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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.
 
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What Are Cryptocurrencies: Overview

 

Cryptocurrencies – 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.

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.

Cryptocurrency uses a technology called blockchain. Specifically, blockchain is a decentralized technology spread across many computers that manage and record transactions. Part of the appeal of this technology is its security.

However, 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.

In addition, 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 a good thing!

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.

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.
 
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What Are Cryptocurrencies Used For?


Like any currency, crypto can be used to buy goods and services. Although, one of the most popular ways people use cryptocurrency is to build up an investment portfolio.

More specifically, 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 are essential steps to take 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, Goldco, or Regal Assets. Although, the last two focus mainly on providing precious metals and crypto IRA rollover services, they are the safest options.

Benefits Of Investing In Cryptocurrencies


There are many benefits to investing in cryptocurrencies:

  • 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.
  • Investors are racing to buy crypto right now, presumably before they become even more valuable. 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 $48,000 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 a 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 Regal Assets.

Regal Assets is a top rated crypto or alternative assets IRA company, where you can choose from a wide selection of cryptocurrency and precious metals. It allows you to combine both assets in a self-directed IRA.

Regal Assets is the first company in the industry to receive a crypto trading license and is also one of the first companies to offer all major crypto assets and precious metals as part of a retirement account, not just Bitcoin.

Crypto IRA Investing


Crypto IRAs, also called Bitcoin 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 or Ethereum, and combine it with precious metals.

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.

Regal IRA – A Combination Of Precious Metals And Cryptos


 

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Regal Assets has combined the must-have precious metals with alternative assets such as cryptocurrencies to take portfolio diversification to another level.

A Regal IRA is the world’s first alternative assets IRA that currently allows you to invest in both hard assets (precious metals) and digital assets (cryptocurrencies).

What are the benefits of including both precious metals and cryptocurrency in a Regal IRA, you may wonder?

Experts have discovered that there is an inverse correlation between gold and Bitcoin. This means that as one goes up in value, the other tends to go down.

Regal Assets’ CEO Tyler Gallagher is quoting:

“Gold and Bitcoin make a perfect combination of assets to include in your retirement portfolio—because they balance each other out.”

Find more information about Regal IRAs in our in-depth Regal Assets review.

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.

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.

What is a Regal IRA?

A Regal IRA is the world’s first alternative assets IRA that currently allows you to invest in both hard assets (precious metals) and digital assets (cryptocurrencies). Regal Assets has combined the must-have precious metals with alternative assets such as cryptocurrencies to take portfolio diversification to another level.

Best Gold IRA Companies

Gold IRA Companies We Recommend

Best Gold IRA Companies – There has never been a better time to invest in gold than today. With the ease of setting up a gold IRA, you can go from worrying about your retirement savings to complete confidence in the security of your wealth before you know it. But choosing the right precious metals company to invest with can be extremely difficult unless you know what to look out for.

When reviewing gold IRA companies its critical to compare the ratings and reviews by looking at independent authority sources. We look at the scores given by using 5 independent rating sources that include the Better Business Bureau, Business Consumer Alliance, TrustLink, TrustPilot, and Ripoff Report.

We have looked into Goldco Precious Metals and Regal Assets which are both top rated gold IRA and alternative assets companies.

Regal Assets Regal IRA

#1 Rated Alternative Assets Company
$250/ Yr
  • Minimum Investment $10,000
  • Cash Sale Minimum $5,000
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  • Combines Metals & Crypto
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Goldco Gold IRA

Best Overall Precious Metals Company
$260/ Yr
  • Minimum Investment $20,000-$25,000
  • Cash Sale Minimum $3,500
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  • Outstanding Customer Ratings
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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.
About How To Invest Gold

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Our mission is to provide investors and retirees all the information they need when it comes to precious metals and cryptocurrency investing. We aim to provide a complete guide on the best ways to invest in gold, silver, and crypto.

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.

Whether you are interested in gold coins, pure minted bars, EFTs, or gold mining stocks, you will find the information you need on this website to get started on the right foot.

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