If you haven’t heard of cryptocurrency yet, chances are you are living under a rock. You’ve heard of Bitcoin, right? That’s one of dozens, possibly even hundreds, of kinds of cryptocurrency out there. Even your grandma talks about buying Bitcoin at the Sunday dinner table. So how do you get started? What do you need to know?
First, learn what cryptocurrency actually is and is not. It’s not all Bitcoin, and it’s also not some magical currency that you can use to commit crimes with impunity. Cryptocurrency is a type of virtual currency that is built on a public blockchain ledger. The blockchain is the public ledger that tracks transactions publicly in real time in a decentralized way that does not include a traditional banking system. It is regulated in many places, and in the United States you do have to pay taxes on your capital gains as well as if you are paid in it. And don’t count on anonymity to keep you safe if you use it to commit a crime – you can still be tracked down in most cases.
When you purchase cryptocurrency you will typically do so though a crypto exchange, just as though you are purchasing stocks. There are lots of crypto options out there and there are lots of crypto exchanges out there, so you will need to determine which ones fit your needs best. Which takes your preferred form of fiat currency? Which has the most agreeable fees?
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Probably the most important thing you need to know about cryptocurrency is how to store it. If you are going to use it as a traditional currency you will need to store it in a secure hot wallet, but this is going to be your least safe option. Hot wallets are often hacked and cleaned out, and unlike currency held in a traditional bank there is no protection against this when it happens – when it’s gone, it’s gone. A cold wallet is the best way to store cryptocurrency if you don’t want to get it stolen, but again if you lose the USB drive or slip of paper associated with your crypto fortune there’s no getting it back.
There’s a lot of misinformation out there about cryptocurrency, but the fact as of this point is that it is completely legal to own in the United States. Learn more about cryptocurrency from this definitive guide to cryptocurrency!