Remember The Past Is Past
A mistake that many new investors make is looking at the past and extrapolating that to the future. Yes, Bitcoin used to be worth pennies, but now is worth much more. The key question, however, is Will that growth continue into the future, even if its not at quite that meteoric rate?
Investors look to the future, not to what an asset has done in the past. What will drive future returns? Traders buying a cryptocurrency today need tomorrows gains, not yesterdays.
How Is Cryptocurrency Taxed
The Canada Revenue Agency taxes crypto transactions as either business income or capital gains.
The difference between the two is immense. If crypto mining or trading is done as a business, then 100% of the capital gains are taxable. If, on the other hand, if an investor is crypto trading or mining that as a hobby, only 50% of the capital gains are taxable.
If youre not sure if your crypto transactions are a business or a hobby, reach out to a tax professional. Its better to pay a professional to help you understand the tax liabilities of crypto than to pay penalties for filing incorrectly later.
Please note, this information is provided for educational use only, and is not tax advice. For tax information that is personalized to your situation, please consult a tax advisor.
Invest In Crypto Companies:
Another way you can get exposure to cryptoassets is by buying the stocks of crypto companies or companies who have a significant portion of their balance sheet in the cryptocurrencies. Micro strategy is one such company that is holding 125,051 bitcoins, valued at about $4.8 billion at the current bitcoin price of $38,700.
Here are a few crypto-companies:
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What Cryptocurrency Should You Invest In
First, Blockgeeks does not give financial advice, and second, never asks anyone else what to do with your money, least of all Google! Always educate yourself, understand the risks, the all possible outcomes, and dont make any investments if you are not 100% comfortable with your decision.
That said, Bitcoin remains the undisputed king of cryptocurrencies its been around the longest and has the largest market capitalization of over 674 billion USD . is the total value of all tokens available, or the price of each token multiplied by the number of tokens in circulation.
However, there are other cryptocurrencies to choose from, such as Ethereum, Cardano, Litecoin, and thousands of others. They all differ in price, availability, demand, transaction speed and fees, and the technology that supports them.
The website CoinMarketCap lists over 5,000 options in order of decreasing market capitalization. Here are the top 10 and their performance as of May 2021.
It doesnt matter what the price of a given cryptocurrency is, you can always buy a fraction of a token. For example, if 1 Bitcoin costs $35,000 USD, you can always buy 0.0001 Bitcoin for the equivalent of $350 USD.
When researching tokens to invest in, you can take a look at CoinMarketCap to get a snapshot of the top performers, but your research should not stop there. In fact, thats where the real work begins.
How To Invest In Cryptocurrencies Guide
In 2022, its no brainier that you shouldbrainier have some portion of your wealth in cryptoassets. Think of cryptocurrency as a new financial system that is more robust and powerful than the legacy financial system. You might be rewarded with spectacular returns, but at the same time it comes with extra risk.
Cryptocurrency as a whole is regarded as a High risk and high return investment, so you should allocate a fixed percentage of your entire asset allocation. According to Fidelity, an investor should have 5% of your portfolio in crypto assets. However, we at CoinSutra feel, you can have more if you are well-educated and informed about cryptocurrencies. But, for a retail investor, 5% of their entire net worth in crypto is a decent amount.
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If Done Right You Can Reap Benefits From Your Cryptocurrency Investment Heres How
In 2009, Bitcoin, the first cryptocurrency, was just a fad that no one believed in. While the blockchain technology behind Bitcoin was impressing the tech community, it wasnt drawing the interest of the common public as an investment option. Now after more than a decade, a lot of cryptocurrencies have entered the crypto market, and Bitcoin has emerged first in line with the highest value.
At the moment, investing in cryptocurrency is on every investors radar. People who bought cryptocurrency in 2017 before the price explosion are reaping the benefits of the investment decision of their lives. So, are you ready to start your investment journey with cryptocurrency?
How To Invest In Cryptocurrency?
1. Start Small
Like the stock market, the crypto market is extremely volatile which means prices will rise and fall unpredictably. It is only wise to invest in cryptocurrency after you make sure you have enough liquid funds for at least 6 months without any debts. Once youre clear on this, start by investing in stocks to understand your capacity to deal with risks. Once you know you can handle the ups and downs, set aside a small part of your money to invest in cryptocurrency. If possible, limit your investment to 5-10% of your income.
2. Select your Cryptocurrency
3. Pick the Right Cryptocurrency Exchange
4. Choose a Cryptocurrency Wallet
Understand How Cryptocurrencies Work
Bitcoin is the most well-known cryptocurrency, but there are thousands of different cryptocurrencies and crypto tokens that you can buy. But most of these share some similarities:
- They rely on blockchain technology. One of the major innovations behind cryptocurrencies is the use of blockchain ledger technology. These are public databases used to track transactions that can’t be changed once new information is added to the existing chain. This transparency and permanence helps make sure cryptocurrency isn’t duplicated, spent twice or otherwise manipulated.
- There are different blockchains. Cryptocurrencies may have their own unique blockchains. For example, there are separate Bitcoin, Binance and Ethereum blockchains.
- They are decentralized. People and companies around the world use their computers to help run the blockchains and get rewarded in return. Because the database and computing power is spread out, there isn’t a central authoritysuch as a company or governmentthat controls what’s happened.
- They are minimally regulated. While cryptocurrencies are relatively new and regulations can be murky, state and federal agencies have shown that they can and want to regulate them. But that doesn’t mean you’re protected or should trust everything you read on a crypto company website.
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Canadians Can Use It To Buy Goods And Services
Finally, lets not miss the point of cryptocurrency: its currency that can be used to buy things. Though, in the past, buying goods with crypto was a hassle, these days new apps and technology have made it much simpler. Here are a few ways crypto can be used to buy goods and services.
Perhaps the simplest way to spend crypto is to link it to a crypto card, which right now come in two main types: prepaid and debit cards.
A prepaid card is basically how it sounds: a card to a crypto wallet, then load it with funds. When everything on the card is spent, it can be loaded again. Of course, in order to load a prepaid card, an investor will first need to convert their crypto into CAD, which can become somewhat of a hassle, not to mention expensive if they have to pay exchange fees.
Debit crypto cards take the loading step out of the process. The card is linked directly to a crypto wallet, and, as long as the retail store accepts the debit crypto card, it can be used on point-of-sale devices. The exchange from crypto to CAD happens on the spot, allowing users to make purchases quickly. The only problem with debit crypto cards: in Canada, investors dont have that many options. Though that may change in the future , for now interested investors will have to select a card from a very limited supply.
Retailers that accept crypto currency
Payment processors that accept crypto
Cons Of Investing In Cryptocurrency
- The cryptocurrency market is highly volatile it can be difficult to predict when values will rise or fall, and the drivers of large swings in value may not always be clear.
- Though crypto blockchains are very difficult to hack, individualscan be susceptible to hacking, due to the same risks inherent in any online activity.
- Cryptocurrencies are not currently subject to much government regulation, so transactions dont come with legal protection.
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What To Look For In A Cryptocurrency To Investment
Every cryptocurrency is different, so the best option depends on your individual circumstances. That said, beginning investors may wish to explore more established currencies, as there is plenty of information about how they work and their performance over time. Feldman points out that Bitcoin can be a very natural place to start, thanks to its size, its unique store-of-value characteristics, the lower technical complexity backing the investment case, and the mature institutional market supporting it.
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This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.
What Do You Need To Invest In Cryptocurrency
While the idea of cryptocurrency can be daunting to beginner investors, the requirements to get started are minimal. If you want to learn how to invest in cryptocurrency, you only need:
Personal identification documents
Bank account information
Secure internet connection
Thats it! It is possible to purchase cryptocurrency through a stockbroker as well. In this case, most of your personal and financial information will be on file already. Now that you have what you need, lets start investing.
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Top Cryptocurrencies To Consider As A Beginner Investor
As a beginning cryptocurrency investor, you shouldn’t try to find a diamond in the rough. You should get your feet wet with more established cryptocurrencies that have built-out networks to support them. That will allow you to get more familiar with the mechanics of cryptocurrency investing, as well as how it fits into your portfolio.
Bitcoin is an easy place to start. Every cryptocurrency exchange will support trading in Bitcoin. It’s well-established, and you know what you’re getting with Bitcoin. It’s nothing fancy, just digital cash, but it has a first-mover advantage that had made it widely adopted. That gives Bitcoin a competitive advantage when it comes to being actually usable as a medium of exchange.
Ether is also a good choice for beginner investors. Ethereum’s technology is behind most DeFi projects, which use the Ethereum blockchain to execute smart contracts and provide financial services without a central authority. Anytime a user wants to write a smart contract to the blockchain, they’ll have to pay Ether to do so. Increased adoption of DeFi applications will lead to greater demand for Ether.
How To Give Cryptocurrency As A Gift
Cryptocurrencies are no longer just the domain of fintech nerds. Even the least technologically inclined among us have heard of them, with their volatile price swings and surges in value making the news in pretty much every corner of the globe.
Opinion on whether to invest in this asset class is varied. Plenty of experts warn that digital money such as Bitcoinwill never become entirely mainstream and are, therefore, overpriced and destined to plummet in value. Others take a more positive view, claiming that cryptocurrencies are the future, that people buying them now can still make a fortune, and that they, as a result, should be high on our shopping lists.
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Do I Need To Do Crypto Taxes
Disclaimer: We are no tax bureau nor tax consultants. If you have issues with taxes, and if large sums are at stake, you better ask your local tax consultant.
Right now there are only a few tax consultants who know how to deal with cryptocurrencies. But it can be safely assumed that the number is growing quickly and that cryptocurrencies will soon be a standard issue for tax experts like securities, shares, ETFs and real estates are.
All we can provide here is an overview of the typical issues with cryptocurrencies and taxes.
How To Invest In Cryptocurrency
Getting to the most important part of this page, its time to learn how to successfully invest in cryptocurrencies. Although many may think investing in digital assets is a complex and impossible thing to do, you can do it if you follow the steps given below.
Some things may change depending on the broker or cryptocurrency you decide to invest in, but the process tends to be similar almost all times.
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What Are The Best Cryptocurrency Books To Read
There are so many cryptocurrency books and blogs that it can be hard to distinguish the best bitcoin guides, for example.
If you are looking for information on cryptocurrency investing for beginners, or a crypto blog that explains new launches, below are some of the best places to look.
Which Crypto Should I Invest In
Bitcoin, ether and dogecoin are some of the most famous cryptocurrencies. But there are now thousands to choose from.
Choosing the right cryptocurrency for you will involve a number of factors. Fundamental analysis determines the intrinsic value of an asset, which is harder to do with crypto. You also need to factor in risk management.
You may be concerned about the environmental impact of some currencies,whose creation requires a lot of computing power. If so, you may prefer an eco version.
Or you may be interested in using a specific coin exchange or broker that deals with only a limited number of currencies, so will have limited choice. This avoids the confusion that comes with too much choice.
Some people may be attracted to the newcomer worldcoin, which is believed to be founded on the altruistic idea of fairer wealth distribution, and is supported by some large Silicon Valley names.
Safemoon, a new currency that is meant to discourage day traders by placing a penalty on those who sell the currency, is a possibility for dedicated HODlers.
For full lowdown on what you can invest in, go to Bitcoin alternatives the most important other cryptocurrencies.
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The Differences Between Uits And Mutual Funds
Mutual funds are open-ended funds, meaning that the portfolio manager can buy and sell securities in the portfolio. The investment objective of each mutual fund is to outperform a particular benchmark, and the portfolio manager trades securities to meet that objective. A stock mutual fund, for example, may have an objective to outperform the Standard & Poors 500 index of large-cap stocks.
Many investors prefer to use mutual funds for stock investing so that the portfolio can be traded. If an investor is interested in buying and holding a portfolio of bonds and earning interest, that individual may purchase a UIT or closed-end fund with a fixed portfolio. A UIT, for example, pays the interest income on the bonds and holds the portfolio until a specific end date when the bonds are sold and the principal amount is returned to the owners. A bond investor can own a diversified portfolio of bonds in a UIT, rather than manage interest payments and bond redemptions in a personal brokerage account.
There are stock and bond UITs, but bond UITs are typically more popular than their stock counterparts, as they offer predictable income and are less likely to suffer losses.
Select A Cryptocurrency Exchange
You must buy cryptocurrency through an exchange such as Coinbase.com, Binance.us, Crypto.com, or Kraken.com. Some factors you may wish to consider when selecting an exchange are security, fees, the volume of trading, minimum investment requirements, and the types of cryptocurrency available for purchase on a given exchange.
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Four Tips To Invest In Cryptocurrency Safely
According to Consumer Reports, all investments carry risk, but some experts consider cryptocurrency to be one of the riskier investment choices out there. If you are planning to invest in cryptocurrencies, these tips can help you make educated choices.
Before you invest, learn about cryptocurrency exchanges. Its estimated that there are over 500 exchanges to choose from. Do your research, read reviews, and talk with more experienced investors before moving forward.
Know how to store your digital currency:
If you buy cryptocurrency, you have to store it. You can keep it on an exchange or in a digital wallet. While there are different kinds of wallets, each has its benefits, technical requirements, and security. As with exchanges, you should investigate your storage choices before investing.
Diversify your investments:
Diversification is key to any good investment strategy, and this holds true when you are investing in cryptocurrency. Don’t put all your money in Bitcoin, for example, just because that’s the name you know. There are thousands of options, and it’s better to spread your investment across several currencies.
Prepare for volatility:
The cryptocurrency market is highly volatile, so be prepared for ups and downs. You will see dramatic swings in prices. If your investment portfolio or mental wellbeing can’t handle that, cryptocurrency might not be a wise choice for you.