Investing In Cryptocurrency Best Crypto Exchanges

How is the concept of cryptocurrency explained in simple terms? The ‘crypto” comes from the fact that his digital kind of money is made safe and secure via the use of cryptography (Oxford dictionary definition of cryptography is ”the art of writing or solving codes”). That’s why it’s so hard to counterfeit alt-coins. Most every alt-coin uses a sophisticated blockchain technology system for verification and exists on decentralized computer networks. Don’t worry if you don’t understand the details. Most people without high- level technical experience don’t, to be quite honest. The main concept you do need to understand is that crypto is impossible to counterfeit and is an intangible form of money not controlled by national banks or a single institution.

PayPal was one of the first mainstream financial entities to allow for the storage, purchase, and sale of bitcoin directly from its platform. After the company put its trust in bitcoin, other corporations and individuals began to take notice. Be able to buy crypto with PayPal was a big step forward in the general credibility of alt-coins.

The Elon Musk cryptocurrency connection is interesting as a kind of lesson, not because of Musk himself. When the founder of PayPal and Tesla Motors, Elon Musk, speaks, people listen. He’s not just a business innovator but also a celebrity. You’ll see his name associated with alt-
coins because he likes to invest in them, talks them up during interviews, and at one time allowed consumers to purchase his cars with bitcoin.

Simply put, it’s the specific process by which fresh alt-coins are put into usable circulation. To mine new coins, users (miners) solve highly complicated math problems that help validate the blockchain network. You do need tools or software for cryptocurrency mining, but no pick-axes or helmets.

Modern-day blockchain miners use computer memory space to perform and store their math calculations. In the early days of cryptocurrency mining, just about anyone could use their home PC to mine, i.e., create, fractions of new coins. But now, unless you have high-end computers and plenty of open memory storage, you can leave mining to the very few people, and institutions, who do it for a living.

Cryptocurrency staking is a special term of crypto jargon that can usually be translated as ”interest”. Most crypto exchanges pay some form of interest on your holdings, based on where you keep your alt-assets. Most of the time, you’ll need to set aside (”stake”) a specified amount of your holdings in a special kind of wallet you can download from your cryptocurrency exchange. That amount acts as a sort of validation of existence for the network. For instance, if you store $5,000 worth of bitcoin in the exchange’s online wallet, you’ll typically earn more interest than if you store it in a hard wallet. The main thing to remember is that each exchange has its own policies about cryptocurrency staking, so be sure to read the details before you choose a place to park your alt-currency.

The cryptocurrency tax situation is in a state of flux, but right now the IRS considers the asset to be a form of property, on which you have to pay capital gains taxes, either short-term or long-term, depending how long you hold it. The best way to stay on the good side of the tax gods, no matter what country you reside in, is to keep meticulous records of your holdings, times of purchase, and times of sale. Fortunately, if you use a reputable cryptocurrency exchange, all those records can be accessed whenever you need them.

Anything can happen like a cryptocurrency crash some day, but you have to keep things in relative perspective. In other words, what are the chances the stock market could crash? Its history since 1929 has shown that it’s susceptible to major corrections, some of which have had very bad results for investors. Crypto is an asset class that’s only 12 years old and has already made inroads with individual, institutional, and major corporate investors. Chances are, and this is just our opinion, cryptocurrency could grow into something like a hybrid of fiat currency and gold, representing both a store of wealth, a hedge against bad times, and a common form of everyday economic exchange.

If you’d prefer the potentially lower returns and damped-down volatility of the stock market, chances are you would not have read this far into an article about finding the best cryptocurrency exchanges. The cryptocurrency vs stocks question comes up a lot. In any case, place your capital wherever you prefer. The vast majority of people who own crypto also own other assets like stocks, bonds, options, futures, commodities, precious metals, etc. The stock market has its ups and downs but over the long haul it tends to return between five and nine percent per year to investors. Again, that’s just an average, but assets like bitcoin and ethereum, which are relatively new, come with the potential to deliver much higher returns than that, which is why people are flocking to the alt-coins in droves.

It’s changing. Just 10 years ago, you’d have been hard-pressed to find an investment guru at one of the major global banks who would give two cents for a wallet full of cryptocurrency. Nowadays, most of those same institutions own bitcoin and a portfolio of other leading alt-coins. National banks around the world are finally recognizing the existence of non-fiat money, at least to the extend that they’re happy to tax your gains on holding it. What does the cryptocurrency future look like? We don’t own any crystal balls, but you can get a hint by viewing the long-term price chart for the world’s biggest and most successful alt-coin, namely bitcoin. Since its debut in 2009, it has had a rocky, roller-coaster ride, but has slowly built up a massive value both in terms of reputation and the amount of the coin in circulation.

There are two main ways to avoid cryptocurrency scams. First, use a reputable crypto exchange and follow their ”best practices” suggestions. Second, use one of the best hard crypto wallets for storage of your non-active currency. By non-active, we mean whatever amount you don’t need for day-to-day purchases, investments, and for earning interest on exchanges. Good news: many exchanges allow you to earn interest (or what they call a ”stake”) even on the crypto you store in a hard wallet. And, as part of those best practices techniques you’ll inevitably learn about, an important one is never to respond to unsolicited emails, texts, or other kinds of messages that purport to be from your best crypto exchange. Always make sure that when you communicate with your cryptocurrency exchange, you are the one who initiated the contact (like logging into the platform or contacting customer service).