Buying Cryptocurrency In The United States
A few years back, the use of cryptocurrencies was limited to close circles of crypto enthusiasts and computer engineers who saw their potential to revolutionize the financial industry. However, speculations quickly turned into proof as cryptos were becoming increasingly recognized as stores of value. As a result, the cryptocurrency market continues to gain traction among retail traders and average consumers. Soon enough, it will be more of a necessity rather than a choice to understand what digital coins are and how they work.
The History of Cryptocurrencies
Most people have the impression that cryptocurrencies are a very recent innovation, when in fact, the first idea for digital money goes back to the late ’80s. That’s almost half a century ago! Still, it took software engineers almost thirty years to launch the first fully functional and now widely accepted digital coin, Bitcoin.
They realized that paying with digital coins could give them more privacy and autonomy over their finances, the possibility to decrease the costs, increase the speed of processing, and complete money transactions. To turn cryptocurrencies from abstract concepts to real transactions, they needed proper technology.
In 2008, Satoshi Nakamoto introduced Bitcoin and the first electronic cash system based on cryptographic proof run on a peer-to-peer network using blockchain technology. However, it wasn’t until recent years that cryptocurrencies really picked up. In our digitally-driven society, many companies were prompted to try to include this technology into their businesses.
The Rise of Cryptocurrencies in the USA
Governments around the world are closely examining the crypto market, weighing out the pros and cons. In the USA, the use of cryptocurrencies has been heavily debated by both federal and state governments since the very beginning. Despite their efforts, they couldn’t come up with a universal decision on the proper financial regulations.
One thing was certain, they didn’t want the USA to miss out on the opportunity to invest in such a prosperous market and become a world-leader in the industry. On the flip side, governments were concerned about potential cyber frauds, misuse of private transactions, and taxation. This caused discrepancies among different US states in their treatment of cryptocurrencies.
The US Congress recently announced a new bill called ‘Crypto-Currency Act of 2020’ that assigns which regulatory bodies will be in charge of cryptocurrencies so that companies and individuals would know where to register their crypto exchanges for example, or how to apply taxes to crypto trades.
Investing in Cryptocurrencies
At the present moment, cryptocurrencies are attractive investments in the financial market. If you want to invest in cryptos yourself, you can do that by buying cryptocurrencies and holding on to them until they gain in value for you to cash out or sell them. This is usually done on crypto exchange platforms. Check our guides on how to buy cryptocurrency in Canada, in the UK, and in Australia as well.
Although crypto trading can turn very profitable for a lot of investors, the market itself is very volatile. The wild price fluctuations are not uncommon for a developing market, as there’s a higher risk of failure and low liquidity. This is why a lot of merchants were reluctant to accept payments with cryptocurrencies, and why customers are choosing more prominent coins like Bitcoin to minimize these risks.
Should You Invest in Cryptocurrency?
There are many members of the crypto community who believe that fiat currencies and our traditional payment system are outdated and bound to be replaced by the crypto industry. That’s why many investors decide to bet different cryptos against the US dollar or euro and watch as their price climbs up the ladder so they can make a profit.
Others have joined the world of crypto for ideological reasons. They strongly believe that the financial power will shift from banks and other central authorities to the consumers, thanks to the advantages of blockchain technology.
We suggest making a thorough research of the market and designing an investment plan upfront. This will help you narrow down your choices and prevent you from spending more money than you can allow yourself to lose.
What Cryptocurrencies are There?
For the eleven years since Bitcoin was first launched, more than 5,000 cryptocurrencies emerged on the market according to CoinMarketCap. While Bitcoin remains the most popular one, others like Ethereum, Bitcoin Cash, Ripple, Monero, Litecoin, etc, are having their breakthrough moment as well. Having said that, they still have a long way to go before they reach Bitcoin’s current value of $9,828!
But why do we need so many cryptocurrencies? Other than the most consumeristic reason, i.e. making a profit, different coins can perform different functions thanks to the applicability of blockchain technology. Bitcoin functions as a store of value, much like fiat currencies do. Ethereum, on the other hand, performs a utility function and serves as an infrastructure for other coins (app or platform cryptocurrencies) to be built on, as well as smart contracts and DApps.
What to do When You Have Bought Your Cryptocurrency
You’ve bought your first digital coins and now you need a place to store them. Most of the trading platforms have their own digital wallets and once you buy cryptocurrencies as their client, the exchange automatically transfers them to your wallet. This can be quite risky unless the platform has an offline wallet where it keeps customer funds disconnected from the Internet.
Another option is to use a third-party platform for storing electronic cash, or the safest option would be to use a hardware wallet instead. This new type of wallet will soon outperform and replace digital ones as it offers extra protection for your money by giving you a personal key that only you have access to.
You also need to keep in mind that wallets don’t necessarily support all cryptocurrencies. There will always be more options for storing bitcoins as opposed to other coins. Take a look at our guide for more on the best wallets for storing your cryptocurrencies.
Disclaimer: Digital currencies and cryptocurrencies are volatile and can involve a lot of risk. Their prices and performance is very unpredictable and past performance is no guarantee of future performance. Consult a financial advisor or obtain your own advice independent of this site before relying and acting on the information provided.