Flip Thru: Bitcoin Spring Cleaning - 4 Tips To Keep Your Wallet Fresh
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Spring is in the air, and Bitcoin is making moves. On Wednesday, Bitcoin rose to its highest level since February 21st at around $57,000. With the Bitcoin market looking up and the spring equinox quickly approaching, it is the perfect time to start thinking about spring cleaning! This week, I'm sharing four tips to help you keep your Bitcoin wallet fresh.
Bitcoin has proven to be an excellent long-term investment due to its scarcity and ability to generate value over time. If you are committed to Bitcoin for the long-term, it may be a good idea to schedule recurring BTC purchases. Scheduled purchases can help you prioritize Bitcoin in your budget. You can decide an amount and frequency that works for you - weekly, monthly, or quarterly - based on your financial situation. Some crypto exchanges and apps allow you to set up recurring Bitcoin purchases using their services, but if you prefer to forgo third-parties, then scheduling a regular trip to your closet CoinFlip ATM may be a good option. We can convert as little as $10 to Bitcoin and send it directly to your digital wallet fast.
With springtime comes tax season. You must report Bitcoin gains and losses on your 2020 taxes. This year the IRS has updated the 1040 tax return form to ask you if you have ever received, sold, sent, exchanged, or otherwise acquired any cryptocurrency. Suppose you have made income from Bitcoin or another cryptocurrency. In that case, you must report that income and pay the required tax.
To make sure you are ready for tax season, always keep a careful record of your Bitcoin activity. Keep track of the market value of your BTC when it was mined or purchased, as well as a log of its market value when you used it or sold it. This information will help you keep track of where you stand with Bitcoin on your taxes.
For more information about Bitcoin and taxes, check out this blog post covering everything you need to know.
Bitcoin gives you the ability to become your own bank which includes the responsibility of keeping your coins secure. This spring, take some time to ensure your BTC is stored safely in a trusted wallet. One of the golden rules of cryptocurrency is never to leave your coins on a wallet hosted by a crypto exchange. There is a saying in the industry - not your keys, not your coins.
When using Bitcoin, it is vital to keep your private key private because it ensures that no one but you can access your bitcoin. Digital wallets hosted by third parties like exchanges keep control over your private keys. This means that if the exchange becomes compromised in any way, you could potentially lose your crypto.
We recommend using non-custodial wallets to store your Bitcoin. For maximum security, however, we recommend using a hardware wallet like the ones from Trezor. Trezor wallets keep your coins offline in a secure device that resembles a thumb drive.
Both non-custodial wallets and Trezor wallets are so secure that if you happen to forget or lose your passwords, you may totally lose access to your coin, so be sure to write your passwords and phrases on a piece of paper stored in a safe location.
If you are of the HODL mentality, then it may be advantageous to transfer some of your BTC balance to an interest-bearing crypto savings account to increase your return rate. Interest-bearing crypto savings accounts work much like traditional savings accounts. With a company like BlockFi, you can deposit your BTC into a long-term savings account and earn up to 8.6% APY. While these accounts bear higher interest rates, they are not as safe as traditional savings accounts as they are not protected by consumer banking laws. For more information about interest-bearing Bitcoin savings accounts and the different options available, I highly recommend this comprehensive guide from The College Investor.
Bitcoin allows financial freedom like never before; however, with this level of freedom comes great responsibility. It is up to you to keep your BTC secure and ensure you're getting the most out of your coins. Over time, your needs change as your financial status changes. Routinely taking some time to review your crypto accounts is a great way to stay on top of your investments. Are there any crypto spring cleaning tasks that you plan to undertake this year? Do you have anything to add to this list? Let me know on Twitter!
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