You Dont Know Best Security Practices
Both the wallets and websites you choose to use hold sensitive personal information – do your best to keep it safe!
If someone compromises your accounts, then you can say goodbye to all of your funds. Take security seriously, and learn from those who have learned the hard way.
When using a wallet, hardware or desktop, be sure to:
- Avoid using Public Wifi
- Avoid using unsecured software/extensions
- Use strong passwords
One more important tip: do NOT use your daily email address when you navigate the crypto space. Use a separate one dedicated to your cryptocurrency investments.
Your Money Could Be Stolen
Be aware that a hacker can potentially steal the contents of your digital wallet.
Your digital wallet has a public key and a private key . However, crypto-asset systems allow users to remain relatively anonymous and there is no central data bank. If a hacker steals your crypto-asset, you have little hope of getting it back.
Using a wallet thats held offline, called a hardware wallet or cold storage, may provide additional protection.
Cryptocurrency Has Lots Of Unknowns
Theres still a lot that needs to be ironed out with how cryptocurrencies work. Think about it: Nobody even knows who the founder of Bitcoin is! Only a small percentage of people in the world really understand the system and know how to operate it. Ignorance makes you vulnerable. We always tell people that if you cant explain your investments to a 10-year-old, you have no business investing in them to begin with. Youre setting yourself up for a big mess.
P.S. Even though it might seem like everyone and their grandpa is investing in crypto, most people say they are still hesitant to put any money into it or dont trust cryptocurrency at all .2
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Crypto Friendly Banks Uk
Most of the UKs major banks now let you move money between a regulated crypto exchange and your bank account.
However, some banks are more cautious than others. For example, Starling Bank had imposed a temporary suspension on outbound faster payments to cryptocurrency exchanges in order to protect customers.
The banks are continually weighing up the risks. Some make it easier for customers to move money to and from crypto exchanges.
Digital Dividends And Interest
There are prominent cryptocurrencies that pay dividends to their owners such as NEO, KuCoin and BTMX. Holders of these cryptos can earn substantial amounts of money as passive income just by having them in their portfolios. If you want more information, head to the article we made on crypto dividends
Additionally, certain crypto platforms such as StormGain offer interest on cryptocurrency that a user uses most often.
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Investing In Virtual Currency Has Produced Jaw
It’s possible to get filthy rich by investing in cryptocurrency in 2022 — but you could also lose all of your money. Investing in crypto assets is risky but also potentially extremely profitable.
Cryptocurrency is a good investment if you want to gain direct exposure to the demand for digital currency. A safer but potentially less lucrative alternative is buying the stocks of companies with exposure to cryptocurrency.
Let’s examine the pros and cons of investing in cryptocurrency.
Should You Invest In Chainlink
Chainlink is worth investing in for the following reasons:
- Chainlink is a well-established project within the crypto sphere with over 1,400 partnerships, outperforming its biggest competitor, Band Protocol, which has only 53.
- Ethereums planned merging of its Mainnet and Beacon Chain proof-of-stake systems will mean greater scalability, security and sustainability for Chainlink making it an even more attractive option for future customers.
- Chainlinks diverse offerings work with any smart contract-enabled blockchain network, which makes it a flexible option for enterprise clients.
- Despite Chainlinks early entry into the distributed oracle network sphere, distributed oracle network technology is in its infancy. Chainlinks full potential is still unknown, but it shows great promise for overcoming the divide between real-world data and blockchain networks.
However, Chainlink, like the rest of the cryptocurrency market, has had a rough year so far in 2022 and has yet to show any real signs of sustained recovery. While it has potential for the future and predictions are generally positive, its important to invest cautiously and never put more into any investment than you can afford to lose.
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How Are Cryptocurrencies Created
One common way cryptocurrencies are created is through a process known as mining, which is used by Bitcoin. Mining can be an energy-intensive process in which computers solve complex puzzles in order to verify the authenticity of transactions on the network. As a reward, the owners of those computers can receive newly created cryptocurrency. Other cryptocurrencies use different methods to create and distribute tokens, and many have a significantly lighter environmental impact.
For most people, the easiest way to get cryptocurrency is to buy it, either from an exchange or another user.
Below, you can find all of the major cryptocurrencies listed by market capitalization.
What Outcome Do I Want
Everyone wants to get money out of a trade. But, then again, when thinking about taking profits, the question is how much is enough? In terms of outcome, are you willing to risk it all and perhaps suffer a loss because you believe youll regain whatever you lost tenfold?
It isnt easy to be so sure about crypto because you generally dont know how the coin will behave. You could sell and see the price keep going up, for example, and regret selling so soon. But, then again, its really hard to tell because crypto prices can generally go up or down regardless of historical data.
So, whats a trader to do? Most of the time, the key is focusing on the percentage of profits youve already made. People have different preferences depending on how much risk theyre willing to take. However, most traders target at least 50% before they take profits.
That being said, you can target 100% profits too before you decide to take. You can even target higher percentages. It really depends on how much risk youre comfortable dealing with. It can be tempting to see where your investment takes you if, for example, it reaches 100% .
Know, however, that this is shaky territory and may put your investment at risk. This is alright as long as you can deal with extreme volatility. Otherwise, you should have a clear percentage in mind to signal when youre going to take your profits off the table.
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You Dont Own A Hardware Wallet
I will be straight up: if youve invested more than $500 in cryptocurrencies, then hardware wallets are a smart investment.
They are disconnected from the internet, which means that hackers can only obtain your funds if they steal your physical device and also know the passphrase to access it. This makes security a much easier task.
If you have large amounts of money, say over $5,000, then it may be worth buying two. The second can act as a copy to the first one, in case you lose it.
Q4 2022 Price Prediction
The Ethereum network is transitioning to a fully proof-of-stake consensus system with subsequent improvements to network speed and flexibility. If this is successful, there could be a surge of interest from investors wanting to cash in on Chainlinks subsequently quicker network.
Coinpedia expects a bull trend to top out at $10.01 for the end of the year but doesnt discount a possible drop to $6.75.
What The Decline In Nfts Mean For Investors
Over the past year, many people bought NFTs as either investments or simply because they are fun or bring them joy. Regardless of the reason, many of those digital assets are now worth a lot less because of the crypto markets downfall in recent months.
From an investing perspective, buying an NFT is even riskier than buying crypto because its almost like a leveraged bet on crypto, according to Yang. Its essentially gambling but people dont really know the difference and they buy them because theyre fun, he says.
Knowing that NFTs are even more risky and speculative than crypto, you should likely stay away from them, especially while theres a general decline in crypto prices. Experts say most long-term investors will be better served by allocating only a small portion of their portfolio to bitcoin or ethereum, two of the largest cryptocurrencies, rather than to an NFT.
You Dont Hodl Hard Enough
On the flip side, lots of investors are impatient and cut their losses early because of emotions.
The cryptocurrency market is made of cycles, where prices rise and fall drastically.
If you buy high, then you will need to wait out an entire new market cycle to end up with profits – meaning a new bear, then bull run – which can be well over a year of waiting.
Remember: if you still believe in the project, then your best bet is to be patient and hold strong, even if the price is dropping fast.
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Cryptocurrency Investment Can Lead To High Returns
Perhaps the main motivator for people to invest in cryptocurrency is the possibility to make a profit. Like it or not, money makes our world spin and is one of the main reasons to invest in cryptocurrency.
Though crypto trading is relatively new, cryptos can lead to higher returns compared to other assets, such as stocks. Cryptocurrencies are highly volatile, which means that one can potentially achieve high returns from a single trade.
At the same time, lets not forget that volatility also means that traders can lose it all in a second. So always consider potential risks! As cryptocurrency investing can be highly demanding, one of the first steps to success is to devise an effective risk management strategy to limit losses.
How Are Cryptocurrencies Taxed
The IRS currently treats Bitcoin as property, not currency. Cryptocurrency transactions are taxable by the IRS whenever a taxable event occurs, such as selling Bitcoin for a fiat currency, paying for a product or service with Bitcoin or trading it for another asset. Currently, investors are responsible for tracking cost basis, gains, and other reporting. For help, refer to IRS Notice 2014-21, or consult with a tax advisor.
However, the Infrastructure Investment and Jobs Act of 2021 which was passed in November 2021 requires cryptocurrency exchanges to report cryptocurrency transactions on form 1099-B starting in 2023. Additionally, the IIJA will require that exchanges of $10,000 or more of cryptocurrency be reported to the IRS, similar to current form 8300 reporting requirements for cash transactions, also starting in 2023. However, its important to remember that this $10,000 reporting requirement does not mean that a cryptocurrency transaction of less than $10,000 is not taxable. The tax code states that all income from whatever source derived is taxable, even if its not reportable to the IRS. For example, an individual who sold $500 worth of items at a flea market would still owe taxes on that income, even though it was not reported to the IRS on a Form 1099.
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Crypto Scams Are Increasing
There are two main types of crypto scams.
Scammers try to trick people into investing in fake opportunities to buy crypto. Watch out for these tactics:
- false promises of very high returns
- fake endorsement from celebrities or government agencies
- people who contact you through social media or text messages
- using dating apps to establish a romantic connection and gain trust
- multiple or constantly changing bank accounts used for transfers
Read more about the tactics used by investment scammers.
Rhett is scammed $97,000 by a fake endorsement
Rhett saw an article on a news website about The biggest deal in Shark Tank history, that can make YOU rich in just 7 days!
Rhett was interested in trading Bitcoin, so he provided his contact details. Soon, an Account Manager named Max began calling Rhett. Max called often, pressuring Rhett to open a trading account and make a deposit. By depositing between $40,000 and $50,000 upfront, Max promised Rhett he could earn at least $15,000 per month.
Max promised Rhett that the money he deposited would be safe because he would have total control of the account. Its more or less moving your money in your left pocket from your right pocket, Max said. Max promised Rhett that he could withdraw his money whenever he wanted to.
Rhett deposited more money in the hope he could recoup his losses. Rhett ended up depositing and losing a total of $97,000.
Top 8 Cryptocurrency Investments In 2022
Many businesses already accept bitcoin as payment, which makes this cryptocurrency a smart investment. Visa, for example, transacts with bitcoin. And after a four-year cryptocurrency hiatus, Stripe will also let customers accept bitcoin payments. The larger banks have begun to incorporate bitcoin transactions into their offerings as well.
While Tesla accepted bitcoin only briefly, it might again if mining it becomes more environmentally friendly. In a step toward that end, Blockstream and Block, formerly known as Square, are launching a bitcoin mine in Texas that will be fully powered by Teslas solar array and Megapack battery, CNBC reported on April 8.
Bitcoin also got a boost in May, when the Luna Foundation Guard announced it would make $1.5 billion in loans denominated by bitcoin and terra USD to stabilize the latter, Fortune reported. The investment firm VanEck seeks to establish a bitcoin exchange-traded fund, although the Securities and Exchange Commission denied the companys first application.
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What Is Cryptocurrency And Should I Invest In It
11 Min Read | Apr 18, 2022
Cryptocurrency. Its the hot buzzword of the investing world these days. But what is cryptocurrency really? Ever heard of Bitcoin, Dogecoin, Litecoin, XRP or Ethereum? Nopethey arent embarrassing rock band names from the 90s. Theyre actually types of cryptocurrencies . And theyre trending everywhere you look.
But heres the million-dollar question: Should you invest in cryptocurrency? Despite what every loudmouth on the internet yells at you from their digital soapbox, buying cryptocurrency isnt a safe bet for your investing future.
But well get more into that in a minute. Lets unpack what in the world crypto is first.
What Cryptocurrency Should I Invest In
If you’re a beginner and searching for the best crypto to invest in, then perhaps it might be wise to stick with established projects like Bitcoin, Ethereum, and XRP. However, there are thousands of other cryptocurrencies to choose from – so you should ensure that you conduct your own independent research.
This article was written for Business 2 Community by Kane Pepi.
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Do You Have To Pay Taxes On Cryptocurrency
Yes. Crypto gains are taxed at a regular capital gains rate: 10 to 37% for short-term gains and 0 to 20% for long-term gains.
According to the IRS, these three are non-taxable and dont need reporting:
- Buying crypto with cash and holding it
- Donating crypto to a qualified tax-exempt charity or non-profit
- Transferring crypto between wallets
Whereas the following do need to be reported and will be taxed as capital gains:
- Selling crypto for cash
- Using crypto to pay for goods or services
- Exchanging one crypto for another
- Mined crypto.
- Being paid in crypto or by airdrop.
- Receiving crypto as a bonus or a reward
If you dont declare your holdings you can get penalized. Its the same penalties for unpaid taxes and as the IRS themselves say, they can add up fast:
- A late filing fee
- Interest on top of both penalties
Your total penalty could amount to 25% or more of your unpaid tax amount.
Blockchain Technology Can Transform The World
Looking for more reasons to invest in cryptocurrency? One doesnt have to be a blockchain developer to see the potential of cryptocurrency and blockchain beyond crypto trading.
With the increasing use of smart contracts and decentralised apps, blockchain technology can benefit different sectors, including gaming, medicine, businesses, and voting. Just ask any gamer about the impressive innovations blockchain-based technology can bring into the world of gaming and digital ownership!
During the ongoing pandemic, in particular, more and more people are turning to blockchain and digital payments to reduce the risk of new outbreaks. Data show an increase in the downloads of crypto apps during the COVID-19 lockdown in 2020. Now even sceptics and strict governments are more positive about cryptos, with regulations becoming much more clearer.
Consult A Tax Accountant
One thing that you should absolutely do after earning a huge amount from crypto is pay your taxes. In the United States, the IRS has sent letters to over 10,000 crypto holders warning them to pay their taxes from crypto earnings or make corrections.
Avoiding paying your taxes could get you into trouble and youll end up losing even more money from penalties. Taxpayers could also be subjected to criminal prosecution for failure to pay their crypto taxes.
If you want to know more about how cryptocurrency is taxed, read our guide here.
What Can You Buy With Cryptocurrency
At this point, most people still see cryptocurrencies as an investment. But cryptocurrency is quickly gaining speed and becoming more widely accepted as currency. And using crypto in this way could become even more popular as these cryptocurrencies keep gaining trust.
Some major retailerslike Whole Foods, Nordstrom, Etsy, Expedia and PayPalare now letting people pay using crypto. And of course, any two people who value the tokens can exchange them for goods or services with each other.
You could also buy those NFTs we were just talking about with cryptocurrency, if owning the worlds first digital perfume or digital toilet paper with flowers is your thing. Yes, those are realbut thats a story for another day.
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