You’ve probably noticed that the use of various cryptocurrencies is exploding! It seems like new coins and blockchain technologies are getting created every day. So, if you’re eager to learn more and invest in crypto but aren’t sure where to start, keep reading.
This post will review what cryptocurrency is, various ways to buy it, tax rules for crypto profits, and a strategy to start stacking coins. You’ll learn six ways to invest in crypto, including some clever, tax-advantaged options for avoiding capital gains taxes altogether.
What is cryptocurrency?
Cryptocurrency or crypto is digital money, known as tokens or coins, that you can use to buy goods and services or hold as an investment. Bitcoin is one of the most well-known cryptos, with a total value of about $1.1 trillion in December 2021. Still, there are thousands of alternative or altcoins, such as Ethereum, Solana, and Polkadot. The total value of all cryptocurrencies is about $2.6 trillion.
To understand how cryptocurrencies work, you need to know something about their underlying technology, which is a blockchain. There are different blockchains in use today, but their purpose is to verify transactions and store data in a secure, open ledger that anyone can see.
Blockchains are decentralized databases spread across many computers all over the globe. No one person or organization owns or manages public blockchains, making them difficult for hackers to manipulate.
Blockchain technology was developed for Bitcoin; however, other crypto networks, such as Ethereum, are also powered by blockchains. Also, there are many other uses for blockchain technology besides cryptocurrencies. They include smart contracts that automate the terms of agreements, recordkeeping for assets like real estate, and supply chain management.
To sum up, a blockchain is a distributed database with many uses, including powering cryptocurrencies.
Why do people use cryptocurrency?
If you wonder why people are investing so much money into crypto right now, there are various...
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