What To Know Before You Start Using Bitcoin
Since the cryptocurrency is different than a traditional bank which everybody used, it naturally works quite differently.
Bitcoin and its transactions should be taken as seriously as your wallet in your pocket or purse.
As stated above, a wallet should be secured just like, or even more than, a physical wallet.
Bitcoins can provide high levels of protection for your online portfolio when properly used.
Here is some advice on how to protect a Bitcoin wallet
- Be Careful Online
- Only Use Small Amounts
- Backup Your Wallet
- Encrypt Your Wallet
- Offline Wallet Should be Used For Savings
An offline wallet provides the highest level of security. When used right you should back it up and encrypt it. This is the best way to keep larger amounts of money held in BTC or other cryptos coins.
- Keep Your Computer Software Up To Date
- Multi-signatures Will provide Extra Protection
The Price of BTC Can Change Quickly
Since Bitcoin is relatively young, the price is extremely volatile and can go up and down unexpectedly over a short period of time very rapidly. Always remember, because of its short life and sometimes illiquid markets, Bitcoin cannot be recommended for a Savings Account. It always is seen as a high-risk asset, and it should never be used to keep money safe that users cannot afford to lose.
Bitcoin Payments Are Irreversible
Another interesting fact about Bitcoin is, once someone issues any transaction, it is irreversible. The transaction, however, can be refunded by the person who receives the funds.
The future is still bright and cryptocurrencies will be moving forward. There may be some changes for some more choices for customers and the protection for their clients.
Bitcoin Gambling Is Not Anonymous
When it comes to securing a wallet, there is some part the customer has to do with securing it.
Bitcoin is a growing public community, and all transactions are stored publicly and permanently on their network. Anybody that has access to the blockchain network can see all the balances and transactions of any BTC address.
Everyone should know, the identity in which the address is referring to cannot be shared until the information has to become revealed during a purchase or other circumstances.
Since more than one address can be used; it is advised that users should use only one address per transaction.
It is the user who is responsible for protecting their Bitcoin wallet and addresses at all times.
When explaining this, it may get a little tricky, but hold on. Not every transaction starts out irreversible. What happens is, each transaction gets a confirmation score which states how hard it will be to reverse them. Every approval can take between 90 seconds to 10 minutes.
If the transaction has a fee attached or is typical, getting a confirmation the first time can take a little longer
Bitcoin Is Still Relatively New
Bitcoin is still very experimental. It is a brand new currency that is still actively under development. It will have a lot of bumps along the way, and everyone needs to expect them. With each improvement, it may bring more challenges. During each development, users may encounter increased fees slower confirmations or more server issues.
Always be smart with your money and be prepared for any problems when using any cryptocurrencies.
Taxes & Bitcoins (BTC)
Bitcoin isn’t an official currency. Always remember, jurisdictions still require you to pay:
- Income Taxes
- Sales Taxes
- Payroll Taxes
- Capital Gains Taxes
These Bitcoins have value, so all of the above meet the tax requirements.
Remember, it is the users responsibility to make sure they follow tax and other legal mandates issued by the government.