The world of cryptocurrency is a promising one. Anyone can invest in crypto today, but there are a few things you should know before you begin. There’s a lot of information surrounding cryptocurrency. Moreover, because it is a new and revolutionary form of currency, the playing field is constantly changing.
That’s why it’s important to do your due diligence and make informed decisions throughout your experience with cryptocurrency. As you scope out the industry and get a feel for crypto, make sure you know exactly what you’re getting into and how to make the most of your investment. Discover everything you need to know about how to invest in cryptocurrency with this guide.
Start By Learning the Basics
Gathering information is the first step to any investment. Even if you already know the basics of cryptocurrency, it never hurts to refresh yourself on the ins and outs of what it is and how it works.
Cryptocurrency is a digital asset that circulates without the authority of a central organization, such as banks or the government. Because cryptocurrency doesn’t come from a central monetary authority, it doesn’t face the same regulations or manipulation that bank- or government-issued currency does.
How Does Crypto Work?
Cryptocurrency relies on cryptography, or secure communications, to circulate securely. Many cryptocurrencies—such as Bitcoin—use blockchain technology. This is a type of distributed ledger that uses a system of disparate computers to enforce and secure the currency’s decentralized network.
Blockchain technology keeps a secure and up-to-date ledger of all transactions involving that specific type of cryptocurrency. Because the ledger is shared across several computers in many geographical locations, it’s more resistant to cyberattacks and other forms of tampering.
There are many uses for cryptocurrency. Some individual crypto units act like any other currency, and you can use them to purchase goods or services. Other forms of crypto revolve around specific software transactions, such as purchases within a video game. Finally, some cryptocurrency units act as stores of value, making them useful in the investment sphere.
Be Wary of the Hype
Cryptocurrency is trendy—and for good reason. As with all financial decisions, though, it’s important to keep a level head and make informed decisions when investing in cryptocurrency. Getting caught up in the hype can lead to misinformation, rushed decisions, and costly mistakes. Make sure you take the time to familiarize yourself with the industry before investing.
Spend some time in the crypto space. Stay on top of news and trends so that you’re always aware of what’s going on in the crypto world. You can also join forums and other online spaces to engage with the community and read up on real-world experiences and advice. Listening to experts and researching are key parts of gathering information to make smart, lucrative decisions.
The US Taxes Crypto as Property
Part of what you should know before investing in cryptocurrency revolves around what you’ll do with the crypto you earn. It’s important to note that, in the United States, cryptocurrency is taxable. However, the IRS taxes crypto as property rather than currency.
This means that you must pay taxes on the capital gains you make when selling crypto. When you buy, mine, or otherwise receive crypto as payment, you’ll pay taxes based on the currency’s value at the time you received it.
Storing Your Cryptocurrency
You must also choose how you want to store your cryptocurrency. There are a few different types of “wallets” that allow you to secure your crypto.
Crypto wallets are applications that allow you to store and retrieve your crypto at will. When you buy cryptocurrency through an exchange, you can choose to store your currency in the exchange’s crypto wallet.
If you don’t want your crypto to stay with your exchange, you can store it off-location in a hot wallet or a cold wallet. A hot can run on any internet-connected device. While this is convenient, it also runs a higher risk of theft because it rests online.
Cold wallets are offline crypto wallets. These wallets exist on external devices such as USBs or hard drives. As a result, cold wallets are more secure against cyberattacks. However, if the external device gets damaged—or if you lose your passcode to get into the device—you can lose the cryptocurrency it contains.
Buying Crypto: Exchanges vs. Brokers
The two main ways to obtain cryptocurrency are buying and mining. Mining requires significant hardware and energy, so many people turn to buying cryptocurrency instead. When you purchase cryptocurrency, you need to pick either a broker or an exchange.
A crypto exchange is a shared platform where users can trade cryptocurrencies. Exchanges have lower fees and allow you to access multiple trade types, advanced performance charts, and other intricate tools for buying and selling.
Brokers, on the other hand, offer convenient and easy-to-use interfaces that make crypto trading much simpler for beginner investors. However, brokers tend to have higher fees. A crypto broker might also restrict how you transfer and store your cryptocurrency, meaning you might have to store your holdings in a broker-specific account rather than in your own crypto wallet.
Mining Crypto: A Lucrative Path
Mining is the process of creating cryptocurrencies. In crypto mining, powerful computers solve complex puzzles. These puzzles actually serve to verify transactions that occur on the crypto’s network. The owner of the computer that solves the puzzle first receives the newly created cryptocurrency. When you choose to mine your own crypto, you take a direct and potentially lucrative path to obtaining cryptocurrency.
The Different Types of Mining Rigs
You need a Crypto Miner, or a Mining Rig, to mine crypto. Mining Rigs are similar to any high-speed computer in that they use advanced hardware to complete tasks. The difference is that Mining Rigs are designed to complete specialized, mining-specific tasks.
Because of this specialization, there are several types of Mining Rigs. Each currency has its own specific mining equipment, such as Bitcoin Miners, Ethereum Miners, and more. You must also consider your needs and goals—including budget, location, and energy requirements—when choosing a Mining Rig.
Better Support Leads to Better Success
Finally, a crucial thing to know is that there’s always room to learn, grow, and delve deeper into the world of cryptocurrency. With the right support and guidance, you can turn your interest into a fruitful and rewarding mining operation. At BT-Miners, we provide crypto users with quality equipment and comprehensive service. In addition to supplying superior mining hardware, we also help with repairs and upgrades, technical support, and expert customer service. Make the most of your crypto mining equipment when you start your crypto journey with us today.