New to Bitcoin? What to Expect – Regulations, Taxes, Volatility, Exchanges
General, Investing - February 5, 2021
New to Bitcoin and crypto? We’ve all been there. Not knowing how regulation, taxes, mining works. Wondering if the IRS is tracking Bitcoin purchases. This video is for those people who are new to Bitcoin and crypto. We want you to participate in the Bitcoin and cryptocurrency market in a safe way.
First, we need to understand how to get into the markets. For this, we look at crypto exchanges. These serve as on and off-ramps to enter the market. Coinbase and Gemini are examples of exchanges in the US. Payment applications like CashApp and PayPal also allow users to buy Bitcoin using the bank account. Some exchanges aren’t be allowed to operate in certain states due to money transmitter laws. This is something you need to keep in mind when looking at Bitcoin and crypto regulation.
These exchanges and payment applications don’t allow users to set up accounts without KYC and AML. KYC stands for know your customer, which ensures that every user’s account is backed by an ID like a driver’s license. AML stands for anti-money laundering. Since a bank account is connected to these ramps, they need to ensure you aren’t laundering money through crypto. This is why Bitcoin cannot be used to hide taxes from the IRS.
The Bitcoin and crypto markets are very volatile. Before entering the Bitcoin and crypto market, decide on your investment thesis or investment idea. This is the reason why you’re buying Bitcoin. Is it because Bitcoin is an inflation hedge? Is it because you want to use an internet currency? Or do you want to buy something that has value and limited supply? Either way, have an investment idea before you enter.
The reason you should have an idea is because many people will try to get in on their idea. In the crypto world, you should be cautious of the ‘pumpers.’ These are people who try to pump a cryptocurrency only because they are holding it. The best way to avoid falling into this trap is to get educated on the topic. Education from an investment, financial and risk perspective is important before getting into this market. If you do this, soon you’ll understand what Bitcoin and crypto news actually means. You’ll understand why institutions and billionaires are buying Bitcoin, and whether it’s a bullish or bearish sign. More importantly, you’ll understand the economics and technology behind Bitcoin and cryptocurrencies to come up with your investment thesis.
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