How to invest in cryptocurrency

How to invest in bitcoin

If you belong to the percentage of people who are not experts in cryptocurrencies, but you are interested in exploring the idea of investing in bitcoin and other cryptocurrencies such as ethereum, cardano or dogecoin, here is how to do it.
It is for this reason that cryptocurrencies are very sensitive to the economic policies that some countries may take or to the statements of important investors, such as Elon Musk.
And while investing in cryptocurrencies does carry risk, but there are risks that can be avoided, such as scams. The U.S. Federal Trade Commission. (FTC) reported that scammers have capitalized on the cryptocurrency boom and from October 2020 to March 2021, about 7,000 people reported losing more than US$80 million in scams.
For Greg King, CEO of Osprey Funds, a firm that invests in digital currencies – as well as other bitcoin experts – the bet is on investing beyond bitcoin. “It makes sense for investors to have a portfolio with bitcoins and ethereums for the long term and own a basket of some of the other (cryptocurrencies) to trade,” King said.

How to buy cryptocurrencies

The most widespread definition of a virtual currency is that it is a digital, non-physical currency that uses cryptography to secure and manage transactions, as well as to create new currencies.
This explanation of what a cryptocurrency is includes the two most important characteristics of these electronic currencies. The first is that they do not have a physical medium. That is, there are no banknotes or coins as there are for euros, dollars or pounds. Cryptocurrencies are virtual and although they can be stored in physical devices (wallets such as hard disks or USB sticks) they have no physical representation.
On the other hand, if you are considering investing but do not want to complicate management, roboadvisors are a good option. Automated managers allow you to take your first steps in an easy and safe way.
The world of virtual currencies never stops and almost every day new proposals emerge, known as altcoins or alternative coins in reference to the fact that they are alternatives to bitcoins. In the previous point we have already reviewed some of the most important ones and now we are going to see how to invest in new cryptocurrencies.

The best cryptocurrency to invest 2021

Hi Mario, thanks for the question. Assuming that for amounts you are obliged to make the income tax return, you have to declare all capital gains although there is no obligation for gains below 1.000¤, having to pay tax at a rate of 19% for the first 6.000¤, at 21% between 6.000 and 50.000¤ and at 23% for profits exceeding 50.000¤.
Good morning Vitalik 😉 and thanks for the question. The truth is that it is difficult to predict whether this overtaking or “flippening” will occur. Personally I think that Ethereum and Bitcoin are not competing projects but complementary, but it would not be unreasonable to think that Ethereum overtake Bitcoin in capitalization because it has already done so in other aspects such as fees generated or the value deposited in the blockchain itself. Ethereum is where there are more developers and where there will be more changes in the coming months, such as the EIP 1559 proposal in July that could turn ether into a deflationary asset and the change in the consensus algorithm later on (from proof of work to proof of stake) with the desired increase in the volume of transactions processed per second.

How to invest in bitcoin in the united states

The point is that these digital currencies have two characteristics that make them similar to the store of value that throughout history has performed this function: precious metals; with gold as the standard bearer.
Curiously, cryptocurrencies are extracted by a process of solving mathematical algorithms, which is called “mining”. In fact, it is actually extraction, just like precious metals, but in this case we are talking about “digital mining”.
If, for example, we refer to Bitcoin, only a total of 21 million monetary units can be mined, this amount is the total monetary mass. It could be compared to all the gold on Earth, mined or unmined.
Any currency can be printed by a Central Bank. It is not a limited asset. There is a limited amount of precious metals on the planet, which has given them the value they have.
In the digital world there is also a limited amount of Bitcoin and other cryptocurrencies. Upon reaching 21 million Bitcoins, no more can be mined. On the other hand, Ethereum is an unlimited asset, the amount that can be mined is infinite; but the trend of the cryptocurrency market forces it to trade accordingly.

Eduardo José Cazorla