Invest
Many people think cryptocurrencies are probably the best investment tool available. There are also many accounts of people becoming millionaires through their investments in Bitcoin. Bitcoin is the most popular digital currency to date, and one BTC had been priced at $800 only last year. In November 2017, one Bitcoin’s price went above $7,000.
Ethereum, perhaps the second most valuable crypto-currency, has recorded the fastest rise ever demonstrated by a digital currency. Its value has risen by at least 2.700 per cent since May 2016. When it comes to all combined cryptocurrencies, their market cap has exploded since mid-2013 by more than 10,000 per cent.
It is worth noting however that cryptocurrencies are high-risk investments. Its market value fluctuates like that of no other commodities. In addition, it is partially unregulated. There is always a chance of them being banned in certain jurisdictions, so any exchange of cryptocurrencies might theoretically be hacked.
If you want to invest in cryptocurrencies, clearly Bitcoin is still the dominant one. However, its share of the crypto-market in 2017 fell very significantly from 90 per cent to just 40 per cent. There are a number of options available at the moment, with some coins based on anonymity, some less accessible and decentralized than Bitcoin and some just copying it outright.
Although buying Bitcoins is very easy-there are several exchanges in existence that trading in BTC-other cryptocurrencies aren’t as easy to purchase. Though, with major exchanges like Kraken, BitFinex, BitStamp and many others beginning to sell Litecoin, Ethereum, Monero, Ripple and so on, this situation is gradually improving. For eg, you can exchange face-to – face with a seller or use a Bitcoin ATM, there are a few other ways to be coin, too.
If you have purchased your cryptocurrency you will need a way to store it. All big exchanges provide services in wallets. But while it can sound convenient, it’s better if you store your assets on your hard drive in an offline wallet, or even invest in a hardware wallet. This is the best way to store your coins, and gives you full control over your money.
As with any other company, you must pay careful attention to the market value of the cryptocurrencies and any relevant news about them. Coinmarketcap is a one-stop tool for monitoring most current cryptocurrencies in terms of quality , quantity, circulation supply and market cap.
Depending on a jurisdiction in which you reside, you may need to include it in your tax return if you have made a profit or a loss that invests in cryptocurrencies. In terms of taxes, they view cryptocurrencies very differently from country to country. The Internal Revenue Service in the US ruled that Bitcoins and other digital currencies should be classified as property rather than currency. This ensures for investors that accumulated long-term gains and losses from cryptocurrency trading are taxed at the normal capital gains rate of each company, which is up to 15 per cent.
Mine
Miners are the single most important component of any crypto-currency network and mining is an expense, just like trading. Essentially, miners give their respective societies a bookkeeping service. They contribute their computational power to solve complicated cryptographic puzzles that are required to validate and record a transaction in a distributed public ledger called the Blockchain.
One of the fascinating things about mining is that the puzzles are continuously increasing in complexity, correlating with the number of people trying to solve it. So the more famous a certain cryptocurrency is, the harder the method is, the more people try to mine it.
Mining Bitcoins has made a lot of people fortunes. Back in the days, using only your phone, or even a powerful enough laptop, you could make significant profits from mining. Bitcoin mining can only become profitable these days if you are willing to invest in a mining equipment of an industrial level. This, of course, brings in big energy bills on top of the price of all the equipment required.
Nowadays, it is claimed that Litecoins, Dogecoins and Feathercoins are the strongest cryptocurrencies in terms of being cost-effective for beginners. For example, using only consumer-grade equipment, at the current value of Litecoins, you might earn anything from 50 cents to 10 dollars a day. But how do the miners benefit from it? The more computational power they obtain, the greater their chances of solving the cryptographic puzzles. When a miner succeeds in solving the puzzle they receive both a reward and a transaction fee.
If a cryptocurrency receives more attention, mining becomes harder, and the amount of earned coins decreases as a reward. For example the reward for good mining was 50 BTC when Bitcoin was first developed. The reward now stands at 12.5 Bitcoins. This happened because the Bitcoin network is designed in such a way that only 21 mln coins can be in circulation in total.
As of November 2017, it has mined and distributed approximately 17 mln bitcoins. However, every single Bitcoin mined will become increasingly more and more valuable as rewards will become smaller and smaller.
All of these variables make mining cryptocurrencies an arms race that is highly competitive and rewards early adopters. However, depending on where you live, taxation and money transfer regulations that apply to profits made from mining. The FinCEN has provided guidance in the US, according to which cryptocurrencies mining and exchanging them for flat currencies can be considered as transmitting currency. This means that miners might need to abide by special laws and regulations that deal with this type of operation.
Accept as payment (for business)
If you happen to own a company and are searching for potential new clients, it could be a way for you to consider cryptocurrencies as a form of payment. Cryptocurrencies value has never been higher, and can only increase. Along with the growing interest, also grows the number of crypto-ATMs located around the world.
First, you need to let your clients know your company accepts crypto coins. Just putting a sign through your cash register will do the trick. The payments can then be accepted via QR codes using hardware terminals, touch screen devices or basic wallet addresses.
In the US, Bitcoin and other cryptocurrencies have been accepted as a virtual convertible currency, meaning acceptance of them as a means of payment is exactly the same as accepting cash, gold or gift cards.
For tax purposes, U.S.-based companies that recognize cryptocurrencies need to report a sales relation, the sum earned in a specific currency and the purchase date. Where sales taxes are payable, the amount due at the time of sale is determined on the basis of the average exchange rate.
Buy goods
In the past it was highly difficult, to try to locate a merchant who accepts crypto-currency. But the condition these days is totally different.
There are a number of merchants-online as well as offline-that embrace Bitcoin as the payment method. They range from large online stores to small local shops, bars and restaurants. For hotels , flights, jewellery, games , computer parts and even a college degree, bitcoins can be used to pay.
Many digital currencies such as Litecoin, Ripple, Ethereum and so forth are still not widely accepted as yet. Things are shifting for the better however, with Apple approving at least 10 separate cryptocurrencies on the App Store as a viable type of payment.
Cryptocurrencies users other than Bitcoin can of course also swap their coins for BTCs. In addition, there are Gift Card sales websites such as Gift Off, which accept about 20 different cryptocurrencies. With a cryptocurrency, you can practically buy something with the gift cards.
Finally, there are marketplaces such as Bitify and OpenBazaar which accept only cryptocurrencies.