FixKit AI

Learn with Kit / Bitcoin & crypto

AI for bitcoin & crypto

Kit swapped its antenna tip for a tiny orange coin. Kit will not tell you the price tomorrow.

Learn it before you buy it

  1. AI is a patient tutor for the hard parts

    Wallets, networks, self-custody, why sending to the wrong network loses money — I asked every 'dumb' question until it clicked. AI never gets tired of it.

  2. Track reality, not projections

    When I ran Bitcoin miners, AI built a daily ledger: what we actually earned vs what was projected, in plain dollars. Real numbers beat brochure numbers every time.

  3. Use models as context, not prophecy

    Long-term models (like the Bitcoin power law) are useful as a 'how stretched is this?' ratio. AI can keep one updated for you — but it's a lens, not a promise.

Your one-minute AI challenge

Open any AI assistant (Grok Bot, Claude, ChatGPT, Grok or Gemini) and paste this. Fill in the [brackets].

Explain self-custody of Bitcoin to me like I'm smart but new: what a wallet and seed phrase are, the 3 most common ways people lose coins, and a checklist before I send any crypto. Don't recommend what to buy.

Fix-it-yourself guides for this

Take payments (cards or crypto)

How do I get paid for the thing I built?

4 tools · 3-step recipe · copy-ready prompt

The full guide

This guide explains Bitcoin and other digital money in plain English: what it is, how to buy and keep it safely, the different ways to own it, how mining really works, how it is taxed, and how to spot scams. Crypto is full of strange words, hype, and people trying to take your money. That is where AI helps most: it can explain a confusing page, double-check a long address, show you the tax rule and where it comes from, or point out the warning signs in an offer, all before you risk a dollar. Nothing here is advice. It is a map so you can ask better questions. New to AI assistants? Start with the Your AI toolkit guide (fixkitai.com/learn/ai/).

👵 New to this? Start here

  1. Learn the one big rule first: whoever has the secret backup words or keys controls the money, so never share them with anyone, including 'support' or an AI.
  2. If you're curious, start tiny: an amount you could lose completely without it hurting, and send a small test before any bigger transfer.
  3. Save every record (purchase dates, amounts, prices, and fees) from day one, because the IRS can tax crypto and you'll need proof of what you paid.
  4. Treat any promise of guaranteed profit, any 'new friend' with an investment tip, or any pressure to hurry as a scam until proven otherwise.
  5. Before any big decision, write down your questions and bring them to a licensed tax pro or financial advisor.
  6. If you're new to AI assistants, read the Your AI toolkit guide (fixkitai.com/learn/ai/) first so you know what's safe to paste in and what never to share.

🎬 Real-life scenarios

Real situations — many from my own life, names removed — showing exactly what was asked and which AI did what.

A first test send before the real one

👤 A retired teacher moving bitcoin off an app for the first time

The problem: She wanted to move about $1,000 of bitcoin from a phone app to a new wallet she controls, and was scared of typing the address wrong.

  1. Opened Grok on her phone and asked: "Walk me through sending bitcoin from my app to my own wallet. Don't tell me whether I should. Stop after the steps."
  2. Copied the receiving address from her new wallet and pasted both the app's send screen text and the address into Claude, asking: "Does this look like a Bitcoin address, and which network is this app sending on?"
  3. Sent a $10 test first, then checked it arrived by pasting the transaction ID into the mempool.space block explorer.
  4. Only after the test showed up did she send the remaining amount to the same saved address.

What happened: The $10 test arrived in about 30 minutes, and the rest followed safely. She paid two small network fees instead of one, about a dollar or two extra, as cheap insurance.

GrokClaudemempool.space

💡 A small test send costs a little and can save everything.

Spotting an address-poisoning trap

👤 A dad of three who moves bitcoin to his own savings wallet each month

The problem: A tiny, unexpected deposit showed up in his wallet history from an address that started and ended with the same characters as his own savings address.

  1. Before his monthly transfer, he pasted the address from his history and the address from his saved, labeled address book into Claude and asked: "Compare these character by character and list every difference. Don't judge whether either is safe."
  2. Claude showed the two matched on the first 6 and last 6 characters but differed in more than 20 places in the middle.
  3. He asked Claude: "What is address poisoning, in two sentences?" to understand what he was looking at.
  4. He deleted the look-alike from his recent list and sent only to the saved address-book entry, with a small test first.

What happened: He avoided sending a few hundred dollars to a scammer. The scam cost him nothing because he caught it before sending.

Claudewallet address book

💡 Never copy an address from your history; use a saved, checked address book.

A grandparent buys a bitcoin ETF in an IRA

👤 A 72-year-old grandfather curious about bitcoin but afraid of apps and passwords

The problem: His grandkids kept talking about bitcoin. He wanted a small amount in his existing IRA without learning wallets or backup words.

  1. Asked ChatGPT: "Explain what a spot bitcoin ETF is to someone who has never owned crypto. No recommendations. Stop after five sentences."
  2. Downloaded the fact sheets for two example funds and asked Claude to compare their yearly fees, who holds the bitcoin, and the main risks in a simple table.
  3. Wrote down three questions and asked his financial advisor whether any crypto fits his age, income needs and risk comfort.
  4. After that conversation, he chose to put a small amount, about 1% of his IRA, in one fund, and set a calendar note to review it once a year.

What happened: He owns a small slice of bitcoin's price through the account he already knew, with no wallet to lose. When bitcoin fell 20% a few months later, his IRA barely moved, and he slept fine.

ChatGPTClaudebrokerage accountcalendar

💡 If you want exposure without keys, a fund in a familiar account is one simple route; size it so a big drop wouldn't hurt.

Checking whether a big monthly payout is really income

👤 A specialty-pharmacy executive who owned some high-payout funds

The problem: A crypto-linked income fund advertised a very high yearly payout rate, and he wanted to know how much was real profit.

  1. Downloaded a year of the fund's share prices and payout notices into a Google Sheet.
  2. Asked Claude: "Using this sheet, calculate total return (price change plus payouts) and show how much of the payouts were labeled return of capital. Don't recommend buying or selling. Stop after the table."
  3. Asked Claude to explain 'return of capital' with a simple example he could repeat to his tax preparer.
  4. Sent the table to his CPA by email with two questions about how those payouts are taxed.

What happened: The headline payout looked like 30% a year, but the share price fell enough that his total return was close to flat, and a big slice of the payouts was his own money returned.

Google SheetsClaudeGmail

💡 Judge a fund by total return, not by the size of the check.

A daily mining ledger: actual vs. projected

👤 A dad of three who owns a few mining machines run by a hosting company

The problem: The seller's spreadsheet promised a monthly profit, but he couldn't tell from the host's dashboard whether he was really getting it.

  1. Each day he downloads the per-machine rewards and power charges from the host's website.
  2. Asked Claude to build a simple 'rent roll': one row per machine, columns for Mined, Power + hosting, and Net, with this month so far next to the projection.
  3. Had an AI agent append each day's numbers to a ledger file automatically and flag any machine that earned zero.
  4. His family dashboard app reads that ledger and shows three plain sentences: what it made yesterday, what it should make, and when the machines pay for themselves.

What happened: In one month the fleet earned about 60% of the projection. The ledger showed why in one line: two machines were off for 9 days. The other days ran close to plan.

ClaudeAI agentspreadsheet ledgerfamily dashboard app

💡 Track actual vs. promised every day, with a plain reason for every gap.

A missed payment that switched the machines off

👤 A busy parent paying for mining machines on an installment plan

The problem: His mining earnings suddenly fell by more than half for a month, and his first thought was that the host had a problem.

  1. Asked Claude to compare the daily ledger with the host's uptime numbers; it showed the machines went dark on the same day.
  2. Before blaming the host, he asked Claude: "List the reasons machines on a payment plan might be paused, starting with my side."
  3. Checked the host's orders page and found an installment had been due a few days before the outage and was still unpaid.
  4. Paid it, set a phone reminder 5 days before each future due date, and asked his AI assistant to mention upcoming payments in his weekly summary.

What happened: The machines came back within a day. The pause cost him roughly a few weeks of earnings, far more than any late fee would have.

Claudephone remindersweekly AI summary

💡 When output drops, check your own bills first; an unpaid installment can switch everything off.

A 'how stretched is it?' power-law check

👤 A family that keeps a small amount of bitcoin and hears big predictions online

The problem: A YouTube video claimed bitcoin was 'massively undervalued'. They wanted a calm way to check that claim themselves.

  1. Asked Claude: "Using fair value = [constant] × (days since 2009-01-03)^[exponent], calculate fair value for today and the ratio of today's price to it. Show the math. Don't predict prices. Stop after that."
  2. Compared Claude's number to the Bitcoin Power Law app's chart to make sure the math matched.
  3. Asked Claude for the three strongest arguments against the model, and read those too.
  4. Saved the ratio in a spreadsheet so they can see if it rises or falls over time, without acting on it.

What happened: Price was about half of the model's fair value, a ratio near 0.5. They noted it as one data point, not a reason to buy, and stopped feeling pressured by the video.

ClaudeBitcoin Power Law appspreadsheet

💡 Turn a scary or exciting claim into one number you can check, then hold it loosely.

A chief-of-staff bot that runs the weekly crypto brief

👤 A dad of three who follows dozens of crypto YouTube creators but has little time

The problem: He couldn't keep up with all the videos and wanted one short weekly summary that showed who said what, with sources.

  1. Set up a 'chief of staff' AI that manages smaller bots: a research bot, a finance bot, and a social-media bot.
  2. The research bot pulls new video transcripts from his favorite creators each week, and Claude summarizes each claim with the channel, date and a link to the moment.
  3. The chief-of-staff bot combines that with the finance bot's read-only view of prices and sends him one email on Sunday.
  4. He reads it on his phone, asks follow-up questions to Grok by voice in his truck, and his notes sync back to his computer.

What happened: Ten-plus hours of videos became a 10-minute read. Disagreements between creators were easy to see, which made him less likely to chase any one prediction.

ClaudeGrokAI agents (chief of staff + helpers)emailphonecar voice assistant

💡 Have AI collect and cite the opinions; you keep the decisions.

Turning mining payouts into a clean packet for the CPA

👤 A family with a small mining side business

The problem: Their mining payouts arrived straight to a wallet with no tax form, and the CPA needed the dollar value of each one on the day it arrived.

  1. Scanned the hosting and power invoices with a document scanner; they went into the family app's document inbox automatically.
  2. Asked Claude to list every payout date and amount from the pool's export and add the bitcoin price on each date from a public price history, showing its source.
  3. Had Claude build one table: payout date, BTC amount, dollar value, and a second table of power and hosting costs, without calculating any tax.
  4. The family app's tax-organizer packet bundled both tables with the invoices, and they uploaded it to the CPA's portal.

What happened: The CPA got about 40 payouts, valued and sourced, in one file instead of a pile of screenshots. Prep time dropped from a weekend to about an hour.

document scannerfamily dashboard appClaudeCPA portal

💡 No 1099 doesn't mean no income; build the record yourself as the coins arrive.

A grandmother asks AI about her new online friend

👤 A 68-year-old widow who met a friendly man through a 'wrong number' text

The problem: After six weeks of chatting, he showed her a crypto trading site where her $500 'grew' to $2,000, and now it wanted a $1,000 'tax' before she could withdraw.

  1. Her granddaughter helped her paste the chat into ChatGPT and ask: "What manipulation tactics do you see in this conversation? Don't tell me what to do. Stop after the list."
  2. ChatGPT listed the classic signs: a stranger after a wrong-number text, slowly building trust, a private trading site, and a fee to withdraw.
  3. They asked Claude where to report it, and filed at ic3.gov and reportfraud.ftc.gov with screenshots and the addresses she'd sent to.
  4. When a 'recovery service' contacted her a week later offering to get the money back for a fee, she recognized it as a second scam.

What happened: She lost the first $500 but did not send the $1,000 'tax'. Hearing the warning signs from a neutral source made it easier to accept.

ChatGPTClaudeIC3FTC ReportFraud

💡 Any fee to get your own money out means the site is fake.

Testing a 'can't-lose' crypto trading bot with a coin flip

👤 A specialty-pharmacy executive researching automated trading in his spare time

The problem: A trading bot's backtest looked like steady profits, and he wanted to know if the 'edge' was real before risking any money.

  1. Asked Claude to explain a 'null test': run the same strategy against random coin-flip trades and see if it still looks good.
  2. Had an AI agent rerun the backtest after adding realistic trading fees and slippage, the small losses when your order fills at a worse price.
  3. Compared results: the bot's profits disappeared once costs were included and looked no better than random.
  4. Logged the result and moved on, risking no money.

What happened: Most of the strategies he tested turned out to be luck. That saved him from a bot that would likely have slowly lost money to fees.

ClaudeAI agentsresearch notebook

💡 Costs decide; if a strategy can't beat a coin flip after fees, it's not an edge.

Writing a family 'if I'm gone' crypto letter

👤 A dad of three who holds some bitcoin in his own wallet

The problem: He realized his wife wouldn't know how to reach his bitcoin if something happened to him.

  1. Asked Claude: "Help me write a plain-English letter for my family about what crypto I own and where the instructions are. I will NOT share any secret words. Flag what to ask an estate attorney. Stop at one page."
  2. Printed the letter and stored it with his will; the backup words stayed in a separate secure place.
  3. Added a yearly 'review the crypto letter' item to the family renewals calendar.
  4. Brought Claude's list of questions to an estate attorney.

What happened: In about 30 minutes he went from 'nobody knows' to a clear plan his family can follow, with no secrets written in the letter.

Claudefamily renewals calendarestate attorney

💡 A self-held coin your family can't find is the same as a lost coin.

Setting up crypto donations for a free website, safely

👤 A builder running a free learning website with a team of AI helpers

The problem: He wanted to let visitors donate in bitcoin without anyone ever being tricked into sending to a fake address.

  1. Used Claude as the planner to write the checklist: one receiving address from a wallet he controls, published in one place only.
  2. Had a Grok bot, acting as the site operator, post the address and a QR code, while ChatGPT helped design the donation box.
  3. Sent himself a $5 test donation by scanning the live QR code, and confirmed it arrived at the right wallet on a block explorer.
  4. Added a line on the page telling visitors the site will never DM them an address.

What happened: The test donation arrived correctly, and the page warns visitors about impersonators who might post fake addresses in comments.

ClaudeGrokChatGPTblock explorer

💡 Publish one address, test it yourself, and tell people where the real one lives.

Bitcoin in plain English

Bitcoin is money that lives on computers, and no company or government runs it. Learn a few basic ideas and the rest of crypto gets much less confusing.

What Bitcoin actually is

Bitcoin is money that lives only on computers, and no bank or government is in charge of it.

📖 Example

Rosa wants to send $100 to her nephew overseas. Instead of going through a bank, she sends bitcoin from an app on her phone, and it shows up in his wallet app, usually within an hour. No bank approves it, but if she types the wrong address, no bank can undo it either.

Bitcoin is a shared public record book, called a blockchain, that thousands of computers around the world keep identical copies of. It lets two people send money directly, without a bank in the middle. It was described in a nine-page paper in 2008 by someone using the made-up name Satoshi Nakamoto, and it started running in January 2009. No single person can shut it down, but that also means nobody can undo your mistakes.

🤖 How AI helps: Paste a confusing paragraph from the white paper into an AI and ask it to explain it like you are 12, then ask for a real-world analogy.

✅ Your first step: Read the one-page summary at the top of bitcoin.org's 'How it works' page, and write down one question it leaves you with.

Try this prompt
I'm new to Bitcoin. Explain this passage from the Bitcoin white paper in plain English, using one everyday analogy: [paste passage]. Then list 3 terms I should look up next. Do not give investment advice or price predictions. Stop after the 3 terms.

Bitcoin white paper (bitcoin.org) ↗ · How Bitcoin works (bitcoin.org) ↗

The 21 million cap

There will never be more than about 21 million bitcoins, a limit written into its rules.

📖 Example

Think of a cookie jar that can only ever hold 21 million cookies. Most cookies are already in the jar, and the rest drip in slowly over the next hundred-plus years. Dollars work differently: the government can print more of them when it decides to.

The software limits the total supply of bitcoin to just under 21 million coins. New coins enter only as rewards to miners, on a schedule written into the code. That fixed, published supply is the heart of the 'digital gold' argument. Whether scarcity alone makes something valuable is a fair question to keep asking.

🤖 How AI helps: Ask an AI to compare Bitcoin's supply schedule with how the U.S. dollar supply works, and to show both sides of the scarcity debate.

✅ Your first step: Look up 'bitcoin circulating supply' on a block explorer and compare it to 21 million.

Bitcoin FAQ (bitcoin.org) ↗ · Controlled supply (Bitcoin Wiki) ↗

Halvings

About every four years, the number of new bitcoins made each day is cut in half.

📖 Example

Imagine a faucet that pours 2 cups of water a minute for four years, then 1 cup, then half a cup. Bitcoin's 'faucet' of new coins works the same way. People watch these dates, but nobody can promise what the price will do after one.

About every four years (every 210,000 blocks) the reward miners get for each new block is cut in half. This slows the creation of new coins over time. Many people watch halvings because past ones have come before big price moves, but past patterns are not promises, and the market knows the dates years ahead.

🤖 How AI helps: Ask AI to build a simple table of past halving dates and block rewards, then double-check it against a block explorer.

✅ Your first step: Search 'next bitcoin halving date' and write the estimated date on your calendar as a reminder to read about it, not to act.

Controlled supply (Bitcoin Wiki) ↗ · mempool.space block explorer ↗

Keys, not coins

Owning bitcoin really means holding a secret password-like code, and whoever has that code controls the money.

📖 Example

Walt's bitcoin is like money in a locked mailbox on a public street. Everyone can see the mailbox, but only his key opens it. If Walt loses the key, the money stays locked forever; if a thief copies it, the thief can empty the box.

You never hold a bitcoin the way you hold a dollar bill. What you hold is a private key: a long secret code that proves you're allowed to move certain coins on the record book. Whoever has the key controls the coins. Lose it and the coins are stuck forever; let someone see it and they can steal them in minutes.

🤖 How AI helps: Ask an AI to explain public keys, private keys and addresses with a mailbox analogy, and quiz you until you can explain it back.

✅ Your first step: Write down, on paper, where you would keep a secret backup if you ever held your own coins.

Transactions (Bitcoin developer guide) ↗

Why 'address balance' can mislead you

Some websites show bitcoin balances in a way that can confuse you, so check the actual transaction, not the summary.

📖 Example

A website shows one of the very first 2009 bitcoin rewards under a modern-looking address and a balance. Someone sees that page and claims 'Satoshi's coins moved!' The real test is to open the original transaction and see whether that exact piece of it was ever spent.

I learned this building a small 'dormancy watch' on some of the very first coins ever mined in 2009. Those early rewards were paid to a raw public key (an old format called P2PK), not to the kind of address most explorers show. Some websites convert that key into a modern-looking address and show a balance, which can make it look like coins moved or did not move when the real question is whether that specific original output has ever been spent. The lesson for anyone: check the exact transaction output, not a summary number on a website.

🤖 How AI helps: AI can walk you through reading a transaction on a block explorer, field by field, so you can tell an output from an address balance.

✅ Your first step: Open mempool.space, paste in any transaction ID you find in a news story, and look for the words 'spent' or 'unspent'.

Try this prompt
I'm looking at this Bitcoin transaction on a block explorer: [paste transaction ID]. Explain each part of the page in plain English: inputs, outputs, fees, and whether each output has been spent. Do not speculate about who owns it. Stop after the explanation.

Transactions (Bitcoin developer guide) ↗ · mempool.space block explorer ↗

Buying and holding safely

Most people who lose crypto lose it to mistakes, hacks and scams, not to prices falling. A few simple habits prevent most of that.

Exchange vs. self-custody

You can let a company hold your bitcoin for you, or hold it yourself; each way has its own risks.

📖 Example

Gloria buys $200 of bitcoin on an exchange app and leaves it there, so the company holds the keys. Her friend Ben moves his $200 to a wallet he controls. If the company goes bankrupt, Gloria may wait months in line with other customers; if Ben loses his backup words, nobody can help him.

An exchange is a company app where you buy and sell crypto. While your coins sit there, the company holds the keys and you hold a promise, like an IOU. If the company fails, freezes withdrawals, or gets hacked, you may have to wait in line with its other customers. 'Self-custody' means you hold the keys yourself in a wallet you control. That removes the company risk but puts all the responsibility on you.

🤖 How AI helps: Ask AI to list the questions to ask any exchange about custody, insurance, and what happens to customer assets in a bankruptcy.

✅ Your first step: If you use a crypto app, find its page on what happens to customer funds if the company fails, and read it.

Crypto assets spotlight (Investor.gov, SEC) ↗ · Understand the risks of virtual currency (CFTC) ↗

Seed phrases: the master key

Your wallet gives you 12 or 24 backup words, and anyone who sees them can take everything.

📖 Example

When Frank set up a wallet, it showed him 12 ordinary words like 'apple' and 'river'. He wrote them on paper and put it in his fireproof box. A week later a 'support agent' messaged asking for those words to 'fix his account'; because Frank knew real support never asks, he ignored it and kept his money.

Most wallets give you a list of 12 or 24 words called a seed phrase. Anyone with those words can rebuild your wallet anywhere and take everything. Write it down on paper or metal, store it somewhere safe from fire and prying eyes, and never type it into a website, a chat, a photo, a cloud note, or an AI tool. No real support person will ever ask for it.

🤖 How AI helps: AI can help you plan where backup copies live and who in your family knows what, without you ever sharing the words themselves. Never paste or say your seed words to any AI, by text or by voice.

✅ Your first step: Tell one trusted family member this rule out loud: 'No real company will ever ask for my backup words.'

Try this prompt
Help me write a simple, non-technical plan for backing up a Bitcoin wallet seed phrase for my family, including what happens if I'm unavailable. I will NOT share the seed words with you. Do not give legal or financial advice; flag where I should ask an estate attorney. Stop after a one-page checklist.

Secure your wallet (bitcoin.org) ↗

Hardware wallets

A hardware wallet is a small gadget, like a USB stick, that keeps your bitcoin secret code off the internet.

📖 Example

Diane buys a hardware wallet, for example from Ledger or Trezor, directly from the maker's website. When she sends bitcoin, she presses a button on the gadget to approve it, so a virus on her laptop cannot sneak her money out. She never uses one that arrives with backup words already written in the box.

A hardware wallet is a small device that keeps your private keys offline and signs transactions inside the device. It protects against malware on your computer. Buy only from the maker or an authorized seller, never secondhand, and never use a device that arrives with a seed phrase already filled in.

🤖 How AI helps: Ask AI to compare hardware-wallet features in plain English, then verify every claim on the maker's own website.

✅ Your first step: Bookmark the official website of any hardware wallet maker you're curious about, so you never buy from a fake site.

Secure your wallet (bitcoin.org) ↗ · Ledger (hardware wallet maker) ↗ · Trezor (hardware wallet maker) ↗

Wrong-network losses

The same digital dollar can travel on different 'roads', and sending it down the wrong road can lose it.

📖 Example

Carl sends $500 of a stablecoin from one app to another but picks a different network than the receiving app supports. The money doesn't arrive, and the receiving company says it may not be recoverable. If Carl had sent $5 first as a test, he would have lost only $5.

The same coin or stablecoin can exist on several different networks. Sending it on a network the receiving side does not support can make it vanish or require a costly recovery, if recovery is even possible. Before every first transfer, confirm the network on both sides and send a small test amount.

🤖 How AI helps: Paste the deposit instructions from both sides into an AI and ask whether the networks match before you hit send.

✅ Your first step: Write on a sticky note: 'Always send a small test amount first,' and stick it near where you use crypto apps.

Try this prompt
Here are the withdrawal settings on the sending platform: [paste]. Here are the deposit instructions on the receiving side: [paste]. Do the asset and network match? List anything that looks inconsistent. Do not tell me whether to make the transfer. Stop after the checklist.

Address poisoning

Scammers make fake account numbers that look almost like yours, hoping you'll copy the wrong one.

📖 Example

Nina often sends bitcoin to her own savings wallet. One day a tiny deposit appears from an address that starts and ends with the same letters as her savings wallet. If she copies that one from her history, her next $1,000 goes to the scammer, so she uses only her saved address book instead.

Scammers send tiny transactions from addresses that look almost like ones you use, hoping you will copy the wrong one from your history next time. Crypto addresses are long, and people usually check only the first and last few characters. Use a saved, verified address book, check the whole address, and do a small test send for anything large.

🤖 How AI helps: AI can compare two long addresses character by character and point out every difference.

✅ Your first step: If you use a crypto app, save your own regular addresses in its address book with clear names.

Try this prompt
Compare these two crypto addresses character by character and list every position where they differ: A=[address] B=[address]. Do not judge whether either is safe. Stop after the list.

Inheritance and 'what if I'm gone'

If you hold bitcoin yourself and nobody knows how to reach it, your family may never get it.

📖 Example

Harold kept bitcoin on a hardware wallet and never told anyone. When he passed away, his kids found the gadget but not the backup words, so the money was lost for good. A simple sealed letter with instructions, kept with his will, would have changed that.

Self-custody coins can be lost forever if nobody else knows how to reach them. Families need a plan that is safe from thieves but usable by the right people. This is an estate-planning question as much as a tech one.

🤖 How AI helps: Use AI to draft a plain-English letter of instructions for your family (no secrets in it) and a list of questions for an estate attorney.

✅ Your first step: Write one sentence in your estate notes saying whether you own any crypto and where the instructions are (not the secret words).

Ways people get exposure

There is more than one way to own a piece of bitcoin: the coin itself, a fund in your regular investment account, company stocks, or mining machines. Each one is a different mix of how easy it is, what it costs, who holds it, and what can go wrong. Every product named below is an example, not a recommendation.

Owning the coin itself (spot)

'Spot' just means buying real bitcoin itself, usually through an app on your phone.

📖 Example

Maria opens an app such as Coinbase, Kraken, Cash App or Strike (named as examples, not recommendations), links her bank, and buys $50 of bitcoin. If bitcoin rises 10%, her $50 becomes about $55; if it falls 30%, it becomes about $35. Fees differ a lot between apps, so she checks what she actually received after fees.

'Spot' just means buying actual bitcoin. You own it directly, and if you hold it yourself, nobody can block your coins. You take on the full ups and downs of the price and the job of keeping it safe. Costs differ a lot between apps, including the hidden 'spread' (the gap between the buy price and the sell price), so compare what you actually get, not just the advertised fee.

🤖 How AI helps: Ask AI to turn a platform's fee page into a plain example: 'If I buy $500, what do I actually get after every fee?'

✅ Your first step: Open the fee page of any crypto app you've heard of and find what it charges on a $100 purchase.

Crypto assets spotlight (Investor.gov, SEC) ↗ · Kraken (example exchange) ↗ · Cash App bitcoin (example app) ↗ · Strike (example app) ↗

Spot Bitcoin ETFs

A bitcoin ETF lets you own bitcoin's price through a regular investment account, like buying one stock.

📖 Example

Linda buys $100 of a spot bitcoin ETF, for example iShares Bitcoin Trust (IBIT) or Fidelity Wise Origin Bitcoin Fund (FBTC), inside her brokerage account or IRA. If bitcoin rises 10%, her $100 becomes about $110, minus a small yearly fee (check the fund's current expense ratio). She never handles a wallet or backup words, but she also can't send the bitcoin to anyone.

An ETF (exchange-traded fund) is a basket you can buy like a single stock. A spot bitcoin ETF holds real bitcoin, so you can follow bitcoin's price inside a normal brokerage account or retirement account like an IRA. You never handle keys, but you pay a yearly fee (the 'expense ratio'), and you can't take out the coins or send them to anyone. Read the fund's prospectus, the official description of how it works.

🤖 How AI helps: Paste two ETF fact sheets into an AI and ask it to compare fees, custody arrangements and risks in a table.

✅ Your first step: Look up one bitcoin ETF's ticker in your brokerage app and find its 'expense ratio'.

Mutual funds and ETFs (Investor.gov) ↗ · ETF glossary (Investor.gov) ↗ · iShares Bitcoin Trust (IBIT), example ↗ · Fidelity Wise Origin Bitcoin Fund (FBTC), example ↗

Covered-call and 'income' crypto ETFs

These funds pay you money every month, but in exchange they usually give up much of the gain when bitcoin shoots up.

📖 Example

Examples of this kind of fund include YieldMax Bitcoin Option Income ETF (YBIT), Roundhill Bitcoin Covered Call Strategy ETF (YBTC), and NEOS Bitcoin High Income ETF (BTCI); they are named as examples, not recommendations. Ed puts $1,000 into one and receives monthly checks. When bitcoin jumps 50%, his fund rises much less because it sold away that upside; when bitcoin falls 50%, his fund falls a lot too. Part of his 'income' may just be his own money handed back.

Some funds earn extra cash by selling 'options', which are contracts that pay the fund now in exchange for giving up some future gains. That lets them pay large monthly distributions. The tradeoff: they usually miss much of the gain when bitcoin jumps, but still take most of the fall when it drops. A high payout can partly be your own money handed back ('return of capital'), and the fund's share price can slowly shrink. I learned to look at total return (price change plus payouts), not just the payout rate.

🤖 How AI helps: Ask AI to explain a fund's distribution notice and calculate total return over a period from the numbers you give it.

✅ Your first step: Find one income fund's latest distribution notice and look for the words 'return of capital'.

Try this prompt
Here are a fund's share prices and distributions over [period]: [paste]. Calculate total return, and explain in plain English what 'return of capital' means on its distribution notices. Do not recommend buying or selling. Stop after the calculation and explanation.

Return of capital (Investor.gov glossary) ↗ · YieldMax Bitcoin Option Income ETF (YBIT), example ↗ · Roundhill Bitcoin Covered Call Strategy ETF (YBTC), example ↗ · NEOS Bitcoin High Income ETF (BTCI), example ↗

Treasury companies and miners' stocks

Some companies own lots of bitcoin or run mining machines, and you can buy their stock instead of the coin.

📖 Example

Strategy (ticker MSTR) is a well-known example of a company that holds a very large amount of bitcoin. Public bitcoin miners include MARA Holdings (MARA), Riot Platforms (RIOT), and CleanSpark (CLSK); all named as examples, not recommendations. Sam buys $500 of one of these stocks; it can rise or fall faster than bitcoin itself because of the company's debt, new share sales, and power costs.

Some public companies hold large amounts of bitcoin (or other crypto) on their balance sheets, and some run mining operations. Their stocks can move more than bitcoin itself because of debt, share issuance, and business risk. Owning them is a bet on management and financing, not only on the coin.

🤖 How AI helps: AI can summarize a company's latest annual report: how much crypto it holds, how it paid for it, and what debt it carries.

✅ Your first step: Look up one of these companies' 'investor relations' page and find how much bitcoin it says it holds or mines.

BitcoinTreasuries.net (public holdings tracker) ↗ · MARA Holdings (example miner) ↗ · Riot Platforms (example miner) ↗ · CleanSpark (example miner) ↗

Mining it yourself

Mining means running special computers that earn small amounts of bitcoin, but you pay for the machine and the electricity.

📖 Example

Joe buys one mining machine for a few thousand dollars and pays a facility to run it. Each day it earns a few dollars' worth of bitcoin, and each day he pays for electricity. If bitcoin's price drops or the machine is off for a week, his profit can shrink to zero or go negative.

You can buy mining machines and either run them at home or pay a hosting company to run them. You earn small amounts of bitcoin daily, but you take on hardware, power, uptime and tax-record risk. The next section covers it honestly.

🤖 How AI helps: Ask AI to build a simple breakeven calculator from numbers you supply, and to show what happens if price or uptime drops.

✅ Your first step: Find your electric bill and write down your price per kilowatt-hour (kWh); it's the first number any mining math needs.

Mining, honestly

Mining can work, but it is a small business with real bills, not a money machine you can ignore. These are lessons I learned running a few machines that a hosting company runs for me.

How the money works

A mining machine earns bitcoin each day, costs electricity each day, and your profit is the difference.

📖 Example

Pat's machine earns about $10 a day in bitcoin and uses about $7 a day in electricity, so he keeps about $3. If bitcoin's price falls 30%, earnings drop to about $7 and he just breaks even. That's why miners always check the price where they stop making money.

A mining machine earns based on how much computing power it adds (its 'hashrate'), how hard the network's puzzle is right now ('difficulty'), the bitcoin price, and transaction fees. Miners sum this up as 'hashprice': roughly what a set amount of computing power earns per day. Your main cost is electricity, priced per kilowatt-hour (kWh), plus any hosting fee. Your profit is the gap between the two, and it changes every day.

🤖 How AI helps: Give an AI your machine's power use and your power rate and ask it to show daily cost, then earnings at three different bitcoin prices.

✅ Your first step: Use any free online mining calculator with made-up numbers and see what happens when you lower the bitcoin price.

Try this prompt
My mining machine uses [watts] watts and my all-in power rate is $[rate]/kWh. Today's estimated earnings per machine are [BTC amount] BTC/day. Show daily power cost and net profit at bitcoin prices of $[low], $[mid], $[high], and the price where I break even. Show your math. Do not tell me whether to buy machines. Stop after the table.

Hosted vs. home mining

You can run a mining machine at home or pay a company to run it for you somewhere power is cheap.

📖 Example

At home, Lisa's machine is as loud as a vacuum cleaner and her electric rate is too high to profit. She moves it to a hosting company with cheaper power. One host charges a flat monthly fee even when the machine is off; another charges only for power actually used, which hurts less during downtime.

Home mining is loud, hot, and limited by your household electric rate, which is often too high to profit. Hosting puts machines in a facility with cheaper power, but you depend on the host's honesty, uptime, and contract terms. Compare how each host bills: flat monthly fees charge you even when a machine is down, while metered billing charges only for power actually used. In my experience that difference makes metered setups far less fragile when uptime slips.

🤖 How AI helps: Paste a hosting contract into AI and ask it to list every fee, what happens during downtime, and what the uptime promise actually excludes.

✅ Your first step: If you ever compare hosts, write two columns: 'charges when machine is off' and 'doesn't', and sort them.

Uptime is the hidden lever

A mining machine only makes money while it's running, so time switched off is money lost.

📖 Example

Tom's host promises 98% uptime, but the fine print excludes 'curtailment', meaning planned power shutoffs on hot days. In a heat wave his machine is off for 10 days and earns nothing. Separately, when Tom missed a payment on his installment plan, the host paused his machines, and that downtime was on him.

A machine that is switched off earns nothing. 'Uptime' is the share of time it's actually running. Read uptime promises carefully: many leave out 'curtailment', meaning planned power shutoffs during heat waves or grid stress, which may be the most common reason machines go dark. Ask whether the promise is per machine or an average across all machines, how it's measured, and what you get if they miss it. A lesson I learned the hard way: if you buy machines on a payment plan, a missed payment can pause your machines, and that lost time is on you, not the host.

🤖 How AI helps: AI can turn a vague uptime promise into a list of the five questions to get answered in writing.

✅ Your first step: Write down five questions to ask any host: the uptime number, per machine or average, how it's measured, what's excluded, and what you get if they miss it.

Track actual vs. projected

Compare what your mining actually earned with what the sales pitch promised, every month.

📖 Example

The seller said Ann's machine would net $100 a month. Her records show $60 in March, because the machine was off for nine days. She writes the reason next to the number, like a landlord noting a vacant month, so she can see the real picture fast.

Sales pitches show projected earnings. What matters is what you actually mined, minus what you actually paid, compared to the projection, with a plain reason when they differ. Think of each machine like a rental unit: a monthly profit and loss per unit and a fleet total. Keep it simple enough to read in 30 seconds.

🤖 How AI helps: AI can turn a pool's daily payout export into a monthly actual-vs-projected table and flag days that look wrong.

✅ Your first step: Make a simple three-column sheet: Month, Promised, Actual.

Try this prompt
Here is my mining pool's daily payout history and my power bills: [paste or upload]. Build a monthly table of mined (in BTC and in dollars at each day's price), costs, and net, next to this projection: [paste]. Flag any day with zero output. Do not give tax or investment advice. Stop after the table and flagged days.

Shop the hardware price

The exact same mining machine can cost very different amounts from different sellers, so always compare.

📖 Example

Ray gets one quote for a machine at $8,000 and, after asking around, finds the identical model for about half that. Asking two or three sellers on the same day saved him thousands. He also negotiates hosting separately from the machine.

The same mining machine can be sold at very different prices by different vendors. Get two or three independent quotes on the day you buy, and negotiate hosting separately from hardware. Comparing quotes is the only way to spot a big markup.

🤖 How AI helps: Ask AI to put several quotes side by side with total cost, warranty and shipping, so you compare like with like.

✅ Your first step: If you're shopping, write the exact model name and get it quoted by at least three sellers on the same day.

Valuation lenses: context, not prophecy

Nobody knows what bitcoin will be worth. These are a few ways people compare today's price with the long-term trend. Treat each one as a guess to test, not a forecast.

The power-law model

The power law is a math curve some people use to judge whether bitcoin's price looks high or low compared with its long-term trend.

📖 Example

Say the model's 'fair value' for today is $100,000 and bitcoin sells for $50,000. That's a ratio of 0.5, meaning price sits at half the trend line. The ratio is more useful than the exact dollar number, because different versions of the model disagree on the dollars.

The power law is a math curve. On a special chart where each step up means ten times more (a 'log' chart), bitcoin's price over the years has stayed fairly close to a straight line. The formula is: fair value = a fixed number × (days since bitcoin started in 2009) raised to a power of about 5.7 to 5.8, with a lower 'floor' line and an upper band. I found it most useful as a ratio: today's price divided by the model's fair value. Different versions of the model can disagree by 20% or more on the dollar number, but the ratio still tells you whether price is high or low against the trend.

🤖 How AI helps: Ask AI to explain a log-log chart and to compute 'price divided by model fair value' from a formula and a date you provide.

✅ Your first step: Open the Bitcoin Power Law app and find where today's price sits compared with the middle line.

Try this prompt
Using the formula fair value = [constant] × (days since 2009-01-03)^[exponent], calculate fair value for [date] and the ratio of [today's price] to it. Show the day count and math. Explain in two sentences why a model like this can be wrong. Do not predict prices or give advice. Stop after that.

Bitcoin Power Law (Porkopolis model app) ↗

Power-law people: who's behind it

A handful of researchers and writers made the power-law idea popular, and they don't all agree.

📖 Example

A physicist, Giovanni Santostasi, argues bitcoin grows by a natural law. Others, like Porkopolis Economics, Fred Krueger, Plan C and Sminston With, publish their own charts and versions. Watching two of them side by side shows how the same idea can give different numbers.

Giovanni Santostasi, a physicist, argues bitcoin's growth follows a physics-like scaling law. Harold Christopher Burger wrote a widely shared 2019 essay describing a long-term 'power-law corridor'. Porkopolis Economics publishes a fair-value model with a floor and upper band. Fred Krueger (DotKrueger) talks about power-law price paths and long-term bitcoin math. Plan C popularized quantile-style versions of these charts, and Sminston With, an engineering PhD, publishes chart-heavy power-law analysis.

🤖 How AI helps: Ask AI to summarize what each person claims, in their own published words, and where they disagree with each other.

✅ Your first step: Watch one short video from one of these people and write down one thing they claim and one question you'd ask them.

Giovanni Santostasi (YouTube) ↗ · Giovanni Santostasi (X) ↗ · Porkopolis Economics (YouTube) ↗ · Porkopolis Economics (X) ↗ · DotKrueger / Fred Krueger (YouTube) ↗ · Fred Krueger (X) ↗ · Plan C (X) ↗ · Sminston With (YouTube) ↗

What the power law claims

Fans say bitcoin's price has grown along a steady curve for years and will keep roughly following it.

📖 Example

Fans point out that, on a special chart where each line means ten times more, bitcoin's history looks like a fairly straight path. They say past low points have stayed above a 'floor' line. But a path in the past is not a promise about the future.

Supporters say the line reflects network adoption growing in a predictable, scale-free way, much like other natural or network systems. They argue the floor has held across many cycles and that volatility shrinks as the asset matures. Some project long-range fair values from the line. Those are model outputs, not guarantees.

🤖 How AI helps: Ask AI to list the assumptions the model needs to stay true, so you know what to watch.

✅ Your first step: Write down one thing that would have to stay true for the model to keep working, like 'more people keep using bitcoin'.

Honest critiques

Critics say drawing a line through past prices doesn't prove the future will follow it.

📖 Example

Imagine drawing a line through a child's height from age 1 to 12 and predicting they'll be 9 feet tall at 30. The line fit the past perfectly but missed how growth slows. Critics say bitcoin's power law could break the same way.

Critics point out that fitting a line to past prices does not prove a cause, and the model has no built-in mechanism for regulation, competition, or a broken trend. Small changes in the exponent or start date change the long-range numbers a lot. A model fit on history always looks good on history. Use it as one lens, not a plan.

🤖 How AI helps: Ask AI to argue against the power law as strongly as it can, then argue for it, and compare.

✅ Your first step: Ask an AI for the three strongest arguments against the power law, and read them before any argument for it.

Try this prompt
Give me the three strongest arguments FOR and the three strongest AGAINST using a power-law model to value bitcoin. Keep each to two sentences. Do not predict a price or tell me what to buy. Stop after the six arguments.

On-chain data and cycles

Because bitcoin's records are public, people study them for clues about mood, but clues are not guarantees.

📖 Example

Analysts notice that coins held for years rarely move, and that prices have often run up in the year or two after a halving. Kim reads these charts as weather reports, not forecasts. She knows patterns can change as more people join.

Because the ledger is public, analysts track things like how long coins have sat unmoved, how much is held by long-term holders, and miners' selling. Others study four-year cycles around halvings. These can describe market mood, but they are not crystal balls, and cycles can change as the market grows.

🤖 How AI helps: AI can explain any on-chain chart you screenshot: what it measures and what it cannot tell you.

✅ Your first step: Screenshot one on-chain chart you see online and ask an AI, 'What does this measure, and what can't it tell me?'

Beyond Bitcoin

Bitcoin is just one digital network. Thousands of other digital coins exist, and most have very different goals and risks.

Ethereum and smart contracts

Ethereum is a different digital network that can run small programs, called smart contracts, that move money automatically.

📖 Example

Jen uses an app on Ethereum that lends out her digital dollars and pays interest, all run by code instead of a bank clerk. She pays a small fee in ether (ETH) for each action. If the code has a bug, there may be nobody to call.

Ethereum is a blockchain that runs programs called smart contracts, which power tokens, lending apps, and more. Its token, ether (ETH), pays transaction fees. More features mean more ways for things to break, including bugs in contracts.

🤖 How AI helps: Ask AI to explain what a specific smart-contract app does and what would happen to your money if its code had a bug.

✅ Your first step: Read the first section of ethereum.org's 'What is Ethereum?' page.

What is Ethereum? (ethereum.org) ↗

Layer 2s like Arbitrum

A 'Layer 2' is a faster, cheaper side road built on top of Ethereum.

📖 Example

Moving $20 on Ethereum might cost Dan more in fees than he'd like, so he uses Arbitrum, where fees are usually much lower. When he wants to move money back to Ethereum through the official route, it takes about a week and he has to claim it by hand. He learned to read how money gets out before putting it in.

A 'Layer 2' is a faster, cheaper side network that bundles lots of transactions and then records them on Ethereum. Arbitrum is one of the biggest. One gotcha I found reading its official docs: moving money from Arbitrum back to Ethereum through the official route takes about a week, and you have to claim it by hand at the end. Always learn how money gets out before you put it in.

🤖 How AI helps: Ask AI to explain a Layer 2's withdrawal process step by step from its official documentation.

✅ Your first step: On any crypto app you use, find the page that explains how and how long withdrawals take.

Layer 2 (ethereum.org) ↗ · Arbitrum docs ↗

Other smart-contract networks: NEAR and Sui

NEAR and Sui are other newer digital networks built to be fast and easy to use.

📖 Example

On Sui, a trading venue called DeepBook keeps every buy and sell order out in public view. That lets anyone see the real market instead of trusting a company's report. Newer networks can grow fast but also have more things that can go wrong.

NEAR and Sui are separate blockchains designed for speed and easier apps. Sui hosts DeepBook, an order book that runs on-chain, which means every bid, offer and trade is publicly visible. That transparency is useful for research because you can see the real market instead of trusting an exchange's report. Newer networks can grow quickly but also carry more technical and adoption risk.

🤖 How AI helps: AI can read a network's official docs and summarize what it is for, how fees work, and what is still experimental.

✅ Your first step: Open docs.near.org or docs.sui.io and read just the first 'what is it' paragraph.

NEAR documentation ↗ · Sui documentation ↗ · DeepBook (Sui docs) ↗

Stablecoins

A stablecoin is a digital token meant to always be worth about one dollar.

📖 Example

Omar holds 100 USDC, a stablecoin, expecting it to stay worth about $100. It is backed by cash and short-term government debt held by the company that issues it. But it isn't a bank account, it isn't FDIC insured, and stablecoins have briefly slipped below $1 before.

Stablecoins are tokens designed to stay worth about $1. Most are backed by cash and short-term government debt held by a company; others use crypto collateral or algorithms. They are only as safe as their backing and their issuer, and some have broken their peg in the past.

🤖 How AI helps: Ask AI to summarize a stablecoin issuer's latest reserve report and what it does and does not prove.

✅ Your first step: Search for one stablecoin issuer's 'reserve report' and look at what it says backs each coin.

Stablecoins (ethereum.org) ↗

DeFi risks

DeFi means money apps run by computer code instead of a bank, and high interest there often hides high risk.

📖 Example

An app offers Beth 20% a year on her $1,000. She asks, 'Where does that money come from?' and can't find a clear answer. A few months later the app is hacked and users lose most of their deposits.

DeFi ('decentralized finance') means money apps that run on computer code instead of through a company. They let people lend, borrow and trade. High advertised interest often hides risks: bugs in the code, hacks, collateral that suddenly loses value, or tokens that can be created out of thin air. If you can't explain where the interest comes from, it may be coming from you.

🤖 How AI helps: Paste an app's yield description into AI and ask 'where does this money come from, and what has to go right?'

✅ Your first step: Before trying any app, write down in one sentence where its interest comes from; if you can't, stop there.

Decentralized finance (ethereum.org) ↗

Taxes and records

In the U.S., crypto can be taxed, and the tax return asks about it. Keeping good records saves a lot of headaches. Have a CPA confirm anything that applies to you.

Crypto is property for tax

The IRS treats crypto like property, so selling, swapping or spending it can mean you owe tax.

📖 Example

Gary bought $1,000 of bitcoin and later used it to buy a $1,500 TV when it had grown to that value. That counts as selling it, so he has about a $500 gain to report. His tax return also asks a yes-or-no question about digital assets.

The IRS treats virtual currency as property, not currency. Selling, swapping one coin for another, or spending crypto can create a capital gain or loss. Form 1040 asks whether you received, sold, exchanged or otherwise disposed of a digital asset.

🤖 How AI helps: Ask AI to list which of your transactions were likely taxable events, with the IRS source for each, for your CPA to review.

✅ Your first step: Look at your last tax return (Form 1040) and find the digital-asset question near the top.

IRS: Digital assets ↗ · IRS Notice 2014-21 ↗ · IRS: Virtual currency FAQs ↗

Cost basis is everything

'Cost basis' is what you paid, and your tax is based on the difference between that and what you sold for.

📖 Example

Helen paid $2,000 for some bitcoin, plus $20 in fees, so her basis is about $2,020. She sells for $3,000, so her gain is about $980. If she had moved the coins to another app that didn't know what she paid, she'd need her own records to prove it.

Your gain or loss is what you sold for minus your basis (generally what you paid, including fees). Coins held more than one year generally get long-term treatment. If you move coins between platforms, the new platform may not know your basis, so keep your own records of dates, amounts and prices.

🤖 How AI helps: AI can merge downloads from several apps into one clean spreadsheet and flag transfers that are missing what you paid. If you've never uploaded a file to an AI, the Your AI toolkit guide (fixkitai.com/learn/ai/) shows how.

✅ Your first step: Download the transaction history from any crypto app you've used and save it in one folder.

Try this prompt
Here are transaction exports from [platforms]: [upload]. Combine them into one table with date, type, amount, USD value, fees, and running holdings. Flag transfers between my own accounts and any rows missing a cost basis. Do not calculate my tax or give tax advice. Stop after the table and flags.

26 U.S.C. §1012 basis (Cornell LII) ↗ · 26 U.S.C. §1001 gain or loss (Cornell LII) ↗ · IRS Topic 703: Basis of assets ↗ · IRS Topic 409: Capital gains and losses ↗

Mining income is taxed twice, on two events

Mined bitcoin counts as income when you get it, and again as a gain or loss when you later sell it.

📖 Example

Jim's machine pays him bitcoin worth $100 on the day it arrives, so he reports $100 of income and his basis is $100. A year later he sells it for $150 and reports a $50 gain. If it had dropped to $60 instead, he'd still have owed tax on the first $100.

Mined coins count as ordinary income (taxed like wages) at their market value on the day you receive them, and that value becomes your cost basis. When you later sell or spend them, you have a capital gain or loss measured from that basis. If mining is a business, the profit may also owe self-employment tax. The catch I learned: the income tax is locked in when the coins arrive, even if the price drops before you sell, and you may never get a 1099 form, so the pool's payout records and the blockchain are your proof.

🤖 How AI helps: AI can attach the price at each payout timestamp to your payout list so your CPA has a clean income schedule.

✅ Your first step: If you mine, make a list of each payout date and amount, ready to add the price for that day.

IRS Notice 2014-21 (Q&A on mining) ↗ · IRS Rev. Rul. 2023-14 (dominion and control) ↗ · 26 U.S.C. §61 gross income (Cornell LII) ↗ · 26 U.S.C. §1402 self-employment income (Cornell LII) ↗

New broker reporting: Form 1099-DA

Form 1099-DA is a new tax form crypto companies send to you and the IRS showing what you sold.

📖 Example

Early in the year, Sue's crypto app sends her a Form 1099-DA listing her sales. She compares it with her own records and finds one transfer between her own accounts listed wrongly. She brings both to her tax preparer.

The IRS created Form 1099-DA for brokers to report digital asset sales. Which years and which details (like cost basis) are reported is phased in, so check the IRS page for the current rules. Even with a 1099-DA, you are responsible for reporting accurately, including activity the form does not capture.

🤖 How AI helps: Ask AI to compare a 1099-DA against your own records line by line and list mismatches for your CPA.

✅ Your first step: Check your crypto app's tax documents page to see whether it issues Form 1099-DA and when.

IRS: About Form 1099-DA ↗ · IRS: About Form 8949 ↗

Scams and red flags

Crypto payments are very hard to undo, so scammers love them. Slow down any time money and pressure to hurry show up together.

Relationship and 'pig butchering' scams

Scammers become your online friend first, then talk you into a fake investment site.

📖 Example

Mary gets a 'wrong number' text and starts chatting with a friendly stranger. After weeks, he shows her a trading site where her $500 'grows' to $2,000. When she tries to take money out, the site demands a $1,000 'tax' first; the whole site is fake.

A friendly stranger, often met online or through a 'wrong number' text, builds trust over weeks and then mentions an amazing trading website. The website shows big fake profits until you try to take money out, then demands 'taxes' or 'fees' first. The whole website is the scam. ('Pig butchering' is the scammers' own nasty name for fattening up a victim before taking everything.)

🤖 How AI helps: Paste the conversation into AI and ask it to list the manipulation tactics it sees. It is often easier to hear it from a neutral voice.

✅ Your first step: Tell a family member: 'If a new online friend ever brings up investing, I'll call you before I do anything.'

Romance scams advisory (CFTC) ↗ · CFTC customer advisories ↗

Guaranteed returns and recruitment

If someone promises steady big profits or pays you to recruit friends, it's very likely a scam.

📖 Example

Bob's neighbor says a crypto bot pays 2% every week, guaranteed, and Bob earns a bonus for each friend he signs up. The early payouts arrive, so more people join. Then withdrawals stop, because the 'profits' were just newer people's money.

Any crypto 'investment' that promises steady high returns, pays you for recruiting others, or pressures you to act now has the shape of a Ponzi or pyramid scheme. Real markets go down sometimes.

🤖 How AI helps: Ask AI to compare an offer to the SEC's list of Ponzi warning signs and say which ones match.

✅ Your first step: Look up the person or firm on FINRA BrokerCheck before you ever hand over money.

Try this prompt
Here is an investment offer I received: [paste]. Compare it to common Ponzi and investment-fraud warning signs and list which ones it matches. Do not tell me whether to invest. Stop after the list and point me to where I can report it.

Ponzi schemes (Investor.gov) ↗ · FINRA BrokerCheck ↗

Fake support and impersonators

Crooks pretend to be company support, the government, or famous YouTubers to steal your crypto.

📖 Example

Alice comments on a crypto video, and a reply from a channel with a nearly identical name says she's won a giveaway if she sends $200 first. She checks the channel handle and sees one letter is different. She deletes it, because real creators and companies don't ask you to send money to receive money.

Scammers pose as exchange support, wallet makers, government agencies, or famous crypto YouTubers. Comment sections and look-alike channels are full of them. Real support will never ask for your seed phrase or ask you to move coins to a 'safe' wallet.

🤖 How AI helps: AI can check whether a link's web address matches the official site and explain why look-alike addresses are dangerous. Never give an AI your passwords or backup words; the Your AI toolkit guide (fixkitai.com/learn/ai/) covers what's safe to share.

✅ Your first step: Bookmark the official websites of any crypto app you use and only log in through those bookmarks.

Where to report

If a crypto scam targets you, report it right away to the FBI's IC3 site and the FTC.

📖 Example

Walter loses $3,000 to a fake trading site. He saves screenshots, the addresses he sent to, and the transaction IDs, then files at ic3.gov and reportfraud.ftc.gov. A week later a 'recovery expert' offers to get his money back for a fee, and he recognizes it as a second scam.

If you are targeted or lose money, report it quickly and keep every record: transaction IDs, addresses, screenshots and messages. Beware of 'recovery services' that contact you afterward promising to get your money back for a fee; many are a second scam.

🤖 How AI helps: AI can organize your evidence into a clean timeline before you file a report.

✅ Your first step: Save the addresses ic3.gov and reportfraud.ftc.gov in your phone's notes now, so you have them if you ever need them.

FBI Internet Crime Complaint Center (IC3) ↗ · FTC ReportFraud ↗ · CFPB fraud and scams ↗

The top cryptos by market cap — what each one is for

Snapshot of the top 20 cryptocurrencies by market capitalization, pulled from the CoinGecko public API on 2026-10-17. Rankings change daily. Stablecoins are included where they rank: a stablecoin is a token designed to hold a steady value, usually $1, backed by cash and short-term government debt, other crypto, or code-based mechanisms. It is not a bank deposit and is not FDIC insured. The 'thesis' fields describe what supporters argue, not what will happen. Nothing here is a recommendation.

#CoinCategoryThe thesis (what supporters say)Used for todayRisksLearn
1Bitcoin BTCDigital money with a fixed limit of about 21 million coins; the original and biggest.store of valueSupporters see bitcoin as digital gold: a fixed supply of about 21 million, no central issuer, and the longest track record and largest network in crypto. They argue it can grow as a hedge against currency debasement and as a global savings asset.Long-term holding, cross-border transfers, ETF and corporate treasury holdings, and payments via the Lightning Network.Large price swings, regulatory changes, and self-custody mistakes. Its value depends on continued belief and adoption.Site ↗Videos ▶
2Ethereum ETHA digital network that runs small programs; its coin pays the fees.smart-contract platformSupporters call Ethereum the base layer for programmable finance: stablecoins, tokenized assets and apps settle on it. They argue ETH captures value through fees and staking as more activity moves on-chain.Paying fees for smart contracts, DeFi, stablecoins, NFTs, and staking to secure the network.Competition from faster chains, activity moving to Layer 2s, and smart-contract bugs. Regulatory treatment of staking is still evolving.Site ↗Videos ▶
3Tether USDTA digital token meant to always be worth $1, run by a company called Tether.stablecoinSupporters value Tether as the most widely used dollar token in crypto, with deep liquidity across many networks and exchanges.Trading pairs on exchanges, moving dollars between platforms, and dollar access in countries with weak currencies.You rely on the issuer's reserves, disclosures and banking relationships. Regulators and critics have questioned its transparency in the past.Site ↗Videos ▶
4BNB BNBThe coin of a big crypto exchange and its network; used for fees and discounts.exchange token / smart-contract platformSupporters see BNB as the fuel of a large exchange ecosystem and the BNB Chain, with fee discounts and token burns that reduce supply.Paying fees on BNB Chain, trading-fee discounts, and access to exchange-linked programs.Heavily tied to one company's fortunes and regulatory standing. More centralized than many networks.Site ↗Videos ▶
5XRP XRPA coin built for sending money between countries quickly and cheaply.paymentsSupporters argue XRP and the XRP Ledger can move money across borders quickly and cheaply, especially for banks and payment firms.Cross-border payments and liquidity on the XRP Ledger, plus trading.Adoption by banks has been slower than supporters hoped, and a large share of supply is linked to one company. It has a long regulatory history.Site ↗Videos ▶
6USDC USDCA digital token meant to always be worth $1, issued by a company called Circle.stablecoinSupporters value USDC as a regulated-style, transparent dollar token with regular reserve reports, popular with businesses and DeFi.Payments, moving dollars on-chain, DeFi collateral, and trading.Depends on the issuer and its banking partners; a brief peg break happened during a 2023 bank failure.Site ↗Videos ▶
7Solana SOLA fast, low-fee network for apps and trading; its coin pays the fees.smart-contract platformSupporters argue Solana's high speed and low fees make it the best chain for consumer apps, payments and trading.Fast trading, DeFi, payments, NFTs and memecoin activity; staking.Past network outages, heavy speculative activity, and competition from other fast chains.Site ↗Videos ▶
8TRON TRXA low-fee network used a lot for sending digital dollars.smart-contract platform / stablecoin railsSupporters point to TRON's low fees and its large share of stablecoin transfers, especially USDT, as proof of real-world use.Moving stablecoins cheaply, especially in emerging markets; paying network fees.Concentrated control and leadership controversies; low fees also attract illicit use.Site ↗Videos ▶
9Figure Heloc FIGR_HELOCHome-equity loans recorded as tokens on a blockchain; not a normal coin.tokenized real-world asset (RWA)Supporters see it as an example of traditional loans (home-equity lines of credit) being recorded and traded on a blockchain, making credit markets faster and more transparent.Representing tokenized home-equity loans on the Provenance blockchain for institutional trading and settlement.Its value depends on the underlying loans being repaid and on one company's platform. Market-cap rankings for tokenized assets may not reflect open, liquid trading the way they do for coins like bitcoin.Site ↗Videos ▶
10Zcash ZECA coin that lets you choose to keep your payments private.privacy coinSupporters argue financial privacy is a right and Zcash offers optional shielded transactions using strong cryptography, with a fixed supply like bitcoin.Private (shielded) or transparent payments and holding.Some exchanges restrict privacy coins due to regulation; most activity has historically been unshielded.Site ↗Videos ▶
11Hyperliquid HYPEThe coin of an online trading platform that runs on its own blockchain.decentralized exchange / Layer 1Supporters see Hyperliquid as an on-chain exchange that rivals centralized ones for speed, with transparent order books and fee revenue that flows back to the token.Trading perpetual futures and spot on-chain; an EVM for apps.Leveraged trading is very risky for users, and the platform is young and relatively concentrated. Regulation of on-chain derivatives is unsettled.Site ↗Videos ▶
12Dogecoin DOGEA coin that started as a joke with a dog mascot; used for tips and fun.meme / paymentsSupporters value Dogecoin's huge community, simple fun brand, and low fees for tipping and small payments.Tipping, small payments, and speculation.No supply cap, and price is driven heavily by social media and celebrity attention.Site ↗Videos ▶
13Monero XMRA coin where every payment is private by default.privacy coinSupporters argue Monero is the closest thing to digital cash, with privacy on by default for every transaction.Private payments and holding.Delistings from regulated exchanges and regulatory pressure; privacy features also attract illicit use.Site ↗Videos ▶
14USDS USDSA digital token meant to be worth $1, run by computer code instead of a company.stablecoin (decentralized)Supporters see USDS as a decentralized dollar from the Sky ecosystem (the successor to MakerDAO), with savings options funded by protocol revenue.DeFi lending, saving and payments on several chains.Depends on collateral and smart-contract security; savings rates can change, and governance decisions affect holders.Site ↗Videos ▶
15WhiteBIT Coin WBTThe coin of one crypto exchange; gives discounts there.exchange tokenSupporters see WBT as a way to share in an exchange's growth through fee discounts, staking perks and token burns.Fee discounts and perks on the WhiteBIT exchange; gas on its Whitechain network.Value is tied to one exchange's business and regulatory standing. Exchange tokens can be thinly traded outside their home platform.Videos ▶
16Chainlink LINKA network that feeds real-world data, like prices, into crypto apps.oracleSupporters argue blockchains need trusted outside data (prices, events), and Chainlink is the leading network that supplies it, including to traditional finance pilots.Price feeds and data for DeFi apps, and cross-chain messaging.Competition from other oracle networks and questions about how much value flows to the LINK token itself.Site ↗Videos ▶
17LEO Token LEOThe coin of the Bitfinex exchange family; gives discounts there.exchange tokenSupporters see LEO as a utility token for the Bitfinex exchange family, with fee discounts and buybacks from company revenue.Fee discounts and benefits on Bitfinex-related platforms.Tied entirely to one company group; trading outside its home platform can be limited.Site ↗Videos ▶
18Cardano ADAA research-focused network for apps, where coin holders can vote.smart-contract platformSupporters point to Cardano's research-first, peer-reviewed approach and its on-chain governance as a careful, long-term design.Staking, DeFi apps and governance voting.App adoption has trailed rivals, and slow, deliberate development can mean falling behind.Site ↗Videos ▶
19Rain RAINA young app on Arbitrum for betting-style prediction and option markets.DeFi / prediction and options marketsSupporters see Rain as a permissionless platform on Arbitrum where anyone can create and trade custom options and prediction markets, with part of trading volume used to buy back tokens.Creating and trading prediction and options markets on Arbitrum.A young project in a gambling-adjacent category; regulatory, smart-contract and liquidity risks are high, and fast rank changes deserve extra caution.Videos ▶
20NEAR Protocol NEARA network designed to make crypto apps easy to use, with a focus on AI.smart-contract platform / AISupporters argue NEAR's easy accounts, sharded design and focus on AI agents make it a strong home for user-friendly apps.Paying fees and staking on NEAR; apps, cross-chain features and AI-focused tooling.Crowded field of competing chains; adoption is still the open question.Site ↗Videos ▶

Your options at a glance

OptionWhat it isGood forWatch out
Buy on an exchange and leave it thereBuy through an app and let the platform hold the coins.Beginners starting small who want simplicity.The platform holds the keys; failures, freezes or hacks can trap your coins.
Self-custody (software wallet)Hold your own keys in a phone or computer wallet app.People who want control and are holding modest amounts.Malware, phishing and lost seed phrases are all on you.
Self-custody (hardware wallet)Keep keys offline on a dedicated device.Long-term holders with meaningful amounts.Losing the backup, buying a tampered device, and inheritance planning.
Spot Bitcoin ETFA fund in a brokerage account that holds bitcoin for you.People who want exposure inside existing brokerage or retirement accounts.Annual fees, market-hours trading only, and you never hold the coins.
Covered-call / income crypto ETFA fund that sells options to pay large regular distributions.People who value cash flow and understand option tradeoffs.Capped upside, full downside, return of capital, and price erosion.
Bitcoin treasury company stockShares in a public company that holds lots of bitcoin.Stock investors wanting leveraged exposure to bitcoin's story.Debt, share dilution and management risk can amplify losses.
Bitcoin miner stockShares in a public mining company.Investors who want exposure to mining without running machines.Power costs, halvings and heavy capital needs; can fall more than bitcoin.
Hosted miningBuy machines and pay a facility to run them.Hands-on people with patience and good record keeping.Host risk, uptime exclusions, hardware markups, and tax tracking.
Home miningRun a machine on your own power at home.Hobbyists who want to learn or reuse the heat.Noise, heat, and household power rates that often erase profit.
Other coins (Ethereum, Solana, etc.)Own tokens of other blockchain networks.People who have studied what a network does and accept higher risk.Many tokens fail; technical, regulatory and concentration risks are higher.
StablecoinsDollar-pegged tokens used to move or park value on-chain.Moving money between crypto platforms or paying across borders.Issuer and reserve risk; pegs can break; no FDIC insurance.
DeFi lending or yieldLend crypto through on-chain apps for interest.Experienced users who can read the risks.Code bugs, hacks and collapsing collateral; yields can vanish overnight.
Dollar-cost averagingBuy a fixed dollar amount on a regular schedule.People who want to avoid trying to time the market.Doesn't prevent losses; fees on small buys can add up.

🚩 Red flags

  • Anyone asking for your seed phrase or private key, for any reason
  • Guaranteed or steady high returns from crypto trading or 'arbitrage bots'
  • A new online friend or 'wrong number' contact who introduces a trading platform
  • A platform that lets you deposit easily but demands fees or 'taxes' before you can withdraw
  • Pressure to act now, keep it secret, or not tell your bank
  • Giveaways promising to send back double what you send
  • Look-alike addresses in your history after tiny unexpected deposits (address poisoning)
  • Fake YouTube channels or comment replies impersonating well-known creators
  • Mining contracts that promise fixed daily profits or hide downtime exclusions
  • 'Recovery services' offering to get stolen crypto back for an upfront fee
  • Someone asking you to pay a bill, fine, or 'government' charge in crypto
  • A hardware wallet that arrives with a seed phrase already printed or filled in

🙋 Questions to ask a pro

  • Which of my crypto transactions this year were taxable events, and how should each be reported?
  • What cost-basis method should I use for coins moved between platforms, and what records do I need?
  • Is my mining activity a hobby or a trade or business, and what does that mean for self-employment tax?
  • What value and timestamp should I use to report mining or staking income?
  • Which mining expenses (power, hosting, equipment) can I deduct, and should I depreciate or expense the machines?
  • Does my 1099-DA match my own records, and how do I report differences?
  • How do bitcoin ETFs, income ETFs or treasury stocks fit my overall risk and time horizon?
  • What share of an income fund's distributions is return of capital, and how is that taxed?
  • Should I own crypto personally, in a retirement account, or through an entity, and what are the tradeoffs?
  • How should my will or trust handle self-custodied crypto so my family can access it?
  • If I was scammed, what can I deduct or recover, and which agencies should I report to?
  • What state tax or reporting rules apply to my crypto activity?

Plain-English glossary

Blockchain
A shared public record of transactions kept in sync by many computers.
Private key
The secret that lets you move your coins; whoever has it controls them.
Seed phrase
12 or 24 words that can rebuild your wallet; the master backup.
Self-custody
Holding your own keys instead of trusting a company to hold them.
Hardware wallet
A small device that keeps your keys offline.
Halving
The roughly four-year event when new bitcoin issuance is cut in half.
Hashrate
How much computing power is mining; more hashrate, more security.
Hashprice
About how much a unit of mining power earns per day.
Breakeven price
The bitcoin price where mining earnings just cover power and hosting.
Uptime
The share of time a machine is actually running and earning.
Curtailment
Planned power-downs during grid stress; often excluded from uptime promises.
Power law
A model where price grows in a straight line on a log-log chart of time.
P2PK
An early Bitcoin output type paid straight to a public key, not a modern address.
ETF
A fund that trades like a stock on an exchange.
Covered call
Selling someone the right to buy your asset at a set price, for income now.
Return of capital
A payout that gives you back part of your own money rather than earnings.
Stablecoin
A token designed to stay worth about one U.S. dollar.
Layer 2
A faster, cheaper network that settles its transactions on a main blockchain.
DeFi
Financial apps run by code on a blockchain instead of a company.
Cost basis
What you paid for an asset, used to figure your taxable gain or loss.

Sources

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