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For quite some time now, cryptocurrencies and bitcoins have taken the news feed, bringing up thoughts of investing in these exciting currencies. But many people are wary, wondering if it’s safe to invest in such an unstable asset. In this article, we’ll examine the reasons to invest in Bitcoin, as well as what some experts have to say about whether or not you should actually do it. If you want to learn everything there is to know about bitcoin trading, trade bitcoin now.
Keep reading if you want to gather some insight on the topic.
Tax Implications
If you’re into cryptocurrency for its investment potential, firstly, you should know that there are some big tax implications. While selling bitcoin is currently taxable (just like selling stocks or any other type of capital asset), bitcoin exchanges and wallets don’t report to the IRS. In short, if you sell your bitcoin through an exchange or wallet, you won’t have to pay taxes on it—yet.
However, if you get paid with bitcoin for work you've done (such as installing new software), that could be a different story. For example, if someone pays you for services rendered with cryptocurrency, what happens next depends on whether they just give it to you directly (and you convert it right away) or if they wire transfer it to your bank account via Coinbase or similar service first.
Market Volatility
It is no doubt anyone can predict what's going to happen with bitcoin—or any other form of cryptocurrency, for that matter. You can make some informed guesses, but if you try to time your purchase or sale based on predictions, they may work against you as easily as for you. Before buying, look at your spending and investment goals and evaluate how far into the future you want to plan.
If not more than a year or two, Bitcoin investment may be an ideal option to hold off your investment until next year at least. If later than that – say five years – then consider going ahead now since bitcoin might take longer than expected before these gains materialize.
Security
Another vital concern with bitcoin investing is security. In today’s modern era, with the advancement of technological aspects, there are a lot of options for enthusiastic financial investors who want to invest in digital currency, but not all of them provide solid storage solutions or insurance policies against theft by hackers. Be careful before you trust your money with any company—ensure they have a good reputation and back up all deposits they receive like banks do.
Anonymity
This is a major selling point for Bitcoin, since one of its main goals is to allow people to send money directly from one individual to another. However, if you plan on investing in any kind of cryptocurrency and/or altcoin, keep your investment as anonymous as possible.
If a wallet allows you to generate a new address every time you receive funds, that’s a great option. Another secure option would be using a wallet where no identification information is asked for when creating an account. But regardless of how you choose to store your coins, there are certain measures you can take right now to help keep your investment safe and anonymous. This includes: Keep Your Private Keys Safe!
Governmental Regulations
Whether or not you should invest in bitcoin comes down to whether or not you trust a particular exchange. Some exchanges are well-established and have had a good track record for security, but new ones can crop up at any time—and it’s all too easy for someone to use an exchange that was once secure but is now compromised. As everything is going digital these days, you cannot simply expect any guarantee. However, buying from established exchanges is as safe as buying from anyone else.
Conclusion
Despite their popularity, investing in cryptocurrencies like bitcoin is still a risky bet. The cryptocurrency market is still very new, volatile and lacks broad appeal. Despite this, many financial experts in this field believe that there are safer ways to invest your money.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.