Did you know that you can produce currency through a complex mathematical operation on computers called mining?
Yes, You got me correct. You can produce wealth through a conventional mathematical operation. It is known as virtual or digital currency or a trending phrase cryptocurrency.
It is especially prominent amongst Gen Z and Millenials. Some laureates call it the future of currency and investment.
But where to invest in Cryptocurrency? Why is an investment in Cryptocurrency gaining prominence?
In this article, we will address all your queries related to What is Cryptocurrency and Is Crypto Taxable? You can rely on the ultimate guide to Cryptocurrency.
Table of Contents
History of Cryptocurrency
Did you know about the 2008 subprime crisis in the United States?
Yes, It gave birth to today’s well-known phenomenon- Cryptocurrency. The Global Financial Crisis of 2008 surfaced because of cheap credit.
It created a bubble in the US economy, and when that burst, it led to 1 trillion bucks investment kept as nugatory subprime loans.
It enhanced the creation of a digital currency, Bitcoin. Bitcoin works on blockchain technology which transcends boundaries, nations, and cultures.
But is Bitcoin safe to buy? Should you invest in Cryptocurrency? Despite the global pandemic knocking on our doors, bitcoin has seen tremendous growth in its investment.
However, the nature of digital currency is unpredictable. There has been a sudden rise in its investment post the Covid-19 pandemic.
Don’t you think a sudden surge can cause a sudden fall too? Let’s discover more about Cryptocurrency and the best avenues to invest.
Is Crypto a Good Investment?
Cryptocurrency is gaining prominence these days. But is crypto a good investment? Which Cryptocurrency is best to invest in?
When we talk about bitcoin, it is a highly volatile form of virtual currency. If you consider it a good investment, consider the associated risks.
It is a legal gamble which carries the fear of being declared by law at any time.
Getting into Cryptocurrency is not as easy as it’s thought. The primary threat it carries along is a security threat.
The chances of cybercrime are rising daily; hence, the fear of Crypto hacking is at its peak. It is also prone to wash trading. Therefore, the regulation and structure of Cryptocurrency need to be more robust to reduce the associated risks.
Despite the flaws and concerns, virtual currencies like Bitcoin and Ethereum have only seen remarkable growth. The investment in blockchain technology has expanded and paved the way for new investment
avenues like non-fungible tokens and decentralized finance. People look at Cryptocurrency as the future of investment but fail miserably to decide what Cryptocurrency to invest in.
How do I Invest in Cryptocurrency?
Every investment requires time and a place of existence. However, the digital currency doesn’t exist in physical form.
Hence, it would be best if you took maximum precautions while investing in Cryptocurrency. But, most people are unaware of how to invest in blockchain.
They usually are in the dilemma of where to invest in crypto. How do I buy Cryptocurrency?
You can make your investment via different exchanges such as Bitfinex and Coinbase. Such businesses require a nominal fee to conduct their transactions.
It is similar to what brokers charge for investment in stock exchanges. However, you can make direct purchases from websites that won’t charge you any commission.
After purchasing a digital currency, you need to store it in your wallet. However, the wallet doesn’t mean you need a physical wallet.
A cryptocurrency wallet can either be in the form of hardware or software. A software form of wallet is essential for active trading in Bitcoin or other forms of digital currency.
However, a hardware wallet can be a good choice if you don’t want to trade daily.
Software wallets come with a secret code. However, a hardware wallet is in the form of a physical device like a USB or data cable.
Therefore, it is more secure from the security perspective in terms of digital media.
How Does Cryptocurrency Work?
There is no regulating authority or central bank to govern the existence of Cryptocurrency. Instead, it follows a decentralized blockchain technology to function.
Blockchain is a dispersed ledger in which the crypto owner upholds all transactions.
The process of the generation of Cryptocurrency involves mining.
Mining is a process wherein the miners solve mathematical problems on their computer systems for which they get bitcoins or Cryptocurrency in exchange.
The buyers can own their Cryptocurrency directly through websites or dealings such as coin base. It uses the public key protocols to save investments.
Cryptocurrency scams constitute a significant threat to watch out for. There has been a sharp rise in cryptocurrency scams since 2021.
Fake websites, Phishing, Fake Applications, Rug Pulls, etc., are some of the most prominent cryptocurrency scams.
It seems very promising on the front, but the associated risks and threats make it a vulnerable investment.
READ MORE: BEST CRYPTOCURRENCY TO INVEST IN 2023
Blockchain Transparency and How to Invest?
Often, people face the question, “Is crypto coin a good investment.” What about blockchain transparency and how to invest in it?
Is it a secure investment? By now, you must have known that Cryptocurrency uses blockchain technology.
The public and private keys ensure the blockchain transactions with an electronic signature. The private key fulfills the ownership requirements of the public key and blockchain.
The owner of the private key has access to Cryptocurrency or blockchain.
The cryptocurrency wallet uses encryption to function with the keys and digital signature; hence, it provides the user with their data privacy.
However, there is an issue with identity verification; anyone can trade crypto, but there is a limit on what input they can add and see.
It is the blockchain that records cryptocurrency transactions. Public blockchains are a comparatively slower process than physical investments or IPOs.
FAQ
What can I buy with Cryptocurrency?
You can use bitcoins and other cryptocurrencies like Ethereum to purchase a wide range of dealings. Many retailers across the world accept Cryptocurrency, but several retailers are holding out too. So you can easily make payments for electronic items, cars, and luxury watches in digital currency for the retailers accepting them.
When I buy crypto, who gets the Money?
Cryptocurrency exists in digital form. Thus, when you trade in Cryptocurrency, there is no actual exchange of coins. If you purchase it from a person via a business, the exchange charges only a nominal fee, but the rest goes to the original owner or the person who sold the virtual currency.
When to Invest in Cryptocurrency?
Like any other stock, Cryptocurrency is preferable for purchase when the prices are lowest. It is the best time to invest in crypto as there is a tendency to increase market value in the future. Therefore, it will fetch you higher returns on investment.
What is the most profitable Cryptocurrency to invest in?
2022 has seen a bearish phase in the advancement of Cryptocurrency. The best Cryptocurrency to invest in in 2022 seems to be EverGrow Coin, as it is a good reflection this year compared to last year. Other indicators suggest Cardano, Bitcoin and Ethereum as well as suitable investment avenues.
Is Crypto Taxable?
The recent announcements in the Indian National Budget 2022 stated to tax Cryptocurrency under the heads of capital gains or business income. It is liable to a tax rate of 30% in India. In other countries, the digital currency is taxable; however, the rates may vary across different nations.
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