With Bitcoin’s price sitting pretty at $57,000 at the time of writing, this popular yet often misunderstood asset has become a household name. But for new users who want to own some of their own cryptocurrency, whether it’s Bitcoin or another altcoin, this type of asset can seem almost inaccessible. Fortunately, with a bit of guidance and education, that can change! If you want to dive into crypto but don’t know where to begin, use this simple guide to cryptocurrency to get started.
What is crypto and how does it work?
To better understand what cryptocurrency is, it’s important to take a look at the most popular asset: Bitcoin. Bitcoin was a cryptography-based electronic currency developed and released in 2009. Unlike other experiments that came before it, this project achieved decentralization by using blockchain technology, making it so that the users of the network had full control without the risks of middlemen like banks charging high transaction rates or seizing funds. Put simply, crypto is an electronic money solution that gives users full control, increases transaction speeds, and decreases the cost and difficulty of transferring funds across borders.
What are the financial implications of using crypto?
Wait, so cryptocurrency is electronic currency? As you can see from the stunningly high prices of most crypto assets… not exactly. With the exception of solutions like stablecoins, most assets are subject to extreme volatility. While this can give way to massive gains, it also puts your money at risk should the price suddenly drop and refuse to rise to its previous level. Another area of concern for users is crypto taxes. Cryptocurrency taxes occur whenever there’s a taxable event, which includes earning cryptocurrency, making crypto trades, or even getting an airdrop.
Trying to figure out your tax liability for virtual currency along with your other taxes can be difficult. If you want to trade in the future, turn to a resource like Crypto Tax Calculator for your filing needs. With support for major exchanges like Coinbase, Binance, and Kraken, easy CSV and API integrations, and automatic categorization so you can calculate your short-term capital gains and long-term gains easily, you’ll be ready to tackle your tax return for the year!
How do I get my hands on some of my own digital currency?
Getting some of your own cryptocurrency is easy. First, create an account at your favorite exchange and deposit funds into your account. Once you have a way to purchase crypto, choose your desired asset (Ethereum and Litecoin are just a couple of other options you may want) and it will automatically be sent to your in-exchange wallet. If you want, you can then transfer it to your own wallet, trade it, sell it, or do anything else you like. Even though crypto seems like it’s very complicated, it’s important to remember that it’s quite easy to get involved in. If you can deal with fiat currency, you can definitely start building up your own collection of digital funds as well!
With Bitcoin prices soaring and the community hoping for six figures in the near future, everyone’s scrambling to get into the crypto game. That being said, some people may simply not understand how it works or they’re worried that it’s too complicated for them to use. The truth? Unless you’re focusing on creating a career in blockchain or want to become a technical day trader, there’s no need to get involved in all of the finer details to start creating a cryptocurrency portfolio of your own. Instead, use the simple guide above to take your first steps in crypto!