Are you interested in buying Bitcoin? Then now is the right time to get started as the Bitcoin market is bubbling with profits. But before buying Bitcoin, you must stop to consider a few important factors. You need to be aware of the volatility of Bitcoin and be thorough with the tax regulations and Bitcoin-related laws of your country. Read on to find out all that you need to know before buying Bitcoin.
What Is Bitcoin?
Bitcoin is a cryptocurrency that was invented by Satoshi Nakamoto in 2009. It is a form of decentralized electronic currency that enables peer-to-peer transaction, storage, and distribution, without the involvement of a central bank or authority. According to Bitcoin News, Trading in Bitcoin is highly profitable, and so more and more crypto enthusiasts are making a beeline for the cryptocurrency market. If you are seeking to trade in Bitcoin too, then weigh out the following factors before buying Bitcoin.
What Should You Be Aware of Before Buying Bitcoin?
l Bitcoin is not entirely anonymous
l Each country has its own unique set of laws related to Bitcoin
l There is a limited supply of Bitcoin.
l The FBI owns about 1.5% of the entire amount of Bitcoin in the world.
l Bitcoin is accountable for taxes.
What Are the Factors to Consider Before Buying Bitcoin?
1. The volatility of Bitcoin
Since its inception, Bitcoin has been highly volatile. Its price plummets and soars at erratic intervals and drives the pressure of supply and demand in the cryptocurrency market. It is the most volatile asset, and its volatility is to be cautiously considered before buying Bitcoin. Buying Bitcoin is easy, but you must be constantly alert of the rising and falling prices of Bitcoin in order to make profits. A perfect example of the alarming volatility of Bitcoin is the incident of December 2017. The Bitcoin price skyrocketed to $19000 and then plunged to $12000 within a week. The volatility of Bitcoin depends upon a variety of factors like Bitcoin-related news, internal governance, regulations, etc. Get informed about the Bitcoin Price Prediction by crypto experts before buying it.
2. The transparency of Bitcoin
The underlying ledger system powered by the advanced Blockchain technology is responsible for the transparency of Bitcoin an option of payment. Every transaction on the Blockchain network is publicly stored in the Blockchain and is immutable, traceable, and public. However, the published information does not give away the Bitcoin address and names of the parties. The transparency of Bitcoin is also due to the fact that Bitcoin transactions do not involve third parties. The parties to the transaction only pay a nominal transaction fee and conduct transparent transactions.
3. Whether Bitcoin is really anonymous
Bitcoin claims to be completely anonymous, but you should check the real anonymity before buying Bitcoin. Blockchain technology maintains the anonymity of Bitcoin by making the transactions, private and public keys, and the Bitcoin address confidential. The information that is made public cannot be linked to the personal address of the parties to the transaction. However, Bitcoin is actually pseudonymous. The Bitcoin address of the parties to the transaction can be traced to the IP address of the parties through network analysis.
4. The taxable nature of Bitcoin
Each nation varies in tax laws and regulations, and so you need to consider the taxability of Bitcoin in your country before buying Bitcoin. Go through the tax regulations that Bitcoin is subjected to, in your nation. If you are in the US, then the US tax law requires you to make a payment proportionate to your Bitcoin profits. Alternatively, you can donate a share of your Bitcoin as well. There are countries that make it mandatory for the Bitcoin traders to declare the capital gains for taxation. The tax is higher if there is a profit, and lower for losses. Make sure that you file the Bitcoin trading taxes in time to avoid legal issues.
5. The wide acceptance of Bitcoin as a form of payment
Here is a piece of good news that will enthuse you before buying Bitcoin. Bitcoin is not only a lucrative form of investment but is an excellent payment option also. You can use Bitcoin to make payments for goods and services as well, just like you use fiat currencies. There are mobile Bitcoin wallets available for making payment easily with Bitcoin. There are Bitcoin debit cards as well that make it possible for the Bitcoin users to spend Bitcoin on the go and even at the stores that do not accept payment in Bitcoin.
Now that you know all that is there to know before buying Bitcoin, then it is time to take the next step and buy a fair share of Bitcoin. Visit a reliable and trustworthy cryptocurrency exchange, and open an account with an authentic Bitcoin wallet to buy and store the Bitcoin. Conduct Bitcoin transactions as well to rake in good profits.