[Cautious end] I took a big loss on BTCFX, so I’m cooling down! And a fresh start! But China...
Hello everyone, Cool Down! I had paused trading due to big losses@xi10jun1.
Regarding BTCFX, which suffered big losses last week, I did not make any trades this week. I was on a cooling-off period.
There have been similar situations before, and this time was among the largest losses in history, so I took a somewhat longer trading hiatus.
※As with the previous time, there is an important notice for paid readers, so I would appreciate it if you could read further down.
※This column is designed so that half of it is free to read, a salt of conscience. Of course, if you read up to the paid portion (updated weekly, 400 yen per month, so about 80–100 yen per article), it would be a huge encouragement!
Performance for this week (Sept 15–Sept 21, 2017)
First, as usual, the performance. I will announce the changes first.
- Last week (until Sept 14, 2017) assets: 102,346 yen
- This week (until Sept 21, 2017) assets: 102,346 yen
- Change: 0 yen
Yes. I did not trade. Staying the same as last week. Also, bitFlyer is acting up, and I can’t display the trading history. Please understand.
I have not looked at charts either. It seems there was a large rebound, but I think I would have lost even more if I had continued as before. By my personality.
And since I’ve regained my mental and physical outlook, I will start trading from today.
So, regarding this week's column, since there appears to have been a DDoS attack on bitFlyer up until yesterday, I will write about that.
Do not underestimate the risk of DDoS attacks
DDoS attacks are DoS attacks (overloading a target service on the network to disrupt it) launched using many machines.
The DDoS attack that occurred around Sept 21 targeted not only cryptocurrency exchanges but also FX businesses such as Gaitame FX, Money Partners, and Toyo Securities.
When such attacks occur, trading becomes impossible (orders don’t go through), and you cannot access sites or tools.
Moreover, hackers may slip in amid DDoS attacks to steal bitcoins. This has been reported at exchanges around the world.
So what happens if this occurs during trading?
Firstly, orders won’t go through, charts and order books will freeze, and access will be blocked, which is easy to imagine.
And once it recovers, it’s easy to foresee huge losses from a flood of sell orders caused by the DDoS attack…, if kept going as before, I think I would incur greater losses.
Originally, cryptocurrency exchanges are prone to hacker attacks, and every year some exchange goes down due to a cyber attack, with cryptocurrency stolen.
While storing in a hardware wallet can provide defense, cryptocurrency itself exists on the network, so it is difficult to implement offline physical security like a bank vault.
Also, cyber attacks like DDoS can be carried out repeatedly, in extreme terms. Therefore, we must recognize the ongoing risk of such attacks.
Free summary: you cannot reduce risk to zero
Ultimately, whether holding cryptocurrency or trading it, it is impossible to reduce risk to zero.
There was talk of keeping it in a hardware wallet, but if you lose the hardware wallet, that’s the end too.
DDoS attacks do not occur all the time, but such things come when you least expect, so I’d like to keep that in mind while trading.
And this paid column will discuss future prospects going forward.
Paid column policy
Recently, I received from fx-on a notice regarding “Possibility of personal information leakage due to unauthorized access.” Consequently, credit card payments may be unavailable, making paid portions of the column inaccessible.
Therefore, for paid subscribers who use credit card payments, I would appreciate it if you could purchase via convenience store payment or bank transfer.
Thank you for your understanding.
Endnote Corner 1: Latest tax information!
The National Tax Agency’s site has updated the latest legal views on Bitcoin.
That is here →No.1524 Taxation relationships when profit is generated by using Bitcoin | Income Tax | National Tax Agency
According to this, profits earned from using Bitcoin are regarded as “miscellaneous income.”
So, for me, profits from margin trading are generally miscellaneous income. As I’ve noted in the endnote corner before, as per my blog post (→Tax declaration for Bitcoin margin trading (BTCFX)! Total taxation of miscellaneous income? Separate taxation? | The Investor Jun of the Yutori generation), but it seems netting losses against gains isn’t possible. It would have been better if there were some relief….
Also, according to NewsPicks comments by bitFlyer President and CEO Hiroo Kano (No.1524 Taxation relationships when profit is generated by using Bitcoin - NewsPicks), if you buy Bitcoin for 100,000 yen and use it to buy something worth 500,000 yen, the 400,000 yen difference is recognized as profit.
When you use Bitcoin to pay for goods or services, if the price of Bitcoin at the time of purchase is higher than at the time of its purchase, that difference is recognized as profit. So, when you shop with Bitcoin on FANCY, this also applies, so please be careful.
※As laws and tax interpretations continue to change, the methods of filing tax returns and paying taxes may change. Before filing, be sure to check with your local tax office or a tax professional.
Endnote Corner 2: Shop with Bitcoin!
Actually, on the overseas e-commerce site FANCY, you can buy goods using Bitcoin! It costs a bit for shipping, but there are stylish items you won’t see in Japan.
Reference how to use FANCY is summarized in this blog, so please check it out.
- →Explaining FANCY (Fancy) account creation, registration, settings, and the flow of purchasing items | The Investor Jun of the Yutori generation
- →How to purchase (settle) FANCY items with Bitcoin | The Investor Jun of the Yutori generation
※Free portion ends here. The rest is detailed analysis and future prospects, so it is paid. If you want to read more, or even as a tip, subscribing would be greatly appreciated! Thank you for your continued support!
