đ°Major factors to Consider when Buying Cryptođ°
Many of the assets we currently trade have long, storied histories. The use of gold in trade has been traced as far back as 560 BC to the ancient Kingdom of Lydia. The first modern stock exchange was created over 400 years ago in Amsterdam. Even ETFs have now been traded for over a quarter of a century.
In contrast, crypto has only been around for a little over a decade. The original decentralized cryptocurrency, bitcoin, was first mined in January 2009. While the technology is in many ways revolutionary, the industry is still very new, and the regulatory framework is still uncertain. The result is a market that currently experiences substantial volatility, triggered by various factors including crypto exchange bankruptcies and high-profile hacks.
Wondering if crypto is right for you? Begin by asking yourself these 5 questions:
â 1. Do you understand the crypto landscape?
â 2. Are you comfortable with the volatility?
â 3. Can you handle the investment risks?
â 4. Do you know how to store your crypto safely?
â 5. Do you understand the tax implications?
Crypto is currently an exciting but speculative asset with high volatility. It's not protected by the same regulations that apply to registered securities, and is not insured by the FDIC or protected by SIPC. To prepare yourself for the risks, make sure you have assessed its long-term potential before you buy. And once again, limit your allocation to an amount you can afford to lose.
Be sure to study all your security options before buying. Choosing between storing your coins with a trusted custody provider versus a crypto trading platform could make a big difference when it comes to protecting your assets, especially if you don't have the time to study crypto cybersecurity protocols.
And as with all financial holdings, make sure you understand the tax implications. The rules for crypto are different from that of traditional asset classes, so don't leave room for unwelcome surprises come tax season.
