3 Things You Didn’t Already Know About Cryptocurrency
If you’re into stocks or investments at all, it’s hard to ignore the impact that cryptocurrency has had on the market in recent years. And, it’s popular for a reason. As of March 2020, cryptocurrency had a market capitalization of $155 billion.
But, so many people (even those who know the market) are still confused about cryptocurrency, and that’s okay!
The truth is, crypto can be easier to understand than most people think. With that in mind, let’s cover three things you probably didn’t know about cryptocurrency. With these little facts, you can continue your educational journey into the world of crypto, and analyze the investment.
1. Yes, They Can Be Risky
Some people avoid investing in cryptos because they think there is a lot of risk involved. Well, that can be said for many different types of investments. But, it’s true that cryptocurrency does come with its fair share of risk.
Think of crypto like a startup company. There is a good chance it will fail. If it does, you end up losing that money from your investment. While some people have made millions from cryptocurrency, others have lost nearly as much. There are major rewards available, but they come with major risks.
2. They Aren’t Considered Currency by the IRS
Currently, cryptos aren’t considered official currency by the United States Internal Revenue Service. Instead, the IRS considers them to be property. Keep in mind, however, the IRS regulations can change over time.
Because of this, things can get a little confusing when it comes to your taxes. The IRS is seriously cracking down on the taxation of cryptocurrency, so it’s important to know what you’re doing as far as taxing your cryptos correctly. Using a service or software like taxbit.com can make the process less confusing, and can help to ensure you’re doing your taxes the right way with your cryptos involved. Consult with a tax professional
3. They Can Disappear Without Warning
Keep in mind that cryptos aren’t tangible things. They aren’t being stored in a warehouse or bank somewhere. Instead, they are completely virtual. So, anything from a major computer crash to an intelligent hacker could completely wipe out your crypto account, and there isn’t much that can be done about it after it happens.
You can protect yourself from your cryptos vanishing by doing things like using a wallet from a reputable firm and keeping track of your private key. Use strong passwords for your account that won’t be easy to guess, and always backup your system information. The fact that cryptos are digital is one of the major appeals, so if you choose to invest, don’t let it also be your downfall.
This is really just the tip of the iceberg when it comes to understanding more about cryptocurrency. But, if you’ve been holding back on investing or you’ve wanted to learn more for a while, hopefully, it gives you a good starting point for understanding cryptocurrency and why it has become so popular within the market. If you can’t seem to get it out of your head, it could be time to take the plunge and make an investment!
Consult with a licensed investment professional before making any decisions.
For live CPA exam prep and accounting classes, join Conference Room for free. Members will be notified of course dates, times, costs, and how to attend these courses.
Get your questions answered to pass the CPA exam, and to learn accounting concepts.
Go to Accounting Accidentally for 400+ blog posts and 450+ You Tube videos on accounting and finance:
Good luck!
Ken Boyd
Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies
(email) ken@stltest.net
(website and blog) https://www.accountingaccidentally.com/
(Image) Dmitry Moraine