What’s the first thing we do as soon as we step foot in a new country? Exchange our currency for their currency. Are you going to Italy? You’re going to need some euros to vacay there. Like every country that has its currency to buy any good or get any service, cryptocurrency is also a digital currency made of computerized codes.
The main difference between the two is that the former is managed by a middleman (government or a central bank).
In contrast, the latter is generated independently, i.e., without any control imposed on it.
Cryptocurrency investment simply means buying them online by exchanging cash for it—the rate of this currency increases and decreases like any other traditional currency. There are certain things that the potential investor needs to keep in mind before diving into the sea of cryptocurrency. Some of them are listed here to help you out.
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Start with small
Cryptos are quite risky and very speculative. Exercising caution is necessary. You need to keep in mind that don’t make the mistake of investing a hefty amount in the beginning. Invest a small amount which you are ready to lose if it comes to that. Despite all the success stories of people making millions of money, investing in crypto at the wrong and inopportune time can result in huge losses. You need to make your move at the right time to get those enticing benefits.
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The uses of crypto vary
Most of the time, cryptocurrency is used for funding illegal transactions. But some businesses accept these for transactions as well. The flow of cryptos is free as there’s no external control of any governmental body. The cost of using cryptos is pretty low, and they are fast as well. This combination makes it good for international money transfers as well. Only the owner has access to his private wallet.
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Cryptos aren’t considered to be the currency by IRS
The Internal Revenue Service (IRS) doesn’t consider cryptos as currency but property. The tax rules that apply to properties, they are also applicable to cryptocurrency investing as well.
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Chances of failure are there
According to some financial experts, cryptocurrency might fail in some years. Many cryptocurrencies are entering the market now after big players like Bitcoin, Ethereum and Litecoin. If the above prediction goes wrong, still not every cryptocurrency will survive in the market. It is better to stick with big cryptos like Bitcoin. It is also wise to learn about that particular digital currency before investing.
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Cryptos can disappear from the market
As we all know, cryptocurrencies are entirely independent of any government enforcement and cannot be frozen. Lack of control can lead to misuse of money and power. A technical issue in the computer or any other digital device without a backup can destroy the stored cryptocurrencies. Invest only after proper contemplation and security.
Conclusion
Cryptocurrency can become a boon and a curse for you if you don’t exercise caution and don’t get complete knowledge about it beforehand. Some things that you must know before deciding on investment are mentioned above. Start with small. Only go for large when you’re certain that it’s safe and you can do it.
Interesting Related Article: “The Future of Bitcoin and Cryptocurrency Money“