Cryptocurrency: Five Things You Should Know About it
If you’re new to cryptocurrency and you’ve never decided to buy bitcoin or other cryptocurrency, you likely have a lot of questions you need answered.
Not to worry, though, because new information about this type of payment is coming out almost daily, and the truth is that few people actually know everything there is to know about cryptocurrency.
The thing we know for sure is that these digital payments are not likely to be eliminated as a way to trade and pay for things anytime soon, so it’s best if everyone learns a little more about them, starting with the following facts.
1. To Tax or Not to Tax?
As of now, the blockchain technology used in cryptocurrency makes people who buy and sell with this type of payment essentially anonymous, which means most people end up not paying any taxes on any of their transactions.
Although the transactions are supposed to be taxed, if you’re anonymous to the government, it is difficult for them to regulate this. Is that going to change in the future? Most people believe that the government is very likely to step in at some point and take a bigger role in the buying and selling of cryptocurrency, including bitcoin and others.
Although many experts are hoping there won’t be too much regulation, some regulation is very likely unavoidable.
2. The Value of Cryptocurrency Is Cyclical
There are many types of cryptocurrency, with the most-popular one being bitcoin. Recently, however, bitcoin slipped out of the number-one spot and therefore the others are currently vying for first place.
But that doesn’t mean that bitcoin is likely to remain out of the number-one spot for good because just like traditional investments, experts believe that cryptocurrency is always going to go up and down. In fact, many experts are now encouraging people to invest with cryptocurrencies so that that type of investment can be an important part of the investment portfolio.
Of course, the cryptocurrency market is a little more volatile than traditional markets, so these same experts argue that cryptocurrency trading should only be a part of your portfolio, not all of it.
3. Prepare for the Year 2030
At this point, the predictions made about cryptocurrencies are just educated guesses, but nevertheless, many people are convinced that by the year 2030, you’ll be able to buy bitcoin and use it for nearly everything because this type of digital currency is likely to replace roughly one-fourth of the traditional currency in every part of the world.
To be sure, it looks very much like cryptocurrency is here to stay because even if that number ends up being lower, it is still a significant change from the way digital currency is being used today. This is also another reason why it’s a good idea to accept the fact that cryptocurrency is not likely to go away anytime soon.
4. It Is Disruptive to the Banking Industry
Because digital currency operates on peer-to-peer transactions and is very attractive to investors, it is very easy to think that the next step is displacing central banking, international banking, and even professional financial advisers, which is significant. In fact, in many ways, banks and financial experts will be most affected by the transition to digital currency, and they are currently trying to adjust to this possibility.
The crypto supply chain is helping to shape the future of commerce, and this is likely to result in investors deciding to cut out fees for banks and financial advisers.
5. Digital Currency Is Not Like Cash
Finally, it’s good to remember that cryptocurrency is not like cash, meaning you won’t be able to buy just anything with it – at least in the beginning. Many transactions made with digital currency are essentially in the clouds, and currently, many governments consider digital currency to be property and not money.
If you buy bitcoin today from exchanges like Huobi, it is much like a transaction for real estate, except that when you sell bitcoin, you give up a discrete digital chunk to another person, even though it is a virtual transaction.
While some credit card companies are making it easier to use digital currency, it is still very unlikely that you’ll be able to go to the grocery store and use bitcoins or other digital currencies.