- “This sounds too much like a fairy tale…”
- What are the tax consequences of crypto trading?
- The truth about 5G and health…
Dear Reader,
Welcome to our weekly mailbag edition of The Bleeding Edge. All week, you submitted your questions about the biggest trends in technology. Today, I’ll do my best to answer them.
If you have a question you’d like answered next week, be sure you submit it right here.
Also, don’t forget about my upcoming State of the Tech Market strategy session…
It’s happening next week… Wednesday, April 6, at 8 p.m. ET…
And while there, we’ll discuss our strategy for the coming months…
Because right now, we’re facing high inflation… continued war between Russia and Ukraine (with all of its implications on oil, food, fertilizer, metals prices, and other sectors)… and fears about rising rates, among other concerns.
In other words, we aren’t in the same investing environment anymore. And we need to adapt.
That’s why I’ll show attendees at my State of the Tech Market an investment class that doesn’t tumble in a crash… stays steady amid inflation… and doesn’t react to a recession.
You might think this sounds too good to be true… But the elite, Silicon Valley insiders, and ultra-wealthy have used this asset class for decades for these very reasons.
So please… if you’re unsure how to invest right now or you’re worried about your current holdings, don’t miss this strategy session.
It’s free to attend… All you have to do is reserve your spot by going right here.
See you next Wednesday!
Is FreedomFi too good to be true?
Let’s begin with a question on how Helium’s network works…
Jeff, forgive my slow comprehension, but I presume, if I buy a few HNTs, I can use those to buy the equipment to set up my own network and Helium will pay me for using it?
This sounds a bit too much like a fairy tale. I, obviously, must be overlooking something, or this business model is bound to fail. How is the FreedomFi/Helium network profiting from it? Thank you,
– Erich K.
Hi, Erich, and thanks for writing in – I’m sure you’re not the only one who’s skeptical, so let’s talk about how Helium’s network works financially…
As a reminder for new readers, Helium is a blockchain tech company that has developed crowdsourced wireless networks.
Helium partnered up with “FreedomFi,” as well as a handful of manufacturing partners, to build the small wireless cells and gateways needed to run a wireless network.
But Helium and FreedomFi are only responsible for the blockchain-based software that stitches the network together and provides economic incentives to get the infrastructure in place.
As for the physical infrastructure, Helium incentivizes regular people to run their own cells.
Anyone can buy the hardware with US dollars or stablecoins and connect it to the network – right from their own homes. They then receive compensation in the form of Helium’s HNT token.
And consumers that want to use the network for their own purposes, like making phone calls or hooking up wireless sensors to the network, pay for that access with HNT.
As I write, one HNT is worth around $23.91. Holders can convert HNT into Ethereum (ETH) at will. And they can sell the ETH for U.S. dollars.
The next step is for Helium and FreedomFi to enable a 5G network with similar coverage levels as the major carriers.
Without economic incentives, it would never happen. But with them in place, the more people who run the Helium-enabled FreedomFi cells, the bigger the network will be.
The larger the network, the more network participants… And with more network participants, the value of HNT will increase.
That’s the power of the “network effect.”
As for your question, Erich… Is all this too good to be true?
While a lot of things have to go right to make this a nationwide network with reasonably good coverage, this is a very real project.
The “crowd” does have to spend money to purchase the equipment to run our own cell. A standard Helium hotspot can cost around $450–650 at present, depending on the vendor. The Helium-compatible FreedomFi gateways can cost as much as $1,000.
One of our team members is in the process of setting up a Helium cell and will have further details to offer in the near future about that process. We’re going to be conducting our own field testing and we’ll be able to measure the return on investment for running a cell.
As for Helium’s profitability… The business model is simple.
Primarily, enterprises pay Helium for use of its network. By using Helium, they don’t have to worry about data caps or overage fees. The costs are a fraction of what a traditional telecom charges because they are usage-based.
That’s made Helium incredibly attractive to companies involved with the Internet of Things (IoT). For example, if a company wants to connect a smoke detector to the internet, it could do so relatively cheaply.
And there are many companies interested in this kind of use case… One of Helium’s current customers is Lime, which uses Helium to track its scooters. Another is a mousetrap company that uses internet-connected traps for its business.
There’s plenty of room to grow, too. Consider a pharma company that wants to track its drug shipments and monitor their temperatures throughout the supply chain. That could soon be possible as Helium’s network expands.
And any company that wants to transfer data using Helium’s network must purchase data credits. Helium compares these credits to minutes on a prepaid phone plan.
To buy data credits, a company has to “burn” HNT, which removes it from circulation. This introduces supply and demand dynamics as HNT are minted and burned over time.
Ultimately, as the system gains more use… it will get even more profitable.
We can expect to see many more projects using these unique dynamics going forward. Helium is paving the way for more than just 5G networks… and the project just raised $200 million in venture capital to further fund this exciting project. This is a great catalyst that will speed up the development.
In short, this is not too good to be true. While it is something that has never been done before, it is the real deal and has pretty incredible potential.
How crypto gains get taxed…
Next, a reader wants to know more about crypto taxes…
Dear Jeff and Team, I appreciate all you do for your subscribers! I am not inclined to be an active trader, but I’m interested in seeing how your application of AI in Perceptron will perform. I’ll allocate a small amount of money and see what that can grow to, using your AI.
My question is about taxes. As this service is designed to move in and out of cryptos in relatively short periods of time, what will be the tax consequences of this? I realize you’re not a tax professional and also that the government is trying to evaluate cryptos, and the regulatory climate for cryptos and tax rules is evolving. What is the government’s current stance on short-term gains from these trades?
– Andy L.
Hi, Andy, and thanks for writing in.
I’m very glad to have you onboard with Neural Net Profits. The Perceptron has been a labor of love to build, and over time, it will bring us lots of profitable crypto trades.
For unfamiliar readers, the Perceptron is an AI that runs on massively powerful computing systems every day. This “neural network” is designed to do one thing: spot trades on the verge of an explosive, higher short-term move.
The Perceptron will allow us to “cut through the noise” of market activity. There is simply too much data in digital asset markets for any human to make sense of.
And there is a certain “magic” to neural networks. They can discern order from chaos. A well-designed neural network can spot patterns that the smartest humans simply cannot see.
Also, this neural network is always learning and improving. With markets changing every day, we must have a system that can adjust to new information.
I’m very excited that this project is now live. (To learn more, go right here.)
But for those of us who are new to crypto trading… what does this mean for our taxes?
You’re right that I can’t give specific tax advice. I recommend proactively working with a good tax accountant who’s familiar with cryptocurrencies.
In general, though, cryptocurrencies are taxed similarly to stocks. If we have held for less than a year, we will owe short-term capital gains. If we’ve held longer than a year, we would owe long-term capital gains. Any capital gains made in trading cryptocurrencies are taxable, just like gains with stocks.
We should also note that any time we trade one digital asset for another, the Internal Revenue Service (IRS) considers it a taxable event. That’s true even if we move directly between two digital assets without using national fiat currency like U.S. dollars.
For example, if we buy a non-fungible token (NFT) on OpenSea using Ethereum (ETH), the IRS says that we owe capital gains taxes if ETH went up in value since we bought it.
The same holds true if we use Bitcoin (BTC) to buy a smaller cryptocurrency on an exchange. Even though we didn’t sell for dollars, the IRS says we owe capital gains taxes if BTC appreciated since we owned it.
This can be tedious to deal with. That’s why we’ve seen a surge in software to help us track and deal with our crypto transactions come tax time.
In fact, I recently wrote about CoinTracker, which is shaping up to become the crypto version of TurboTax. Its software simplifies the calculation of gains and losses across a digital asset portfolio.
The good news is, as the cryptocurrency space continues to develop, we will see more and more services pop up to help us deal with the potential hassle of tax time.
Is 5G bad for our health?
Let’s conclude with a question about whether 5G causes health risks…
Hi Jeff, first I would like to say thanks for this important information that you share with us, and I always read with interest. But I want to ask an urgent and important question. What is the truth about 5G and health? Is it true that 5G has many studies that show dangerous effects on human health?
– Carlos A.
Hi, Carlos, and thanks for the kind words. I’m always glad to hear from engaged readers.
As for the truth about 5G and health… rumors and questionable information have spread for years. I remember the same kinds of discussions back when both 3G and 4G were rolling out.
Mobile phones emit radiofrequency radiation, or radio waves, which are a form of non-ionizing radiation. This kind of radiation is normal and all around us.
Non-ionizing radiation only has enough energy to excite a molecule, and the byproduct is merely heat.
Ionizing radiation, by contrast, is higher frequency and can be a severe health hazard. It can cause radiation sickness, burns, cancer, and even genetic damage. Ionizing radiation is the kind of radiation we find in using nuclear power.
It is important to be clear that 5G wireless technology is a form of non-ionizing radiation. And for that matter, so is our 4G wireless technology and every other generation prior to that.
Radio frequencies (RF) have been used in radio, TV, wireless networks, and many other services for decades. And regulatory agencies carefully study this space to ensure that these waves have no negative impact on consumers’ health.
To be clear, there has been no conclusive evidence that RF wireless technology causes any side effects in consumers who use or are in the presence of wireless networks in a way that we use this technology in our day-to-day lives.
A study in Denmark analyzed the records of more than 358,000 mobile phone subscribers with brain tumor incidence data from the Danish Cancer Registry. The analysis found “no association between cell phone use and the incidence of glioma, meningioma, or acoustic neuroma, even among people who had been cell phone subscribers for 13 or more years.”
In 2018, however, there was some bad reporting concerning a study on the effects of high exposure of radiofrequency energy on rats.
The research wasn’t designed to be a real-life scenario. Basically, the researchers put high-powered transmitters right next to the rats 24 hours a day. It would be the equivalent of putting a high-powered based station attached to our heads around the clock… That’s just not a real-world scenario.
The research found that male rats exposed to radio waves developed schwannomas (small tumors) on their hearts at statistically higher rates than the control group. However, mice and female rats exposed to the same radio waves did not develop any of these small tumors.
And ironically, the animals exposed to the radiofrequency radiation actually lived longer than the control animals that weren’t.
Also worth mentioning is that there have only been a handful of documented cases in humans of schwannomas of the heart… They are incredibly rare in humans.
The study also used levels of radiofrequency energy that were considerably above what the Food and Drug Administration (FDA) deems the current safety limit for cell phones. And the current safety limits have a 50-fold safety margin to ensure consumer safety.
The National Cancer Institute has also noted that it does not see increasing numbers of brain tumors in the general population. Given that humans have been exposed to radiofrequency energy for decades, if there was a direct correlation to our health, we should have seen the impact already. So far, we have not.
While researchers will continue to investigate any connections between 5G and our health, the evidence at present doesn’t seem to require any cause for alarm. With all that said, I’m always keeping my eye out for any credible research on this topic. If/when I do, I will of course share it with my readers.
Thanks for writing in.
That’s all we have time for this week. If you have a question for a future mailbag, you can send it to me right here.
Have a good weekend.
Regards,
Jeff Brown
Editor, The Bleeding Edge
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