It is important to understand Bitcoin and cryptos before you start investing !
You’re probably wondering if it’s too late to invest in bitcoin or other cryptos ? or if the price is already too high ? The answer is NO, you still early and could take advantage of it if that’s something you interested in.
Bitcoin is the most popular cryptocurrency of all time. It is a decentralized digital currency that you can buy, sell and trade directly in no time without the need of a bank. It was created in January 2009 by a mysterious man named Satoshi Nakamoto who believed and described the need for “ an electronic payment based on cryptographic proof instead of trust”.
Although Bitcoin was designed as a peer-to-peer electronic cash system, it has also attracted crypto-curious investors, who view it as a store of value similar to gold. Expert think that bitcoin will soon replace gold. It is Exchangeable for other currencies, products, and services. The coins’ real value, however, is extremely volatile.
A Decentralized Network.
Peer-to-peer (P2P) technology allows Bitcoin to operate independently of centralized authorities or banks.
Crypto transactions and distributions are managed collectively by the network. However, Since it is open-source, nobody owns or controls it, and anyone can use it, in many different ways that is not possible with the regular method payment that you know.
IS CRYPTOCURRENCY THE FUTURE ?
Unlike Venmo and PayPal, which rely on their existing debit/credit accounts to transfer money, crypto has no central authority: any two people, anywhere in the world can send bitcoin or other cryptos to each other without the involvement of a bank , government or other institution. Therefore, many countries and their government around the world are not really happy with this new type of Asset.
In recent years, more and more Businesses and organizations are increasingly accepting cryptocurrencies as forms of payment. El Salvador was the first country making Bitcoin a legal tender and now Ukraine just passed a law legalizing it. More and more countries are working on some laws to legalize the use of bitcoin and crypto.
It can only grow positively in the future, and might even replace the US dollar one day. Who knows ?
IS IT WORTH IT ?
Bitcoin is becoming more and more popular everyday, millions of people and thousands of businesses are currently using it. This is the true power of decentralization, no more transaction fees and it gives individuals the total control of their funds.
When you think about it why would you let a stranger (Banks) hold your life savings ?
IS BITCOIN GOING TO LAST ?
If you had invested only $10 in Bitcoin in 2010 it would be worth over $400,000 today. No stock market in the history of the world has performed as good as Bitcoin. It would not be surprising if it replaces “Paper money” and hit $100,000 within 5 years.
The world has changed and we believe that digital currency is the future of money.
HOW CAN SOMEONE GET BITCOIN IN 2021 ?
- As payment for goods or services.
- Purchase Bitcoin at a crypto exchange.
- Exchange Bitcoin with someone.
- Earn Bitcoin through competitive mining.
You’ll need a cryptocurrency exchange if you want to buy, sell or trade cryptocurrencies easily. These services work similarly to a stockbroker, letting you buy cryptos like Bitcoin, Ethereum, and Dogecoin.
A good platform should be easy to learn and use. To find the best crypto exchange, it’s important to consider how many currencies are supported, pricing, withdrawal options, and security.
WHAT IS THE MOST POPULAR CRYPTO PLATFORM ?
Binance and Coinbase are by far the two most popular cryptocurrency exchanges. However, these two cryptocurrency platforms are kinda different from each other.
Coinbase is a U.S.-based exchange designed for beginners with a simple interface and limited transaction types. On the other hand, Binance has a steep learning curve, supports advanced users, and provides international traders with hundreds of currency trading options. Although Binance is user-friendly and offers three trading levels according to experience level, it’s not nearly as easy to use as Coinbase.
The Binance.US version has fewer options, higher fees, and is not available in every state so remember if you live in the USA you won’t be able to use the original version of binance, you will have to go with the binance.US version.
Note: Before you decide which crypto platform you going to use, you have to understand the two different type of crypto exchanges available for traders and investors."Decentralized Vs Centralized".
WHAT IS A CENTRALIZED CRYPTO EXCHANGE ?
A centralized cryptocurrency exchange is a platform where you can buy, sell and trade digital assets. In this case, you must trust a third party to monitor the transaction and secure the assets on your behalf, whether you’re the buyer or seller. There is no tracking of their deals on the blockchain.
Just know that Verification of your personal information is required for such exchanges.
Platforms: Coinbase / Binance / Kraken / Gemini / Kucoin
WHAT IS A DECENTRALIZED CRYPTO EXCHANGE ?
A decentralized cryptocurrency exchanges work like centralized one, except they don’t rely on a third party to hold your assets. All funds for this exchange are kept on the blockchain.
These platforms allow peer-to-peer (P2P) trading, which typically uses assets, proxy tokens, or an escrow system, rather than IOU-based system like those used by centralized crypto exchanges.
Platforms: Bisq / Uniswap / Kyberswap / PancakeSwap / Atomex
HOW DOES IT WORK ?
A user doesn’t need to know anything about Bitcoin to use it. It’s just a mobile application or computer program that provides a personal bitcoin wallet and enables a user to send and receive bitcoins & cryptos freely. This is how most people think it works, but it is more than just that.
If you really think about it, Bitcoin allows its users to have full control of their funds, which is why banks and most governments are still skeptical about it.
However, After calling it a scam and valueless for a while, now big banks like Citigroup and JPMorgan & Chase have invested hundred of millions of dollars in Bitcoin already.
HOW FAST IS BITCOIN GROWING ?
There is a growing number of businesses and individuals using Bitcoin and other Cryptocurrencies. This includes all types of businesses like restaurants, hotels, apartments and law firms, as well as popular online services such as Microsoft, Namecheap and overstock.com.
Bitcoin’s cumulative gain since 2011 has exceeded 20,000,000%, far exceeding the Nasdaq 100 and US Large Cap stock benchmarks combined.
Remember back in 2010 it was only worth a couple cents, now it’s trading around $43,000.
Although, it remains a relatively new phenomenon, it is growing rapidly. As of October 2021, Bitcoin is being traded around $63,000, putting its market cap at roughly $800 billions, with millions of dollars worth of bitcoins exchanged daily. The total value of the Cryptocurrency market now stands above 2 trillion.
Bitcoin is the largest digital currency, accounting for over 50% of all cryptocurrency market capitalization.
IS BITCOIN SUPPLY UNLIMITED ?
There will never be more than 21 millions bitcoin, and so far 18.78 millions of bitcoins have already been mined. Unlike paper money, it cannot be inflated, printed or manipulated in any way.
WHAT ABOUT BITCOIN AND TAXES?
Bitcoin is now listed on multiple exchanges and available in most countries in the world. It is paired with major world currencies, such as the U.S. dollar and the euro.
According to the US Treasury Department, bitcoin transactions and investments cannot be considered illegal because of their increasing significance. On sept. 7, 2021 El Salvador will become the first country to make Bitcoin legal tender. They even did more than that, to promote crypto, the Salvadorian government will give $30 in Bitcoin to every citizen who signs up for its national digital wallet named “Chivo”.
We also believe this is just the beginning, very soon every country in the world will follow the same path.
How to prepare your bitcoin tax form ?
Bitcoin is classified as an asset, which implies that it is subject to taxation. The IRS has made it mandatory for taxpayers to report all kinds of bitcoin transactions, no matter how small in value.
Every U.S. taxpayer is required to keep a record of all buying, selling, investing or usage associated with their Bitcoin or other cryptos.
The IRS sent warning letters in July 2019 to more than 10,000 taxpayers it suspected “potentially failed to report income and pay the resulting tax from virtual currency transactions or did not report their transactions properly.” It warned that incorrect reporting of income could result in penalties, interest, or even criminal prosecution.
Crypto owners can use services like Turbotax but for crypto, to help them save time, make their investment legit and maximize their refund during tax season.
Online softwares like Cryptotrader.com or Koinly integrates directly with your favorite cryptocurrency platforms so that you can import your historical transactions easily. Whether you’re trading, mining, staking, or earning interest, you’ll be able to import your transactions and calculate your taxes easily. By partnering with the largest tax preparation platform, you can easily E-File your crypto gain and loss with your entire tax return.
You can directly import your reports into TurboTax Online, TurboTax Desktop, TaxAct, and many other tax platforms!
What makes Bitcoin so important ?
- Bitcoin is global : You can send it across the planet as easily as you can pay with cash in the physical world. There are no weekend closings, no fees, and no limits on how much you can withdraw.
- Bitcoin is private : Bitcoin payments require no bank statements or unnecessary personal information to be provided to the merchant. However, transactions do not contain any identifying information other than bitcoin addresses and amounts involved.
- Bitcoin is secure : The encryption of the Bitcoin network makes its payments fundamentally more secure than standard debit/credit card transactions. When making a bitcoin payment, no sensitive information needs to be sent over the internet. Your financial information is very unlikely to be compromised, or your identity stolen.
- Bitcoin is open : Bitcoin transactions are all published publicly, without exception. There is no possibility of manipulating transactions or changing the supply of bitcoin. The software is free and open-source, so anyone can review the code.
- Bitcoin is Safe : More than ten years after being created, there has never been a successful hack of the bitcoin network. The network and its security have been examined and studied by countless computer scientists and cryptographers because it is an open-sourced.
WHY THE GOVERNMENT DOES NOT LIKE BITCOIN ?
Cryptocurrencies can be transferred from one account to another without a middleman’s need. This means that a user can send bitcoins to any location without the help of any central bank, financial institution, or government agency, which makes them lose control over citizen’s funds. People have therefore accepted it as a viable financial system.
Most developed countries as well as some emerging economies have legalized it already. However there are still many countries like Bolivia, Algeria, Vietnam, and now China that have banned the usage of cryptocurrency.
WHY THEY FEAR BITCOIN ?
Some of these countries have prohibited it because they suspect that it can be used for fraudulent activities and criminal purposes. At the same time, some economies fear that it can be a threat to their control.
Now let’s get into the five main reasons why the government does not like Bitcoin:
- Loss of control due to decentralization.
Because bitcoin’s underlying technology does not allow a central authority to control any transaction, the government loses its power to regulate monetary policy.
- Crime concerns.
Many drug mafias are using the bitcoin network to trade drugs and harmful chemicals. More seriously, terrorist organizations are also involved in crypto transactions for trading weapons.
- Fiscal treatment is complex.
Since Bitcoin uses blockchain technology, a decentralized network, the government finds it hard to plan the monetary policy and tax regulations.
- A threat to the business of central banks.
After Bitcoin has become popular, many central banks have lost their business, which is eventually a loss to the government. That’s exactly why the government, as well as central banks, do not like it.
- The concept of Bitcoin is still young.
Many people still do not trust the concept of bitcoin. Time can only say whether bitcoin will be used as a global currency or not. Although, experts believe that it has a promising future.
