What You Don’t Know About Cryptocurrency, but Should

Cryptocurrency is the craze that’s consuming a wide array of new investors. Between Elon Musk tweeting about Dogecoin to most recently Miami, FL is looking to become the new crypto hotspot. It’s apparent that cryptocurrency has taken over the global stage and for the immediate future isn’t slowing down in popularity. So, the question remains the same,

“Is Cryptocurrency here to stay for the long haul?”

Let’s take a look at 5 things you didn’t know about cryptocurrency.

1.    North Korea Has Stolen Billions of Dollars of Cryptocurrency.

Throughout North Korea’s current regime, they have made a killing through criminal activity such as drug trafficking and cybercrime.  Cryptocurrency is no different. As recently as 2019, North Korea has stolen in upwards of $600 Million worth of Bitcoins. These sorts of activities account for at least 15% of North Korea’s total income.

2.    The IRS is Still Learning About Cryptocurrency.

The United States currently recognizes cryptocurrency as personal property for tax purposes. In the last few weeks, I’ve even heard someone say they were going to file an insurance claim for their “Lost Bitcoins” through their homeowner’s insurance to reconcile their losses.

Crazy stories like this on top of how much you may have to pay in taxes is going to drive whether or not The United States allows Cryptocurrency to remain mainstream.

For Example,

You walk into a grocery store and your cryptocurrency is worth $1.00 and by the time you pay for your groceries, the cryptocurrency is worth $1.50. Not only are you paying sales tax on the goods you just bought, but you will have to pay taxes on the gain you made while walking through the grocery store.

3.    Bitcoin is a Limited Resource.

Just like oil and diamonds, Bitcoin is a limited asset. That means the price is going to be driven by the simple effects of supply and demand. Right now, demand is high and supply has a fixed value. However, what you need to know is that supply is going down in value because many people have lost access to their digital wallets.

There was a story about an entrepreneur named Gabriel Abed, who had 800 Bitcoins worth about $25 Million. And he lost the password to his wallet. And lost all of the value of Bitcoins. This occurred when a colleague apparently reformatted his laptop, thus barring Abed from gaining access to his fortune.

So, the $25 Million question is this,

“Does the money that you don’t have access to, have any value?”

4.    There Are Over 5000 Coins.

In the early 2000s, there were over 8,000 commercial banks. Now there are less than 5,000. If cryptocurrency remains mainstream, you have to ask yourself,

“What coins are here to stay? And which coins are going to become extinct?”

That within itself is the Trillion-dollar question. From what I’ve read, Mark Cuban has been reported saying the coin he believes most in is Ethereum. After Bitcoin, it is the second-largest cryptocurrency by market capitalization. Holding over $300 Billion.

Where a smart investor would look is into which coin has the blockchain technology that will be desirable in order to help decrease the number of financial crimes. This within itself has the opportunity to save financial institutions. British Banks alone spend $5 Billion per year fighting financial crimes.

5.    Lack of Value.

Grant Cardone has been recorded saying that purchasing a primary residence is a dumb investment because you have to pay the bank the house doesn’t pay you. And an investment that doesn’t pay you is not a good investment. Cryptocurrency the only way to make a profit is to buy low and sell high. There are no dividend payments and basically, you’re at the mercy of the markets.

Your Guide,

Joshua Krafchick

“The Unconventional Money Guy”

Additional Reading to Teach You How to Make More Money.

1. Does Marriage Affect Your Money?

2. Want to Be Average? Invest into Target Date Funds.

3. Which Money Mistakes Are Costing You The Most.

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