How to Invest in

Cryptocurrency
W I T H E A S E A N D SE CU RITY
 Table of Contents
Introduction .................................................................................................................................................. 1

Chapter 1:
Bitcoin Investing (and Other Cryptocurrencies to Know)............................................................ 5

Chapter 2:
Buying and Selling Digital Currency.................................................................................................... 10

Chapter 3:
Cryptocurrency Risks and Volatility...................................................................................................... 14

Chapter 4:
How to Make Money With Cryptocurrency (and Stay Tax Compliant)................................... 17

Chapter 5:
Crypto for Business.................................................................................................................................... 21

Chapter 6:
Digital Asset & Cryptocurrency Banking: How Vast Bank Helps.............................................. 24
Introduction
You’ve probably heard about cryptocurrency in the news, or
from a friend who’s been an early adopter of this new asset.
Put simply, cryptocurrency is gaining steam as a lucrative — yet
volatile — investment for those with an eye for opportunity.

In fact, many find the concept of cryptocurrency to be

complicated or downright confusing. That’s not surprising,
considering the crypto industry is based upon a complex web
of financial, mathematical, and computational foundations.

To help you invest safely and confidently, this guide will

serve as both a beginner-friendly overview and a functional
handbook on how to invest in cryptocurrency. Keep in mind
that this information and recommendations contained herein is
compiled from sources deemed reliable but is not represented
to be accurate or complete. In providing this information,
neither Vast Bank, N.A. nor its affiliates are acting as your agent
or is offering any tax, accounting, investment or legal advice.

Let’s get started.

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What is cryptocurrency?
Cryptocurrency is a digital currency, meaning it is a medium of exchange that can be used to purchase goods
and services.

Unlike traditional currency, there is no governmental body or institution which oversees cryptocurrency. Instead,
a universal ledger records the existence and value of each unit of currency. The ledger uses cryptography
(encoding and decoding) to secure transactions.

The lack of centralized authority allows for greater freedoms. For example, cryptocurrency can be sent anywhere
in the world for a much lower transactional fee than that charged by traditional institutions for exchanges
and transfers. It’s also more prone to have drastic fluctuations in value, making cryptocurrency investment a
tantalizing opportunity for those looking to turn a profit.

There are thousands of different kinds of cryptocurrencies being exchanged publicly, at a variety of different
valuations. The top cryptocurrency, Bitcoin, had a value of $40,300 per unit in August 2021. However, the third
most common cryptocurrency (Tether) could be purchased for $1/unit at that time.

Many individual businesses have begun to issue their own cryptocurrency, usually referred to as “tokens,” that
can be used to purchase goods or services from that business exclusively. You can think of them like arcade
tokens—you’ll need to use traditional currency to purchase the cryptocurrency.

In total, cryptocurrencies are valued at over

$1.5 trillion globally.

How does cryptocurrency work?

Cryptocurrency is based on a technology called blockchain. Blockchain makes it possible to create records and
conduct transactions securely without relying on a governing authority like a bank. Using blockchain, it’s very
difficult to alter or hack important financial data.

The backbone of blockchain investment is made up of peer-to-peer networks. You may have heard the term
“bitcoin mining.” Bitcoin mining requires specialized equipment and significant amounts of electricity to
perform sophisticated computing operations. Here’s how it works:

Bitcoin miners use mining hardware called “application-specific integrated circuits,” or ASICs, along with Bitcoin
software to verify one megabyte of transactions. To add this block of transactions to the blockchain, Bitcoin
miners need to solve an intricate computational math problem. ASICs require massive electricity consumption
that is not accessible by the average person.

The miner’s goal is to deliver a 64-digit hexadecimal number called a “hash” that is less than or equal to the
target hash. Transactions are run through a hashing algorithm to create a hash that represents the associated
data.

After the correct hash is generated, it is used to verify the data before it is added to the blockchain. Once
validated, the block is “chained” to all the previous transactions in the ledger, hence the name blockchain.

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Is cryptocurrency a good investment?
Cryptocurrency has seen successes and limitations since it rose to prominence in the 2010s. Let’s look at the pros
and cons of this system of blockchain technology.

PROS OF CRYPTOCURRENCY: CONS OF CRYPTOCURRENCY:

Lack of intermediaries means no interference from The markets for various types of cryptocurrency are
any one authority, lower costs for transactions, and subject to volatility. Bitcoin, for example, has seen
24/7 accessibility. This also means that countries with values rise to $65,000 then crash to half that figure
a high level of corruption can access and use currency within just a few months.
that bypasses the corrupt institutions.

Transactions are transparent, meaning anyone can The privacy and anonymity of cryptocurrency
see what’s occurring on the ledger, but completely have attracted criminal organizations who have
private and anonymous for the actual owners of the generated illicit business transactions and targeted
cryptocurrency. cryptocurrency investors with high-level scams.

Because all transactions are computer-based and Cryptocurrency is not universally used and accepted.
peer-reviewed, there is a very low risk of inaccuracies For example, $100,000 in bitcoin doesn’t have the
and security breaches. same purchasing power as $100,000 in USD. However,
blockchain technology is growing quickly in popularity
and useability.

Should I invest in cryptocurrency?

Like any other investment opportunity, whether investing in cryptocurrency is a good idea for you depends
on your specific situation. Here are a few things to consider as you ask yourself, is cryptocurrency a good
investment?

• THE MARKET IS VOLATILE

Cryptocurrency is high risk, high reward, and often… high stress. As prices rise and dip, it becomes clear
that this may not be the best route for long-term savings, such as your retirement plan.

• PREDICTIONS ARE HARD TO MAKE FOR THIS NEW INDUSTRY

Whereas financial patterns are often predictable and based on the past performance of traditional currency,
blockchain technology is a new arrival. That makes it hard for the experts to understand and predict
possible cause-and-effect relationships between cryptocurrency and the world around us.

• THERE IS NO REGULATION AND FRAUD IS RAMPANT

Insured, reliable intermediaries protect most of our traditional assets. Examples of this are fraud protection
on your credit card, or FDIC insurance that prevents your bank from losing your savings.
Cryptocurrency has no such protections. Every crypto investment, trade, or third-party interaction opens
your entire digital wallet up to predatory behavior.

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 • CRYPTOCURRENCY SHOULD BE PART OF A GREATER ASSET GROWTH PLAN
At this time, cryptocurrency is an exciting investment opportunity to supplement a traditional financial plan.
Cryptocurrency is no substitute for an energy savings account and stable retirement portfolio.

However, for tech-savvy investors and businesses who are able and willing to navigate the ups and downs of
the market and spend time learning how to trade cryptocurrency, now could be a perfect time to get in on
the ground floor.

How to invest in cryptocurrency

Where to buy cryptocurrency can be a confusing topic for would-be investors. In the past, the only way to get a
hold of cryptocurrency was to mine it yourself or find a private seller.

Now, a multitude of “crypto exchanges” have emerged to provide a simpler marketplace for the purchase and
sale of cryptocurrency. As you learn how to buy cryptocurrency, you may see these investment websites referred
to as DCEs. DCE stands for digital currency exchange.

The best crypto trading platforms allow users to trade

one type of cryptocurrency for another, purchase
cryptocurrency with traditional currency, or buy and sell
an array of cryptocurrency stocks and tokens.
Choosing the best cryptocurrency exchange will require some research, as the platforms differ from each other
in options, features, and intended users.

Can traditional banking and secure crypto management exist side-by-side? Now it’s possible with Vast Bank.
Reach out to one of our customer success representatives today for more information.

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CHAPTER 1:

Bitcoin Investing
(and Other Cryptocurrencies to Know)
This chapter of our crypto guide will help you dig deeper into
bitcoin investing and other popular types of cryptocurrency.
We’ll answer some of the most common questions about
crypto, including:

• What is bitcoin?

• How does bitcoin work?

• What is bitcoin used for?

• How much is bitcoin worth?

• Is bitcoin safe?

• Should I invest in bitcoin?

• How do I buy bitcoin?

By the end of this chapter, you should feel knowledgeable

about bitcoin and able to make informed decisions about your
investment future.

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Types of Cryptocurrency
There are thousands of cryptocurrency types being sold and used around the world. In this guide, we’ll focus on
the most popular currencies you’re likely to consider as a new cryptocurrency investor.

BITCOIN
Bitcoin is the most recognizable form of cryptocurrency. There are over 18.5 million bitcoin tokens in
circulation, with a cap of 21 million quickly approaching. In fact, Bitcoin has such a level of popularity that any
cryptocurrency coin that isn’t associated with the platform is called an “altcoin”.

BITCOIN CASH
This bitcoin spin off, the result of a “hard fork” in August 2017, has a larger block size (8MB), changing
processing speeds for traders and miners. It’s intended as a low-fee peer-to-peer electronic cash system that
enables users to send money around the world for very low fees.

ETHEREUM
Ethereum focuses on decentralizing applications the same way bitcoin decentralizes currency. Tokens used on
Ethereum are called “ether”, which is exchanged between app developers and the people who use the end
product on their phones and other devices. It is the second-largest cryptocurrency by market capitalization
behind bitcoin.

XRP
XRP is the name of the cryptocurrency used by a digital payment network called Ripple. It allows for global
transactions and enables third-party developers to use Ripple and XRP in their projects. XRP is in the midst of
a legal suit with the SEC. The SEC claims RIPPLE is an unregistered security and nearly all US exchanges have
delisted the token.

What is Bitcoin and how does it work?

Bitcoin is a digital currency that is decentralized, meaning it operates without banks or governments managing
the transactions. Instead, peer-to-peer networks keep a public “general ledger” updated with records of
purchases, transfers, expenditures, and more. Bitcoin was designed as a way for people to send and receive
money online.

New transactions are collected every 10 minutes or so and added to the ledger as a block in the ledger, creating
a long “blockchain” of records. This is where the term “blockchain investment” comes from.

To create a bitcoin, bitcoin miners (manning very powerful computers) must be the first to complete a
complicated cryptographic calculation that solves the next block in the blockchain. Then, the rest of the peer-
to-peer network verifies that it’s correct. The miner’s reward is called a block subsidy; a preset amount of new
Bitcoin that they receive plus the fees users pay to have their transactions included in the block.

In essence, a bitcoin represents consensus from the peer-to-peer network that establishes ownership of a coin.
The coin’s owner possesses a private key that gives them the ability to generate a private password, which is
then used to retrieve or spend their currency.

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Is Bitcoin safe?
While the peer-to-peer nature of Bitcoin makes many of its processes safe, there is a risk of hacking and other
fraudulent activity that can wreak havoc on investors. Bitcoin scams are common and there are opportunities for
cybercriminals to infiltrate and empty digital wallets.

Along with these risks is the overall volatility of cryptocurrency in general. For example, bitcoin values have been
known to drop by 50% overnight. However, these risk factors are not limited to the world of crypto. Most world
currencies are not backed by material goods (such as gold) and are susceptible to market changes and hackers.

Any currency is at risk of theft and devaluation. The safety level of Bitcoin is better quantified by your overall risk
tolerance.

What can you buy with bitcoin?

For those wondering how to use bitcoin, the answer can be complex.

Many major retailers, like Amazon, are beginning to accept bitcoin as payment as long the purchase is routed
through a third-party service. One such service, called Purse, accepts the bitcoin payment on behalf of the
retailer and pays the merchant in gift cards that have been offered up by people looking to buy cryptocurrency.

Some companies accept bitcoin directly. The key difference between paying with cash and paying with bitcoin
is that these companies issue refunds based on the dollar value of bitcoin at the time of the return rather than
refunding the exact amount of bitcoin that was paid. This is to prevent bitcoin owners from using purchases to
cushion their investment against deflation.

Typically, cryptocurrency is a roundabout way to make payments. However, this is likely to change in the future as
cryptocurrency grows.

How much is bitcoin worth?

Bitcoin values, including bitcoin to USD values and bitcoin stock prices, change daily. Resources like CoinDesk
provide updates on cryptocurrency values, top crypto exchanges, Bitcoin news, and updates on bitcoin trading
and other crypto stock.

Does Bitcoin trade 24/7?

Unlike traditional financial markets, Bitcoin trading takes place round the clock. While this is advantageous for
international transactions and to speed up trade activity, it does mean that losses can occur quickly while the
investor is otherwise occupied.

Is Bitcoin a good investment?

“Should I buy bitcoin” is the question that arises as more and more investors learn about cryptocurrency.

To make a long answer short, Bitcoin can be a good investment for those who are prepared to ride a sometimes
unpredictable rollercoaster of trials and successes.

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Many predict that bitcoin values will increase into six
figures per coin over the next decade.
Others feel that the lack of regulation makes Bitcoin too
susceptible to fraud.
So for anyone who’s prepared for either outcome, they might just be prepared for a bitcoin investment.

How to invest in Bitcoin

Investing in Bitcoin is not as simple as, say, purchasing stocks from a well-known financial management
company. If you’re looking to invest in bitcoin, you’ll need to know the following:

HOW TO GET BITCOINS

If you’re a computer whiz, you might be able to mine some bitcoin. The rest of us will have to use exchanges like
Coinbase, Kraken, Gemini or Binance (among many others).

These services vary in features and user requirements. For example, some require no personal identification at
all and some require standard info. Many of the exchanges allow users to withdraw their bitcoin into a personal
digital wallet for more security and ease of spending, while others (especially those focused on trading) do not.

CAN YOU BUY BITCOIN WITH A CREDIT CARD?

Making a crypto investment using a credit card is usually a simple process. The best place to buy crypto is by
using a website or app that offers functionality, security, and good customer service. These exchanges will allow
you to use a credit or debit card to purchase a percentage of available bitcoin.

HOW TO BUY BITCOINS WITH CASH

While the easiest way to purchase bitcoin is to use a credit card online, you can also purchase bitcoin in cash if
you’re willing to take some extra steps.

If you have a Bitcoin ATM nearby, you can insert cash in exchange for bitcoin. Otherwise, you can find a local
seller or even visit a Walmart financial services desk to have your cash transferred to a bitcoin seller.

WHERE TO BUY BITCOIN

Investors looking for the best app to buy crypto will find that there are many options available, each with varied
offerings depending on your situation and needs.

To facilitate your purchase, it’s wise to use a service that is licensed and reputable.

Vast Bank aims to set a new standard for cryptocurrency

investment by combining the trustworthiness and
reliability of a federally regulated financial institution
with the freedom and flexibility of digital asset management.

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 Other popular services that are not associated with established banking institutions are Kraken, Swan, and
CashApp. While comparing cryptocurrency exchange providers, read reviews, check the fine print, and research
the security measures that each exchange takes to protect your investment.

WHEN TO BUY BITCOIN

Maximizing your profits as a prospective bitcoin investor and trader is easier when you understand the ebb and
flow of prices over time. Crypto is newer than other currencies and investment options, so it’s more difficult to
analyze past behavior and make predictions.

Dollar Cost Averaging is a strategy that can help to reduce the impact of volatility on the investments that you
make. Using this strategy, you would invest a certain amount of money on a scheduled basis.

For example, you could opt to purchase $150 of bitcoin each month. Some months, you’ll be purchasing Bitcoin
when prices are higher. Other months, you’ll purchase Bitcoin when prices are lower.

A long-term, steady strategy of buying and holding

cryptocurrency typically outperforms more complex
strategies.
HOW TO TRADE BITCOIN
We’ll explore how to make money trading crypto more in Chapter 4 of this guide. Briefly, here are the steps that
you’ll take in order to begin trading bitcoin:

1. Become familiar with the factors that determine the price of bitcoin

2. Pick a trading strategy (for example, day trading crypto, bitcoin hedging, etc)

3. Purchase bitcoin

4. Set up and monitor your trade

5. Close your trade to receive your profit or cut your loss

HOW TO SELL BITCOIN

When you’re ready to offload some bitcoin, you can do so through most of the same exchanges that you used
to purchase your bitcoin. These platforms will allow you to transfer your bitcoin to a digital exchange wallet,
then cash it out and transfer the funds to your traditional bank account.

Managing the ins and outs of acquiring, monitoring and selling your bitcoin can be daunting. Vast Bank’s
crypto services allow you to invest with confidence and peace of mind. Reach out to a representative for
more information.

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CHAPTER 2:

Buying and Selling

Digital Currency
Purchasing and selling cryptocurrency is a way to gain a
foothold in the growing digital currency market and to earn
some cash in the process.

In this chapter, we’ll explore the dynamics of buying and

saving cryptocurrency as well as selling it to others in exchange
for cash.

What is digital currency?

Digital currency is called by many names, including virtual currency,
e currency, cyber currency, digital money, blockchain currency, and
digital coins.

These terms encompass thousands of coins or tokens of digital

decentralized currency that are secured by cryptography.

To learn the basics on how digital currency works, understand the

different types of digital currency, and see the answers to some
frequently asked questions about cryptocurrency, please see the
introduction to this guide.

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Buying and selling digital currency
As a financial tool, digital cryptocurrency functions a lot like stocks. Consumers can purchase coins or tokens
in full or as a percentage of the total unit of currency, and retain ownership or trade it for cash as the value
increases or decreases.

Here’s how to purchase and sell bitcoin and other major digital currencies:

1. SET UP AN EXCHANGE ACCOUNT

An exchange account is a hub for all activities related to cryptocurrency. The exchange account you select
acts as a digital currency management tool that enables you to purchase and store your cryptocurrency, and
sell it for cash from interested buyers.

One common misconception is that exchanges set or influence currency valuations and prices in some way.
In reality, the exchange rates for cryptocurrency usually depend on the activities of the buyers and sellers
who are using the exchanges.

If you’re interested in trading cryptocurrency rather than holding onto it, a brokerage account may be more
useful. Crypto brokerage accounts can be set up more quickly and enable for quick transfers to cash out
your profits or cut your losses.

Here are some examples of exchange accounts. Vast Bank does not endorse any of these services
specifically; these are only a few examples of digital currency exchanges online, according to crypto
authority CoinBase:

Binance | Coinbase Exchange | Huobi Global | FTX | Kraken

2. DECIDE ON CURRENCIES TO BUY AND SELL

With thousands of different online currencies to choose from, deciding which cryptocurrency to invest in can
be the hardest step of the process.

You can start by viewing the top cryptocurrencies based on their share of the total value of all the coins in
circulation. Next, research digital currency information to learn about the differences among these types of
currencies.

For example, Bitcoin (BTC) is the first virtual currency that skyrocketed from a value of $500 to almost
$30,000 in just five years. This blockchain virtual currency is not backed by any other currency or physical
goods.

The best cryptocurrency to buy depends on your level of

risk tolerance, how much you’re looking to purchase, and
what you plan to do with your digital currency.

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 3. DETERMINE YOUR INVESTING AND TRADING STRATEGY
When you invest in and trade cryptocurrency, it helps to have a method to guide your decisions and
activities. Here are a few strategy ideas:

Day trading: This is a method in which short- Long-term investing: Perhaps the easiest strategy
term gains and losses are taken through multiple is to purchase cryptocurrency and hold on to it as
transitions over a short period of time. Day trading the market changes.
cryptocurrency can be especially effective because
While the buy-and-hold strategy does not offer
of the volatility of the market.
the guaranteed growth of, say, a high-yield savings
Jumping on a brief increase in digital currency account or certificate of deposit, you could end
pricing can help a day trader pocket hundreds a up sitting on a hefty sum if a currency takes off like
day. However, this takes some finesse. Good day bitcoin, ether, and others.
traders stay on top of market updates and have
enough liquidity to capitalize quickly when they
spot a lucrative opportunity.

Lending: Many platforms exist to facilitate crypto Early entry: Some investors like to take their
lending. You can choose to lend your coins to chances on a relatively new digital currency and
others, and earn interest on the loan. This works hope it increases in value as quickly as bitcoin and
similarly to the way a bank lends funds and charges ether have. It’s hard to predict the future of digital
interest. currency, but taking risks can be rewarding.

The borrowers are usually traders who would

otherwise struggle to access crypto loans. Some
sites, like BlockFi, even offer the option to receive
your interest payments in different currencies.

4. INITIATE TRANSACTIONS UTILIZING YOUR STRATEGY

The final step is to put your plan in motion. Purchase the cryptocurrency you’ve decided upon and take the
time to implement your investment or trading strategy safely and effectively.

In the beginning, it’s usually best to stick with popular, proven exchanges and digital currency until you learn
how to spot and avoid scams and unstable arrangements.

How to purchase cryptocurrency

There are many safe ways to purchase cryptocurrencies like bitcoin, ether, binance coins, tether, and more. One
company that has made moves to enter the cryptocurrency market is PayPal. You can purchase cryptocurrency
through the PayPal platform, and use their partnership with Walmart’s payment centers to complete cash transactions.

Otherwise, you can find an exchange like the ones discussed throughout this chapter to purchase using an ACH
draft, a credit card or debit card. One word of caution: it’s usually best to avoid purchasing a volatile digital
currency with a credit card. If you end up losing money, your loss will be compounded by the interest that you’ll
also pay on your debt.

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How to save and store cryptocurrency securely
You can keep your cryptocurrency right in your wallet! Well, not the one in your pocket. Digital wallets are a little
different. There are four kinds of wallets that are used to store digital currency:

HOT WALLETS
Hot wallets are online wallets that are accessible on internet-connected devices. Hot wallets generate a private
code for the user, called a key, that connects you to your bitcoin or other e-currency. They are very convenient
and easy to access, but are vulnerable to security breaches if another party gets ahold of your information.

COLD WALLETS
Cold wallets are physical wallets that store your digital currency. They don’t look like wallets you use to store
cash. Cold wallets are offline hardware (similar to a USB memory stick) that use software to allow users to view
their cryptocurrency information without putting their private key at risk over the internet.

PAPER WALLETS
Paper wallets are technically another type of cold wallet because they aren’t connected to the internet. In fact,
they don’t require electricity at all. Paper wallets are literally a printed piece of paper containing the owner’s
public and private keys. These numbers exist nowhere else online. If the numbers are lost, so is access to the
cryptocurrency. Most paper wallet users laminate the codes and store them in safes or deposit boxes.

EXCHANGE WALLETS
Exchange wallets are often confused with hot wallets. The difference is that exchange wallets are administered
and managed by the exchange itself. The owner does not use private keys to access their digital currency, so
funds could be lost in the event of a security breach within the exchange.

While exchange wallets are useful for quick and easy transactions, such as day trading, they are not optimal for
storing your coins, especially in large quantities. One important phrase to remember is, “not your keys, not your
coins.” Private keys are, in essence, the only access to the actual value of your cryptocurrency.

The freedom of cryptocurrency with the security

of a bank?
Vast Bank is setting a new standard for digital currency management by providing a safe, effective platform
that can be used side-by-side with traditional banking tools. Learn more about Vast Bank’s cutting-edge,
secure UI by contacting us today.

13
CHAPTER 3:

Cryptocurrency Risks
and Volatility
“High risk, high reward” seems to be the unofficial slogan for
cryptocurrency. Digital currency is certainly at risk of security
breaches and fluctuating values, but is there a way to invest
safely and minimize cryptocurrency risks?

In this chapter, we’ll answer the questions that all potential

digital currency investors ask: is cryptocurrency safe to invest
in? Is cryptocurrency reliable? Is investing in cryptocurrency a
good idea?

Read on to find out.

How safe are cryptocurrencies?

Cryptocurrency risks tend to take the spotlight in news stories as more
and more investors try their hand at buying and selling digital currency.

Cyber currency investments can result in impressive financial gains,

and breathtaking losses (like this painful story about a man who cannot
access nearly $300 million in bitcoin after losing his private keys).

Along with misplaced passwords, cybersecurity breaches, fluctuating

valuations, and other cryptocurrency risks have people wondering: how
safe is it to invest in bitcoin and other digital currencies?

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 Let’s take a closer look at some of the most significant cryptocurrency risks:

VOLATILITY
If you’re looking for a steady investment with guaranteed returns, cryptocurrency might not be your best bet.

Values for the most popular digital currencies have

fluctuated wildly over time. For example, in just a few
months in 2021, the price of one bitcoin bounced between
$30,000 and $60,000.
As for long-term investments, no one is sure what will happen to cryptocurrency in the next few decades.
Because nothing like it has existed, there’s no good way to predict whether the value of today’s cryptocurrencies
will rise or fall...or whether they’ll fade from relevance entirely.

UNREGULATED MARKETS
One of the most alluring aspects of digital currency is also a factor that makes investing in cryptocurrencies risky:
decentralization. No governing authority controls or regulates most forms of cryptocurrency, including Bitcoin.
Instead, peer-to-peer efforts and protections protect the integrity of transactions.

While this is great news for freewheeling investors who prefer a “Wild West” environment, there is also ample
opportunity for criminals to use crypto coin investment to hide their activities, launder funds, and even steal
from other crypto owners.

Additionally, whereas the FDIC insures investments like certificates of deposit and savings accounts in the
United States, no such central resource backs cryptocurrency. When crypto coins disappear, they’re gone for
good.

HACKING AND CYBERCRIME

We can’t answer the question “how risky is cryptocurrency?” without discussing one of the most troubling risks
of investing in e currency: hacking.

Attacks such as phishing, password hacks, and even the physical theft of private keys have affected investors
since the inception of cryptocurrency. Fortunately, services and tools exist that can help individuals minimize
their cryptocurrency risks.

On a larger scale, with billions of dollars tied in the cryptocurrency trade, a successful major hacking event could
affect the entire global economy. If thieves discover a vulnerability in the cryptographic codes that protect the
blockchain records, a weak spot in the peer-to-peer protection network, or some other threat to cryptocurrency
security, the consequences would be dire.

HUMAN ERROR
You may not lose the password that protects a $300 million fortune, but human error could still be a danger of
investing in bitcoin or other digital currencies. Misplacing a cold wallet or transposing private key numbers could
cost you your investment.

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 FORKS
New cryptocurrencies are created as a result of a fork, but not the kind you use to eat dinner. A fork is a change
in blockchain protocol that changes whether the software deems a transaction valid or not.

If a significant portion of the nodes that validate transactions decide not to adopt the software change, a “hard
fork” made up of the objecting nodes will develop. The result is a new currency, which is based on a different
protocol.

For example, a fork is what led to the split between bitcoin and bitcoin cash. Though named similarly, these
currencies are separate now after a disagreement over a software update split (or forked) the Bitcoin community
into two camps.

Forks are a continued risk in bitcoin investment and other crypto coin investment because a change in
blockchain protocol can have a substantial impact on the value of cryptocurrency.

This is because forks can be predicted, unlike other investment events. As word of an impending fork travels,
investors can implement crypto coin investment strategies that drastically alter the price of the currency.

Is cryptocurrency a good investment?

After learning about all the risks involved with digital currency, potential buyers may wonder: Is investing in
cryptocurrency worth it? Is digital currency safe if I take more stringent precautions?

The bottom line is that digital currency investment is risky. Your level of involvement should be based on a few
factors:

• Your risk tolerance

• The amount of time you can spend learning about how to invest in crypto assets safely and how to protect
yourself as a cryptocurrency investor

• Whether you have enough fiat assets (aka U.S. dollars) saved to ensure financial stability in the event of an
emergency

• Access to tools that help you protect your cryptocurrency

How to trade crypto safely and securely

Ideally, cryptocurrency investors could enjoy the thrill of the digital currency trade with some of the security
offered by traditional banks.

Vast Bank offers solutions that give you more peace of mind as you manage your cryptocurrency.
Reach out to a representative today for more information.

16
CHAPTER 4:

How to Make Money

With Cryptocurrency
(and Stay Tax Compliant)
There’s more to making money with cryptocurrency than meets
the eye. As you aim to stack your crypto profits, you’ll be more
successful with a solid trading strategy and an understanding
of how cryptocurrency is taxed.

How to make money with

cryptocurrency
Investors from all walks of life are interested in cryptocurrency. What
unites this diverse group of people is a common interest in making
money by buying, selling, and saving cryptocurrency.

Some may view cryptocurrency as easy money. In fact, making money

on crypto is more often a result of savvy financial moves rather than
sheer luck.

17
 There are several ways to make money with cryptocurrency. Here are some strategies to consider as a new
investor:

Buy-and-hold investing: No other currency makes the advantages of the buy-and-hold more obvious than
Bitcoin. From values of just a few dollars per coin to values in the tens of thousands, anyone who held onto their
bitcoin for several years is certainly feeling good about their decision.
While spending $40,000 on a bitcoin may not be in your budget, you can still make money with cryptocurrency
by purchasing a fraction of bitcoin or opting to invest in a newer or more affordable currency and waiting to see
whether the valuation increases majorly over time, like that of bitcoin.

Day trading: For those with the time and inclination to keep a constant eye on prices and market activity, day
trading is one of the best options when a new investor is wondering how to make money with cryptocurrency.
To make money trading crypto, investors need to watch carefully as the values of various currencies increase
and decrease throughout each day. This requires a proficient level of analytical skills. To make money daily with
cryptocurrency, you’ll need to analyze market charts, stay abreast of crypto news and trends, and understand
how changes and events impact the behavior of cryptocurrency values.
Along with investing money in cryptocurrency, traders should invest time in learning about crypto and engaging
with online communities on Reddit, CoinBase, and elsewhere.

Staking: One of the less common yet very effective ways to make money in cryptocurrency is to become part of
the validation process.
Proof of Stake networks need lots of help to validate crypto transactions. They’ll pay you to access your coins for
validation purposes. All you have to do is leave your cryptocurrency locked in a hot wallet rather than spending
it or cashing out.

Lending: Investors without initial resources to purchase cryptocurrency may be looking for loans to enable their
goals. Crypto lending is facilitated by a variety of platforms, each with their own processes and interest rates.
If you’re interested in becoming a lender, do your research on reputable platforms to avoid putting your coins at
risk of security breaches and fraudulent activity.

Mining: Want to know how to make money with cryptocurrency in the most hands-on way? Give mining a try.
Mining is essential to generating cryptocurrency blockchain and verifying transactions.
To get involved, you’ll need to be tech-savvy and invest in specific hardware that enables the complex
cryptographic computations required to mine new currency. For those interested in how to make a living off
cryptocurrency, you could try to take your mining a step further and run a master node. Running a node can
become a full-time job with ongoing hardware investments.

Taking advantage of airdrops: Sometimes, currency is distributed free of charge to increase awareness of new
tokens and coins. This is called an airdrop.
Exchanges sometimes initiate airdrops to implement new projects or features that require a substantial amount
of currency holders. You can use your free coins to invest, trade, or sell for cash.

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How is cryptocurrency taxed?
Along with learning how to make money with cryptocurrency, you’ll need to understand how cryptocurrencies
are taxed.

DO YOU PAY TAXES ON CRYPTOCURRENCY?

Tax return forms now ask taxpayers whether they’ve transacted in cryptocurrency in the past tax period. You’ll
need to respond clearly and truthfully to avoid potential legal jeopardy.

When you earn money from stock or savings investments through a bank or traditional stock brokerage, you
receive a 1099 form for accurate IRS reporting. Cryptocurrency exchanges typically do not provide these forms,
nor do they provide substantial reporting to the IRS as organizations.

Despite not receiving a 1099 form, you’ll still need to report any gains and pay appropriate taxes on those
amounts.

WHAT ARE TAXES ON CRYPTOCURRENCY?

Whenever you exchange cryptocurrency for traditional currency, you potentially incur a tax liability. Essentially, if
you receive more value from the exchange than what you spent to purchase the cryptocurrency, you’ll be liable
for taxes.

The tax you’ll pay is a capital gains tax, not a transaction tax. If you simply hold onto your cryptocurrency without
exchanging it for cash, you haven’t realized a capital gain. So, like a stock investment, you aren’t liable for
increased taxes as the value of your stored cryptocurrency increases.

CAN CRYPTOCURRENCY BE TAXED EVEN IF YOU LOSE MONEY?

Fortunately, losses realized from cryptocurrency can help you offset the amount of taxes you owe. If you
exchange your cryptocurrency for cash that is lower in value than what you invested to purchase the currency,
you’ve incurred a capital loss which reduces your taxable income.

Losses due to hacking or lost private keys are a grey area. Most of the time, these losses are not deductible.
However, it may be possible in some cases to treat the stolen or lost amount as a capital loss. If you run into
this unfortunate situation, work with a tax professional to be sure that your stolen cryptocurrency is accurately
reported.

IS THERE A WAY TO AVOID GETTING TAXED ON CRYPTOCURRENCY?

The IRS is stepping up enforcement and accuracy measures in response to the growing prevalence of
cryptocurrency investment and trading activities.

New policies are in the works that would assist the agency in adding new reporting requirements for
cryptocurrency investors and traders and help them collect taxes already owed on capital gains from
cryptocurrency sales.

It’s likely that cryptocurrency exchanges will be subject to more stringent reporting protocols, meaning that
failure to accurately report your own crypto gains could become an even riskier liability.

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What is the best way to make money in crypto?
A high-tech, secure UI that enables you to manage banking and crypto assets in tandem is the new gold
standard for cryptocurrency investing.

Vast Bank has partnered with CoinBase and award-winning app producer Invstr to create a crypto
management platform that is unlike any other. Please reach out to a Vast Bank representative for
more information.

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CHAPTER 5:

Crypto for Business

Many businesses are beginning to see bitcoin and other
cryptocurrencies as a potential investment opportunity and a
way to give customers more payment options.

For example, Tesla announced in early 2021 that the company

had purchased $1.5 billion in bitcoin and would accept digital
currency payments from customers.

Even individuals are eyeing cryptocurrency as a business

opportunity in itself, as mining and other services present
opportunities for earning money and providing new services.

This chapter will explore cryptocurrency from a business

perspective, including:

• Investing in crypto for businesses

• Banking for businesses with cryptocurrency

• Ways for small businesses to accept bitcoin and other

cryptocurrency

• Crypto related businesses such as crypto mining

Whether you’re a business owner interested in crypto, or a

crypto owner interested in business, there is a lot to learn.
Let’s dig in:

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Why use digital currencies for business?
Innovative businesses are the first to adopt new technologies and find ways to use them to gain an advantage
over their competitors. Here are a few key functions of crypto for businesses:

1. Blockchain based technology presents an opportunity for businesses to offer new products and services and
improve processes. For example, low-cost, 24/7 financial transfers can reduce costs for businesses that rely
on routing funds globally. These savings and efficiencies can be passed on to customers and used for new
ventures.

2. Building a business with crypto means that small and emerging businesses have access to new liquidity
pools that enable faster growth. Such businesses may not otherwise be able to secure traditional business
loans, which come with strict underwriting qualifications.

3. Some organizations have created entire crypto trading business segments which enable them to buy and
sell digital assets profitably. If a business already possesses infrastructure that can support crypto trading,
such as manpower and technology resources, day trading and other investment activities are relatively easy
to scale.

4. Enabling customers to pay with cryptocurrency can provide access to new demographics. One study found
that businesses receive a substantial ROI when they take steps to implement crypto payment acceptance,
and that up to 40% of customers who pay with crypto are new to the merchant.

How to accept crypto payments as a business

In the past, businesses that were unable to accept
credit card payments noticed that they were missing
out on valuable transactions. A similar effect may be
occurring now for businesses that are unable to accept
cryptocurrency payments.
Enabling cryptocurrency for online business payments requires the use of online payment processors which will
help you process digital currency payments, usually with a fee charged per transaction. CoinBase Commerce
and PayPal are two such services that can be easily integrated to allow you to offer more flexible payment
options.

Risks of using crypto in business

Businesses investing in cryptocurrency face unique accounting challenges. For example, the most commonly
used cryptocurrency accounting method records “writedowns” of digital asset losses, but does not record
“writeups” of digital asset gains.

To complicate matters, cryptocurrency inventory is difficult to categorize. Digital currency doesn’t neatly fit into
the definitions of intangible assets, investments, or cash equivalents.

These can confuse or mislead investors who are carefully inspecting a business’s financial statements and lead to
issues at tax time, when accurately listing a business’s assets is imperative.

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How to start a crypto trading business or crypto
mining business
Along with integrating cryptocurrency into an existing organization, countless crypto businesses are springing
up that aim to profit from trading and digital currency support services.

Popular crypto business ideas include crypto mining, peer-to-peer crypto loaning, crypto ATM management,
opening your own crypto exchange, and providing consultant services to blockchain business and investment.

Here are the steps to start your own crypto business:

1. Create a crypto business plan: Your plan should anticipate startup costs and ongoing business costs,
identify your target market, set price points, and details your business name and branding.

2. Form your business: Like traditional businesses, crypto businesses need to be legally established under a
specific business structure, such as an LLC or corporation. Business formation requirements vary from state
to state, so be sure to adhere to rules and regulations in your location.

3. Attain licenses, permits, and insurance: Paperwork and license fees will be plentiful at this stage of
forming your crypto business. Be sure to follow guidelines carefully to stay in compliance.

4. Open a bank account for your crypto business: Because you’re working with cryptocurrency, you’ll need
a crypto-friendly business bank account. Research the best banks to use for crypto currency-related business
in your area. For example, the best bank in WI for crypto currency business is one that integrates traditional
business banking services with crypto banking tools.

How to protect your crypto business

Security is critical for businesses that use cryptocurrency or provide crypto services. For these companies, there
are two prongs to operating safely: storing your crypto securely and adhering to tax compliance regulations.

You should access your cryptocurrency through a thoroughly audited third-party wallet that cannot access or
store your private keys. You should also ensure that your team members cannot be locked out of the crypto
wallet, as organizational account access can cause issues.

As you buy, sell, trade and save cryptocurrency, record transactions in a way that will facilitate simplified and
accurate tax filings. Crypto can create an accounting nightmare, but you can make your life easier by preparing
transactional data throughout the year.

Grow your crypto business with better banking

technology
Vast Bank offers the new standard for business banking with cryptocurrency. Now you can manage your
business transactions side-by-side with your cryptocurrency, resulting in a safer and easier way to grow your
crypto business. Reach out to a Vast Bank representative today for more information.

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CHAPTER 6:

Digital Asset &

Cryptocurrency Banking:
How Vast Bank Helps
Cryptocurrency banking is a challenge for individuals and
businesses with digital assets. Investors who buy, sell, or save
digital currency like bitcoin and ether need banks that work
with cryptocurrency.

In this chapter, we’ll discuss the ins and outs of cryptocurrency

banking and how to find the right crypto-friendly bank for you.

Why is it so difficult to find

cryptocurrency banking
solutions for businesses?
Traditional banks have been slow to create solutions for customers that
transact with crypto.

Though opinions are shifting, cryptocurrency investing has typically

been regarded as a high-risk activity. Banks are risk-averse by nature
and, as a result, few have been willing to innovate new services that
help clients securely manage their cryptocurrency.

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 Another issue that has kept financial institutions from creating cryptocurrency banking systems is the fact that
cryptocurrency is very different from fiat currency. Most banks do not have the understanding or the resources to
innovate useful, efficient, safe cryptocurrency banking products.

What to look for in a crypto-friendly bank

Choosing a cryptocurrency bank can be a tough task, especially for investors that are looking for services that
allow them to integrate crypto banking and fiat currency banking side-by-side. Here’s what to look for:

1. BANKS THAT ALLOW CRYPTOCURRENCY TRANSACTIONS

At the most basic level, your bank should support cryptocurrency transactions. That means that your bank
should have no restrictions against buying, selling, and saving cryptocurrency.

2. BANKS OFFERING CRYPTOCURRENCY SERVICES

A traditional bank without cryptocurrency services is not useful to customers who purchase, trade, sell,
and save bitcoin and other currencies. The bank you choose should provide custodial services for digital
currency investments so that you can view and manage your cryptocurrency side-by-side with your
traditional assets.

3. BANKS USING CRYPTOCURRENCY AND EDUCATING PARTNERS AND CUSTOMERS

If a bank is investing in cryptocurrency and is abreast of the future of digital currency, these are good signs
that the institution is crypto-friendly and is actively involved in making cryptocurrency banking secure and
modernized.

4. BANKS WITH WELL-TRAINED SUPPORT STAFF

Imagine this: You’re dealing with a potentially costly cryptocurrency issue and your bank’s team seems not to
understand digital asset management in the first place.

To ensure that you receive the support you need, select a cryptocurrency bank with knowledgeable staff
who can help with your inquiries.

Choosing the best cryptocurrency bank for you

Crypto investors need to be discerning when it comes to cryptocurrency banking. Because of the complexity
of digital asset management, customers often experience frustration and difficulty trying to integrate their
cryptocurrencies and fiat currencies.

Vast Bank is the first nationally chartered financial

institution to both purchase and provide custodial
services for a digital asset on behalf of a customer and
directly from their bank account.
This accomplishment represents a milestone for federally regulated banks and a big step toward building
customer trust and broader adoption of cryptocurrencies.

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Cryptocurrency banking with Vast Bank
Vast’s crypto investors receive wraparound services that make it easy to manage digital assets:

• Seamlessly purchase and custody digital assets through your bank account. Banks that allow cryptocurrency
purchases and enable you to withdraw cryptocurrency to your bank account simplify your financial
transactions.

• Simultaneously manage your fiat and crypto accounts side-by-side.

• Utilize a high-tech and secure UI, powered by world-class software and regulated by the Office of the
Comptroller of the Currency.

• Relax knowing that your cryptocurrency banking is supported by reputable third-party partners with
advanced crypto technology infrastructure providers for crypto market execution services, market data
feeds, transaction monitoring, order routing, and digital asset custody.

• Take advantage of integrated access to seven cryptocurrency exchanges.

• Enjoy algorithmic order execution, deep liquidity, and crypto wallet management.

• Utilize industry-leading crypto features with the stability, security, and dedicated customer service of a
trusted, family-owned bank.

At Vast Bank, we feel that a solution that brings together traditional banking and cutting-edge cryptocurrency
management is long overdue.

We look forward to helping you meet your financial goals while continuing to look to the future of money
management. Please reach out to a Vast Bank representative today to learn more about cryptocurrency
banking solutions.

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