Part of the joy of cryptocurrency is that every transaction is recorded. However, as your activity grows across different wallets, platforms, and transaction types, reviewing that information can quickly become more complicated. If you’re trying to review your history, reflect on the way you’re trading, and understand why you made certain decisions, you’ll want to keep your own records. A clear personal record can give you a more practical overview of your activity and make it easier to identify patterns over time. That way, you’ll be able to take stock of what’s going on, without relying on the blockchain, or your preferred exchange.
Why Record-Keeping Matters
Every time you make a sale, you should keep a record of the transactions, which you can keep in your own spreadsheet. If you’re reasonably tech-savvy, you can automate this with the help of a few simple scripts. That way, you won’t have to expend any mental energy to make the record-keeping happen; it will simply be done for you.
What Information Should Be Retained
So, what data points are going to be useful when you come back to review your finances?
The most useful pieces of information are likely going to be the date and time, the amount you’re trading, and the price. You can color-code your transactions so that you can see at a glance whether you traded at a good price or a bad one. It can also be useful to keep a log of the transaction’s hash, so that you can track it down later on and confirm that everything is as you think it is.
Organising Cryptocurrency Transactions
You don’t need to put sensitive information, like private keys and seed phrases, into your records. If you do, then you’re creating vulnerability without any real benefit. It might be the case that you need to log real-world transactions, in which case physical receipts can be very useful. If you spend any time interacting with a Bitcoin ATM, this can be a worthwhile habit to build.
Supporting Better Financial Oversight
Successful trading in the long term means being able to review your history. This means not only keeping records, but ensuring that those records are clear and navigable. This is particularly useful when you’re making dozens, or even hundreds, of transactions every day.
At the same time, keeping clear records might allow you to more easily meet your tax obligations – without stressful delays and additional work.
Creating Long-Term Organisational Habits
The more money you end up putting into crypto, and the larger your portfolio grows, the more important it becomes to keep good records. The easiest way to consistently keep good records, moreover, is to adopt the right organizational habits as early as possible. If you’re diligent and meticulous, and you set aside time and mental energy to review your own performance, you can stand a better chance of developing as a trader, and avoiding costly mistakes. What’s more, you might save yourself a great deal of frustration later on.