Brian Colombana: How I Paid My Bitcoin Taxes – The Journey to $200k+ Profit and a Crypto IRA

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TL; DR I am a 26-year-old cryptocurrency investor who made roughly $200,000 profit since 2013. I recently had to pay a bunch of taxes on my gains and wanted to share my experience. I also wrote a script that calculates your bitcoin taxes for you if you want something automated – it can be found here.

The Beginning: How Did I Get Into Cryptocurrencies?

I first heard about Bitcoin from a college buddy back in 2012 or so – he told me there was this magic internet money that guaranteed price appreciation forever! My initial thoughts were “sure why not” but then it turned out that he lost his wallet file with the bitcoins he bought at around $1 each. It didn’t take long before he convinced me to make my first purchase; I ended up buying 15.25 BTC at around $5 each shortly after the MtGox hack which sent prices tumbling back down to about $3. My life went on as normal but the price of Bitcoin kept going up and then down and then back up again.

My college buddies and I were in Thailand a few years ago Not only that, but I had no clue how to actually use Bitcoin – I didn’t even know what a wallet was or how you actually made transactions with it at the time! So for a couple of years, it just sat there collecting dust until 2013 when Coinbase launched their services – this is when things got interesting! A couple of weeks after they announced their launch I decided to give Bitcoin another shot and I bought my first Bitcoin here – around $120 worth at the time. I received some pretty terrible advice from various family members and friends which lead me to sell them all at a “huge” profit (relative to what they paid for, let’s say $500) says Brian Colombana.

My First Sale: April 2013

Eventually, I decided to buy back in while Bitstamp was still under $100 and bought about 5 BTC each month until their price went up again – these were some of the darkest days of Bitcoin where Bitstamp got hacked and shut down after someone stole roughly 19000 bitcoins from them. That is when people really started thinking that Bitcoin is just not going to work out anymore. As you can imagine, my friends mostly told me “cutting my losses” and selling them all. But I decided to hold on – a decision that made me so happy later on.

How I First Got Into Altcoins

In early 2014, the Bitcoin price was back up again and I started hearing about these new altcoins being launched almost daily! Apparently, there were hundreds of other coins just like Bitcoin but with different names and logos that you could invest in. However, this is when things got out of control – people were launching an ICO for a new coin every single day. While many of those projects probably had no intentions of ever actually releasing a working product, they promised big returns if you bought their pre-sale tokens at $0.01 or something along those lines.

From what I remember, it was around this time when people started to get extremely skeptical about altcoins and all of the new ICOs that were coming out. People on Reddit and Bitcointalk had their FUD (Fear, Uncertainty, and Doubt) posts like crazy! But there was one particular subreddit called “Altcoin” which actually had a ton of useful information for beginners like me – if you heard about an upcoming coin or wanted to start mining someone would probably chime in on that thread with helpful advice.

I ended up buying lots of different coins but only stuck with the ones that showed signs of promise early on – namely Litecoin, Feathercoin, Darkcoin/Dash back then, Ethereum when it first launched, and Monero. Ethereum took off like crazy back in 2015 when it went from $0.95 to around $21 each within the span of a couple of months!

This was actually my first big exit – I remember selling most of them around March 2017 for between $40-$50 each on Coinbase after reading about some banks being keen on Ethereum’s underlying technology called “smart contracts”.

Did You Know ICOs Were Going To Take Off? Do you think that you were early enough into cryptocurrencies if you purchased BTC at sub-$100 prices back in 2013/2014? I’m not sure myself honestly but one thing is for certain – had I decided to put all of my savings into Bitcoin back instead of buying new altcoins.

Conclusion:

I could literally write a novel about my first couple of years in the cryptocurrency space – it was just crazy! I learned how to program, got into Blockchain development, started mining, and made lots of new friends along the way. According to Brian Colombana nothing is certain in this space but if you’re thinking about getting into cryptocurrencies I suggest that you start now – regardless if cryptocurrencies are going to take off or not.

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