One of the biggest technological milestones achieved that will be spoken of for years to come is digital currency. For the last couple of months now, cryptocurrency has been a major topic for investors.
Cryptocurrency incorporates Bitcoin, Ethereum, Litcoin and a wide array of digital currency currently making impacts in the business industry. For starters, the price of Bitcoin has significantly risen by as much as 300% within one year, and experts expect it to double by the end of 2017.
What’s more, Ethereum sits at the helm of a 2000% increase, so it’s clear to see why investors are so excited about investing in cryptocurrency.
However, amidst all the excitement, it’s easy to overlook some aspects or have too high expectations which can lead to disappointments later. You see, many times investors venture into the business of cryptocurrency with unrealistic dreams which don’t turn out as expected.
To avoid your hopes being dashed, which could in turn cast cryptocurrency in a bad light for you, here are three things investors should know about cryptocurrency from an expert’s perspective.
1. Cryptocurrencies are volatile
Unlike bonds and stocks, cryptocurrencies are highly volatile and can change at any time. The same way, say, the value of Bitcoin can rise by as much as 25% in a matter of hours, the same can happen in reverse. By having this knowledge of cryptocurrencies, investors can go in there with realistic dreams and know how to invest wisely.
2. Scammers are on the rise
With every positive trend comes a negative trend to counter it. For cryptocurrency, and more so Bitcoin and Ethereum, due to their value, investors need to stay on the lookout for scammers who have taken advantage of the cryptocurrency excitement to prey on unsuspecting investors. In some reported cases, hackers have attacked accounts and transactions, leading to a loss for investors. While the process of investing in cryptocurrency is generally secure, investors should still increase their cyber-security to keep potential hackers away and protect their accounts.
3. Cryptocurrencies are now taxable
Irrespective of how different Bitcoin or Ethereum may seem from conventional assets like stocks that investors work with, you still have to pay taxes for them. Various federal governments have, in recent days, targeted different investors who have made massive profits from cryptocurrencies but have not paid taxes for them.
With cryptocurrency increasing in popularity, governments have seen a potential source of revenue and have begun taxing investors.