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Buying Your First Crypto? 5 Things You Need To Know

  • 2021-06-28

Cryptocurrencies have garnered considerable attention from investors, financial analysts, and the media. An increasing number of companies across the globe are harnessing crypto assets for different purposes – such as investment, transactions, lending and borrowing, and more. Given that cryptocurrencies empower financial operations with greater transparency, speed, security, and efficiency, they are evolving as a better alternative to fiat currency.

One of the biggest trends in the crypto market is trading. A multitude of experienced investors, as well as beginners, are tapping into the crypto trading market to earn money and amplify their profits. If you are also planning to make your first crypto investment, make sure to devise an intelligent strategy and equip yourself with adequate knowledge of the crypto market rather than leaping ahead without a plan.

In addition, be mindful of the following five things to increase your chances of success.

1: Cryptocurrencies are volatile

The value of cryptocurrencies pivots around supply and demand. Their price escalates when the demand is high and drops when the demand is low. In addition, the news on crypto adoption plays a significant role in influencing the price of crypto assets. While positive news catapults their price, negative news devaluates cryptocurrencies. Elon Musk’s tweets are a perfect example of the same.

The price of Bitcoin – which was USD 56928.97 on May 12, 2021 – plummeted to USD 49,972.80 on May 14 following Elon Musk’s tweet on May 13, stating that Tesla suspended vehicle purchases using Bitcoin. A month later, Musk tweeted on June 13 that Tesla will resume accepting Bitcoin when miners who verify transactions will use more renewable energy. This tweet added to Bitcoin’s positive momentum, increasing its price by 9.8% to USD 39,035.

While investing in cryptocurrencies, understand that they are volatile. The price of an asset that is higher today might plummet the next day or even in a few hours or minutes.

2: Don’t trust, verify

It cannot be denied that the billion-dollar crypto market is vulnerable to scams and hack. On May 8, Elon Musk hosted a show, Saturday Night Live (SNL). Scammers leveraged his appearance on the show by promoting fake giveaways on Twitter and YouTube. Though these social media channels were in the name of SNL, they were actually operated by scammers. They asked users to transfer Dogecoin to a specific wallet address with the promise to double the amount transferred. As of May 9, scammers received at least 9.7 million Dogecoin that valued at approximately USD 5 million at the time of the scam.

Considering such incidents, it is of paramount importance to verify any promotional news before acting on the same.

3: There is no minimum to buy

One of the main attributes of cryptocurrencies is that they can be fractionalized. It means that you need not buy one complete coin; you can buy a fraction of it.

For example, Bitcoin is divisible up to the eighth decimal. You can invest in as little as $10 worth of Bitcoin and try your hands on crypto trading.

This is extremely helpful, especially for first-time crypto traders. As a beginner, you are more likely to be concerned about putting a higher amount into a crypto asset and the risks involved in trading. By capitalizing on the fractionalization aspect, you can reap the benefits of trading while mitigating the concern of losing your investment.

4: Profits may be taxable

Each jurisdiction has its rules and regulations pertinent to cryptocurrency. However, if you are in the U.S., you need to be cautious while investing in cryptocurrencies since they may be taxable. The Internal Revenue Service (IRS) perceives cryptocurrency as property instead of currency, thus taxable. It means that if you buy a coin for $10 and it doubles in price and you invest that $10 of profit into anything, you are needed to report that profit and pay tax on it.

The centralized exchange platforms regularly share account information with the IRS, so you won’t be able to escape. Moreover, the Federal Government would not hesitate to send people to you to investigate the trade.

5: It’s easy to buy crypto

Buying cryptocurrency is easy. A number of online crypto exchanges and ATMs enable users to buy their desired crypto assets. BelcoBTM is a registered ATM kiosk that simplifies the crypto buying process for both beginners and experienced traders. Just 3 simple steps and you get your coins transferred to your wallet. Verify your number, scan your wallet address, and deposit cash to complete the transaction. Simple as that!

Wrapping Up

Making an investment requires thorough research, the right strategy, and the need to keep an eye on market trends and conditions. On the contrary, incomplete homework and lack of knowledge of the industry that you are planning to invest in can lead to unpleasant consequences. Thus, keep in mind the above-mentioned points and choose the right investment partner to reap benefits from your crypto investment – even if it is the first one.

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