When I look at a company like Blockchain, their approach seems obviously about market share, and more precisely as you point out, customer data. They already monetize advertisement within the wallet, but I think it's more about the long game -- creating a massive database of potential customers with personalized data. They're probably sniffing all the PII they can, too.


I assume you're referring to privacy issues? Because the customer has given a Shapeshift/Changelly useful starting points for de-anonymization via blockchain analysis. The company now knows your inputs and outputs on various blockchain -- and can now analyze your activity in both directions, past and future.

But these are just private companies, so unless they are honeypots, using this data to deanonymize you should theoretically require warrants.

Since when are bitcoin gambling sites considered money transmitters for the purposes of AML/KYC? I'm not aware of any new enforcement actions or precedents that specify that.

I have noticed over the past 9-12 months that some casinos and sportsbooks have reportedly begun enforcing KYC, and in some cases the changes have coincided with allegations of insolvency or scamming.

I'm not saying it's not the law -- but I'm not sure that it is. And it's quite convenient that these sites can lock up people's funds over it.


If you deposit and withdraw only bitcoins from a casino, there is no switching between fiat and crypto. Yet, here we are....

There's even a US bill in circulation that wants to make bitcoin mixers AML/KYC compliant by defining them as banks.

But that's why banks require KYC -- they are considered financial institutions and money transmitters, so they need to comply with anti money laundering laws. Governments are beginning to treat exchanges the same way. So if people use them to store money, they're essentially banks. They know your identity, they monitor your financial transactions, they report suspicious activity to the government. They may not be lending institutions, but for our purposes as customers, they're essentially banks.

There's even a bill in the US -- not passed yet -- that seeks to define exchanges (and other entities including mixers) as financial institutions. If the bill is passed, exchanges will literally be considered banks.

Since last week? As far as I know, they said they were going to implement those new rules in Q1, as early as January. There were some warnings about this. I think it had to do with the acquisition by Circle.

Personally, I pulled my money from Poloniex when the first announcement was made (December, I think). I don't trust them or the third party they use to verify documents, and I didn't want my funds locked up over it.


I love the idea of decentralized exchanges. But how do you get USD in and out of the system?

There's things like Tether, but they've had huge banking problems, and have also been subpoenaed by the US government -- seems risky to depend on. And they require KYC for direct banking anyway.

There's two things happening:

More legitimate entities (like licensed exchanges) are enforcing KYC because regulators are closing in. Regulators might shut them down (or even level criminal charges) if they don't do KYC per money laundering regulations.

But I believe less scrupulous entities (including ICO issuers and casinos) are capitalizing on this trend in order to deny people their rightful payouts. When people rightfully refuse to give up their documents to anonymous strangers who might sell them on the dark market, they don't get paid. That's free advertisement for ICOs, free money for casino's coffers, etc.

Check out the Altcoin Speculation board for some ideas: https://bitcointalk.org/index.php?board=224.0

Although you should take peoples' forecasts with a grain of salt. A lot of people are just "talking their book" -- telling you to buy so they can profit. Be skeptical of anything that is overly hyped. If a market is already hyped and has seen huge gains, I would stay away. Once a market gets to that point, the path of least resistance is down.

As for how much to invest: I wouldn't risk much. You're a beginner, so you should approach it that way.

I'd kill for an 18% general tax rate. Indians are quite lucky if this gets passed.

For me, day trading is taxed at my ordinary tax rate, which is almost 30% -- and that's just for federal income tax. There's another ~6% for state income tax, too.

That's why its so important to hold for long term capital gains in the US. You get taxed at 15-20% that way, but you need to hold for a year or more. So it's not really "trading" per se.

Sure, maybe it has always existed. But the CFTC also enforces against these practices pretty aggressively. They filed eight anti-spoofing enforcement actions against banks and individuals earlier this year.


How is it so different? Whether it's the exchange or individual traders behind it, spoofing can manipulate the markets.


If exchanges aren't policing against spoofing, then I imagine that depends how big of a whale you are.

The lesson to take away from that is the old adage: "Don't put all your eggs in one basket." If you keep all your coins in one place, you could lose everything at once.

Consider keeping multiple wallets that use multiple storage mediums (including cold storage), then spread your wealth among them. You certainly don't want to keep all your coins on an internet-connected machine. Even if you maintain good practices and encrypt your online wallet, it can be compromised.

I wouldn't take OKEx's volume numbers seriously. I remember watching Okcoin churn millions of BTC in daily volume in their heyday. They have the algos and they have strong incentive to use them, given how much credence people give to these self-proclaimed volumes.

Huobi was also known for faking volumes in past years. And if you look at Binance's order book depth vs. volume, it's likely they've been faking volume since inception. Remember -- CZ was originally CTO at Okcoin. I bet he has lots of experience with these volume churning algos.

All these exchanges are so shady.....

If you're scalp trading many times a day, you need to keep funds on the exchange. That's one of the reasons why scalping is risky on top of being a waste of time.

Otherwise, you can withdraw coins for as long as you plan to hold them. Personally, I only swing trade a dozen times a year or less, so I rarely have money on an exchange. I withdraw my money when the trade is executed.

Whatever you do, don't treat the exchange like a wallet. Don't use it to store money. If you're engaged in a trade, fine. But if not, you're taking needless risk.


No third party service can possibly prevent all phishing/suspicious e-mails. That's crazy. It's your responsibility to be vigilant.


Only once they've been reported, analyzed and flagged within their system. In the meantime, you might get hacked...

Yes, you can. The OP cites exchange hacks/collapses specifically -- you can protect yourself from those by not storing money on exchanges. When you want to sell, withdraw the fiat money immediately.

Most of your coins should be in cold storage. No online connection makes hackers and malware less of an issue. Encrypted wallets on flash drives and paper wallets are common methods for storage. Be sure to make multiple backups and keep them safe from the elements.


The biggest pitfalls are social engineering and phishing attacks. If you are good at recognizing suspicious emails, etc. and you don't download untrusted files or visit risky websites, it's pretty unlikely you'll fall prey to a malware attack.

Actually, Buffett hates gold and doesn't invest in it. It's not about the volatility. He basically just thinks it's useless -- and he's mostly correct about that. Its primary use is money. He likes silver for its industrial and medical uses, though:


So, Buffett's opinion of Bitcoin is quite similar to his opinion of gold.


Yup, the game is rigged. This reminds me of the Hunt brothers...

That sounds downright terrifying. Do you think biometric authentication is really inevitable for all finance? I can think of a some scary scenarios that could emerge from this.


Even if the Lightning Network is robust, there is still the issue of key security. I think people will need to periodically fund channels from their cold storage -- sort of like transferring from savings to checking -- and those transfers may be subject to high fees and/or long waits.

You don't want to risk holding much value in LN. It's an online wallet.

This is the best way to retain privacy -- p2p trading with cash. Technically, it isn't anonymous since you still need to interface with the buyer/seller. He knows some things about you like Localbitcoins username, what you look like, maybe your phone number.

That's the only way I use Localbitcoins -- basically as classified ads. You won't pay escrow fees or deal with KYC that way.


Use TOR for web browsing (including broadcasting raw transactions). You can also automatically route your internet connection through a good VPN like Private Internet Access.


Indeed. But let's think about that.

When you interface with the internet, web sites, merchants and third party payment processors, you leave behind an abundance of data. Cookies, IP addresses, email addresses, usernames, wallet public keys/addresses (as with lightweight wallets), browser and OS information, etc. Much of that data will be stored, somewhere, in a database.

And one day, when the police/government are investigating you, that information might become accessible to them. That may not matter, depending on what you are hiding (or not hiding). But due to the public nature of the blockchain, if they can tie some transactions to you, they may be able to discover much more about your historical activities and financial holdings.

Maybe this possibility is remote; maybe I am paranoid. But I think we all ought to be thinking about this shit now, before governments and blockchain analysis companies develop more sophisticated surveillance systems.

I like Arthur Hayes and I've always enjoyed reading the BitMEX blog, but I agree. It doesn't sound like a well-informed or calculated opinion, and his thing is short term volatility trading anyway. I think BitMEX does have a 6-month contract and I'm sure they analyze market conditions for risk analysis... maybe he has some additional insight that we don't.


That's because industry people grasp the fundamentals. They're probably not great at forecasting price and are bad at timing market moves, but they can gauge underlying adoption. But yeah, I'm sure there's some bias mixed in there as well.

I'll keep using what I use -- BTC units with decimal points -- until the market forces me to change.

I've been hearing this suggestion ever since I got into Bitcoin in 2013. I think we'll eventually move to smaller units, but there's no point in pushing "bits" or "satoshis" when most people still haven't wrapped their head around bitcoins yet.

Government acceptance is the best kind of advertisement there is. It totally legitimizes BTC -- apparently it will legitimize BCH as well, which I'm sure some bitcoiners won't like.

I also think that as more states do this, the less likely a federal clampdown on cryptocurrency becomes.


I'm partial to the idea that Bitcoin's deflationary nature discourages that kind of spending, but I could see this being an attempt to goad cryptocurrency investors into paying their taxes.

Anyway, I hope people avoid paying BTC to governments. These transactions will be "ground zero" for analyzing your blockchain activity.

The way I read it, the OP isn't trying to avoid paying taxes. He is trying to minimize tax liability. There is a big difference. Most of the tax law profession is based around advising clients on how to set up businesses and entities to legally minimize their tax liability. It's not about tax evasion.


I think many people would take exception with that statement. In the US, the short term capital gains tax rate goes as high as 40%. I think some other countries tax even higher. When tax rates approach half your entire income, it makes a massive difference to your savings and the lifestyle you can afford.

You should avoid reusing addresses. You should also be careful to use coin control: remember that signing transactions with outputs from multiple addresses associates all those addresses together.

You should always use IP address obfuscation when broadcasting transactions to the network. You can push raw transactions over TOR using a push service like https://blockchain.info/pushtx or you can connect to the network through a good VPN.


Bitcoin transactions are not anonymous. They are pseudonymous. Even if you never fully verify your identity with an exchange, things like IP addresses, cookies and PII like physical addresses (e.g. if you've bought an Amazon gift card with BTC and had something shipped to your home) can be used to identify you. Lots of PII gets leaked when dealing with third parties via web browser. And if blockchain analysis companies (working with governments) can identify one or two of your used addresses, clustering techniques may allow them to map much of your transaction history.

Be careful out there!