What are perks of owning cryptocurrency in your wallet? Image credit: AdobeStock
You have probably heard a lot about cryptocurrencies, but what are they exactly? How can you get benefits from keeping cryptocurrency in your wallet? This article will tell you how to obtain cryptocurrency and store it. If you’re interested in this new type of digital currency — and who isn’t? read on for some vital information.
Traditional dollar, pound, and others require intermediaries for transactions. For example, the third party in a transaction will verify it, manage price fluctuations and ensure that the process goes smoothly. But a transaction using cryptocurrency requires no third-party intermediary; it is between two parties only, with no intermediary.
Bitcoin is known as a decentralized system because no central authority dictates using bitcoins or making transactions with them. There are numerous ways to purchase bitcoins and other cryptocurrencies, but the process of doing so has taken significant steps toward simplicity in recent years.
A cryptocurrency wallet contains three keys: public key, private key and a backup key for sending and receiving virtual currency. Public keys are crypto equivalent to an IP address; they go online with the cryptocurrency and can send or receive funds with other people. When an investor sends currency to another person or pays, they must use their private key to authorize the transfer. As with passwords, if an investor loses their private key or is compromised somehow, no one can access the funds.
Unlike traditional centralized currencies such as the dollar, there is little risk of loss from cryptocurrency theft and hacking because no central servers hold billions of dollars worth of cryptocurrencies on portals like Immediate Edge. Therefore, if a cryptocurrency exchange suffers a security breach, there is only an associated loss of money. But in the dollar case, there would be a lot more money and potentially more people affected if you lost your funds in such an instance.
As any central bank or government does not back cryptocurrencies, they are subject to several different laws, especially when it comes to tax collection. For example, some countries require miners and users who wish to receive and sell cryptocurrency for fiat currency, for example, USD or GBP, to pay tax on their earnings from mining and trading. This effectively makes cryptocurrency more complicated than is necessary from a legal perspective.
When comparing the fees associated with traditional currencies, the cost of transacting with a cryptocurrency is less than that of traditional currencies. For example, the significant fee for sending a USD wire transfer is around 30USD at most banks. With the cryptocurrency wire transfer, this can fall to as little as $1.50. This means if you have an international net income and wish to pay your bills in dollars, then cryptocurrencies might be a much better choice than usual.
Cryptocurrency transactions are almost instantaneous; there are rarely any delays in transacting using them instead of transferring money using normal channels such as credit cards and bank transfers. However, the ‘time for money to transfer’ can be up to several days, which can prove frustrating if you are waiting for a payment from someone or if you are paying others. But with cryptocurrency, it can happen within minutes.
Cryptocurrencies are becoming more common in the international arena, especially for smaller amounts that are hard to track, such as trading and mining. But foreign investments in cryptocurrencies can mean both gains and losses for investors annually. Moreover, many governments have promised low taxes or removed taxes on cryptocurrency transactions altogether, which traditional banks cannot do since their respective governments highly regulate them.
Identity theft is a significant concern for many people, and modern technology and the Internet have made it easier than ever to steal someone’s identity. But because the private key holder can only access a cryptocurrency, it is much harder to compromise someone’s identity. It is virtually impossible since you would know immediately if your private key had been compromised.