Unless you have been intentionally avoiding the topic, you have likely heard a lot about cryptocurrencies in the past months. Their popularity is growing and it seems that the more we know about them, the more questions we have.
Some people are skeptical to use them, let alone investing in them. There might be a new crypto blog or other crypto articles on the internet that can help them remove their preconceived notions about cryptocurrencies by providing correct and substantial information. As a society, we still have a lot to learn about cryptocurrencies but here are three important points to consider if you’re interested in digging deeper in the world of crypto!
All Cryptocurrencies Fluctuates in Value
So let’s say you have decided to “mine” for the cryptocurrency of your choice and want to make a passive income by getting in on the ground floor. This can still be done because new cryptocurrencies are being released every day. The more people that “mine” for a cryptocurrency, the higher value it will take on.
We basically assign value to these cryptocurrencies, just as we do traditional currencies. For this reason, the monetary value of all cryptocurrencies fluctuates enormously.
What’s more, it’s not simple to withdraw your financial investment once you’ve invested in cryptocurrency. Unlike using an ATM machine, the metaverse makes it difficult but not impossible to get your money back once it’s been invested.
Cryptocurrency Is Not Government-Regulated
Cryptocurrencies are hosted in a technology we call the Blockchain. In short, the Blockchain is made up of decentralized servers that do not belong to any single power. That is, it is not regulated by a central government. This fact is widely seen as a double-edged sword.
Although it prevents exploitation by a powerful few, who often misuse technology for their own personal gain, it also means that cryptocurrencies can be used to pay for illegal goods purchased on the dark web. The lack of an all-seeing eye that monitors transactions enables the easy exchange of all commodities, even the unseemly ones. As a user of cryptocurrency, it is up to you to use your money for honest transactions.
It is fair to say, however, that government-regulation is slowly creeping up on the cryptocurrency world. In the United States, and several other countries, cryptocurrency holders are required to report their crypto transactions as a capital gain or loss. As far as taxes go, nothing fancy is required. Your crypto transactions are reported on a basic tax return form using Schedule D and Form 8949. Most tax platforms are automatically equipped with all the necessary protocols to make crypto reporting as easy and painless as possible.
Cryptocurrency Is Not Very Eco-Friendly
Although there are a few exceptions, consumers are beginning to realize that cryptocurrencies are not very kind to the environment. There has been a massive push to create and employ cryptocurrencies that do not require large amounts of energy to power. The number of servers it takes to keep any cryptocurrency up and running as a form of payment isn’t sustainable. With just a little bit of research, you can find a cryptocurrency that corresponds to your purchasing needs all the while exhasusting less energy. For example, many people buying and selling in the metaverse are starting to pull away from Bitcoin in exchange for “greener” alternatives such as Chia, Greencoin or Solarcoin.