Tips Before Buying Cryptocurrency
Ignorance is not always bliss as sometimes you miss out on crucial points that can save you from falling into a pit. Well, let me get this straight, I am talking about the most debatable topic in the business world. Can you guess? It is none other than cryptocurrency.
Oh! I forgot to ask, are you aware of this digital currency? Don’t worry; keep reading ahead, you will have a lot to discover about the whole cryptocurrency ecosystem.
Let me explain the term cryptocurrency through an example. Imagine in the future technology goes crazy and leaves you with a single mode of paying for your needs and wants i.e. digitally; no banks or government interference with your transactions. What would you do?
This is what cryptocurrency payment is all about. You can mine coins online and pay in exchange for the products, or services.
Well, you can’t invest your hard-earned money in something which is highly volatile. It is necessary to look at every nook and corner for any loopholes before investing in this high-risk market.
SALIENT TIPS FOR THE CRYPTO NEWBEES
Get ready with your magnifying glasses as we embark on discovering the foremost points about investing in crypto platforms.
- First things first check your wallets
Prior of getting into the world of the cryptocurrency ecosystem make sure that you are not forfeiting your hard-earned money into this digital currency. Cryptocurrency investment should not be taken lightly and if you are weak at heart, or get nightmares after such huge investments, then my friend cryptocurrency is not a cup of your tea. So think not just twice but several times, research like crazy, depend upon honest ratings and reviews, look over whether your wallet permits you to transfer your account into another device, and also the performance of input/output of the currency and then jump into investing cryptos.
- Don’t follow the herd!
That’s right! No matter what do not get influenced by your surroundings unless you have experienced the adrenaline in your body. Just because your favorite crypto magazine tells you that cryptocurrencies are another word for investment growth does not mean that you catch the first train you get and register for a wallet. Cryptocurrency being volatile can either make you or break you so consider both positive and negative aspects before investing.
- Get to the root cause!
Look for quality over quantity! Don’t buy a coin because it is cheaper; go through the search history of its origin, growth, or downfall in the market, why and how it was created, how large is the community developer, who is operating on it, how nimble is the storehouse on GitHub; usually the updates are logged in the open-source software.
There are thousands of cryptocurrencies in the pond of the cryptocurrency ecosystem, some of which target to imitate bitcoin while others endeavors to resolve other ongoing business issues. They all have assorting levels of developer decentralization.
Essentially, you need to dig out everything about the coin in which you are willing to invest including the coin’s security model, the proof of work, and proof of stake, how the hashrate juxtaposes other PoW coins, and so on. If you are unaware of these terms, then you are not there yet! (To invest in cryptocurrencies)
- Don’t get a lock if you can’t take care of your keys!
Cryptocurrency is no less than an asset which means the holder is the legitimate owner and wholly responsible if you lose your coins. This is the reason why the experienced user will guide you not to endow the cryptographic keys to a wallet of digital currency to a third party for an exchange as such firms are unregulated to certain hacks.
Nevertheless, it will be a nail-biting business if you safeguard the keys yourself by saving them on a hardware device.
Ask yourself whether you can safeguard the seed phrase, the password for the key that unlocks your crypto coins. If yes, then you can go with the option, if not then give it to someone who can store the keys to your crypto treasure.
- Don’t forget the taxes!
Do you know the IRS (Internal Revenue Service) treats cryptocurrency as property and not a currency when it comes to tax-paying purposes? Although, crypto assets are not equally regulated as much as banks or stocks. But, the IRS gets account information regularly from the centralized exchanges which mean any misunderstanding in your crypto assets can result in the government sending pick-ups to interrogate you about the same.
IN A NUTSHELL
The motive behind this article was not to scare you off, or stop you from investing in cryptocurrencies. Just sending a heads up along your way! Think and research before you enter the cryptocurrency ecosystem.