Most of you have probably heard about Bitcoin as a new form of money. Your knowledge might either come from the newspaper headlines screaming about the phenomenal Bitcoin price surge at the end of 2017, or some of your tech-savvy fellows that started investing in Bitcoin a while ago. But cryptocurrency goes well beyond Bitcoin.
Cryptocurrency is an exciting world of innovation. When you’re getting started, however, it can be a rather complex place to get your head around. So, we’ve prepared some tips to help you pick the right way when entering the cryptocurrency market.
Do Your Research Before You Begin
Whilst you may not be looking to invest in crypto for profit, researching the currencies available in the market is an important step. For instance, you may wish to own the currency to trade or purchase items with – and knowing which coins to buy will help you considerably in the long run, not least because some tokens are a lot dearer to transact with than others.
There are plenty of good places to research. Joining crypto communities on the largest forums will significantly enhance your knowledge. Reputable cryptos will also have a Wikipedia page to give you an overview of the currency, how it was started, and what it aims to do. Whilst this won’t necessarily provide you with trading insights, it is a great place to start.
Lastly, once you have decided on what to invest in, it is a great idea to get involved and share your thoughts with like-minded individuals within a crypto community. But take advice with a pinch of salt as people may be biased and even adopt nefarious practices to drive up a particular coin’s value.
Make Sure You’re Protected
Cryptocurrencies have a lot of monetary value attached to them and attract a lot of crime and criminal enterprise. It is fundamental that you ensure that your coins are protected at all times in a wallet and that information you’re sharing about yourself is kept to a minimum.
Treating your cryptocurrency in the same way you would treat your bank account details is a good initial practice, but remember, hackers are intelligent enough to exploit weaknesses. Storing cryptocurrency in a hardware wallet away from the Internet connection is always advisable.
Finally, writing down passwords and keys should be kept to good old pen and paper. There is no safety in saving private details on your computer that can be exploited in the same way that a software wallet.
Cryptocurrency Is Now Taxable in Many Jurisdictions
Previously, cryptocurrency flew under tax radars and taxing authorities didn’t track down individuals that made profit from investing. Instead, historically, they relied on the individual to be honest on their tax returns and declare the capital gain. This, however, has changed.
When tax authorities have realized that cryptocurrency is bringing billions in revenue, they have cracked down hard on crypto enthusiasts. Tax offices have teamed up with banking institutions and crypto exchanges to trace transactions and target individuals that are ignoring rules.
Before purchasing, it is important to check the taxation status of cryptocurrency in your state. Failure to do so can result in prosecutions – do not be caught out. Stay honest and pay the appropriate tax to avoid any devastating repercussions.
Exchanges Are Very Useful, Some More So Than Others
When it comes to buying crypto securely, there are many good exchanges that will enable you to do so. There are also some exchanges that are not so good – they may have lots of regulations, high fees, security issues, or very complicated interfaces. Researching the features of different exchanges before buying is a great idea.
Some exchanges deal in big volumes each day and there are millions of transactions processed each month on them. It can be a clear sign of the exchange’s popularity among the users, though it can also offer a lot of room for hackers to exploit the system. So, be sure to check whether the exchange has a robust security and hasn’t been subject to the user funds theft. This represents a great achievement of the cryptocurrency platform and points at its trustworthiness.
Exchanges also hold a wealth of trading information, some with an in-depth analysis of the coin’s performance. Many exchanges also carry a dedicated user community that is on hand to provide hints and useful insights into how to get the best results from a platform.
Enjoy Yourself and Buy Coins That You’re Passionate About
Cryptos are all unique in one way or another, and they all have strengths and weaknesses. The key thing with cryptocurrency is to enjoy the experience. Buying coins that are innovative or that you’re passionate about will give you a more fulfilling experience. Find out about the vision developers have for the crypto, learn about its practical value and real-life adoption.
Some coins are doing a truly amazing work, setting up charitable foundations and bringing financial fluidity as well as the freedom to impoverished countries. By installing crypto platforms in the third-world countries, they are leveling the financial playing field and allowing smaller economies to compete in a more robust way. Others are bringing simplicity and ease to everyday transactions through better implementation of technology. Whatever motivates you, it should be reflected in your choice.