Newbie's Story Introduction to Bitcoin (please excuse my grammar/spelling)

[basic11]

This is my story on Bitcoin,...so far

So I had heard of bitcoin many times throughout the year in youtube videos or news from RT, but I never really paid much attention to it. Until I saw Stefan Molyneux talk about it and debate it against Peter Shciff. The reason I became interested in it was the way Peter Monlyneux spoke of it as the better alternative to paper fiat currency. I gained interest fairly quickly and I started to research it and spent many hours watching videos about it. Then I ran into a Russia Today video in which Amir Taaki was being interviewed and questioned on the legitimacy of Bitcoin. I think out of all the people I have seen talk about Bitcoin, Amir Taaki is the most exciting to watch because of the passion he exerts about Bitcoin and it’s technology. The more I learned about Bitcoin the more excited I became about this new technology and I felt as if I was living in significant moment in our history.

Then I learned how to mine Bitcoin using my computer. Unfortunately the speed of my GPU only brought me up to 7kh/s. This is in early December 2013, at which current time Bitcoin price was around 850-1000 USD. So I new the speed of my GPU wasn’t going to be good enough. I looked to buy new graphics cards online as kept watching more videos and learning more about Bitcoin. Then I decided that it would be better for me to buy Bitcoin. On December 13th I went on Coinbase, which seems like the easiest way to buy Bitcoin, so I bought 0.5 Bitcoin which turned  out to be over 500 dollars. I was excited to get half a Bitcoin, which I was planning to use to buy other Alt.Coins. I was going to use it to buy Litcoins, Megancoins, Namecoins, and Feathercoins.

So It takes about four business days to process a Bitcoin purchase in Coinbase. During this period of time China announced it would ban third party payment companies to work with Bitcoin related business. This caused everyone to panic and a lot of people started to sell their Bitcoins. This drove down the price significantly and in about two days the price went down almost 50%. By the time my Bitcoin purchase finished processing Bitcoin was worth about half of what I had paid for it. Well the cool thing about Coinbase is that when things like this happen they are really helpful. I expected to have 0.5 Bitcoin in my account, but Coinbase cancelled my purchase because it was a high risk transaction. I'm assuming when the price of Bitcoin becomes highly volatile it is considered a high risk transaction. Although this can be helpful if the price keeps going down, It makes it difficult to buy at any price. I am still trying to purchase Bitcoins, but the price keeps changing so much that everytime I make a purchase in Coinbase they cancel my order because of it being a high risk transaction. At the time I am writing this Bitcoin prices are ranging between 650-700$.

The reason I want to buy Bitcoin Now is because I feel as more countries like India and South Africa enter the market with their own exchanges the price of Bitcoin will rise significantly. I was thinking about using Local Bitcoins, but the price they ask for is much higher than what I get from Coinbase. I have decided to start using bitstamp, while still trying to buy from Coinbase.

My Questions for the forum users:
1.   When filing for taxes in U.S. in the future do I need to mention Bitcoin?
2.   What are some reliable Alt.Coins to buy?
3.   Why do you think there hasn’t too much government intervention on Bitcoin, and the Federal Reserve.
4.   What do you expect to happen for Bitcoin in 2014?(Economically, Politically and technologically)
5.     Do you expect any other Alt.Coin to surpass Bitcoin in use or price?
6.     Does Bitstamp or other exchanges have the same high risk transaction cancellation like Coinbase?

[KriszDev]

If you want to see the mining profitability you can see at http://www.coinchoose.com/. As I read your message you mine with GPU whitch is good for SHA-256 mining ,but not really good for scrypt mining for scrypt the CPU is best.

[hilariousandco]

My Questions for the forum users:
1.   When filing for taxes in U.S. in the future do I need to mention Bitcoin?
2.   What are some reliable Alt.Coins to buy?
3.   Why do you think there hasn’t too much government intervention on Bitcoin, and the Federal Reserve.
4.   What do you expect to happen for Bitcoin in 2014?(Economically, Politically and technologically)
5.     Do you expect any other Alt.Coin to surpass Bitcoin in use or price?
6.     Does Bitstamp or other exchanges have the same high risk transaction cancellation like Coinbase?

1) Probably in the future, yes. I'd read up on capital gains tax.
2) Depends what you mean by reliable? I'd do my own research rather than asking others: http://coinmarketcap.com/
3) I'm sure there will be, they're probably just weighing up their options. It's still early days for Bitcoin/cryptos.
4) I'm expecting big things. I reckon it will continue to grow and will shoot up in value if a big merchant gets behind it.
5) Nope.
6) Not used them, so can't say.

[skillface]

Actually I also wonder if you have to declare income or pay taxes from BTC trading (though it might be different for me since I'm Australian).

As I read your message you mine with GPU whitch is good for SHA-256 mining ,but not really good for scrypt mining for scrypt the CPU is best.

GPUs are still the best way to mine Scrypt, I'm doing just that with Dogecoin and Catcoin (Dogecoin is already out of the reach of CPU mining unless you've got a high-end CPU or multiple computers). Though there are a few coins that can only be mined with CPU really (I believe Primecoin is one).

With the lack of any Scrypt equivalent of ASIC miners, higher-end AMD cards are the only real way to mine most Scrypt coins. Even with my overlocked GTX 670 and i5 2500k I'm now struggling to reach a combined 350KH/s (with the CPU contributing a whole 27KH/s or so @4.7GHz).

[allgoodthings1]

My Questions for the forum users:
6.     Does Bitstamp or other exchanges have the same high risk transaction cancellation like Coinbase?

No, they don't. But their situation is entirely different than that of Coinbase. Coinbase is not an exchange. It's a facilitating link between the consumer and exchange. So the integrity of their operation requires them to do things differently. I think you'll find.. within the limits of there persona, Coinbase does well exactly what it says it will do.

[infinitybo]

@Basic11 The IRS has not issued guidance on Bitcoin yet therefore you don't need to mention this.

[hilariousandco]

@Basic11 The IRS has not issued guidance on Bitcoin yet therefore you don't need to mention this.

True, but they probably will in the future.

[tricomp]

My Questions for the forum users:
6.     Does Bitstamp or other exchanges have the same high risk transaction cancellation like Coinbase?

No, they don't. But their situation is entirely different than that of Coinbase. Coinbase is not an exchange. It's a facilitating link between the consumer and exchange. So the integrity of their operation requires them to do things differently. I think you'll find.. within the limits of there persona, Coinbase does well exactly what it says it will do.

I think the order cancellation due to high risk from Coinbase may be due to the form of payment. Credit card may be reversed. Did you try a different method of payment?

[axewater]

don't buy any alt-coins ... just mine them and sell for btc or ltc.
maybe at most buy some LTC because i think they are undervalued at this time
best strategy i've found so far is :

look for new coin launch
mine as soon as it launches
wait for it to get tradable at an exchange
sell within first day or at first sign of price going down

sometimes you will get stuck with coins that never get to a market (exchange) which means you wasted your time

if you want to avoid this strategy, another reasonable option is multipool mining. thats a pool that switches to the most profitable coin of that moment. you will get lots of different coins this way though, be ready to do some work shipping them to exchanges and selling them (for btc or ltc)

[a19292866]

It's still early days for Bitcoin/cryptos. 4) I'm expecting big things.