Cryptocurrency is new virtual money, which, unlike fiat money (that is, paper money familiar to us!) does not have a physical expression. In other words, we cannot physically touch the crypto or put it in the wallet. “Coin” is a unit of crypto. The crypt is maximally protected from scammers, from fakes, and duplication. If the emission of fiat money is not limited, then there is always a strict emission for the crypt. For example, 21 million coins are the largest amount of cryptocurrency in Bitcoins. 22 million coins cannot be in life.
Another interesting point about crypto is that its characteristic feature lies in decentralization, i.e., no internal or external regulator. Banks and judicial authorities, tax authorities and even the state cannot track the crypto in any way, they cannot influence the transactions that you conduct. Why is this happening? All data is entered into the blockchain. Well, is it interesting for you what cryptocurrency is? Is buying crypto a taxable event for a person?
You can read about how the digital world works on the ChangeHero.io website because it is full of useful information directly on how to become a real investor and learn how to understand the new world for us.
How to get crypto
How to buy a trx and know that you can use it at any time? There are 3 options (they are perhaps the most basic) how to take the crypt.
- Purchase. This is the surest and most straightforward way; there is nothing simpler than it because you directly purchase digital currency for rubles or dollars. You can take it on special platforms called cryptocurrency exchanges. By the way, the exchange rate is much more profitable in banks than in exchange offices or in wallets. It is worth choosing those sites that have a large turnover and demand. For example, if you know such a crypto exchange as Binance, you can be sure of it, since for 5 years in a row, it has been ranked first in the list of the best exchanges that help investors, support transfers in rubles and dollars from bank cards.
- Mining (classic). In simple words, these are special powerful computing systems that help to get a crypt. But if earlier it was easy to mine a crypt, then since 2018, this option has become not very convenient and even unprofitable.
- Mining (cloud). This option is for those who are willing to spend their time mining Bitcoins. But it’s a very effective and efficient way to get crypto in the long run. A contract is concluded for a year, during which you are provided with a powerful service for mining bitcoins. Everything that you manage to take is thrown off into your account. Income depends on what the exchange rate is on the market, as well as how quickly or slowly the complexity of the network grows.
These 3 options are perhaps the most realistic and affordable if you decide to start acquiring crypto.
Main differences from the ruble and the dollar
These are the listed important features that clearly distinguish crypto from regular fiat money.
- Decentralization and accessibility. The Bitcoin network consists of a chain of client programs, i.e., wallets that are evenly distributed across databases, i.e., blockchain. In simple terms, the blockchain is completely open to view the registry of all operations in the system. You can look into any wallet without entering a password and without going through authorization.
- Complete transparency of payments. Payment history will never be deleted from the database, so it can be easily tracked. In order to find out all transactions, it is enough to know only the Bitcoin address.
- The lack of control over the network. This is ingenious since Bitcoin does not have a controlling center that can freeze an account or withdraw funds for non-payment. In other words, everything is so protected and inaccessible that only the owner of bitcoins has the right to do something with the purchased crypto. But it is also worth remembering the other side of the coin, there are small commissions, as well as irrevocable deals that cannot be canceled or withdrawn.
- No tax deductions. Is buying crypto a taxable event? This is where many people can rejoice since the purchase of cryptocurrency and its subsequent storage are not taxed. But if the storage of a crypt and its purchase does not have a tax, then large transactions are still subject to taxation. Again, if the transaction is unprofitable, then there will be no tax. It is important to read about this in more detail on the site that is given at the very beginning of the article.
Today, crypto is a powerful, independent, and decentralized computing network, the performance of which is more than 8 times higher than the total computing power of all super laptops in the world. In order to seize even limited control over it, huge resources and expenses of hundreds of millions of dollars are needed.
Popular cryptocurrencies today
Bitcoin is perhaps the most popular cryptocurrency that many people hear about. With its appearance, Bitcoin marked the beginning of the development of all other similar currencies. Ethereum is the most popular cryptocurrency, which is no weaker than the usual bitcoin. Litecoin is an alternative cryptographic currency that is a “helper” of Bitcoin. Litecoin is also a peer-to-peer payment system through which transactions and transfers of funds from one user to another can be carried out.
The competition among the crypto is too high; they are in a constant stage of the competitive process. Which currency to trust and give preference is the choice is yours. But remember that they do not exist in huge numbers. There are 5 major cryptocurrencies that should be considered global: Bitcoin, Ethereum, Ripple, Bitcoin Cash, and Litecoin. Everything that you are presented with, the rest, is no longer a cryptocurrency at all but a fraudulent scheme. it is these 5 giant cryptocurrencies that occupy the entire part of the digital market. The basic idea of bitcoin is quite simple since it is primarily a means of storing and exchanging values. However, this is just the tip of the iceberg, as cryptocurrencies have other functions as well.
What about taxes?
Despite the rapid progress and growing popularity of cryptocurrencies in the world, their fate today depends too much on the authorities. Fortunately, it is clear to many governments that cryptocurrencies have enormous value, which is still difficult to comprehend fully. As trillions of dollars flow into the crypto economy, many countries will likely try to become leaders in the cryptocurrency space. It is worth remembering that where there is money, there will be taxes. As the economy develops, investors, corporations, and users will be subject to new rules dictated by governments.
So, most likely, insane anarchy and unregulated digital enrichment will turn into a controlled option. A number of countries are already laying the groundwork for this to happen. While China and South Korea have opted for bans, Switzerland has issued guidelines aiming to become the most cryptocurrency-friendly nation. Naturally, all this will not happen now, not next week, and not even in 2023. But the fact that the authorities are already “looking askance” at the cryptocurrency is a fact.