You Own Some Cryptocurrency, Now What?

Five things for after contributing to an initial coin offering

Contributing to an initial coin offering (ICO) can be equally exciting and stressful. Researching projects and companies, understanding how to contribute, and potentially asking a lot of questions along the way takes time, energy and patience. But once you’ve contributed, that doesn’t mean you should just sit back and wait.

You more than likely have developed an active interest in the project you contributed to, as well as the cryptocurrency market in general. Keeping an eye on developments is key to your success and will be useful if you intend to buy and sell in the future.

Below are five things to consider after you’ve made your initial contribution.

Keep track of your portfolio

First and foremost, you should keep tabs on the project you contributed to. You may have chosen to contribute to a single ICO or you may have built a more diverse portfolio of cryptocurrencies that includes a range of altcoins and tokens focused on privacy, smart contracts or other projects.

Regardless of your situation, make sure you keep an eye on the company or companies that you are supporting. Check their website and follow the associated social media channels, paying close attention to any gains or setbacks in the development process. Don’t be shy — ask questions, keep in touch with the community and stay on top of industry news. It’s important to remember that cryptocurrency is still a relatively volatile investment, so the more educated you are and the more you engage with the industry to stay informed, the better.

Download tracking apps

With that in mind, it’s worth exploring a number of resources to simplify the tracking process. It’s helpful to find an app that tracks your profit as well as your total coin value, if possible. As this Mashable guide highlights, different apps offer a range of different features, so consider what’s important to you — for instance, being able to track multiple cryptocurrencies or having the option to customize your app with a rich variety of features. Blockfolio is one example of a popular app that is highly customizable but can be slow to add new coins. Other features to look for include alerts for when a coin reaches a certain price and data visualization. Some other useful apps: Delta, Cryptotrax and Cryptocompare.

View up-to-date market information

Of course, your initial investment is just one piece of the crypto puzzle. Understanding the value of your cryptocurrency in the wider market is essential if you intend to trade your cryptocurrency at the most opportune times — in other words, buying the dip and selling into rallies.

Coinmarketcap.com is one of the most used cryptocurrency websites for tracking capitalization of various cryptocurrencies. It is a useful way to see the market value of your investment, as well as other coins. Other sites include Onchainfx, which provides an extended range of metrics. Cryptocompare, which includes mining information, wallet reviews and a forum in addition to cryptocurrency rankings. And Coingecko, which also includes information about upcoming initial coin offerings, or ICOs.

Remember that peaks and troughs can occur on a weekly basis, so be sure to review the company as a whole — it should have a strong development team, clear vision and enthusiastic community. Unless you are extremely well educated in cryptocurrency, short trading is not advised.

Investigate trading exchanges

The country you live in may determine the exchanges you are able to access. It’s worth doing some investigation to make sure you’re joining an exchange that you can actually buy and sell from. For example, in Europe you can use Kraken or Bitcoin.de, while in the United States Coinbase is a popular exchange. Coinsquare is a well known Canadian exchange, and Asian exchanges include BTCChina. This Investopedia article explores some of the world’s most popular exchanges in further detail.

A number of exchanges, including popular ones such as Binance and Bitfinex, are looking at moving operations out of Asia to Malta (in the case of Binance) or Switzerland (Bitfinex). This is largely due to those countries being more progressive when it comes to regulating ICOs. Canada, the United States, Australia and other nations in Europe and Asia are regularly updating regulatory frameworks regarding cryptocurrency and ICOs, so you should pay attention to the regulatory environment in your jurisdiction.

Stay ahead of the taxman

On a related point, you need to stay informed about the tax implications of your ICO contribution. Again, this may differ depending on where you live and how the market is regulated, as many countries treat cryptocurrency like assets (such as real estate) rather than currency.

In the United Kingdom and the United States, for instance, if you sell your cryptocurrency for fiat (U.S dollars, Euro, British Pounds or other government-backed currency), then you are generally liable for capital gains tax, which is a tax on the profit made when an asset sold has increased in value. This tax only applies to the gain, not the entire sale, so it’s important to keep a record of the purchase value of your cryptocurrency. Likewise, any purchases made with cryptocurrency should be recorded, as this may be treated as asset disposal.

As with all financial matters, seeking professional advice is advised if you are unsure about whether you need to pay tax on your cryptocurrency.

To stay plugged in to exclusive content, upcoming updates, and the latest announcements, sign-up for our company newsletter at etherparty.com. On our official site you can also find more information on Rocket, Etherparty’s all-in-one, end-to-end solution for crypto-crowdfunding.