Crypto scams and theft are running rampant right now, due to a combination of crypto’s novelty, the increasing amounts of cryptocurrency circulating throughout the world, and the new infrastructure upon which the systems are built. It’s a prime environment for what William Quigley, one of Tether’s original co-founders and co-founder of the Wax blockchain, calls “Olympic-level scammers” to test their skills and get away with all the new money being circulated in the crypto market. Scammers stole over $14 billion in crypto last year.
Make sure to thoroughly check out your crypto card’s insurance policy in case of hacks. Also, use a card that lets you transact in stablecoins for more predictable monthly transfers.
Even Crypto.com, a mainstream crypto exchange, recently got hacked and lost an estimated $30 million. The breach exposed 483 digital wallets, but the company claims no customer funds were lost. The incident, however, exemplifies why investors with a lot of crypto should always use good digital wallet hygiene (no sharing security phrases or passwords), backup large amounts of crypto using cold storage, and inquire about the insurance policy for any crypto debit card or credit card before opening one.
Traditional banks, in comparison, have FDIC insurance to cover losses if your bank goes out of business. Unknown to many is that FDIC insurance doesn’t cover loss or theft; that protection usually comes down to the bank’s individual insurance policies. Banks are covered under federal policy to cover customers in the event of fraud, but the responsibility is on the customer to report errors in a timely fashion.
Similarly, you should know the ins and outs of any protection or insurance coverage you receive with a crypto debit card, and what responsibilities rest on you.
- Pro Tip
- Alternatives Ways to Buy Cryptocurrency
- 1. Wait for Crypto Exchange-Traded Funds (ETFs)
- 2. Invest in Companies Connected to Cryptocurrency
- Option 4 – Create Your Own Blockchain Cryptocurrency (Most Difficult)
- Step 1
- Step 2
- Step 3
- Step 4
- Step 5
- 4. Place Your Cryptocurrency Order
- Inheritance and Estate Tax and Inheritance and Estate Tax Exemption
- What is the cheapest way to buy crypto?
- Cash out of an exchange
- Do You Have to Pay Taxes on Crypto Earned With a Crypto Debit Card?
- Exactly How to Buy Cryptocurrency
- 1. Choose Between Crypto Exchanges and Cryptocurrency Brokers
- 2. Choose a Platform
- 3. Create a Cryptocurrency Exchange Account
- 4. Deposit Money into Your New Account
- 5. Purchase Your Cryptocurrency
- 6. Decide How You Will Store and Research Crypto Wallets
- 7. Manage Your Cryptocurrency Investment
- Option 2 – Make a New Crypto on an Already Existing Blockchain
- Step 1
- Step 2
- Step 3
Alternatives Ways to Buy Cryptocurrency
While buying cryptocurrency is a major trend right now, it’s a volatile and risky investment choice. If investing in crypto on an exchange or via a broker doesn’t feel like the right choice for you, here’s are a few options to indirectly invest in Bitcoin and other cryptocurrencies:
1. Wait for Crypto Exchange-Traded Funds (ETFs)
ETFs are extremely popular investment tools that let you buy exposure to hundreds of individual investments in one fell swoop. This means they provide immediate diversification and are less risky than investing in individual investments.
There is a huge appetite for cryptocurrency ETFs, which would allow you to invest in many cryptocurrencies at once. No cryptocurrency ETFs are available for everyday investors quite yet, but there may be some soon. As of June 2021, the U.S. Securities and Exchange Commission (SEC) is reviewing three cryptocurrency ETF applications from Kryptcoin, VanEck and WisdomTree.
2. Invest in Companies Connected to Cryptocurrency
If you’d rather invest in companies with tangible products or services and that are subject to regulatory oversight—but still want exposure to the cryptocurrency market—you can buy stocks of companies that use or own cryptocurrencies and the blockchain that powers them. You’ll need an online brokerage account to buy shares of public companies like:
- Nvidia (NVDA). This technology company designs and sells graphics processing units, which are at the heart of the systems used to mine cryptocurrency.
- PayPal (PYPL). Already a popular choice for people buying items online or transferring money to family and friends, this payments platform recently expanded to allow customers to buy and sell select cryptocurrencies with their PayPal and Venmo accounts.
- Square (SQ). This payment services provider for small businesses has purchased over $220 million in Bitcoin since October 2020. In February 2021, the firm disclosed that Bitcoin made up around 5% of the cash on its balance sheet. In addition, Square’s Cash App allows people to buy, sell and store cryptocurrency.
As with any investment, make sure you consider your investment goals and current financial situation before investing in cryptocurrency or individual companies that have a heavy stake in it. Cryptocurrency can be extremely volatile—a single tweet can make its price plummet—and it’s still a very speculative investment. This means you should invest carefully and with caution.
Option 4 – Create Your Own Blockchain Cryptocurrency (Most Difficult)
Warning, you’ll need a fully-functioning technical head to do option 4, writing your own code to create a new blockchain and native currency isn’t just a few clicks of the mouse.
You’ll need technical training, coding skills, and a full understanding of how blockchain technology works.
While this takes the most work and is by far the most difficult option, you have the most freedom with how the final product turns out and can create something truly innovative.
Native coins are considered better than tokens so you also have a better chance of attention and success with this option. If this is the option you want to try, then here’s what you’ll need to do.
A blockchain’s operating protocol is also known as its consensus mechanism, so it’s time to choose the consensus mechanism for your blockchain. The most commonly used consensus mechanisms areproof of work (PoW)and proof of stake (PoS).
Now it’s time to design the architecture of your blockchain. You need to ask yourself some important questions such as: should it be permissioned or permissionless? Should it beprivate or public?The answer to these types of questions will depend on the reason you’re creating the crypto in the first place.
Next up, it’s time for auditing for both the blockchain and code. If this is beyond your scope of understanding, then it’s advisable to hire a specialized blockchain auditor to review your blockchain’s code and identify the vulnerabilities.
Before you can finish up, you need to check out the legalities of what you’ve created. Before minting, pay for specialized legal advice to ensure your crypto is compliant with all relevant laws and regulations.
And minting can finally begin. You’ll need to wisely decide how many you’re going to initially release and how many can be minted in total.
4. Place Your Cryptocurrency Order
Once there is money in your account, you’re ready to place your first cryptocurrency order. There are hundreds of cryptocurrencies to choose from, ranging from well-known names like Bitcoin and Ethereum to more obscure cryptos like Theta Fuel or Holo.
When you decide on which cryptocurrency to purchase, you can enter its ticker symbol—Bitcoin, for instance is BTC—and how many coins you’d like to purchase. With most exchanges and brokers, you can purchase fractional shares of cryptocurrency, allowing you to buy a sliver of high-priced tokens like Bitcoin or Ethereum that otherwise take thousands to own.
The symbols for the 10 biggest cryptocurrencies based on market capitalization* are as follows:
- Bitcoin (BTC)
- Ethereum (ETH)
- Tether (USDT)
- Binance Coin (BNB)
- Cardana (ADA)
- Dogecoin (DOGE)
- XRP (XRP)
- USD Coin (USDC)
- Polkadot (DOT)
- Uniswap (UNI)
*Based on market capitalization as of June 28, 2021
Inheritance and Estate Tax and Inheritance and Estate Tax Exemption
Pennsylvania does charge an inheritance and estate tax in some cases. However, depending on the relationship between the heir and the deceased, the state may charge the following taxes:
- Surviving spouses and from a parent to a child under the age of 21: 0%
- Direct descendants and lineal heirs: 4.5%
- Siblings: 12%
- Other heirs (except charitable organizations, exempt institutions and government entities): 15%
What is the cheapest way to buy crypto?
Besides buying cryptocurrencies, some exchanges offer free crypto rewards upon signing on to their platform. You can also get here are several ways to get cryptocurrencies for free through rewards from purchases; charging your services in cryptocurrencies; crypto mining; completing surveys and being an affiliate marketer.
Cash out of an exchange
If you bought into Bitcoin or another cryptocurrency back in the day when things were a little less streamlined than it has become recently, you likely bought in via an exchange like Binance or Coinbase. In order to use the money that you have on these exchanges, you’ll have to withdraw the funds to your bank account. Typically you will have to use use the same account that you initially used to deposit your funds. This is a security feature as well as a way to prevent money laundering.
Depending on the exchange that you used, the process will vary, but will typically be some version of this:
Log in to your account
Pick what cryptocurrency that you’ve invested in that you would like to withdraw from
Set the amount
Request a transfer to your bank account
Transfer times can vary depending on the exchange. Typically, you can expect that your withdrawal request will be processed within a day, but sometimes can take multiple days, so plan accordingly so you have enough time for the money to hit your account before your start to shop. (Alternatively, you could shop using a credit card and then use the cryptocurrency you cashed out to pay off your bill.)
Do You Have to Pay Taxes on Crypto Earned With a Crypto Debit Card?
Yes, you’ll need to record the value of the crypto you earned in U.S. dollars and report that income on your tax return.
Centralized crypto exchanges like Kraken, Gemini, and Binance do currently report trading activity to the IRS, though it hasn’t always been that way, according to Lisa Bragança, former SEC branch chief and investment attorney. There are not consistent requirements as to what exchanges must report yet. Regulators likely want to increase tax reporting responsibilities for any crypto platform where decentralized finance (DeFi) activity takes place, and that would include activities like staking (holding) crypto on a rewards card in exchange for monetary benefits.
And Bragança thinks the exchanges will comply: “As these exchanges are seeking to get more authority, they are seeking that kind of legitimacy.”
Exactly How to Buy Cryptocurrency
Below is our step-by-step guide on how to start investing in crypto currencies and on how to generate some passive income and some interest with it.
1. Choose Between Crypto Exchanges and Cryptocurrency Brokers
Your journey into crypto currency trading starts with choosing a crypto exchange, payment services, or crypto broker. These act as intermediaries for purchasing cryptocurrencies including cryptocurrency exchanges, payment services, and brokerages. Cryptocurrency exchanges relatively speaking are a convenient option because they offer a wide range of features for users and include the likes of Coinbase, Gemini, and Binance. Essentially they are platforms designed specifically for crypto trading offering lower fess, advanced analytics, and tools.
2. Choose a Platform
The best cryptocurrency exchanges are specifically designed for crypto trading we advise you use a crypto platform. Look for one a platform that comes with robust security features; offers easy sign-up and management of your account(s), lets you manage several cryptocurrencies, and also allows you to trade across cryptocurrencies.
3. Create a Cryptocurrency Exchange Account
Though most cryptocurrency markets’ setup is similar, there is a general registration process that tends to be rather similar at each crypto trading platform. TO create an account you will need to first sign up you requiring you to provide some personal information like your name, driver’s license and an email address. The exchange will then send you an email to confirm that you are in control of the associated address. Then you will need to add a payment method that could be a bank account or a credit/debit card that can be used as a mechanism for deposits and withdrawals for your crypto account.
4. Deposit Money into Your New Account
After opening an account for you to buy a cryptocurrency, you’ll need to make sure you have funds in your account. You will need to deposit money into your crypto account by linking your bank account, authorizing a wire transfer, or even making a payment through your debit or credit card.
5. Purchase Your Cryptocurrency
Once you have sufficient funds in your crypto account then you can go on to purchase Bitcoin Dogecoin, Ethereum, or any other crypto.
6. Decide How You Will Store and Research Crypto Wallets
As part of your cryptocurrency purchase you willneed a digital wallet to store your crypto currencies. Crypto currencies generally come two forms:
Cold Wallet: this is a physical, hardware-wallet for storing cryptocurrency that isn’t connected to the internet. This type of wallet offers an additional tier of protection as it is more difficult to hack than an internet-connected wallet.
Hot Wallet: This is a software-based digital wallet that is connected to the internet and often comes in the form of an application.
7. Manage Your Cryptocurrency Investment
Once you have your crypto funds in your wallet you can then go about the business of managing your Crypto assets. This entails speculating on the cryptocurrency market like selling bitcoin, buying and selling NFTs, or using your cryptocurrency to buy products and services.
Option 2 – Make a New Crypto on an Already Existing Blockchain
You don’t need to create a new blockchain or modify an existing one in order to create a new cryptocurrency. For example, theEthereum blockchainis designed to host cryptocurrencies from any number of different developers.
If you create a crypto on an existing blockchain, the result would be that your creation is classified as a token. Since this is a digital currency that isn’t native to the blockchain on which it operates.
You will need a certain level of technical knowledge and expertise to create a new token on an existing blockchain but the process is simple enough that only basic know-how is necessary.
Below you can find the steps you need to follow if you want to create a new token on an existing blockchain.
Choose the blockchain platform you want to use – Binance Smart Chain and Ethereum are common choices
Use software such as WalletBuilders or something similar in order to create the token. This type of tool will guide you through the making-process easily and allow you to customize your token how you want.
Now your token is complete, it’s time to mint. Using a platform like Binance Smart Chain or Ethereum will mean that you probably won’t need the services of a professional auditor or lawyer before issuing a batch of tokens.
While tokens aren’t as customizable as coins, they are faster, cheaper, and easier to create. Your token will still benefit from the security of the blockchain and any other features used on that platform.
Your token will also benefit from the credibility that comes with using an established blockchain.