Do you remember the moment when crypto started making sense to you? For me, it was when I realized that there was much more to cryptocurrency than just Bitcoin. There are thousands of other crypto coins, cryptocurrency, tokens, and decentralized applications with their own unique use cases and characteristics. Now I remember that when I first tried telling my friends and family about this enormous ecosystem, it flew right over their heads.
Now let me tell you how you can help others make crypto click. If my personal experience is anything to go by, the first question you probably get when you start talking about cryptocurrencies with friends and family is, what the hell is cryptocurrency? Well, here’s how I answered that question. Put simply, cryptocurrencies are like regular currencies, except they’re entirely digital.
Well, crypto originally, refers to cryptography, which is the study of secure communications, and that’s the set of technologies allowing for sending a message that only the sender and the recipient can read. And in the case of cryptocurrencies, that’s money. But crypto today is also used to describe the entire universe of crypto assets. And these are assets, as we’ll discuss later, we’ll explain how the work that does not rely on third parties like central banks or banks to authenticate their value or authenticate their movements.
Each individual cryptocurrency coin is fundamentally just a collection of numbers and letters. This sounds complicated, but it’s actually not far off from what we see with currencies today. Here’s what I mean by that almost every physical money bill on the planet has a unique serial number. This serial number corresponds to information like when the bill was printed, where it was printed, and so on. In theory, a record of all money bills that have been printed and where they are is kept by a central bank which shares this information with smaller banks and the government.
Each individual cryptocurrency coin is like the serial number you see on a physical bill, just without the physical bill. Just like regular bills, almost every cryptocurrency can be divided into smaller pieces. In the case of Bitcoin, each BTC can be divided into 100 million pieces called a satoshi, which are like cents to a dollar.
What is Blockchain in Cryptocurrency:
So a blockchain is just a database, but it’s a special kind of database. So rather than being stored on the sort of a single computer by a single institution, like a bank, say, it is a database that is distributed across lots of computers called nodes, and they each have a copy of this database and they update it in blocks. So a new block of transactions is added to the chain that is stored. That’s where the blockchain comes from. And as Matthew was talking about, the blockchain is sort of a key part of crypto. It was invented with the invention of Bitcoin, and it helps add new transactions without appealing to a single centralized entity. Everyone in the computer network has to agree for a new block to be added.
Education is the key to the mass adoption of cryptocurrency. But the start of that crypto learning curve can be steep for the fiat. Cheap concepts like blockchain, mining, and staking are hard to understand and even harder to explain. In simple terms, as I’m sure many of you can attest, this can be a problem when you’re trying to help your friends, family, and significant other understand where all your money is going and why. So that’s why today I’m going to tell you how to explain complex crypto concepts in a way they will understand, and even how to answer the questions and address the concerns you’re likely to get.
How does a cryptocurrency wallet work?
A cryptocurrency wallet address is like a bank account, except that there’s no physical card that goes along with it. It’s just an account number. Because you don’t need to provide any personal information to create a cryptocurrency wallet. This means that your identity is not attached to your crypto wallet like a bank account is. Most importantly, any cryptocurrency held in your personal wallet is held directly by you.
This means that nobody can shut down your cryptocurrency wallet or block your transactions because you have total control over that account at all times. Now, the tradeoff here is that if you lose access to your cryptocurrency wallet or forget to write down the recovery phrase you get when you make one, well, you’ll lose your cryptocurrency forever. Instead of banks and the government keeping track of everyone’s bills and bank account balances, these records are stored across all the computers connected to a cryptocurrency network. These transactions and account balances are public and can be viewed by anyone using something called a blockchain explorer. Because computers can earn cryptocurrency for processing transactions on a cryptocurrency network, this incentivizes more computers to join the network to process transactions and earn cryptocurrency. This makes cryptocurrency networks secure because there is no single point of failure.
Is cryptocurrency a good investment?
Today I want to give you a little bit of an idea about what I think about cryptocurrency.
The cryptocurrency market is really complex and moving really fast. From the very beginning, cryptocurrency has had a lot of moving parts and even people who are deeply involved in them including some very good friends of mine find that there are pieces of it that they don’t fully understand. There’s no single company, and there’s no set management behind what would be known as the cryptocurrency market, but it’s also a real technological market, and trying to understand the ultimate mission of any one of these cryptocurrencies remains a little bit difficult sometimes. So I don’t think we should invest or call it investing in something that we don’t fully understand.
The principles of rule one investing lay out very clear standards and very clear boundaries that can be used to analyze whether or not a business is worth purchasing.
We call these boundaries or the kinds of things we’re doing, we call that investing. So one common question though, is whether or not a cryptocurrency like bitcoin or Ethereum sort of meets the standard of investment. And I’m going to attempt to explain why I don’t think that cryptocurrencies are a safe or prudent investment, but why it might be a lot of fun to put a little money into them from the risky business point of view. So first, cryptocurrencies, they’re a little bit hard to understand.
One of the standards of the rule when investing is before you invest in something, you should be sure you understand it very well. You should know its management, its mission, its history, and the fundamentals. It’s got to have a track record. And with most companies, this information is relatively easy to find and understand if those companies are kind of in your wheelhouse. With cryptocurrencies, though, it’s really not the case.
Is cryptocurrency legal and Taxable?
Yes, cryptocurrency is legal in Australia and also taxable as well. So today we are going through crypto tax in Australia and how I’m personally preparing my tax return. Please keep in mind that I’m not a tax accountant and this article is not financial advice.
So I just made $5,000 on bitcoin. Can I cash out and go on holiday? Is there anything I should know? Hold up. If you make a profit on crypto, you need to pay tax.
Do I need to pay tax on crypto?
Yes, you do. It’s called capital gains tax and it works in a similar way to the tax that we pay on shares. We pay tax on the capital gains or the profit on our share. And it works in the same way with crypto.
We pay capital gains tax on the profit that we made when we trade crypto. Basically, the profit that we made from crypto gets added to our income as capital gains and then we get taxed according to our tax bracket. According to the ATO, a capital gains tax event occurs when you sell or gift cryptocurrency, trade or exchange cryptocurrency, including the disposal of one cryptocurrency to another cryptocurrency, convert crypto to fiat currency or use cryptocurrency to obtain goods or services.
What if I don’t tell them I made a profit on crypto?
Most crypto exchanges are linked to the ATO, so they will probably already know about it. Okay, so what if I became a crypto trader and traded some of my bitcoin to dogecoin because Elon Musk said it’s going to the moon? Do I still need to pay capital gains tax? Yes. According to the ATO, if you dispose of one cryptocurrency to acquire another cryptocurrency, you dispose of one capital gains tax asset to acquire another capital gains tax asset. So you do need to pay capital gains tax.
How can I reduce my tax on crypto?
Should I open an offshore bank account? If you hold your crypto as an investment for twelve months or more, you may be entitled to a 50% capital gains tax discount when you eventually dispose of your cryptocurrency. I see.
What if I actually didn’t make a gain on crypto and I actually made a loss?
If you have a capital loss on cryptocurrency, you can use that capital loss to offset a capital gain you make in a later year. However, you can’t deduct a capital loss from your other income. It’s important to keep a record of all of your cryptocurrency transactions.
So then you can work out if you made a capital gain or a capital loss in your crypto exchange. It should have all of your transactions listed there. But another tool that you can check out is called Sharesight. It can track your share portfolio and also your crypto portfolio and it can also produce tax reports as well. And if you would like to check out the share site for yourself, I’ve got a link in the description below and it’s free for up to ten holdings.
What if I start faking my crypto and I start earning interest on my crypto? Do I still need to pay taxes then?
Yes, you will need to pay tax because it’s accessible income.
What if I purchased some stuff online from this website, a totally normal website that only accepts Bitcoin as payment? Do I still need to pay capital gains tax?
This is where you may be able to claim that your cryptocurrency is actually a personal asset and you may not have to pay capital gains tax on it. However, this all depends on how long you’ve held your cryptocurrency. Usually, the longer you’ve held your cryptocurrency, the more likely it is to be deemed an investment rather than a personal asset. And also your intention for buying crypto in the first place. The ATO says where cryptocurrency is acquired and used within a short period of time to acquire items for personal use or consumption, the cryptocurrency is more likely to be a personal use asset. And there are some examples of this on the ATO website, so definitely check that out.
What if all of my crypto purchases were actually for personal use?
The ATO will know and it’s definitely not worth it. I guess you will just keep doing what I’m doing and buying and holding my crypto.
So I hope that this has answered some of your questions about crypto tax in Australia. And if you have any more questions about crypto tax. You can comment below the article.
What cryptocurrency will explode in 2023?
Some cryptocurrency investors believe that a few of these cryptocurrencies are among the finest ones to buy for the future. The first step in cryptocurrency investment is buying cryptocurrencies. After that, most investors must store their digital assets in a safe cryptocurrency wallet.
Here are the top 10 cryptocurrencies to buy or invest in 2023.
- Bitcoin
- Ethereum
- XRP
- XLM Stellar
- ADA Cardano
- DogeCoin
- Polka Dot
- Neo
- Celsius
- nano
What cryptocurrency should I invest in 2023?
Bitcoin: One of the most widely observed cryptocurrency prices is that of bitcoin. There’s a good reason behind that, too, since it’s among the most widely used and established digital currencies and the one I first heard about. Bitcoin is regarded as a blue-chip cryptocurrency. In 2009, at the tail end of the financial crisis, bitcoin was first developed, and as of now, it has experienced incredible growth.
The market value of the company is currently close to United States dollars, 450,000,000,000. It serves as the default digital currency for the majority of investors as well, making it the most valuable coin in the world today. The current CoinMarketCap ranking is 1, with a live market cap of $387,463,409,895 USD.
Ethereum: Ethereum is one of the better ones to invest in. Ethereum can now seem to be a market coin that is quite fresh. But because it can produce intelligent or smart contracts, crypto investors are aware that it has succeeded. Among the various cryptocurrency types, Ethereum is one.
In addition to offering developers an open-source crypto environment, the corporation leverages its network as a cryptocurrency. Furthermore, Ethereum enables developers to create Ethereum applications that connect to a network, much like smartphone applications that let downloading apps from third-party sites. Investors can also purchase Ethereum just as easily as they do bitcoin if they believe it will be a more lucrative investment. The network of Ethereum can be programmed and used in more specialized ways.
The live Ethereum price today is $1,354.71 USD with a 24-hour trading volume of $10,093,470,995 USD. We update our ETH to USD price in real-time. Ethereum is up 2.50% in the last 24 hours. The current CoinMarketCap ranking is 2, with a live market cap of $166,162,839,213 USD.
Will Crypto Recover or Die?
The first point of view, new technologies generate investor excitement as intended they should. But precisely because the tech is new, investors cannot gauge how much excitement is warranted.
The second point that Sebastian makes is that these boom and bust cycles can’t tell you much about whether technology will triumph. Investors bet on things they hope might work. But the nature of early-stage tech bets is that a majority of ventures go to zero during the upcycle. Soaring valuations are no guarantee of success, and on the way down, plunging share prices are equally poor signals.
Lastly, Sebastian points out that innovation and profit are not reliably connected. Trains, bicycles, and eCommerce were all genuine innovations, but many early pioneers went bankrupt. In a similar fashion, some of today’s crypto innovators will go bust, but they could point the way for others. And I think Sebastian’s got a great point here that innovation is obviously happening, whether it’s in bitcoin or other sectors of the crypto industry.
It’s the current crop of entrepreneurs and innovators or it’s one class to come, it’s very obvious that this technology is superior to previous attempts in the financial industry and around fiat currencies. And so the idea that it’s going away, that it’s going to zero as an industry, is just absurd. Bitcoin and cryptocurrencies, they’re here to stay.
And this time is probably not different. It’s likely to recover. And so being able to be a long-term thinker, not get caught up in the short-term price volatility is a superpower when you’re dealing with innovative areas with high volatility to the prices that are associated with Sebastian’s nails, bitcoin and crypto will rise again.
Can crypto make you rich Overnight?
I was like, alright, there’s got to be another way to invest my money. I’m not going to stick around
First heard about Dogecoin from the subreddit called Wall Street Bets and Elon Musk. Dogecoin is riskier than other cryptocurrencies, like bitcoin or Ethereum because there’s no supply cap. Experts even call it a meme trade. Based on social media buzz, cryptocurrency.
Is now one of the biggest in the world. It did start originally as a joke back in 2013, but it is the big winner in crypto this week. Glover spent $40 on Dogecoin, which was priced at the time. Over the coming days, his investment grew to over $300. I’m like, I don’t know what the hell this is, but the next time this jump happens, I’m going to beat all the way in. I’m not missing out the second time this happens because it’s going to happen again. And so that was kind of what sparked my whole, like, okay, 24/7 research on dogecoin.
However, experts disagree. Cryptocurrency is an extremely risky investment. Experts warn you to only invest what you can afford to lose.
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Conclusion: I already told you many things today, but none of it is financial advice, because that would be lame. I prefer to give you the knowledge you crave to find your own way out of being a wage slave. I put the highest quality crypto content on this site to counter the Moon Boy hype, bitcoin news, coins, tokens, tutorials, tools, crypto wallets, crypto exchanges, and more.
