The Top 5 Benefits of Investing in Cryptocurrency
- Written by NewsServices.com
Cryptocurrencies are all the rage right now. If you're not familiar with them, they are digital or virtual tokens that use cryptography to secure their transactions and control new units' creation. Cryptocurrencies are decentralized, not subject to government or financial institution control.
Bitcoin, the first and most well-known cryptocurrency, was created in 2009. In recent years, the popularity of cryptocurrencies has exploded, and their value has skyrocketed. If you're thinking about investing in cryptocurrency, here are five reasons why you should do so.
Let's take a look at these reasons.
Easy Transactions
There is a common misconception that Bitcoin and other cryptocurrencies take too long to process transactions. It takes an average of 10 minutes for a block to be confirmed under the 'Bitcoin Core' protocol. To put this into perspective, if you're buying a coffee with your credit card from Starbucks, there's no guarantee that the transaction will have been completed in less than 10 minutes.
In fact, should you leave the store after making the purchase and return moments later, expecting your transaction to be complete, chances are you'll find your purchase has vanished from your bank statement. And yet we still use our cards despite this security risk (sometimes even when we've made purchases in well-known brands like Starbucks). If you want to buy eKrona, then choose the right trading platform.
Top Security
Cryptocurrencies are highly secure currencies, and they use cryptography to secure transactions and regulate the generation of units. Moreover, cryptocurrencies are stored in an encrypted environment, making them impossible to hack for a third-party person or organization.
Also, wallets used to store these assets are secured by private keys that only the user knows about. So there is no fear of a wallet being hacked into as it cannot be accessed without the private key.
Tax Benefits
Investing in cryptocurrency allows you to take advantage of tax benefits since it is considered capital gains rather than income. Capital assets refer to financial assets like stocks, bonds, mutual funds, etc. Capital gains occur when proceeds from selling these assets exceed their cost basis. The gain is subject to capital gains tax which has lower rates than ordinary income.
You are eligible for more tax deductions on cryptocurrency investments since it is considered property. If you invest in cryptocurrency, that investment is treated as a property sale for tax purposes. The acquisition cost starts with the amount you originally spent on your cryptocurrencies. This can give you significant additional deductions relative to trading stock options.
Inflation Hedge
Why invest in cryptocurrency? As with any investment, you're making money to provide security in retirement. Cryptocurrency offers people the chance to invest in a hedge against inflation, which is helpful since living costs have been rising steadily for years. This provides an opportunity for investors to make more money if their investments are tied directly to the goods and services they need (which everything except for land is).
The Bottom Line
The blockchain technology that is the foundation of cryptocurrency has potential applications in many areas. In addition, investing in cryptocurrency can provide significant investment returns. Cryptocurrency may also offer some protection from identity theft. And if you lose your private key, there's no FDIC to reimburse you. But all this doesn't mean it's risk-free, and prices of cryptocurrencies can fluctuate significantly—just like any other type of investment.
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