Today, there’s so much excitement and noise about digital currency or cryptocurrency, and there’s no indication this frenzy will go away anytime soon. Some experts even say that digital currency is the most revolutionary invention since the birth of the internet. So, what is this digital currency and how does it work? Here’s an absolute beginner’s guide into to the world of cryptocurrency.
What is digital currency exactly?
To fully understand digital currency you must first learn about Bitcoin. Bitcoin was the first digital currency created in 2009 by an individual (or a group of individuals) who call themselves Satoshi Nakamoto. Bitcoin is designed to be used just like any cash online, except that transactions are made without theinterference of a third party such as a bank. This means that people can buy things online completely anonymously. Another characteristic of Bitcoin and other digital currency is that the value is not tied to a country. One Bitcoin is worth the same anywhere in the world. Today, there are many other cryptocurrencies you can invest in beside Bitcoin, and all of them are doing great on the market.
Is it safe?
Most of the people who want to own digital currency wonder if it’s safe to use. The answer is absolutely yes, as long as you know how to use it right. Blockchain technology makes digital currency almost impossible to copy or use to commit fraud. However, that doesn’t mean your cryptocurrency can’t be stolen. Cryptocurrency exchanges and wallets can be penetrated. If that happens, it’s really hard to catch the perpetrator because of digital currency’s anonymity.
How to invest in digital currency?
If you’re interested in investing in digital currency, you usually have to make an exchange to buy it. Buying money with money might sound crazy, but cryptocurrency actually behaves more like an investment than traditional money. It’s more like buying gold or silver. You don’t go to a bank to buy gold, but you dabble in thestock exchange.
In order to buy digital currency, you must go to an exchanger. An exchanger is a person who exchanges regular money for electronic currency or one electronic currency for another. Simply put, you take your dollars or pounds or any other currency and exchange them forcryptocurrency. Your exchanger will take a fee for completing your transaction and you’re good to go. This is the whole process of buying digital currency and becoming a proud holder. It’s actually much easier than traditional stock exchange.
What else can exchanger do?
Aside from exchanging, exchanger can also offer professional advice. Brokers usually offer elaborate charts and statistics on different cryptocurrencies and their performance on the market. Experienced exchangers can give advice whether it’s the good time to sell and buy digital currency or just let your investment rest for the time being.
How to choose the right exchanger?
There’s no one definite advice on that. You have to do your own research online, check the reputation of different exchangers, see if they are vulnerable to hacker attacks and how’s their customer support. Even though themajority of investors have positive experiences with exchangers and cryptocurrency, there are no absolutely safe investments.
Can I see my balance?
Yes. Most exchangers offer virtual wallets where you store and handle your digital currency. With a wallet, you can check your balance anytime and make transactions with other investors and businesses that accept payment in cryptocurrency. However, you don’t have to hold a wallet with your exchanger. You can look around until you find a wallet that satisfies your needs. Every time you sign up for a wallet, ask about their security and safety measures. Also, make sure your wallet is stored offline when not in use. This is one of the easiest ways to avoid hackers and stop them from getting to your investment.
Is Bitcoin (or any Cryptocurrency) a Permitted IRA Asset?
Yes, you can hold Bitcoin in an IRA.
While IRS guidelines on IRA investments are at least a little bit fuzzy in regard to Bitcoin, current guidelines permit all but the following asset types to be included in a Roth or traditional IRA:
- Metals – with exceptions for certain kinds of bullion
- Coins – (but there are exceptions for certain coins)
- Alcoholic beverages
- Certain other tangible personal property
Bitcoin doesn’t fit under any of those categories – at least not neatly. Since the IRS has yet to specifically rule on the acceptability of Bitcoin and other cryptocurrencies in retirement plans, the retirement industry is moving slowly – and cautiously – toward acceptance.
Remember that the IRS doesn’t specifically approve what you can hold in your IRA (but they do specifically prohibit collectibles). So be aware of anyone stating they have ‘IRS Approved‘ investments. You can read the complete article here.
It’s obvious that you don’t need to be The Wolf of Wall Street to become a successful digital currency investor. You just need to do some research and be smart, and you’re probably come out as a winner.
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