush had passed me by, I missed the bus, missed out on the gold rush scramble to multi million dollars of ‘easy money’. However a whole new recession was looming, the LUNA crash has recently happened, Bitcoin languishing at about 1/3 of its all time high and all the other coins had diminished in value along with it, as Bitcoin the original and some would say best crypto currency goes down it pushes all the other down too

So although bad news for the crypto industry of course it is good news for those wishing to buy in this dip and then hope it goes back up on a stellar rise once more. There are of course many factors that determine if this will happen, the UK and US economy both need to recover, this looks like it may be months if not years so holding onto these coins (HODLing as its known – Hold On for Dear Life) is a long and tiresome process. Some of these coins, of which there are new ones created almost every day if not certainly every week, may not make it though the rough times so that could be 100% loss

Plus although the US regulatory bodies are still arguing between each other, there is the ever present threat of regulation, as most crypto companies are US based this is relevant, although many are in Europe (Malta is known as crypto island due to many companies existing there) So although the larger exchanges that deal with crypto currency are regulated as they are the ‘on ramps’ of FIAT (traditional currency such as £,$ etc) they have to conform to some regulation. However those that deal entirely with crypto and DeFi (de-regulated finance) as its name suggest do not. The UK government does at this time not regard crypto as currency or legal tender, they do of course regard any profit made from crypto as currency and therefore want their share (typical!) The whole subject of Capital Gains tax is something I’ve just started to look into and will consult a crypto savvy accountant when (and if!) the need arises

So initially I bought a little crypto, I’ll go into this in more detail in a crypto section so for now just take it as a given I bought some crypto, now crypto is broken up into many different types. There is the classic Bitcoin, the first and currently the most costly of all coins. It is mined (ie, generated by computers using a complex algorithm to ‘mine’ the coin) The coin has an entry into the blockchain which is an online and publicly visible ledger of all transactions, so it can be viewed by anyone. But only changed by genuine transactions all approved by other nodes in this chain therefore making it theoretically un hackable. This doesn’t mean to say the weakpoints in this system, the exchanges and users that hold the Bitcoin are hackable and they are hacked, some spectacularly so

So before we get all technical we’ll go back to basics, there are several types, in 2 main bodies. Bitcoin is Proof of Work (POW), an algorithm is hashed out and coins are ‘mined’ its not environmentally friendly and great deal of energy is expelled in running some very big and powerful computers to complete this work. The alternative is Proof of Stake (POS) this is where there is simply x number of coins, these exist pretty much from day 1 and the blockchain keeps a record of these and as they are bought/sold etc the record updates and the coins change hands. With both types of crypto you can buy, sell ,swap and gift as you would with any currency. You can also win it in online games and earn it through various other financial dealing such as loaning it out to other crypto holders or companies