Digital currency, the cryptocurrency, has seen a rapid rise in prominence in the portfolio and books of excited investors looking to make big money. Although it has been in the market for over a decade, it still feels like cryptocurrency is in its gold rush phase. As the concept of digital assets is new and thrilling for new investors, many people have inclined towards the majestically compellinguniverse of crypto. However, many investors do not have proper knowledge about what they are getting themselves into which may be a major reason why so many investments go in vain. A software developer at Oxford took a survey and found out that nearly a third of crypto investors had little to no knowledge regarding the crypto sector when they got involved in it.
FourThings You Need To Know About Investing In Cryptocurrency.
This is the case with most of the new investors as well. The lack of knowledge might prove to be quite an expensive burden on the investors. Therefore, if you are a beginner who has just recently discovered the world of crypto, there are some major factors that you need to know.
You Still Need To Pay Tax On Your Profits.
The major reason why cryptocurrency got popular was due to the lack of involvement of central monetary sources in the middle of asset or money exchange between two sources. However, you are still entitled to pay tax on the profit you make during cryptocurrency exchange. You have to pay either Capital Gain Tax or Income Tax. The basic taxpayer rate is 10% CGT while higher rate taxpayers or additional rate taxpayers will pay 20% CGT.
If you are involved in the crypto exchange, you must have deep knowledge about the tax you are entitled to pay. However, it is much easier to just hire a crypto tax agent to deal with the official business. Find a crypto tax agent in Sydney by checking out SCFCPA. You will find the best and most experienced tax agents with a firm grip on their areas of expertise.
You Cannot Mine On Your PC Anymore Like Older Times.
There was a time when an average person could mine cryptocurrency by sitting at home and using their PC. All you needed was some luck and some time and you could mine a lot of high-value bitcoins. However, the computer processing power needed to make transactions has increased significantly and is simply not possible on simple PCs anymore. Which brings us to our next point.
Cryptocurrency Is Harmful For The Environment.
Since normal PCs are not enough to mine bitcoins, you need powerful hardware that usually requires a tremendous amount of electricity and energy to work. A rough estimate of electricity used to power such computers was calculated to be 119 terawatt-hours per year. That is the amount of energy the entire nation of Norway uses in a year.
Are You Aware Of The Risk Factor Involved?
Moreover, inexperienced investors will invest in cryptocurrency without being aware of the risk involved. Bitcoin and hrs value fluctuates significantly and abruptly in a matter of days. This means, that even if you own a good amount of cryptocurrency, you can lose all your assets in a day.