Own Bitcoin in your ROTH IRA – Step by Step – Updated

Own Bitcoin in your ROTH IRA – Step by Step – Updated

Note: When I first made this article in 2018, it was full of fun little anecdotal SNAFUs, so that you could follow along and experience my travails vicariously, in an orgy of schadenfreude. But a lot has changed in the last four years, and I’ve updated the article to be much more streamlined.  I’ve tried to keep the original whimsy in the introduction…

So you’re convinced.  Bitcoin and cryptocurrency are the wave of the future (or at least you hope to make a fortune trading the swings), but the new tax law that you’re supposed to calculate your gain and pay taxes on every trade is cramping your style.  Well, you could avoid paying taxes if you owned and traded the cryptocurrency inside of a tax deferred retirement account (or better yet, a Roth IRA so you never pay taxes on the gains).

But doing so is a bit complicated.  For years I had heard of “self directed” IRAs that allowed you to invest in real estate (but my IRA didn’t have enough money to do that).  Later on, I learned about how you could invest in gold  through an IRA or the IRA could even start its own LLC that you manage (also known as a checkbook IRA).   But I never had a reason to want to do so.

Enter Cryptocurrency.  No matter whether you’re HODLing, trading, or running masternodes, the potential upside is enormous, and you don’t need a huge amount of money to get started.  Now there’s a reason to put that arcane knowledge to use.  What follows below are the things I’ve learned by doing this process myself.

Overview of the IRA/LLC process

  1. First you’ll need a self directed IRA with a trust company that allows IRA/LLCs also known as checkbook IRAs.  So find one with minimal fees that you trust, and open an account.
  2. Find an attorney who specializes in this sort of thing to create your LLC.
  3. Once your LLC is created you need
    1. Request a bank check sent to your house from the IRA in your LLCs name
    2. Open a bank account in your LLCs name.
  4. Open an a corporate account for the LLC on a crypto exchange.
  5. Wire the money from the bank account to Gdax.
  6. Trade your heart out.

It doesn’t sound that hard, but it will likely take you several weeks to make it all the way through the process.  I’ve tried to help you make it as streamlined as possible

Step 1: The first step is to open a self directed IRA

You’ll need to open a self directed IRA with a custodian that allows IRA/LLCs.  My personal preferences are:

  1. Custodian has an online sign up (I HATE paper forms)
  2. Low fees
  3. Allows you to pay maintenance fees with a credit card

Due to anti-kickback laws, no professional you deal with can “recommend” a service to you.  So if you already selected an attorney, they can’t recommend an IRA custodian, and vice versa.  But perhaps if you worded your question in the form of “which companies are the easiest to work with?” they might be able to answer.

Back in 2018, Based on these two criteria, I originally selected Kingdom Trust, updated fee schedule it looks like they eliminated the IRA/LLC option, and the regular self directed IRA option has a percent of portfolio based fee, which simply doesn’t work for me.  So I ended up going with IRA Trust Services, which underwent a name change (and acquisition?) to ForgeTrust.

Fast forward to 2022, and I chose DirectedIRA.  Slightly lower fees, and they can actually handle the LLC formation and be your registered agent, so they can be a one stop shop.  Directed IRA is Mat Sorensen’s company (the attorney whose video above got me into this whole thing in the first place.

They’re pretty much all going to charge an annual (or more often) maintenance fee, check fee, wire fee.  They often charge per “asset” within the IRA, but the only asset should be the LLC you’re going to form.

Action steps:

  • Fill out the Application for new account form
  • You need to fund the account in some way.  Ideally a large chunk, like say $5000 or more, but whatever you can do that they will accept will work.  You can also transfer assets from an existing IRA/Roth IRA.  You can also rollover your 401k if you leave your job.

Step 2: Have an attorney form your LLC

You can begin this step while you’re waiting for the IRA to fund.  I consulted with two attorneys (Mat Sorensen and Nick Spradlin).  I ended up going with Nick Spradlin mainly for the lower price and because he has offices in Florida.  This step took about two weeks.

You WILL need a Tax Id number for your LLC, so it’s easier to pay the attorney to file it for you than for you to do it yourself (IMO).  It’s also easiest to name your LLC: FirstName LastName IRA LLC.  That way when you go to the bank, they immediately see the relationship.  You can also pay for a DBA (doing business as fictitious name) but I didn’t opt to.  I highly recommend using an “e-book” rather than a traditional printed binder.

You can also pay for the attorney to be your registered agent within the state of registration (which should be your state of residence).  This makes a lot of sense when you’re investing in real estate and there may be legal issues with subcontractors or tenants, but I’m not sure it’s such a great deal if you’re just buying Bitcoin.  (Update: the major reason to do this is that if you are the registered agent, and you use your home address, then it’s going to show up in public records.)

It’s absolutely imperative that this be set up correctly, so use an attorney that specializes in IRALLCs, and not just any ole attorney or LegalZoom.

A couple weeks later you’ll get an e-mail with several things.

  • Articles of Incorporation where the attorney filed your LLC with the State
  • An LLC seal
  • An LLC membership certificate
  • Your Tax ID number
  • And your LLC Operating Agreement, Minutes, and Ledger

Step 2b: What do you do with all this LLC stuff?

  1. First you need apply your company seal to the Membership Certificate.  There are instructions on how to do it using Adobe Acrobat.
  2. Then print out the Certificate and sign it.
  3. Print the signature pages from the Operating Agreement and Minutes and sign them.  Scan everything back together and assemble the documents into one big file. (Or print them all and then just scan them together.)
  4. Send them all to your IRA Custodian (see Step 3 below)

Step 3: Tell your IRA Custodian to invest in your IRA/LLC

This will likely involve several forms.  You’ll need to to fill out an LLC agreement form where you tell them the name of the LLC and provide all of the documents above, and then an Investment Authorization “Kit” (series of forms) authorizing the IRA Custodian to “invest” (send money) to the LLC.  This means that you’re going to have a bank account in the LLCs name.  For some odd reason, neither of the self-directed custodians would allow me to simply wire money to an exchange.  They required that I wire the money to a bank account first, and then send the money from the bank account to the exchange.

Now…good luck finding a local bank that will open a business account for your IRALLC.  They want to know things like what is the nature of the business?  How many customers do you have?  What demographics do they have? What is your average revenue per month?  How much do you anticipate in monthly cash deposits?   Uh…It’s a business where I’m going to open the account, send the funds to an exchange, and just keep the minimum balance required to keep the account open.  I have no customers and no revenue…

Apparently, even more traditional businesses held in IRALLCs run into this problem.  I’ve discovered there are a few banks that cater to the IRALLC market.  Solera National Bank is very IRALLC friendly, has no minimum balance requirement, and no monthly maintenance fees.  They were very easy to work with, and I recommend trying them based on my experience.  You’ll need to answer some questions about the business and send them all your LLC documents, and then wait for it to be approved.  This took about a week, (after thrashing around looking for a bank that would take my money), so start your bank account as soon as you get your LLC docs.

Bank Secrecy Act (Currency and Foreign Transactions Reporting Act)

As part of opening the bank account, they’ll ask you a series of questions required by the Secrecy in Banking act.  One of them includes whether you are creating or exchanging virtual or digital currency.  To the best of my reading, the answer is no.  (If you answer yes, they won’t let you open the account by the way.)  DISCLAIMER: I am not an attorney, nor do I play one on TV, nor did I sleep in a Holiday Inn last night.  This is not advice nor a legal opinion.  The best that I can see is that if you’re in the business of exchanging (like Bittrex or Coinbase) or you’re going to be creating a cryptocurrency (like Ripple) then you probably should say yes.  But if you’re just buying, holding, and selling cryptocurrency, you should be okay saying no.

Step 4: Open a Corporate Crypto Exchange Account

This is actually one of the hardest steps.  BinanceUS and Coinbase are both incredibly obtuse.  First they will ignore your application for two to three weeks.  Then they’ll ask for more information and ask a huge number of questions that you’ve already answered.  They can’t seem to figure out that the source of funds is your own personal IRA money.  They seem to think that you’re going to be soliciting other people’s retirement accounts. Honestly, I wouldn’t even try.

Uphold was relatively easy to set up, but their fees are insanely high, and a lot of the crypto can’t be sent anywhere.  And then a week later, they told me they were going to suspend my account if I didn’t send them more information that I had already sent them twice.  0/10, would not recommend.

That leaves Gemini and Kraken.  Kraken approved me so fast that I never even completed Gemini’s application process.  Now I hate Kraken’s interface.  It’s even worse than Coinbase (I still don’t understand why they killed Coinbase Pro.)  Kraken also doesn’t allow ACH transfers.  You’ll have to wire the money.  BUT that’s a small price to pay for actually having a working, bona fide corporate account.

Final words

Be very careful NOT to engage in any prohibited transactions.  If you’re audited (the IRS says that it’s targeting IRA/LLCs), your IRA could lose IRA status forever.

The IRA will need to pay an annual registration fee with the state you incorporated in, so save some money for that.

You’ll also need to reserve some money for the IRA account fees, and Bank account fees (or maintain the minimum balance to avoid the fees).

You’ll need to provide an annual valuation of your LLC to the custodian that is prepared by a qualified third party (i.e., NOT you or a direct relative).

Overall the process is not that hard, but if you don’t know what to expect or what the right words are, it’s easy to feel stupid and lost.

Dealing with Nick Spradlin was very easy and quick despite my not paying for the expedited service.  I’m not sure if he works in all states, but I know he advertises in Florida and Texas.

Masternode and ZenCash SecureNode SuperNode Setup Service (Outdated)

Masternode and ZenCash SecureNode SuperNode Setup Service (Outdated)

Outdated Article

I no longer consider Masternodes to be a good investment. Most of them are scams or the return is just too small. So unless you want the governance involved with a masternode project, I’d stay away from them altogether. I no longer host any masternodes except for Horizen Supernodes and Securenodes for a very select clientele. For the most part, if you want to host a masternode, you should use an automated service like Allnodes. The information on this page is kept just as legacy information.

The average person looking for returns is FAR better off using Defi or simply staking their coins than using masternodes. I am currently working on a Defi introduction and tutorial and will update this page once that is done.

Masternodes 2018-2020…Legacy information (Outdated)

0

Masternodes are incredibly popular right now.  There has been an explosion in the number of masternode projects, and a kind of nuclear arms race to attract new buyers with high ROI.  Many of the new coins start out with 1000% ROI or higher.  This means that you could get your initial investment back within 2 months (if the price holds).

But setting up a masternode often requires a bit of Linux know how.  The most popular set up is called a “cold wallet” where the coins that are kept as collateral live in your desktop wallet (preferably encrypted).  Then a Linux Virtual Private Server (VPS) is set up that connects to the collateral and provide 24/7 masternode status regardless of whether your local wallet is open or connected to the internet.

Most of the masternode coins provide instructions on how to set up your Linux VPS. If you’re reasonably good at following directions, AND the guide is set up well, then it’s not too hard to figure it out yourself.  However, many of the newer coins have incredibly bad guides.

  • They skip steps.
  • There are spaces where there shouldn’t be, and no spaces where there should be.
  • Commands that belong on one line are split, and commands that should be two separate commands are joined together.
  • Sometimes commands are missing altogether.

Some of the projects have nifty install scripts, so all you have to do is download an install file and run it.  Qbic is an example of this, however, the script doesn’t fully work, and will leave you with a broken installation.

That’s where I come in.  I’ve installed more than 30 masternodes from more than a dozen different coins.  My first client had been trying to set up his Goa masternode unsuccsesfully for 6 days.  He was losing $225 a day!!!

Here are the services I provide:

In addition to setting up the Masternode VPS, I also walk you through the process of setting up your local wallet and troubleshooting any issues that come up.

All prices are quoted in USD and payable in LTC, ETH, or BTC at the current market rate.

Masternode (setup only)

  • You supply the VPS
  • Cost is $75 per coin
  • Discount of $25 per coin if ordering multiple at the same time.
  • One week of troubleshooting is included.
  • I will show you how to maintain the VPS and update the server.

Masternode hosting (setup and 1 year of hosting)

  • Setup costs are the same as above (same as above)
  • One year of VPS hosting and server updates is $140
  • Note, if you host multiple coins with me, you may be able to host 3-4 coins on the same VPS.  The fee to host an additional coin on the same VPS is $60.
  • Subscriptions are renewable

Discount example 1: Masternode hosting for 2 coins on the same VPS

  • Setup costs $50 x 2 = 100
  • Hosting cost $140 + $60 = 200

Discount example 2: Masternode hosting for 3 coins on the same VPS

  • Setup costs $50 x 3 = 150
  • Hosting cost $140 + $60 + 60 = 260

HoriZen (formerly ZenCash) Super/Secure Nodes

Horizen (formerly ZenCash) is my favorite masternode type project.  It is an incentive-driven application platform with optional zk-SNARK based privacy features that aims to provide everyone with complete control of their digital footprint. Launched in May 2017 (no ICO and no pre-mine), the platform is said to enable real-life use cases beyond the ZEN currency, including the ability to privately chat with others, publish information and go anywhere on the web with complete privacy.

As of Fall 2019, the team is reportedly working towards releasing the Horizen SDK which would allow developers and enterprises to build what they call “an unbounded set of applications, products and services on top of the Horizen technology platform which is a truly decentralized side-chain based system powered by Horizen’s globally distributed multi-tier node network.”

Horizen Secureand Supernodes  Nodes are quite a bit more involved than Masternodes both in set up and VPS requirements.

  • If you supply the VPS
  • Cost is $100 per Secure Node
  • One week of troubleshooting is included.
  • I will show you how to maintain the VPS and update the server.

HoriZen Secure Node hosting (setup and 1 year of hosting)

  • SuperNode: One year of VPS hosting and server updates is $232
  • SecureNode: Due to automation and economies of scale, I can offer Secure Node hosting including set up and maintenance for $60 per node.  (Yes I know this is less than set up only.  It’s a shook up crazy world.
  • Super/Secure Nodes cannot share a VPS with another coin.
  • Subscriptions are renewable

 Frequently asked questions


What servers do you use?

I generally use OVH.com servers.  Their VPS SSD 1 for masternodes and VPS SSD2 for secure nodes.  I use Contabo for Super Nodes.

Will my coins be safe?

The coins will always remain in your local wallet.  HOWEVER,  I recommend that

  • As soon as you receive the coins that you make a back up of your wallet.
  • Store the back up in a safe place (from theft, fire, and water)
  • Encrypt your wallet and DON’T lose the password.

It’s far more likely that you lose your coins due to negligence or your computer crashing than to being hacked. Please, for the love of God, back up your wallet and don’t lose the password.

How long have you been doing this?

I set up my first mastenode coin for myself and on December 28, 2017 and set up my first client a few days later. I have been using Linux since 2003. I have been running Linux VPSes since 2011.

What happens if you decide to quit this business?

If I decide to stop providing this service,

  • All hosted clients will receive their full year’s subscription.
  • OVH allows transfer of a VPS to another account.  A month before the expiration, I will help migrate all client VPS to their own accounts.
How do we get started?

If you haven’t filled out the sign up form yet, that’s a great place to start Once we’ve talked/chatted and both agree to the work to be done, then I’ll need

  • Your payment and the txID (so I credit the right person)
  • Your masternodeprivkey (In your local wallet, go to Debug Console and type “masternode genkey”
  • If you’re providing the VPS, I’ll need the IP address and root password.
What's involved on my (the client's) end?

You’ll need to

  1. Buy the coins
  2. Transfer them to your local wallet.
  3. Create a new address and send the EXACT amount of collateral to the wallet.
  4. Wait for at least one confirmation
  5. Go to the Debug console in the wallet.
  6. Type “masternode genkey”
  7. Type “masternode outputs”
  8. Copy all of the codes generated and save them in a text file.
  9. I will walk you though what to do with them.
What's the difference between a Zencash Securenode and a Masternode?

Masternodes mostly speed up network transactions and sometimes vote on the direction of the project.  Secure nodes receive daily challenges where they receive and send a shielded (private) transaction each day.  This provides the network with thousands of private transactions making it much harder to track.  A secure node needs needs more memory than the typical masternode needs in order to run the challenges.  There is also a performance aspect to secure nodes and super nodes, in that the node must complete the challenge under a time limit. 

Secure nodes and Super Nodes are also paid differently than a masternode.  Masternodes are paid (usually) from a lottery system based on a list of all masternodes running at a given time.  Once a masternode has received its rewards, it goes to the bottom of the list.  Horizen nodes are based on daily uptime.  A nodes that is up for ~93% of the day is paid for that day.  Payments are manually reviewed and paid out once a week.

Additional Horizen Resources:
Horizen Website – https://horizen.global
Horizen Academy – https://academy.horizen.global/
Horizen Discord – https://discord.gg/SuaMBTb
Horizen Blog – https://blog.horizen.global
Horizen Github – https://github.com/ZencashOfficial
Horizen Forum – https://forum.horizen.global/
Horizen Twitter – https://twitter.com/horizenglobal
Horizen Telegram –https://t.me/horizencommunity
Horizen on Bitcointalk – https://bitcointalk.org/index.php?topic=2047435.0
Horizen YouTube Channel – https://www.youtube.com/c/Horizen/
Horizen Facebook Page – https://www.facebook.com/horizenglobal/

What is the best way to get in touch with you?

Telegram and Discord are probably the best ways to get in touch with me. My username on Telegram is @patrokov. I have a Discord Server for the Masternode Service.  My username is patrokov#7056.  If you can’t start a DM with me in Discord, it’s most likely because we are not on the same servers. I can also Skype (same username) but Skype doesn’t alert me when I get a message, so it’s better to use a different method unless we pre-arrange a meeting or chat. E-mail also works.  You can fill out the form below, and I will get in touch with you. 

When do you do this work?

I mostly do the work in the evenings after work and on weekends.

How to Secure a Masternode VPS

Now that I’ve helped several people with their masternodes, I’ve noticed that many people are just copying and pasting the commands from an online setup guide.  Unfortunately, a lot of the guides gloss over important things like server security.  The video below shows how to secure a Linux VPS.  All of the commands in the video are found below it, so you can just copy and paste them…ironic isn’t it?

Steps in Securing a Linux VPS for a masternode

As root on the VPS:

adduser crypto
usermod -aG sudo crypto
su – crypto
sudo apt-get update

now back on your computer
Mac or Linux

ssh-copy-id crypto@ip.address

#Windows
#copy the contents of id_pub.ppk
#paste it into .ssh/authorized_keys on the vps

mkdir .ssh
nano .ssh/authorized_keys
chmod 660 .ssh/authorized_keys

Now test your new keys
Leave the first putty window open
Open a NEW session and choose your private key from the auth
Save the session
Did it work? Yay!!!

Now let’s disable password and root logins:
you could sudo nano /etc/ssh/sshd_config
but that’s not cool. Let’s do it with sed!

sudo sed -i ‘s/PasswordAuthentication yes/PasswordAuthentication no/’ /etc/ssh/sshd_config
sudo sed -i ‘s/PermitRootLogin yes/PermitRootLogin no/’ /etc/ssh/sshd_config

#restart ssh server

sudo service sshd restart

Now test your settings
Open a new session and try to log in with root@ip.address
It shouldn’t let you
Now try to login as your username without using the key, and it shouldn’t let you.

You’re half way there, livin on a prayer!!

Now let’s install a simple firewall
We’ll lock down all the ports except the one needed by SSH and your coin (this will change depending on your coin).
We’ll limit the number of SSH connections to help prevent brute force attacks

sudo apt-get install ufw -y
sudo ufw allow ssh/tcp
sudo ufw limit ssh/tcp
sudo ufw allow 9999/tcp #replace the number with the port of your coin
sudo ufw allow 8888/tcp #you can open additonal ports if running more coins
sudo ufw logging on
sudo ufw enable
sudo ufw status

And now let’s install fail2ban

sudo apt -y install fail2ban
sudo systemctl enable fail2ban
sudo systemctl start fail2ban

Cryptocurrency Investment and Speculation Primer – Part 1

Okay, you’ve decided to take the big plunge and invest (or speculate) in the wild world of cryptocurrencies.  The potential rewards are overwhelming but so are  the choices.  In this article, I’ll be covering the major strategies (as I see them) and what is involved.  In part 2, I’ll be going over some specifics of how to implement some of the strategies below.  Note: Mining is not included in this article as I touched on it in my Beginner’s Guide to Cryptocurrency.

Motivation and Goals

The first question to answer is what is your motivation and what are your goals?  Are you just looking to earn a little extra or are you trying to save up to put your kids through school?  Your individual situation will influence which strategy might be best to take.

The FOMO is real

In case you’re not up on your internet lingo, FOMO stands for Fear of Missing Out.  Although FOMO might have its place (for example motivating you to learn about this stuff in the first place), if you make your investment and speculations based on FOMO, then you’re going to sell low and buy high and lose your shirt.  Sometimes it’s better to just hold and wait for another opportunity.

Satoshis or Dollars or Something else?

Is your goal to accumulate satoshis (1 millionth of a bitcoin) or dollars.  Trying to do both at the same time may lead to compromises that result in neither.  Satoshi gatherers usually have a longer term view thinking that eventually cryptocurrencies will become a viable (if not dominant) way of buying goods and services.  Dollar accumulators want the value of their investment to be worth more dollars even if it costs them satoshi value in the short term.  Decide on a goal up front.

Strategy 1: The HODL

This comes from a famous misspelled forum post from back in 2013 that reads in part, “I AM HODLING. I type d that tyitle twice because I knew it was wrong the first time.  Still wrong.  w/e.  BTC crashing WHY AM I HOLDING? I’LL TELL YOU WHY.  It’s because I’m a bad trader and I KNOW I’M A BAD TRADER.”

The strategy is pretty simple.  It’s basically Jeremy Siegel Stocks for the Long Run applied to cryptocurrencies.  Choose a selection of crytpocurrencies that you think may have a future, and HODL them for all you’re worth through thick and thin.  You probably want  to hold some mainstream (Bitcoin, Litecoin, Dash, etc.) as well as some newer, cheaper, up-and-coming alt-coins.

This strategy probably the best one for people with limited time and tolerance for anxiety.  Once you buy, don’t look at the price on a weekly, daily, hourly basis.  Just check once a year.  This strategy is also best for a longer time horizon.

Strategy 2: Sleep at night speculation

This is similar to the HODL strategy except that whenever a coin doubles whatever you put into it, you withdraw half and put it into another potential up and coming alt-coin. As an example, let’s say you buy 100,000 PurplePill coin for the equivalent of $0.001 (total of $100). The price of PurplePill goes to $0.002, now your PurplePill is worth $200.  Sell $100 of it and use it to buy another new alt-coin.

If the PurplePill becomes worthless, you still have $100 in the new alt-coin.  If the price of PurplePill goes up to $0.1, then your initial $100 is now worth $5000.

But if you hadn’t sold, then it would be worth $10,000!!! This strategy sucks!!!

The FOMO is real.  Yes, you halved your potential profit, but you also preserved your original capital, and own a new alt-coin that might do just as well.

This has a couple of benefits over the HODL.

  1. Over time your portfolio will become highly diversified.
  2. This will limit your potential for catastrophic loss
  3. AND put you in a position where you own lots of alt-coins which may one day breakout and make you “instantly” rich after you held them for however many years.

Strategy 3: Day trading

Just like it sounds, this involves frequent trading in and out of various alt-coins.  People who do this are usually skilled in the dark art of Technical Analysis.  It doesn’t take a huge effort to learn how, but boy can you lose your shirt fast if you don’t know what you’re doing.  You can combine this with Strategy 2 to provide a short term and long term combined strategy.

Strategy 4: Masternode investing/speculating

Dash was the first coin to implement masternodes.  These are computers that hold a large number of coin (1000 in Dash’s case) and are used to verify and speed transactions.  In return, masternodes receive “interest” in the form of new coins. As of this writing, a Dash masternode receives about 200 new Dash each year, representing a 20% annual return on the initial investment.

Sounds like an awesome deal right?  Plus if the price of Dash rises, the value of both your masternode and its interest rises.  Unfortunately, at the current price of Dash, a masternode will set you back a cool million dollars.  If you had bought your masternode just 12 months earlier, it would only have cost you $12,000.

This is the closest to true value investing (IMO) because you get an income as well as a speculative assest (even if you’re being paid in said speculative asset).

So the key is to look for solid up and coming coins that have the potential to go up in value.  Good luck.

As a more speculative play, you can look for brand new coins that often pay out more than a 1000% interest.  These will pay back the original cost of the coins within 15-40 days.  So if the price can hold out for one month, you’ll have your initial investment back plus a masternode in that coin.  Keep it or cash out and repeat.

Do this strategy over and over with various new coins.  After 1 year of this, you’ll have 6-10 masternodes providing an interest return in that many new coins.  Now if just one of them doubles or quintuples in value…. well, you get the idea.

Personally this is my favorite strategy.  It does take a little server administration know how to set up a masternode, but you can learn it or outsource it fairly easily.

Warning!! Danger Will Robinson!!!

NEVER NEVER NEVER put your coin in a wallet on the masternode.  Never give anyone the private keys to your wallet.  Your wallet should reside on your own computer, and the masternode just references the wallet.  People have been scammed out of their coin by people they hired to set up their masternode.  Don’t fall prey to it.

Bonus: How to evaluate a cryptocurrency

No matter which strategy you adopt, you need to be able to analyze a potential alt-coin investment.  Here is a handy checklist that you can use to evaluate the worthiness of a potential investment/speculation.

What are the coins fundamentals?

  • What problem is coin or project trying to solve?  How is their approach different?
  • Does the project have a compelling story?
  • Who is on the team? A 30 person team with experience is more credible than a project of 2 people with no experience.
  • Who is the leader of the team.
  • What partnerships does the project have in place?  It’s one thing to claim a future benefit to…someone.  It’s another thing to have a client signed up in advance.
  • What is the community response to the project?
  • How much capital is backing the project?  Technology is wonderful but without capital to back it up, there’s no there there.
  • Are there any anticipated events (such as the CEO being featured on a cable news show)?

Technical aspects

  • What exchanges is the coin listed on?  This can dramatically affect the ability of the someone to acquire the coin.
  • What is the volume of trading?  Be very very wary of purchasing coins with low volume.  You might not be able to sell it at any price.
  • What is the price history
  • If you do technical analysis, feel free to do so.