Everything you need to know before investing in cryptocurrency

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Cryptocurrencies are digital assets— that you can use as investments and even for online purchases. It is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.

  • Cryptocurrencies are not backed by a central authority such as a government. Instead, they run across a chain of computers. It is exchanged from peer-to-peer on the web without a middleman.
  • Cryptocurrencies are decentralised—which means no government or bank manages how they’re made, what their value is, or how they will be exchanged. All the crypto transactions are secured by cryptography—meaning that it only allows the sender and intended recipient of a message to view its contents.

High interest debt

Your first priority should be paying off high interest debt, like credit cards and personal loans, researcher says. If left unpaid, the debt will compound and can become difficult and overwhelming to pay off. The average credit card interest rate is currently moe than 16%.

Retirement

With a traditional 401(k), contributions are made with pre-tax dollars. This means that any money you put in comes straight from your paycheck, reducing your taxable income for the year. With a Roth IRA, you invest money that’s already been taxed. When you withdraw it in retirement, you get the gains tax-free, assuming you follow the withdrawal requirements.

Emergency fund

To determine how much you should have in an emergency fund, start by adding up all your necessary monthly expenses, including rent, food, bills, loan repayments and insurance. Then multiply that total by the number of months you want your fund to cover.

Cryptocurrency “brokers,” which are mainly exchanges, will be required to issue a 1099-like form disclosing who their customers are. Businesses and exchanges will also be required to file a Form 8300 each time they receive over $10,000.

How to buy ?

Just like the stock market, the crypto market has exchanges or brokers which are the facilitators. These exchanges often charge a fee or commission for each transaction. Some even give rewards for hitting a milestone, some give them as a joining bonus. This policy may differ with each exchange. Unocoin, a Bitcoin trading site, is now allowing its users to buy vouchers from over 90 different brands using Bitcoins. Using these vouchers, you can buy Domino’s pizza, ice cream from Baskin Robbins, beauty and health products from Himalaya, and even home appliances from Prestige.

How can you store your cryptocurrency?

Cryptocurrency can be stored in something called a ‘wallet’, which can be accessed by using your ‘private key’—the crypto equivalent of a super-secure password— without which the crypto owner cannot access the currency. A crypto wallet stores the private keys that give the user access to their cryptocurrencies—allowing one to send and receive cryptocurrencies like Bitcoin and Ethereum. It should be noted that your coins are stored on the blockchain, and the private key is required to authorise transfers of those coins to another person’s wallet.

 

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