With the way things played out this year, a lot of people are giving investing a more serious thought. Being left with almost no money and no assurances of work have made folks more conscious about the way they manage their finances. Among the top realizations that most folks have is that insurance and investments are important.
Do your due diligence first before making the jump
While almost everyone has heard of Bitcoin or at least has some sort of idea about what it is, a lot of investors aren’t too familiar with cryptocurrency.
In a nutshell, cryptocurrency is a digital currency that is secured by cryptography which makes it very hard to replicate and produce counterfeits. They are not managed by any banks or government institutions but are stored in public domains through blockchain technology.
Cryptocurrency has been around for quite some time now, as Bitcoin — the very first cryptocurrency — was invented in 2009. However, despite its longevity, not a lot of investors know much about it.
If you’re interested in it and are seriously considering investing in them, you must do your research first before taking a dive. Ask people you know are already in it. If you’re a veteran, don’t put your hard-earned money into something you don’t know. It’s better to take it up with DVBE consulting before you make any final decisions.
Here are a few noteworthy things you should know about cryptocurrency.
6 Things You Should Know About Cryptocurrency Before You Invest in It
1. It is very risky
Cryptocurrency is a highly volatile investment avenue. Despite some people’s testimonies of earning millions from Bitcoin investments, making an investment at the wrong time can result in an extreme loss for the investor. If you plan to put some of your money in it, only invest what you’re willing to lose
2. Cryptocurrency has a variety of uses
Cryptocurrency is not controlled by any authorities which means that it cannot be frozen nor will transactions using crypto be charged exorbitantly. It is used in a lot of transactions and is getting to be a popular money transfer option because of the very minimal charges.
3. Investors implement different strategies in cryptocurrency investments
Just like any other stock market investment, cryptocurrency investors employ different strategies. Investors consider several factors, such as market analysis methods or global events, to know where and when to buy and sell cryptos.
4. Cryptocurrency is not considered by the IRS as a legitimate currency
In the United States, the Internal Revenue Service or IRS does not recognize cryptocurrency as a legitimate form of currency Rather, they consider it as property therefore, any unit of crypto that an investor has is taxed as property, just like real estate. For this reason, the IRS is strict in enforcing tax measures and extensive record-keeping for crypto investments.
5. It can fail
Just like any other investment, cryptocurrency is not entirely foolproof. Especially given its highly volatile nature. Investors who want to get a piece of the action as speculators are recommended to go with the better-known cryptos such as Bitcoin, Litecoin, or Ethereum.
6. It can disappear
By disappear we mean completely vanish without a trace. Since cryptocurrency is virtual and stored in blockchains, the lack of a physical storehouse makes it highly susceptible to being wiped out from the system, especially if one of the computers crash and doesn’t have any backup.
Security-wise, users who lose their wallet’s private key can no longer recover the crypto they own. It is also vulnerable to techie scammers and hackers, given all the information and technology that are easily accessible today.
As an investor, you should only get your wallet from highly reputable firms, use strong passwords, and protect your private key.
Like in anything else, don’t blindly dive into something you don’t know, especially when it comes to investments. It is better to find out as much as you can before committing. Protect your money by knowing what you’re getting into.