BANKRUPT: Genesis Global Chapter 11

By Staff Reporters

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The bankruptcy of Barry Silbert’s Genesis Global may not have pummeled crypto markets like the implosion of Sam Bankman-Fried’s FTX did, but it features a list of top creditors with similarly large claims topping $3 billion in total.

According to Bloomberg, Genesis’s Chapter 11 filing on Thursday listed seven creditors owed at least $100 million. By far the biggest one is a $766 million claim related to customers of crypto exchange Gemini, who have money stuck with Genesis’s lending unit. FTX-linked entities have 10 claims of more than $100 million, according to a redacted list filed Saturday. 

In all, Genesis owes its top 50 creditors $3.4 billion; for FTX, that figure stands at $3.1 billion. While some of the names of Genesis’ biggest creditors have been redacted in the filing, below is a list of major names.

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CRYPTO-CURRENCY: Worth Since 2020?

By Staff Reporters

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Winners Since March 2020:

Here’s how much $100 in each of the following cryptocurrencies and stocks back at the bottom of the U.S. market in March 2020 would be worth today:

CITE: https://www.r2library.com/Resource/Title/0826102549

  • Bitcoin (CRYPTO: BTC): $405.67
  • Ethereum (CRYPTO: ETH): $1,268.90
  • Dogecoin (CRYPTO: DOGE): $4,731.19

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CRYPTO-CURRENCY: Trades 24/7/365

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The US stock and bond markets are closed today for MLK Day, so we’ll have to wait 24 more hours to see if this year-opening rally will continue for a third week.

But crypto currency trades 24/7, and the same hopeful inflation news that’s been lifting stocks has also given life to beaten-down cryptocurrencies. Bitcoin gained for the 11th straight day on Saturday, topping $20,000 for the first time in more than two months.

So, here are some ways in which the non-stop crypto market affects institutions — banks and exchanges, in particular.

The stock market takes a break every day, and every weekend. That gives all the players in the market — individual investors and institutions — a chance to assess and reposition their assets for their next moves. But since crypto trades all the time, there are stretches during the 24-hour day when banks and exchanges are effectively closed, and money isn’t being moved around as quickly or efficiently as it would during business hours.

This can cause lags — if a crypto trader is trying to deposit money into their crypto exchange account to execute a trade at, say, 2 am ET on a Sunday night, that money won’t actually move until the next day. That has the potential to cause some friction in the markets.

CITE: https://www.r2library.com/Resource/Title/0826102549

In short, there’s a mismatch between the standard business hours of many institutions and the 24-hour nature of the crypto markets, which may have an effect on the markets.

MORE: https://www.newsnow.co.uk/h/Business+&+Finance/Cryptocurrencies

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What is a CENTRAL BANK DIGITAL CURRENCY?

By Staff Reporters

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DEFINITION: A CBDC is a digital form of central bank money that is widely available to the general public.

CITE: https://www.r2library.com/Resource/Title/082610254

“Central bank money” refers to money that is a liability of the central bank. In the United States, there are currently two types of central bank money: physical currency issued by the Federal Reserve and digital balances held by commercial banks at the Federal Reserve.

While Americans have long held money predominantly in digital form—for example in bank accounts, payment apps or through online transactions—a CBDC would differ from existing digital money available to the general public because a CBDC would be a liability of the Federal Reserve, not of a commercial bank.

MORE: https://www.federalreserve.gov/faqs/what-is-a-central-bank-digital-currency.htm

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WASH SALE RULE: Not For Cryptocurrency?

By Staff Reporters

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DEFINITION

The wash-sale rule prohibits selling an investment for a loss and replacing it with the same or a “substantially identical” investment 30 days before or after the sale. If you do have a wash sale, the IRS will not allow you to write off the investment loss which could make your taxes for the year higher than you hoped.

CITE: https://www.r2library.com/Resource/Title/082610254

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Don’t get soaked by the wash sale

Even if you sell at a loss from a brokerage account or IRA, it still might not want to permanently exit a portfolio position. It may want to get back into an investment now at a cheaper cost with room to re-grow.

BUT – Just wait a moment, according to the IRS “wash-sale” rule.

The IRS will not count a capital loss if, within 30 days before the sale or within 30 days afterwards, the taxpayer is also buying or acquiring a “substantially identical” investment. The rule applies to investments like stocks, bonds, mutual funds, exchange traded funds and options – but not cryptocurrency.

The basic trick is just keeping track of the days. Another skill is considering what counts as “substantially identical” for the fast-moving investor who sees a buying opportunity either 30 days before or after the day of sale.

An investor could sell a stock and buy an exchange traded fund or mutual fund that contains the stock and not run afoul of the rule, Going the other way, from a mutual fund or ETF containing a stock to a direct stock purchase, also will not trigger the rule, he noted.

EXAMPLE: Suppose an investor has several investment accounts — perhaps one is a long-term account and the other is more for short-term trades. The rule applies across the account. So if one sells and the other buys within 30 days before or after, the wash-sale rule will scrap the capital loss.

Buying and selling shares of two different funds tracking the same index within the 30-day period could also cause the wash sale rule to kick in. However, a move like selling a piece of an ETF tracking the S&P 500, and then soon buying an ETF tracking the Russell 1000 Index would be OK according to a tutorial from Charles Schwab SCHW, +3.70%. “That would preserve your tax break and keep you in the market with about the same asset allocation,” an explainer said.

But while someone’s eyeing a repurchase and letting the wash-sale window close one place, they may have a chance to start the tax strategy process in a different part of their portfolio. “There’s really tax loss harvesting opportunities across a number of different asset classes this year.”

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PODCAST: Suicide Financial Crisis Risk?

By Rick Kahler MS CFP

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I lost over $450,000, I cannot pay the bank, I’ll become homeless. Suicide is the only way out.”

This desperate plea summarizes one of the top posts a few months ago on a Reddit forum for the cryptocurrency Terra Luna. Like other cryptocurrencies, it has recently lost more than 99% of its value.

Over the past five years I have written several columns and given a number of media interviews on the risks of speculating in cryptocurrencies. My most recent one generated a conversation with several of my financial planning peers about the recent crypto meltdown. One of them called my attention to the discussions about suicide on cryptocurrency forums, where some members were posting suicide prevention phone numbers.

READ HERE: https://kahlerfinancial.com/financial-awakenings/money-psychology/financial-crisis-and-the-risk-of-suicide

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SBF: Apologizes as FTX Scrambles to Live

By Staff Reporters

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Following his crypto exchange’s epic implosion, FTX boss Sam Bankman-Fried (SBF) said he was sorry for mistakes he made, and pledged to “give anything I have to” in order to raise the $4 billion in capital FTX needs to avoid bankruptcy.

As the SEC bear down on the company, shady activities are coming to light: FTX loaned its affiliated firm, Alameda Research, ~$10 billion worth of customer assets to fund high-risk bets, per the WSJ.

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STABLECOINS: Altering the US Banking System?

By Staff Reporters

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DEFINITION: Stablecoins are cryptocurrencies where the price is designed to be pegged to a reference asset. The reference asset may be fiat money, exchange-traded commodities, or a cryptocurrency.

CITE: https://www.r2library.com/Resource/Title/082610254

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In fact, Stablecoins could have such a profound effect on the established banking system that U.S. regulators need to require that the digital tokens fit in without disrupting it, said Martin Gruenberg, the acting chairman of the Federal Deposit Insurance Corp. (FDIC). His remarks were delivered at a Brookings Institution event recently.

Gruenberg’s agency is among the U.S. banking watchdogs that will have significant influence over how stablecoins are regulated, and the FDIC has also had to weigh in with recent sanctions against firms – such as FTX US – that have made claims misrepresenting how FDIC deposit insurance backstops their operations. As U.S. banks have increasingly sought to offer crypto services, including maintaining custody of customer’s digital assets, Gruenberg said that his agency has been cautious about allowing regulated lenders to engage.

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What is a Non-Fungible Token [NFT]?

About NFTs

[By staff reporters]

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According to Wikipedia, a non-fungible token (NFT) (previously referred to as Bitcoin 2.0) is a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable. NFTs can be used to represent items such as photos, videos, audio, and other types of digital files. Access to any copy of the original file, however, is not restricted to the buyer of the NFT. While copies of these digital items are available for anyone to obtain, NFTs are tracked on blockchains to provide the owner with a proof of ownership that is separate from copyright.

In 2021, there has been increased interest in using NFTs. Blockchains like Ethereum, Flow, and Tezos have their own standards when it comes to supporting NFTs, but each works to ensure that the digital item represented is authentically one-of-a-kind. NFTs are now being used to commodify digital assets in art, music, sports, and other popular entertainment. Most NFTs are part of the Ethereum blockchain; however, other blockchains can implement their own versions of NFTs.

Crypto Currency Basics: https://medicalexecutivepost.com/2014/01/23/understanding-currencies-bitcoins/

The Crypto-future through Bitcoin, Ethereum, Ripple XRP and IOTA

Carbon Footprint!

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CARBON

The NFT market value tripled in 2020, reaching more than $250 million. The rise of NFT transactions has also led to increased environmental criticism. The computation-heavy processes associated with proof-of-work blockchains, the type primarily used for NFTs, require high energy inputs that are contributing to global warming. The carbon emissions produced by the energy needed to maintain these blockchains has forced some in the NFT market to rethink their carbon footprint.

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Inflation and Crypto-Currency

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By Staff Reporters

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The inflation-proof nature of cryptocurrency works in the same way as stocks– inflation will cause prices to increase so companies can charge more for their goods which means people are willing to pay.

However, since cryptocurrencies are fairly new and not backed by anything at this point it’s better if they make up a small portion of your portfolio instead of trying to go all in with one coin unless you have enough money lying around where losing some won’t hurt too much.

A lot of corporate investment portfolios have started to include crypto because let’s face it, inflation matters.

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UPDATE: Sentient GOOGLE, Corporate Earnings, the Markets and Cryptocurrency

By Staff Reporters

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Blake Lemoine, an engineer for Google’s responsible AI organization, described an AI system that he has been working on since last fall as sentient, with a perception of, and ability to express thoughts and feelings that was equivalent to a human child. He was promptly suspended.

Earnings Are Under Threat. Companies from Target to Microsoft have warned their results will be lower than expected, while analysts have trimmed earnings forecasts across industries. Investors will get further clarity next month when companies begin reporting results for the second quarter.

The S&P is in a historic slump having fallen in nine out of the past 10 weeks for just the third time since 1980. And cryptocurrencies, which trade 24/7, tumbled following another red-hot inflation report.


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Cryptocurrency Trades and Income Taxes 2021

Virtual Currency – Real Taxation

By Staff Reporters

What you need to report to the IRS

The IRS treats virtual currencies as property, which means they’re taxed similarly to stocks. If all you did was purchase cryptocurrency with U.S. dollars, and those assets have been sitting untouched in an exchange or your cryptocurrency wallet, you shouldn’t need to worry about reporting to the IRS.

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Reporting is required when certain events come into play, most commonly:

  • Trading one cryptocurrency for another.
  • Selling cryptocurrency for fiat dollars (government-issued currency).
  • Using cryptocurrency to buy goods or services (e.g., paying for a cup of coffee with cryptocurrency).

A critical distinction to make is that triggering a taxable event doesn’t necessarily mean you’ll owe taxes, said Andrew Gordon, an Illinois-based certified public accountant and tax attorney. Just because you have to report a transaction doesn’t mean you’ll end up owing the IRS for it.

READ HERE: https://www.msn.com/en-us/money/taxes/yes-you-must-pay-taxes-on-cryptocurrency-trades-heres-how/ar-AATamDL?li=BBnb7Kz

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Understanding Crypto Currencies & Bitcoins

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Understanding Risks and Benefits

By Timothy J. McIntosh CFP® MPH CFA CMP®

TMMedical professionals might not know rupees from ringgits, but any investor should consider the benefits of currency investing.  Buying currencies allow for a hedge against the U.S. dollar and also permit for an investor to take advantage of major movements of foreign currencies for profit.

Today, it is easier than ever to invest in currencies through mutual funds or exchange traded funds.  U.S. investors are impacted by foreign currency fluctuations through international stock and bond exposure.

Advantages

The advantage of investing in currencies is the investment generally has limited correlation with other real or liquid assets.  Medical professionals can initiate the process of currency investing by starting a forex account.  In many instances, an account can be opened with minimal investment.

Taxation

One caveat is the tax consequences, as currency-based profits are taxed as ordinary income rather than the more favorable capital gains rate.

Digital Currency

Bitcoin is an open sourcepeer-to-peer payment network and digital currency pioneered in 2009 by pseudonymous developer “Satoshi Nakamoto“. Bitcoin has been called a cryptocurrency because it utilizes public-key cryptography for protection. Users send payments by broadcasting digitally signed messages that reassign ownership of bitcoins. A decentralized network of specialized computers verifies and timestamps all transactions using a proof-of-work system. The operators of these computers, known as “miners“, are satisfied with transaction fees and newly minted bitcoins.

Commercial Use

The commercial use of Bitcoin, illicit or otherwise, is currently diminutive compared to its use by speculators, which has led to extreme price volatility.  Companies and merchants have an enticement to recognize the currency because transaction fees are lower than the 2 to 3% classically imposed by the major credit card companies like Visa®.

Bitcoin Graph

Assessment

Given the fact that Bitcoin is a new currency with extreme volatility, medical professionals should be very cautious with any potential investment.

UPDATE: 2017

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Crypto-Currency “GAS” FEES: Ethereum Network

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By Staff Reporters

According to Wikipedia, a cryptocurrency, crypto-currency, or crypto is a collection of binary data which is designed to work as a medium of exchange. Individual coin ownership records are stored in a ledger, which is a computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership. Cryptocurrencies are generally fiat currencies, as they are not backed by or convertible into a commodity. Some crypto schemes use validators to maintain the cryptocurrency. In a proof-of-stake model, owners put up their tokens as collateral. In return, they get authority over the token in proportion to the amount they stake. Generally, these token stakers get additional ownership in the token over time via network fees, newly minted tokens or other such reward mechanisms.

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Product Details

CITE: https://www.r2library.com/Resource/Title/0826102549

Cryptocurrency does not exist in physical form (like paper money) and is typically not issued by a central authority. Cryptocurrencies typically use decentralized control as opposed to a central bank digital currency (CBDC). When a cryptocurrency is minted or created prior to issuance or issued by a single issuer, it is generally considered centralized. When implemented with decentralized control, each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database.

A cryptocurrency is a tradable digital asset or digital form of money, built on blockchain technology that only exists online. Cryptocurrencies use encryption to authenticate and protect transactions, hence their name. There are currently over a thousand different cryptocurrencies in the world, and many see them as the key to a fairer future economy.

Bitcoin, first released as open-source software in 2009, is the first decentralized cryptocurrency. Since the release of bitcoin, many other cryptocurrencies have been created.

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Enter GAS

Gas refers to the unit that measures the amount of computational effort required to execute specific operations on the cryptocurrency Ethereum network. Since each Ethereum transaction requires computational resources to execute, each transaction requires a fee. Gas refers to the fee required to conduct a transaction on Ethereum successfully.

READ: https://www.morningbrew.com/daily/stories/ethereum-gas-fees?utm_campaign=etb&utm_medium=newsletter&utm_source=morning_brew&mid=349b552221c994e2540a304649746d7c

CITE: https://www.r2library.com/Resource/Title/082610254

Gas fees are paid in Ethereum’s native currency, ether (ETH). Gas prices are denoted in gwei, which itself is a denomination of ETH – each gwei is equal to 0.000000001 ETH (10-9 ETH).

NFT: https://www.morningbrew.com/emerging-tech/stories/2021/02/22/nft-market-tripled-last-year-gaining-even-momentum-2021?email=marcinkoadvisors@msn.com&mid=349b552221c994e2540a304649746d7c&uid=jotgRJS1MLYGk2SSdfbR4b5r

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For example: Instead of saying that your gas costs 0.000000001 ether, you can say your gas costs 1 gwei. The word ‘gwei’ itself means ‘giga-wei’, and it is equal to 1,000,000,000 wei. Wei itself (named after Wei Dai, creator of b-money) is the smallest unit of ETH

MORE: https://swyftx.com/learn/what-are-ethereum-gas-fees/

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PODCASTS: What is a STABLECOIN?

HEDGE AGAINST INFLATION

By Dr. David E. Marcinko MBA CMP®

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What Are Stablecoins? - CB Insights Research

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DEFINITION: Stablecoins are blockchain-based digital currencies that have been created with the aim to have a stable value. Stablecoins achieve price-stability through various different methods such as a peg against a fiat currency or a commodity, through collateralization against other cryptocurrencies or through algorithmic coin supply management.

CITE: https://www.r2library.com/Resource/Title/0826102549

Every stable coin includes a specific set of mechanisms that mostly behave in the same way. In general, stable coins keep collateral of the asset and manage the supply. In this way, they incentivize the market, which allows trade of the coin for no more or less than $1.

A stable coin can be considered the best depending on several factors: It should be stable. PAX is one the most stable stablecoin. It should be liquid and available on most exchanges. It should be backed by FIAT. PAX is 100% collateralized in US bank accounts. It should be regulated. It should be redeemable.

MORE: https://www.msn.com/en-us/money/markets/treasury-fed-fear-stablecoins-could-disrupt-financial-system/ar-AAOE7lO?li=BBnb7Kz

PODCAST #1: https://www.youtube.com/watch?v=O3rVWLhBIPo

PODCAST #2: https://www.youtube.com/watch?v=GsSSLDzKCOE

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PODCAST: Curmudgeon On “Crypto-Currency”

Curmudgeon on Crypto-currency


Vitaliy Katsenelson, CFA

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What Exactly is a Financial DAO?

A decentralized autonomous organization

DR. DAVID EDWARD MARCINKO FACFAS MBA CFP MBBS [Hon] [Executive Summary] -  PDF Free Download

BY. DR. DAVID EDWARD MARCINKO MBA CMP®

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What is DAO - Decentralized Autonomous Organizations

A decentralized autonomous organization (DAO), sometimes called a decentralized autonomous corporation (DAC), is an organization represented by rules encoded as a computer program that is transparent, controlled by the organization members and not influenced by a central government. A DAO’s financial transaction record and program rules are maintained on a blockchain. The precise legal status of this type of business organization is unclear.

A well-known example, intended for venture capital funding, was The DAO, which launched with $150 million in crowdfunding in June 2016, and was nearly immediately hacked and drained of US$50 million in cryptocurrency. The hack was reversed in the following weeks, and the money restored, via a hard fork of the Ethereum blockchain: the Ethereum miners and clients switched to the new fork.

CITE: https://www.r2library.com/Resource/Title/0826102549

MORE: https://www.msn.com/en-us/money/topstocks/what-is-a-dao/ar-AAOIpjw?li=BBnb7Kz

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Bitcoin

The Beginners Guide

By Forbes Wealth

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crypto

Bitcoin Part 1: The Beginners Guide

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Bitcoin – “Millennials Fake Gold”

Bitcoin – The  Digital Generation’s Gold Surrogate

By Vitaliy Katsenelson CFA

I’ve been asked about Bitcoin a lot lately. I’ haven’t written anything about it because I find myself in an uncomfortable place in agreeing with the mainstream media: It’s a bubble.

Bitcoin started out as what I’d call “millennial gold” – the young (digital) generation looked at it as their gold substitute.

http://contrarianedge.com/2017/12/01/bitcoin-millennials-fake-gold/

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Conclusion

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Bitcoins for Retirement?

 In a Balanced Portfolio?

By Rick Kahler CFP®

A reader recently sent me the following email: “As you know, there are ‘market experts’ pitching bitcoins as an ‘investment’. Has a Huge YTD gain. I’d bet a lot of your readers would like to know if a bitcoin position has a place in a balanced financial portfolio.”

I always appreciate hearing from readers, especially when they challenge me with topics I would normally not have considered. Bitcoins are not something to which I’ve paid serious attention.

How they Work

First, let me explain that a Bitcoin is a type of digital currency which is traded person to person. It is not backed by a government or considered legal tender. While Bitcoin is one of the earliest and most widely known digital currency systems, it is not the only one that is available. These are sometimes called “altcoin,” “virtual currency,” or crypto-currency.”

Unlike government-created currencies where a central bank controls the creation of the currency, Bitcoins are uncontrolled or tracked by any government. This allows people to send or receive money across borders freely, with none of the restrictions, tracking, or caps that are normally placed on transactions by governments.

A digital money system has an inherent problem common to all money systems. How do you keep the currency, especially one that is entirely digital, from being counterfeited? What stops someone from creating Bitcoins or selling the same Bitcoin multiple times?

The solution is a type of open source, public ledger that tracks every Bitcoin transaction from the beginning of Bitcoin time. It makes it virtually impossible to cheat. The creation of new Bitcoins is controlled via a process called mining. Only a limited number of new Bitcoins are allowed into the system annually, similar to how the precious metal supply gradually expands annually based on the mining of new metal.

The market in trading Bitcoins is probably as “free” as a currency market can get. The price of Bitcoins is based on supply and demand. Since Bitcoin was only created in 2009, it has less than a decade of performance to evaluate, but throughout its short history the price has fluctuated wildly. For example, it reached $31 in July of 2011, then dropped back to $2 by that December. In November of 2013 it hit a high of $1,242. The following month, the price dropped to $600, rebounded, crashed, and eventually stabilized to a range of $650 to $800.

The reader who asked me about Bitcoin was certainly right about its impressive 2017 year-to-date performance. On January 1, 2017, a Bitcoin sold for $496.90. As of August 19 it closed at $4,109.10, nearly a ten-fold increase in just eight months.

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Operating History

An article on Investopedia offers a good overview of Bitcoin‘s operation and history.

It also describes some of the risks to evaluate before considering it as an investment. These include the relative novelty and lack of track record of digital currency, the possibilities for hacking and fraud, the uncertainties of future regulation, and the competition of other developing virtual currency systems. It also points out that Bitcoin transactions are similar to dealing with cash. They are “permanent and irreversible,” with “no third party or a payment processor, as in the case of a debit or credit card – hence, no source of protection or appeal if there is a problem.”

Assessment

While I like the libertarian freedom of the idea of a currency uncontrolled by government intervention, I don’t consider owning such a currency an investment. I do consider buying or selling digital currencies like Bitcoin a speculation. Like other speculative investments, these do not belong in any retirement portfolio. 

Conclusion

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