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Cryptocurrency can be incredibly profitable if you are lucky and also do your due diligence. There's a reason why people talk about Bitcoin billionaires, you know.
During the peak Bitcoin price, everyone wanted to get a share of cryptocurrency. They were buying up Bitcoin mining hardware, downloading cryptocurrency apps, and even looking into cryptocurrency investing apps to help them boost their portfolios.
Great as cryptocurrency can be, there's a lot of things that people don't tell you that you should know. Here are some of the biggest ones that might change your mind about investing.
Many people have lost everything in crypto.
Investing in cryptocurrency sounds like a great way to make millions right off the rip, but this is only part of the story. A lot of people who have tried to make their wealth in crypto ended up losing everything.
Whether it was due to bad investments, poor timing, or just running into a hacker who decided to make off with the loot, doesn't matter. What matters is that it can happen to anyone. The risk is real.
Though this really doesn't really matter to some, investing in cryptocurrency started as a criminal thing.
Bitcoin was the criminal currency of choice when it first was invented. It was primarily used as a currency on sites like Silk Road on the Dark Web, simply because it was harder to trace when compared to regular PayPal transactions.
Investing in cryptocurrency has become a way to make a lot more Dark Web transactions remain profitable—and also has become a way to launder money. Food for thought.
The chances of you getting hacked are pretty high.
This is one of the things that people often point out briefly, then sweep it under the rug as "just another risk." It seems like something that will happen to someone else and not you, until it happens to you. Then you panic.
Major Bitcoin wallets and exchanges have all been hit by hackers. When they're hit, there's no telling that you will get the money that you invested back. Or rather, there's no telling that you'll get your Bitcoin back.
If you don't think it could happen to your wallet or exchange, take a look at what happened with Mt. Gox.
Getting insured Bitcoin wallets is really tough.
Though there were a couple of wallets that had offered insurance on cryptocurrency thefts and hacking, this is no longer the case. There's currently only one that allows it to happen.
After too many losses and hacks, insurers basically blacklisted cryptocurrency-based businesses. Currently, only one theft-and-loss insured Bitcoin wallet exists. Yikes, right?
There's a chance that your investment could become illegal, depending on where you live.
This is one of the things you should be aware of when conisdering investing in cryptocurrency abroad. Though the United States has embraced crypto, not all countries have. Some countries, such as South Korea and China, have taken strong stances against cryptocurrencies.
While you may be able to invest in them now, there's no saying you will be able to cash in your chips if you invested as a citizen of one of these countries. You could end up losing a lot on the crypto market if your government bars you from accessing your investments, you know.
Taxes can get nightmarish.
Before you invest in Bitcoin, you might need to hear this. The IRS will want a share of any gains you make in crypto investments. They treat gains in Bitcoin the same as any other investment.
The problem here? Trades are not always easy to keep track of, and many people will end up falling behind on cryptocurrencies as a result of the bookkeeping error. You might need a professional tax preparer to help you figure out your returns.
It's not always easy to figure out which new cryptocurrencies are worth investing in.
There's a common believe that people who invest in cryptocurrencies just need to avoid the currencies that seem sketchy at face value in order to avoid an ICO scam. This is not necessarily true.
Though you can spot a lot of red flags through glancing at an ICO's website, there have been some pretty sophisticated Initial Coin Offering scams that have taken people for millions.
Due diligence can prevent you from falling for the scam, but let's be real, sometimes, it does end up being a matter of pure luck. Cryptocurrencies are risky, you know.
Investing in cryptocurrency concepts really isn't like the investing in stock market.
The stock market and other traditional investments have backing in the form of physical wealth, government approval, and assets. With cryptos, you don't really have that.
Cryptocurrencies are as valuable as people make them out to be. There's no backing from governments, no guarantees, nothing. It's food for thought, and a large part of the reason they are considered to be the most dangerous investments you can make.
You should find out how the cryptocurrency token or ICO you want to invest in works.
Cryptocurrencies are a method of fundraising for tech companies and can be used in a variety of different ways. That's why ICOs are so important; they further a purpose!
Some are made as a way to promote new blockchain technology advances. Others are designed to be a cash substitute. Still more are used as tokens for websites.
Find out what your cryptocurrency is supposed to do, and investing in cryptocurrency releases will be a lot more understandable.
Finally, no one tells you how addictive investing can be.
This might be the biggest secret that is held among those who like to invest in cryptocurrency, in my opinion. It's a thrill. Seeing your money make excellent returns, the fear of losing it all pulsing in your veins, it's exciting in a way that most other investments aren't.
Rumors have swirled about people who have started to invest in crypto as a way to get a "rush." We'd believe it. It's one of the most exciting ways to plunk down cash we've seen.