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What Are Cryptocurrencies?

Cryptocurrency Guide: Why Invest In Cryptocurrencies Or Bitcoin?

Thanks for visiting our cryptocurrency guide: Learn what cryptocurrencies are, how they work, and why you should invest in crypto. Find out about the benefits and risks, how to find a licensed cryptocurrency broker, what crypto IRA investing is, and much more.

What Are Cryptocurrencies: Overview

 

Cryptocurrency – The Digital Currency Of The Future


Cryptocurrency has been around since 2009 and has grown in popularity ever since. Cryptocurrencies, like Bitcoin and Ethereum are viewed by many experts as the new digital versions of gold and silver.

For instance, cryptocurrency is an excellent investment to grow your wealth because:

  • Just like physical precious metals, cryptocurrencies do not correlate with the dollar and stock market and can serve as valuable protection in case of an economic downturn.
  • Cryptocurrencies are totally decentralized and controlled by supply and demand. For instance, Bitcoin and Ethereum are “mined” by powerful computers, and their supply is limited, which nullifies inflation.
  • Ethereum, just like silver, has multiple industrial uses aside from being a digital currency. In fact, it is a smart contracts platform, and its technology is currently being used by banks and governments worldwide.
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    How Does Cryptocurreny Work?

    Help the value of your retirement savings to skyrocket with a coin IRACryptocurrency uses a technology called blockchain. It is a decentralized technology spread across many computers that manage and record transactions.

    Part of the appeal of this technology is its security. But everyone does not see eye to eye on the benefits of this digital currency.

    That is because it has no insurance or government endorsements, such as FDIC or SIPC protection.

    And since it has no national or international banking rate checks, some in the banking industry deem it to be a fraud.

    But for investors who want to keep their assets outside of the financial system, this is great news!

    Becuase cryptocurrencies remove governmental control and give investors more power over their assets.

    In other words, the government can never take this asset away from you or debase its value.

    Cryptocurrency is the digital currency of the future, and more and more people are racing to buy them now, presumably before they become even more valuable.

    Crypto Offers Huge Trading Potenetial

    One part of crypto’s popularity among traders is its volatility. These swings allow traders to make money on the price moves.

    If that sounds like an opportunity you want to take part in, you can start by viewing a wide range of cryptocurrencies or check out our #1 recommendation of crypto exchange, Coinbase.
     
    Regal Assets' cryptocurrencies selection, Bitcoin, Ethereum, Ethereum Classic, etc.
     

    What Are Cryptocurrencies Used For?


    Like any currency, crypto can be used to buy goods and services, but it can also be used to make secure transactions online, and more.

    Although, one of the most popular ways people use cryptocurrency is to build up an investment portfolio.

    In other words, cryptocurrency is an alternative asset that adds diversification to your portfolio.

    The value of crypto can fluctuate (almost daily). So, by investing in, for example, Cardano you have the potential to grow your investment significantly in a bull run and take out large profits.

    But you also have to be aware of the risk of a bear market and sell before it happens or ride it out as a long-term investor.

    The bottom line is that much of the interest in these unregulated currencies is to trade them for profit, with speculators at times driving prices skyward.
     
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    What Are Cryptocurrencies Worth?


    Think of cryptocurrency as being similar to the stock market: cryptos’ value goes up and down, depending on the day.

    Different forms of crypto are totally decentralized and controlled by supply and demand. When the demand increases, the price follows, and the other way around.

    Researching the technology behind the cryptocurrency and follow price predictions of the crypto you want to invest in is crucial before committing to a purchase.

    You need to understand what your choice of crypto is used for. Otherwise, you will invest blindly, which is hardly ever a successful strategy.

    Most importantly, you need to ensure the specific cryptocurrency you are investing in is stable.

    Luckliy, you can get help from professional cryptocurrency providers, like Coinbase, Coin IRA, or Regal Assets.

    Although, the last two companies focus mainly on providing precious metals and crypto IRA services, they are the safest options to protect your retirement savings.

    Benefits Of Investing In Cryptocurrencies


    There are many benefits to investing in cryptocurrencies, and here are a few:

    • Cryptocurrency remove central banks from managing the money supply, which is beneficial since, over time, these banks tend to reduce the value of money via inflation.
    • Cryptocurrency is seen as the digital currency of the future, and are becoming more common for purchasing goods and services, as well as serving as an asset diversifier for investors.
    • As the U.S. inflation rate increases, the value of crytocurrencies goes up. It may be a good idea to invest and reserve your share of cryptos before it is too late.
    • The technology behind cryptocurrency, the blockchain, is a decentralized processing and recording system that is more secure than traditional payment systems.

    Risks Investing In Cryptocurrencies


    Like any investment, there are some risks involved when investing in cryptocurrency:

    • With cryptocurrencies come an instability of values. Extreme price fluctations have happened in recent years. The Bitcoin price spiked to nearly $20,000 in late 2017, dropped to $10,000 in 2019, and is now at the incredible $57,000 level. This volatility increases the risks of investing in cryptocurrencies.
    • Not all businesses recognize digital currency as a form of payment (yet), so there may be an issue with lack of acceptance.
    • Even with encryption to protect cryptocurrency transactions, there have been hacks resulting in substantial losses. This is why it is a good idea to invest in a crypto IRA, where your account is covered by a custodian (an entity that is licensed and regulated by the IRS. The custodian could be a bank, credit union, trust, or another company called a non-bank custodian).

     
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    What are cryptocurrencies and what are they used for? Benefits and risks of Bitcoins, Crypto IRA investing.

    Where Are Cryptocurrencies Stored?


    The term for the storage for cryptocurrency is called a wallet, which is either software that encrypts your account information and tracks your currencies or a physical hard drive.

    What type of wallet you choose depends on how safe you want to store your crypto.

    Hard wallets are the safest and hack-free option, but if you need quick access to your cryptocurrency for day trading, it is better to keep them on the exchange.

    However, the absolute safest way to store your crypto is to open a crypto IRA.

    Best of all, a crypto IRA allows you to store your cryptocurrency completely tax and penalty-free.

    Cryptocurrency Taxes


    In most countries (the U.S. included), cryptocurrencies are treated as property for tax purposes, not as currency.

    Just like other forms of property—stocks, bonds, real estate—you incur a tax reporting requirement when you sell, trade, or otherwise dispose of your cryptocurrency for more or less than you acquired it for.

    But when investing in cryptocurrency through a crypto IRA, you can avoid a lot of the tax consequences that exist when trading crypto normally, which is very powerful.
     

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    Finding Licensed Cryptocurrency Brokers


    It is crucial that you buy crypto from a reputable company that is a licensed cryptocurrency broker.

    There are quite a few out there but our #1 recommendation is Coin IRA.

    Coin IRA is a sister company to Goldco that was founded in 2017. It was one of the first companies in the U.S. to allow investors to add cryptocurrency to their 401(k)’s and similar retirement accounts.

    It quickly became one of the nation’s leaders, focusing on helping people diversify their assets and skyrocket their wealth.

    You can read more about Coin IRA in our crypto IRA guide.
     
    Help the value of your retirement savings to skyrocket with a coin IRA
     
    Our second best option is Regal Assets.

    Regal is another top rated crypto or alternative assets IRA company that lets you choose from a wide selection of cryptocurrency and precious metals and combine the two.

    To find out more, check out our in-depth review of Regal Assets and its Regal IRA.
     
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    Crypto IRA Investing


    Crypto IRAs, also called Bitcoin or Coin IRAs, have become a popular way to invest in the emerging cryptocurrency asset class, while simultaneously reaping some tax benefits that are commonly associated with retirement accounts.

    In a standard Individual Retirement Account (IRA), individuals can keep their investments in traditional securities such as stocks, bonds, and money market funds.

    Crypto IRAs provide an additional option for investing in cryptocurrencies, such as Bitcoin, Ethereum, or Cardano, and combine it with precious metals and other alternative assets.

    Crypto IRA accounts are covered by custodians who manage self-directed accounts.

    An IRA custodian is a financial institution that holds your account’s investments for safekeeping and sees to it that all IRS and government regulations are adhered to at all times.

    NOTE: Cryptocurrencies are still viewed as a high-risk investment, so do NOT invest any sum of money that you could not afford to lose. The content on this website is for information purposed only and cannot be taken as financial advice. Always speak to your financial advisor before making any investment decision.

     
    Coin IRA guide: Help the value of your retirement savings to skyrocket with a coin IRA
     

    Frequently Asked Questions & Answers

    What is cryptocurrency?

    A cryptocurrency is a form of digital currency that is “mined” by powerful computers. Cryptocurrency works using a technology called a blockchain. Blockchain is a decentralized technology spread across many computers that manage and record transactions.

    Why invest in cryptocurrency?

    Like Bitcoin and Ethereum, cryptocurrencies are viewed by many experts as the new digital versions of gold and silver. Just like physical precious metals, cryptocurrencies do not correlate with the dollar and stock market and can serve as protection in case of an economic downturn. Cryptocurrency is totally decentralized and controlled by supply and demand. For example, Bitcoin’s supply is limited, just like gold, which nullifies inflation.

    What are cryptocurrencies used for?

    Like any currency, cryptocurrencies can be used to buy goods and services, but one of the most popular things people use cryptocurrency for is to build up an investment portfolio. Cryptocurrency is an alternative asset that adds diversification to your portfolio.

    Where do you best store your cryptocurrency?

    You can store your cryptocurrency using a wallet. A soft wallet is a software that encrypts your account information and tracks your currencies. Hard wallets are considered a safer option since they are physical hard drives or thumb drives that hold all of your account data and encryption. They are not connected to the internet, which makes them hack-proof. However, the safest and most tax-beneficial option is to store your cryptocurrencies in a crypto IRA or Bitcoin IRA, which is then held by a custodian for safekeeping.

    Do I have to pay taxes when trading my cryptocurrencies?

    In most countries (the U.S. included), cryptocurrencies are treated as property for tax purposes, not as currency. Just like other forms of property—stocks, bonds, real estate—you incur a tax reporting requirement when you sell, trade, or otherwise dispose of your cryptocurrency for more or less than you acquired it for. However, when investing in cryptocurrencies through a crypto IRA, you can avoid a lot of the tax consequences that exist when trading crypto normally which is very powerful.

    Why invest in a crypto IRA?

    A crypto IRA allows you to hold digital assets, like Bitcoin (and precious metals if you so choose) in a self-directed IRA, while simultaneously reaping some tax benefits that are commonly associated with retirement accounts. Crypto IRAs provide an additional option for investing and for portfolio diversification. It is also a safer investment since crypto IRA accounts are covered by custodians.

     
    Please feel free to reach out if you have any questions about the content of this website. If you believe something is explained incorrectly, please send us an email at [email protected].


    Disclaimer: The owner of this website is not licensed as an investment advisor and, accordingly, does not make any recommendations regarding clients’ personal investment portfolios. It is recommended that you carefully evaluate and research the risks and rewards associated with investing in alternative assets such as physical precious metals and cryptocurrencies before you make a purchase.
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    Gold backed IRA - Goldco, Regal AssetsWe believe that investing in precious metals and cryptocurrencies through your IRA or 401(k) is one of the best ways to invest in this asset class, due to the tax-saving component. A gold or crypto IRA is the best way to protect your retirement account and adds financial insurance.

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