Learn all about cryptocurrency
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In this guide, I will answer all the questions you might have about cryptocurrency. I’m going to tell you when it was invented, how it works and why it’s going to be so important in the future. By the end of this guide, you’ll be able to answer the question, “what is a cryptocurrency?” for yourself.
One more important note about blockchains: In an ideal world, they would be perfectly distributed; in practice, few achieve total equality. To ensure a cryptocurrency does its job, most of them require some kind of management structure, often a decentralized autonomous organization (DAO). Learn more in the DAO crypto guide.
Learn all about cryptocurrency
Although cryptocurrencies are considered a form of money, the Internal Revenue Service (IRS) treats them as financial assets or property for tax purposes. And, as with most other investments, if you reap capital gains selling or trading cryptocurrencies, the government wants a piece of the profits. How exactly the IRS taxes digital assets—either as capital gains or ordinary income—depends on how long the taxpayer held the cryptocurrency and how they used it.
Cryptocurrency trading, or the buying and selling of digital assets like Bitcoin (BTC) and Ethereum (ETH), has emerged as a dynamic and potentially lucrative endeavor. As cryptocurrencies continue to captivate global interest and more institutional investors join the sector, cryptocurrency trading is gaining increasing popularity.
Trend lines can be applied to a chart showing virtually any time frame. However, as with any other market analysis tool, trend lines on higher time frames tend to be more reliable than trend lines on lower time frames.
Because there are so many cryptocurrencies on the market, it’s important to understand the types. Knowing whether the coin you’re looking at has a purpose can help you decide whether it is worth investing in—a cryptocurrency with a purpose is likely to be less risky than one that doesn’t have a use.
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All about cryptocurrency trading
Several cryptocurrencies are available on the market, each with risks and benefits. When you build your cryptocurrency portfolio, spreading your investment can prevent you from losing it all in one go if a singular asset takes a sharp plummet.
This ‘block reward’ paid to miners is the origin of all cryptocurrency coins (again, not tokens!). After miners (or validators for PoS networks) are given their reward, these parties can sell their coins on popular cryptocurrency exchanges like Coinbase.
Cryptocurrencies are legal in the European Union. Derivatives and other products that use cryptocurrencies must qualify as “financial instruments.” In June 2023, the European Commission’s Markets in Crypto-Assets (MiCA) regulation went into effect. This law sets safeguards and establishes rules for companies or vendors providing financial services using cryptocurrencies.
Researching the types of payments an exchange accepts when buying cryptocurrency is helpful. Some exchanges allow wire transfers, credit cards, or other digital payment methods. Choose an exchange compatible with the payment method you want to use.
