After cryptocurrency was invented in 2009, it has revolutionized payments and monetary systems. However, this technology is still considered new since governments around the world are not unified on regulations and how it should work. If you want to buy crypto, you need to do the hard work of research to determine if it’s a good fit for your portfolio. These are some things you need to consider first.
Legal issues
It is true that crypto is decentralized, but there are a lot of legal issues you could face by ignoring this aspect. You still need to comply with anti-money laundering laws and know your customer rules and other regulatory requirements. This is why it may be ideal to work with a crypto lawyer to sort out the legal issues.
The rules governing crypto vary from country to country. It is safer to find a lawyer who’s versed in the specific region to help you handle the legal challenges.
Storage
There are a few options when it comes to storing crypto. You can opt to store them in the exchange where you bought them or use a wallet. The wallet comes with two options, a cold storage or a hot wallet. Most experts would recommend a cold wallet.
Cold storage is safer because they are not accessible to hackers. However, they may be more complicated for people without tech expertise. Others opt to write down their password details and carry them physically.
Profit
Crypto can be profitable, but you can also lose all your money. The market is extremely volatile and hardly predictable. Some coins, such as Bitcoin and Ethereum, have more value, while others, known as shitcoins, tend to lose all their value.
So, how do you know which one to invest in? Well, crypto performance depends a lot on their real world value. For example, bitcoin is used for cross border payments and is relatively easier to transfer. It is also limited which increases its value over time.
If you need to invest, opt for a coin with some real world use such as payment, or tied to a service. This way, there can be something backing the currency. Some other coins are pegged to the USD, making them relatively stable.
Taxation
Depending on where you live, you’ll have to pay taxes on your crypto income. Capital gains tax is quite common in many countries, but others allow you to claim some taxes back when you sell at a loss.
In other countries, you’re free to hold and collect profit without paying any tax. Such countries attract young crypto traders who live entirely off their profits. If you’re considering this path, this could be an option for you.
Governing laws
Unfortunately, crypto is still banned in some countries. This means that you cannot carry out any transactions within that territory. It is necessary to confirm the governing laws on crypto before buying some to hold or trade.
Also, the laws governing crypto in countries often change. Remain updated with new regulations to stay compliant.
