Has cryptocurrency come of age in 2021? Crypto has soared in the first half of the current financial year. The value of Bitcoin, Ethereum and Dogecoin shot up.
Major corporations including Apple, Google, Tesla, Samsung, Facebook and PayPal have devised strategies tuned to crypto. Pioneers in the technology count themselves among millionaires now.
After initial skepticism, India is slowly changing its stand towards crypto. Legislation is on the anvil to classify crypto as an asset like a commodity. There are a few things you have to be aware of before investing in crypto.
Any monetary decision should be preceded by detailed research and homework. Conduct a detailed study about all the cryptos out there in the market. First you have learn what blockchain technology is. Blockchain is the foundational tech of crypto.
Steer clear of schemes
Crypto is decentralised. There is no regulatory mechanism available as with central bank-issued currencies. You have to do your homework about the source of the currency, the nature of the issuer and their authenticity. Do not fall into traps and fraudulent schemes. Be wary of fraudsters who promise impossible returns.
The value of crypto is volatile. Do not put all your eggs in one basket. Test the waters by investing a small amount. You can start small trading too. Start with a single currency and follow its trends. That will give you a deeper insight into how cryptos work. Once you are confident of the sector, you can diversify your investment.
Devise your own strategy
There are fraudsters and imposters in all fields. Crypto is no exception. There are people who collect money from gullible investors and supply them with wallets with non-existing currencies. Once they get the money, they would be untraceable. Do not take all advice at face value. Learn on your own. Learn about all the currencies in the market. Consider the opinions of experts in the field. Do not imbibe whatever you see on social media. You have to form an investment strategy that suits you best.
Crypto investment demands patience. This is a highly volatile market. There may be a spike in prices. There may be a slide in prices. Face these swings with equanimity. Analyse the market calmly and logically.
Cryptocurrencies are stored in wallets. There are online wallets and offline wallets. New investors are recommended to keep an online wallet. Get a strong password to keep you safe from hacking and online theft. It is a good idea to create an exclusive email id for crypto transactions alone.
Know your taxes
Before you invest in crypto, you have to have a deep understanding about local tax laws in the country where your assets are based in. Most of the countries tax crypto heavily.