5 Common Misapprehensions Regarding BTC
By Space Coast Daily // May 1, 2021
Despite existing for more than a decade now, the crypto market is still a considerably emerging market, characterized by daily innovations and technological progress.
Hence, despite what the beginners and rookie investors hear regarding the crypto market, they should know that it is still a very good option to enter this market and add crypto into your investment portfolio in order to improve your portfolio returns.
The focus of this article is primarily on BTC and how due to rumors and the spread of misinformation, people have misconstrued and misinterpreted phenomena related to BTC, which has led them to make inaccurate decisions, eventually causing harm to their investments and earnings.
However, regardless of this focus on BTC, it should be known that bitcoin is not the only digital currency and that there are multiple others in the market that have a brilliant recent record and can be a very lucrative investment option for investors who are looking to start with a relatively lower cost of investments, as BTC prices have skyrocketed in the recent past.
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Some of these other options of crypto are ethereum, litecoin, binance coin and XRP etcetera. You should be well-informed and should conduct thorough research about which virtual currency you should be investing in prior to entering the market.
The following is a list of the top four misconceptions regarding BTC in the minds of the people who are looking to enter the cryptocurrency market, also the rumors or misapprehensions which rookie investors may hear or even be unaware of:
BTC are only utilized in Legit and Legal Activities
Despite the fact that bitcoins were once utilized to buy MDMA during a certain point in the last decade, one should understand that this is not the only purpose its used for. In the recent past, upon increased acceptance of bitcoins and other crypto in different global markets, you can also make transactions in order to purchase a certain product or service through crypto payments, e.g. on AT&T or Microsoft. PayPal has also announced that they will be revealing a feature in the next year, where its users will be able to convert their credits into BTC and make payments through it.
Crypto is not the quickest Method of Payment
The pace of all the virtual currency payments differs from one another, relying on multiple underlying factors. We can see this through the examples set to us by the two best crypto in the world currently, namely Ethereum and Bitcoin. Ether has a quicker transfer of crypto payments than that of Bitcoin. It should be known that the transaction speed of all the virtual currencies differs from one another.
Having said that, it should be known that the payments of these crypto are not processed right away. Even in the case of Bitcoins, the processing time can vary from a range of seconds to even some days. This range of time mainly relies on factors such as the amount of processing fee paid, i.e. the higher it is the faster are the transactions and payments wired.
Digital Currencies Are Also Taxed
Despite the overlying opinion about Bitcoin that they are not taxed because of the fact that they are decentralized, which means that they are not regulated by any third-party or a regulatory governmental institution, it is not true. BTC is in fact taxed, not always but in some cases.
For the people who hold bitcoins and have been trading them and making profits on them by trading their crypto on registered crypto exchanges, they will be required to report these earnings under the label of ‘Capital Gains’ in their tax information which is submitted to and then reviewed by the respective regulatory authorities under the governments. These capital gains are thereafter taxed by the respective government.
We recommend our readers to perform a thorough research regarding these rules, laws and taxation rates in their local areas, thus allowing them to manage their bitcoin holdings and the earnings through them more efficiently.
Crypto Payments Are Not Free of Charges
If you have ever heard that there are no costs or charges associated with BTC payments or transactions, well, it is completely untrue. In fact, there is a progressive fee policy in the crypto market, where you are charged according to the size of your crypto transaction, and while these charges can be relatively minimal, they are still expenses that a BTC holder must need to pay.
This fee is in the shape of processing charges for the payment. If you require an in-depth reason for the purpose of this fee, a brief justification is that this fee is charged in order to compensate the miners of bitcoin, who sit at the back-end creating new blocks on the block-chain technology, a digital ledger which hosts and records all the BTC transactions.
For their complex and skillful services, these miners are rewarded with compensation, which is the processing fee that the users are charged. The difference in this fee, however, is because of the varying urgency with which the users require the payments. In layman’s terms, the user pays higher charges if they want their payment to be processed faster.