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Crypto as investment

  • 22-06-2020 9:11am
    #1
    Registered Users Posts: 447 ✭✭ iAcesHigh


    I'm thinking about dedicating small part of my portfolio to crypto, probably just Bitcoin for now, and wanted to confirm two things:
    1. There is no tax to be paid on "gains" as this is nothing else than another currency and not an asset as such?
    2. As I don't plan to use Bitcoin for any purchases or transfers, but solely as risky part of my investment portfolio, would something like Revolut be good enough? I know they take 2.5% atm while, at the first glance, average exchange house takes between 1.5% and 2%, but if that's the only downside I think I'll be willing to pay for convenience (or is the exchange rate, for example, also just treacherous?)


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Comments

  • Registered Users Posts: 5,205 ✭✭✭ Elessar


    Good idea OP. Everyone should have some exposure to Bitcoin imo, the huge potential is worth the risk. But be prepared for wild swings in price. Don't panic sell like lots of people if BTC loses ~40% over a few days. Buy and hold it for the long term.

    1. Capital Gains Tax is payable on any realised gains, same as any other asset.
    2. Unless you personally hold your bitcoin, you don't own your bitcoin. If there was a hack or Revolut went under (unlikely but still a possibility), you could lose it all. Buy it and get yourself a hardware wallet like Ledger and store it on that.


  • Registered Users Posts: 447 ✭✭ iAcesHigh


    Elessar wrote: »
    Good idea OP. Everyone should have some exposure to Bitcoin imo, the huge potential is worth the risk. But be prepared for wild swings in price. Don't panic sell like lots of people if BTC loses ~40% over a few days. Buy and hold it for the long term.

    1. Capital Gains Tax is payable on any realised gains, same as any other asset.
    2. Unless you personally hold your bitcoin, you don't own your bitcoin. If there was a hack or Revolut went under (unlikely but still a possibility), you could lose it all. Buy it and get yourself a hardware wallet like Ledger and store it on that.

    Thanks for comments, yeah, I wouldn't be selling it for quite some time ;)

    1. Well if that is a currency why would you have to pay CGT? If you change € for $, and $ gets 100% stronger before you transfer back to €, you don't have to pay any CGT....2
    2. TBH if the only issue Revolut going under, for the amounts I plan to invest for now it's simply not worth it owning Bitcoin tbh. But I do understand the concern...


  • Registered Users Posts: 5,205 ✭✭✭ Elessar


    iAcesHigh wrote: »
    Thanks for comments, yeah, I wouldn't be selling it for quite some time ;)

    1. Well if that is a currency why would you have to pay CGT? If you change € for $, and $ gets 100% stronger before you transfer back to €, you don't have to pay any CGT....2
    2. TBH if the only issue Revolut going under, for the amounts I plan to invest for now it's simply not worth it owning Bitcoin tbh. But I do understand the concern...

    Why do you think currency is CGT exempt? It's not. If you have any gains from a disposal of any asset, including currencies, you owe CGT on it. Currently at 33%


  • Registered Users Posts: 447 ✭✭ iAcesHigh


    Elessar wrote: »
    Why do you think currency is CGT exempt? It's not. If you have any gains from a disposal of any asset, including currencies, you owe CGT on it. Currently at 33%

    so anybody changing EUR to GBP in Revolut should pay CGT if GBP went up and they converted GBP to EUR?


  • Registered Users Posts: 5,205 ✭✭✭ Elessar


    iAcesHigh wrote: »
    so anybody changing EUR to GBP in Revolut should pay CGT if GBP went up and they converted GBP to EUR?

    Yep, if its over the €1270 yearly personal exemption


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  • Registered Users Posts: 447 ✭✭ iAcesHigh


    Elessar wrote: »
    Yep, if its over the €1270 yearly personal exemption

    If that's the case, even when not above €1270 everybody should at least report it in their tax return then - so let me rephrase this, is anybody doing that in real life? :) I presume lot of people use Revolut to translfer EUR to GBP to buy goods on Amazon.co.uk and sometimes would transfer back to €, but I never heard anybody really reporting this in their tax return...


  • Moderators, Category Moderators, Motoring & Transport Moderators, Regional East Moderators Posts: 59,680 CMod ✭✭✭✭ unkel


    iAcesHigh wrote: »
    I presume lot of people use Revolut to translfer EUR to GBP to buy goods on Amazon.co.uk

    I presume people don't. The only reason to do that is to speculate on the value of the currency (by holding a position)

    You don't need to transfer EUR to GPB to buy anything from Amazon. You just pay in GBP, which gets instantly translated to EUR on your Revolut account at the interbank rate, so no capital gain or loss is ever made this way (and thus no CGT is due)

    "Wind is Ireland's oil" - An Taoiseach, 25/05/2022



  • Registered Users Posts: 447 ✭✭ iAcesHigh


    unkel wrote: »
    I presume people don't. The only reason to do that is to speculate on the value of the currency (by holding a position)

    You don't need to transfer EUR to GPB to buy anything from Amazon. You just pay in GBP, which gets instantly translated to EUR on your Revolut account at the interbank rate, so no capital gain or loss is ever made this way (and thus no CGT is due)

    that's just silly law then, which is fine, nothing I can do about it :) Thx for enlightening me...

    P.s. I would always transfer into GBP during the week so I can click buy on the weekend when I do my shopping...


  • Registered Users Posts: 4,655 ✭✭✭ makeorbrake


    iAcesHigh wrote: »
    2. TBH if the only issue Revolut going under, for the amounts I plan to invest for now it's simply not worth it owning Bitcoin tbh. But I do understand the concern...

    The rates you quoted for crypto exchanges are not accurate. Here are the fee schedules for Binance and Kraken.
    You're talking about maker/taker fees ranging from 0.1 to 0.3%.

    On storage, unless you are dealing with extremely small amounts, then you should invest in a hardware wallet. A Ledger Nano will cost you about €50 delivered. It's a sound investment.


  • Registered Users Posts: 2,072 ✭✭✭ ZeroThreat


    Elessar wrote: »
    Yep, if its over the €1270 yearly personal exemption

    €1,270 is a very specific number they have the annual personal exemption fixed at.

    I've noticed its been at this amount for donkeys years, then I recalled that the IR£ to € exchange rate was fixed at €1.27 so I assume it used to be £1000.

    It's odd that the exemption hasn't changed in all these years considering all the other changes to rates and bands over that time.


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  • Registered Users Posts: 5,352 ✭✭✭ jmreire


    Like everyone else ( or 99%) I've heard of Cryptocurrency, so I know its there, but that's about all. I have absolutely no idea of the mechanics of it How would I go about investing some money in it? I saw a video of Pat Kenny apparently going wild about " Bitcoin era", but was this a scam? What do you Crypto experienced people think?


  • Moderators, Category Moderators, Motoring & Transport Moderators, Regional East Moderators Posts: 59,680 CMod ✭✭✭✭ unkel


    ZeroThreat wrote: »
    €1,270 is a very specific number they have the annual personal exemption fixed at.

    I've noticed its been at this amount for donkeys years, then I recalled that the IR£ to € exchange rate was fixed at €1.27 so I assume it used to be £1000.

    It's odd that the exemption hasn't changed in all these years considering all the other changes to rates and bands over that time.

    Yep, hasn't changed since the time we used the Irish Punt (nearly 20 years ago). A form of stealth tax.

    "Wind is Ireland's oil" - An Taoiseach, 25/05/2022



  • Registered Users Posts: 8,130 ✭✭✭ corks finest


    Shamrock rovers


  • Closed Accounts Posts: 137 ✭✭ 5555555555


    If you are investing in crypto you might want to invest in a hardware wallet to store it.


  • Registered Users Posts: 6,026 ✭✭✭ grindle


    jmreire wrote: »
    Bitcoin era", but was this a scam? What do you Crypto experienced people think?

    100% a scam, if there were a guaranteed money making tree nobody'd invest in anything else.


  • Closed Accounts Posts: 779 ✭✭✭ Arrival


    Do not buy crypto on Revolut or anything else other than an actual exchange which allows you to withdraw the coins to your own private wallet. Revolut only offer a dividend, an IOU attached to the value of coins basically, so buying through them means you not only don't even own any of the actual coin in question but you also don't even contribute towards the overall market you're obviously hoping increases in market cap and value.

    It really isn't difficult to use an exchange like Kraken to buy coins. If you invest ~€500+ it'd be worth getting a hardware wallet (seriously don't worry about not understanding things with these, they've made every effort to make them easy to use for everyone) which aren't very expensive but if less than that using a wallet like Electrum would be fine - you should still be sure to only write your keys/seed phrases down and never store them digitally though.


  • Registered Users Posts: 447 ✭✭ iAcesHigh


    Arrival wrote: »
    Do not buy crypto on Revolut or anything else other than an actual exchange which allows you to withdraw the coins to your own private wallet. Revolut only offer a dividend, an IOU attached to the value of coins basically, so buying through them means you not only don't even own any of the actual coin in question but you also don't even contribute towards the overall market you're obviously hoping increases in market cap and value.

    It really isn't difficult to use an exchange like Kraken to buy coins. If you invest ~€500+ it'd be worth getting a hardware wallet (seriously don't worry about not understanding things with these, they've made every effort to make them easy to use for everyone) which aren't very expensive but if less than that using a wallet like Electrum would be fine - you should still be sure to only write your keys/seed phrases down and never store them digitally though.

    TBH for me this is quite a big downside and I can only imagine many would agree. The whole point of modern money problem is digital, we are using less and less cash, but still need hardware to store this new currency? Sounds a bit silly TBH... I know this is very subjective, but this is the only reason why I still didn't pull the trigger and invested some cash in it...

    I did read a bit about web wallets, but it seems these aren't really preferable nor liked, does anybody have any info on those?


  • Registered Users Posts: 10,905 ✭✭✭✭ Bob24


    iAcesHigh wrote: »
    TBH for me this is quite a big downside and I can only imagine many would agree. The whole point of modern money problem is digital, we are using less and less cash, but still need hardware to store this new currency? Sounds a bit silly TBH... I know this is very subjective, but this is the only reason why I still didn't pull the trigger and invested some cash in it...

    I did read a bit about web wallets, but it seems these aren't really preferable nor liked, does anybody have any info on those?

    You don't need it, but it is there if you want it.

    You can think of it that way:
    - you can leave your crypto on a third-party platform which is the same as depositing cash in a bank. It is convenient but your asset is not under your direct control and turns into someone else's liability; hence you are exposed to counter-party risk.
    - or you can store you crypto in a hardware wallet which is the same as storing cash under your mattress. In that way you don't have any counter-party risk, but you are now responsible for the logistics and safety aspects of storing your asset.

    I think most people will agree that if used properly a crypto hardware wallet is much more practical and safer than self-storing cash (especially for large amounts).

    So if the goal is to take direct custody of the asset crypto is more convenient than cash. And you also have the exact same option to give custody of it to someone else if you want to, so it is not taking anything away versus cash.


  • Registered Users Posts: 4,655 ✭✭✭ makeorbrake


    iAcesHigh wrote: »
    TBH for me this is quite a big downside and I can only imagine many would agree.
    We've all become accustomed to having a third party custody our wealth. With crypto, people have to try and get out of that mindset and get comfy with taking responsibility for custody'ing their own wealth.
    iAcesHigh wrote: »
    The whole point of modern money problem is digital, we are using less and less cash, but still need hardware to store this new currency? Sounds a bit silly TBH...
    If it's just to go digital, then you have no need for crypto. You can use your bank, cards and digital transfers.
    But maybe it's about things like self sovereignty relative to your wealth/money. Maybe its about privacy as cash slowly gets taken out of the equation. Maybe it's about hard money as opposed to wealth eroding national currency which robs people through incessant money printing and inflation.

    A hardware wallet can be had for less than €50 so I'm not sure what the big deal is? Even your cash needs a physical walllet. And you can use a USB stick if you prefer - for less cost although you'll have to educate yourself on how to use it correctly/securely. Some higher end phones now come with digital wallets - but they're going to set you back much more.
    iAcesHigh wrote: »
    I did read a bit about web wallets, but it seems these aren't really preferable nor liked, does anybody have any info on those?
    If the amount of crypto you are talking about can't justify the purchase of a hardware wallet, then I would say that a web wallet would be just fine. Web wallets are usually used for 'walk around money'. They could potentially be hacked but people are ok with using them for smaller amounts - so that they have access to a certain amount of crypto at all times.


  • Registered Users Posts: 447 ✭✭ iAcesHigh



    A hardware wallet can be had for less than €50 so I'm not sure what the big deal is?

    It's not about the money, but convenience. I would never have more than €20 on me so I would really prefer not to have any serious amount of bitcoin in any physical state at home. Not 3 months ago my friend was robbed and, while thief's didn't touch laptops nor expensive bike he had, they did take crypto wallet. If I got it correctly, they won't be able to use it as he had it "locked", but that doesn't change the fact he lost his money (which wasn't much so he isn't loosing too much sleep due to it).

    I kind of hoped there is similar thing to bank in crypto world, where certain third party is willing to hold on to your crypto (even for a fee) and is insuring it up to XY amount in case something goes wrong. But I suppose this goes against the core behind crypto (which is probably one of the reasons I never bought any crypto, for now)


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  • Registered Users Posts: 4,655 ✭✭✭ makeorbrake


    iAcesHigh wrote: »
    It's not about the money, but convenience. I would never have more than €20 on me so I would really prefer not to have any serious amount of bitcoin in any physical state at home.
    You can leave it on an exchange then - but that is NOT recommended.
    iAcesHigh wrote: »
    Not 3 months ago my friend was robbed and, while thief's didn't touch laptops nor expensive bike he had, they did take crypto wallet. If I got it correctly, they won't be able to use it as he had it "locked", but that doesn't change the fact he lost his money (which wasn't much so he isn't loosing too much sleep due to it).
    Glad to see the robbing and thieving community get bitcoin! ...even if they don't get/understand how to actually take possession of it.:D
    You can lose a hardware wallet or have it stolen or taken away from you. It doesn't matter. What matters is the 12 or 24 word seedphrase and private key. If you have that, then you have ownership.
    If your friend doesn't have it, then he misunderstands how to store crypto.
    iAcesHigh wrote: »
    I kind of hoped there is similar thing to bank in crypto world, where certain third party is willing to hold on to your crypto (even for a fee) and is insuring it up to XY amount in case something goes wrong. But I suppose this goes against the core behind crypto (which is probably one of the reasons I never bought any crypto, for now)
    Again, I'll say to you - if the amount of crypto you're talking about can't warrant the purchase of a €50 valued hardware wallet, then just get a web wallet and put your crypto on there.
    If the concern is not the outlay but the fear of not using the wallet correctly or storing the key correctly, then go out and buy a hardware wallet - and hold a nominal amount of crypto in there to begin with - just to get used to it. Everything is difficult until its not.


  • Registered Users Posts: 10,905 ✭✭✭✭ Bob24


    iAcesHigh wrote: »
    Not 3 months ago my friend was robbed and, while thief's didn't touch laptops nor expensive bike he had, they did take crypto wallet. If I got it correctly, they won't be able to use it as he had it "locked", but that doesn't change the fact he lost his money (which wasn't much so he isn't loosing too much sleep due to it).

    I kind of hoped there is similar thing to bank in crypto world, where certain third party is willing to hold on to your crypto (even for a fee) and is insuring it up to XY amount in case something goes wrong. But I suppose this goes against the core behind crypto (which is probably one of the reasons I never bought any crypto, for now)

    Sorry for your friend, but this is why I was careful to say that "if used properly a crypto hardware wallet is much more practical and safer than self-storing cash".

    If your friend has lost access to their crypto simply because their hardware wallet was stolen, they unfortunatly misunderstood how hardware wallets work and how to safely use them.

    As mentioned in the previous post they should have had a 12 or 24 words passphrase stored somewhere safely which would let them regain full access to their funds on a new wallet (the wallet itself doesn't store any coins, it just stores the private encryption key and makes it easy to transact with it, and the passphrase is a way to restore the key to a new wallet).

    This is why I regularly say on this forum that telling beginners to use hardware wallets without doing the educational bit on how they work is a bad idea. If used improperly they are actually not safer than depositing cryptocurrency on a reputable crypto custody service.

    So you are right that besides using a hardware wallet, people can go for some type of crypto "banks" (they actually do exist and the likes of crypto.com have secured some type of insurance cover - although there is never any absolute guarantee when giving custody to someone else, which is also true when depositing cash in a bank).

    But I deeply think that once someone gets serious about crypto and starts investing large amounts, they ought to understand how cold storage works anyway and take custody of at least part of their holdings.


  • Registered Users Posts: 447 ✭✭ iAcesHigh


    ok ok ok, you got me to it at this point :)

    Comparing Trezor and Ledger, I tend to be leaning towards Ledger S, but not sure if it's worth taking solely the device (LIKE THIS) or the 2-item pack (LIKE THIS)

    Also, am I correct in reading that none of these is actually compatible with iOS (and I would need to go with Ledger X which does support Bluetooth)?


  • Registered Users Posts: 10,905 ✭✭✭✭ Bob24


    iAcesHigh wrote: »
    ok ok ok, you got me to it at this point :)

    Comparing Trezor and Ledger, I tend to be leaning towards Ledger S, but not sure if it's worth taking solely the device (LIKE THIS) or the 2-item pack (LIKE THIS)



    Also, am I correct in reading that none of these is actually compatible with iOS (and I would need to go with Ledger X which does support Bluetooth)?

    Yes you are correct, if you want to use an iPhone to transact you would need the Ledger X (having said that you can double check but I believe that you can still install the iPhone app if you have a Ledger S and it will let you view you current balance and transactions history based on your public key - the only thing is you won’t be able to initiate transactions).

    A bit of background info related to you other question: basically as I was saying when using a hardware wallet, the wallet itself is just a convenient way to secure your private keys and transact with them. And what is of utmost importance is to be sure you have a backup of the keys in case the hardware wallet breaks or is stolen (keys can be represented as a sequence of 12 or 24 “seed words” based on a standard method which works across most brands of hardware wallets, meaning seed words provided by a Ledger wallet can for exemple be used to restore your keys to a Tezor wallet if you decide to change brand).

    Those words can simply be written on a piece of paper but it is obviously fragile. The package you are looking at includes a metal device which lets you store these words in a more durable manner (waterproof, fireproof, etc). If you are just having fun to understand how hardware wallets work it isn’t absolutely necessary and you can just write down the words on paper, but I would definitely recommend it if you are getting serious and storing large amounts.

    Also another word of warning: anyone getting access you your seed words would be able to restore you private keys to their own hardware wallet and thus to get full access to your crypto. So they should be stored in a very safe location. They are basically more important and critical than the hardware wallet itself.

    Good decision to look into this if you are planning to get serious about crypto btw ;-) Setting it up will help you better understand the concepts of wallet, private keys, and blockchain which are key to how crypto currencies work.


  • Registered Users Posts: 4,655 ✭✭✭ makeorbrake


    iAcesHigh wrote: »
    ok ok ok, you got me to it at this point :)

    That's the spirit! :cool:
    iAcesHigh wrote: »
    Also, am I correct in reading that none of these is actually compatible with iOS (and I would need to go with Ledger X which does support Bluetooth)?
    Do you really have to have compatibility with iOS? That's a shame as the Nano S is just €50. Nice slick design but anything associated with apple always seems to cost more!


  • Closed Accounts Posts: 779 ✭✭✭ Arrival


    iAcesHigh wrote: »
    It's not about the money, but convenience. I would never have more than €20 on me so I would really prefer not to have any serious amount of bitcoin in any physical state at home. Not 3 months ago my friend was robbed and, while thief's didn't touch laptops nor expensive bike he had, they did take crypto wallet. If I got it correctly, they won't be able to use it as he had it "locked", but that doesn't change the fact he lost his money (which wasn't much so he isn't loosing too much sleep due to it).

    I kind of hoped there is similar thing to bank in crypto world, where certain third party is willing to hold on to your crypto (even for a fee) and is insuring it up to XY amount in case something goes wrong. But I suppose this goes against the core behind crypto (which is probably one of the reasons I never bought any crypto, for now)

    They broke in and stole his hardware wallet? Did they take other stuff as well or just that?


  • Registered Users Posts: 447 ✭✭ iAcesHigh


    Bob24 wrote: »
    Yes you are correct, if you want to use an iPhone to transact you would need the Ledger X (having said that you can double check but I believe that you can still install the iPhone app if you have a Ledger S and it will let you view you current balance and transactions history based on your public key - the only thing is you won’t be able to initiate transactions).

    I would just like to see the value, don't need to transact directly so S might be "enough"
    Bob24 wrote: »
    Those words can simply be written on a piece of paper but it is obviously fragile. The package you are looking at includes a metal device which lets you store these words in a more durable manner (waterproof, fireproof, etc). If you are just having fun to understand how hardware wallets work it isn’t absolutely necessary and you can just write down the words on paper, but I would definitely recommend it if you are getting serious and storing large amounts.

    Also another word of warning: anyone getting access you your seed words would be able to restore you private keys to their own hardware wallet and thus to get full access to your crypto. So they should be stored in a very safe location. They are basically more important and critical than the hardware wallet itself.

    Then I feel that "writing it down" in my password manager app is much more secure than any of these two features :)
    That's the spirit! :cool:


    Do you really have to have compatibility with iOS? That's a shame as the Nano S is just €50. Nice slick design but anything associated with apple always seems to cost more!

    As per above, I would like to be able to see "value" using my phone, so if Nano S allows for that it's more than enough
    Arrival wrote: »
    They broke in and stole his hardware wallet? Did they take other stuff as well or just that?

    crypto wallets (it's shared space, so all were robbed), jewelry and cash - so staff that can't be easily tracked back to them when selling.... Thinking about it now, I would assume he backed it up meaning he might have saved his coins (I didn't talk with him about it since)


  • Registered Users Posts: 1,266 ✭✭✭ djan


    Just to add to the point that you need physical storage to own your bitcoin.

    All you need is to remember your 12 word phrase and address and you are basically good to go.

    The physical ledgers just make it easier to use.

    Regarding insurance, AFAIK coin base at least was insured in the case of any issues. Given the reputable exchanges are fully registered and compliant companies and some within EU, should also give some peace of mind.


  • Registered Users Posts: 10,905 ✭✭✭✭ Bob24


    iAcesHigh wrote: »
    Then I feel that "writing it down" in my password manager app is much more secure than any of these two features :)

    Absolutely your choice with regards to what you feel is the safest way, but usually the recommendation is that it shouldn't be stored on any electronic device as it can easily break and potentially be hacked, and particularly not on a device which connects to the internet or might transfer any data to a cloud platform (the concept of "cold storage" is that keys are not present on any device which could potentially be remotely hacked, giving absolute 100% certainty that theft isn't possible without physical access to the medium the keys are stored on).

    If you are running your password manage only on devices which don't have internet access and have a backup of the underlying data I guess the above issues wouldn't apply though.


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  • Registered Users Posts: 4,655 ✭✭✭ makeorbrake


    @iAcesHigh : Listen to Bob24. More than likely nothing would happen but you can't take that risk with digital money.

    - Your password manager could be hacked at their end
    - It could very easily be hacked at your end via whatever devices you run it on
    - When you input the keys there to begin with, who's to say that your device hasn't already got a keylogger running on it....or your machine could be compromised by clipboard malware after the fact.
    - The password manager may run a solid show in terms of security against external attacks but who's to say someone on the inside doesn't compromise your key.

    That key can never be seen by anyone.


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