If you’re considering investing in Crypto, there is no time quite like the present. Yet it’s important you know the ins and outs of it and it isn’t something you just jump into without really thinking. While it might seem like something that everyone is doing, there is a big difference between people who are dabbling without knowing what they’re doing, and those that are making serious money from it. In this article we take a  look at three essential things you need to know before you start investing in cryptocurrency to help you have a better experience and long-term journey. Keep reading to get inspired. 

Crypto is highly volatile

Cryptocurrency prices can rise and fall dramatically in very short periods of time. Coins like Bitcoin and Ethereum have seen huge gains—but also sharp crashes. This volatility means that while you can make huge profits, at other times you could end up losing large chunks, if not all of your investment depending on what the crash is and how much you have invested. It’s important you only invest what you can afford to lose and don’t make any rash decisions. Some people lose money because they panic, they latch onto the hype, or they worry about missing out. Instead, keep your cool and just think rationally.

You have to pay tax on Crypto

A common misconception is that crypto profits are tax-free—but that’s not the case. Cryptocurrency is thought of as an asset, meaning you may need to pay tax when you sell, trade, or even spend it.  This includes when you sell it for a profit, swap one cryptocurrency for another and use crypto to buy goods or services. Keeping detailed records of your transactions is essential, as calculating what tax you need to pay can be complicated, especially if you trade frequently! Many investors choose to work with a crypto tax specialist to ensure everything is reported correctly.

You need to understand what you’re buying

Not all cryptocurrencies are created equal. Some are designed as digital currencies, others power decentralised applications, and some have very little real-world use at all. Before investing, take time to research the project behind the coin—its purpose, the team, and how it’s actually used. Understanding whether a crypto asset has long-term potential or is just riding a trend can make a big difference to your investment outcomes. You can have a look on financial blogs or newspapers, forums and even social media to find out more about what the different types of crypto are and how you can buy and utilise them.

Crypto is something that isn;t going away and can be highly profitable if you know where you need to spend your money and which to invest in. But before you go dicing in headfirst, it’s important you know exactly what you’re doing, what risks to take and what it involves. Do you have some top tips for people who are just starting out on their crypto journey? Let us know in the comments below, we’d love to hear from you.