Since the creation of Bitcoin in 2009, people have been increasingly buying into cryptocurrencies with every year that passes by.

A payment system like this has never been seen before and arouses due interest as a result. If you’re looking to become a crypto trader, there are fundamentals of cryptocurrencies that you need to familiarize yourself with. This article will act as a simple guide to the newbie crypto trader.

There are various things to run through that include cryptocurrencies at their basic level, Blockchain technology, how they work, their scope and potential in the future, risks that come with cryptocurrencies, and the legal aspects of crypto.

What is crypto or cryptocurrency?

Cryptocurrencies are defined as a medium of exchange that is based on the internet. Payments are made by satisfying certain cryptographic functions.

Unlike regular national currencies like the US Dollar or British Pound, cryptocurrencies are not regulated by a central authority like a bank. Since crypto transactions occur via cryptographic functions, cryptocurrencies cannot be penetrated or hacked.

Of course, this means that cryptocurrencies are utterly immune to Government influence and manipulation. This proves to be a revolutionary factor because this is the only form of money that successfully functions without the backing of a regulatory body.

For a transaction to be confirmed, the private key of the sender has to sign it.

When this is confirmed, the information of said transaction is broadcast to the entire network. Then it is sent from one peer to the next.

Given its intricate and vague nature and the fact that it is new to the average joe despite being on the market for a decade, there is a lot of confusion around cryptocurrencies.

This confusion is rooted in the fact that the government has not supported cryptocurrencies so far, and the introduction of laws that may not support crypto activities.

Unfortunately, people, by and large, tend to believe the hype surrounding the regulations and not the actual rules. Also read about  how to report crypto taxes ,as this is also plays a major role.

The potential risks for crypto-traders

If you are planning to become a crypto trader or trade bitcoin with a trading software like cryptosoft, chances are this is the first question you wanted to be answered. There is no denying that cryptocurrencies are risky in some ways. However, they do have possess critical traits that make them vastly different from the currencies we know.

Absolutely nobody can reverse transactions once they are confirmed. Drop the idea of approaching your bank, or any other central authority to undo your operations. Given the complexity of the technology, cryptocurrencies are based on, banks are not capable of controlling them.

The good news is that they are secure. You can only transfer cryptocurrencies if you’re the owner of the private key. That being said, it is futile to try and hack the system.

It is impossible to link crypto accounts to their real-world identities. You will receive bitcoins on addresses that are in the form of chains with multiple characters. You can analyze the flow of the transaction but there is no way to find the real owner of the account.

The lack of centralization means that you do not require permission to make use of cryptocurrencies.

You can download the software and begin cryptocurrency transactions in a matter of minutes. Unlike in the case of other currencies, there is no gatekeeper in such a network. There are also free crypto tax calculator available to check taxes.

The value and scope of cryptocurrencies

As mentioned earlier, cryptocurrencies are immune to external influence. This means that it is impossible to stop someone from using a cryptocurrency (like Bitcoin, for example).

The rise of cryptocurrencies has created room for the beginning of a modern economy.

Cryptocurrencies are defined as money that is independent of external influence from authority and is highly likely to increase its value over the next few years.

It is not surprising that people all over the world are showing massive interest. Several crypto traders have gotten into the game from shield themselves from the devaluation of their national currencies.

 As you may have realized, cryptocurrencies have their upsides and downsides. You can leverage them based on your goals and priorities.

Regardless of what the media has shown cryptocurrencies to be, it should be known that cryptocurrencies are here to change the economy for good.

You can choose to take a chance on something like this that is expected to increase in value over the next few years exponentially. Or, you can stay safe and watch this economic revolution take place.

The Best Crypto Tax Software

An integral part of being a crypto trader is having to do the tedious task of filing your taxes. You’re much better off getting your crypto taxes done by a professional and checking out these crypto tax calculators.

Token Tax

TokenTax makes it very simple to report your crypto capital gains and income taxes. Be sure you know that TokenTax is the only crypto tax platform that supports every well-known exchange.

CryptoTrader.tax

CryptoTrader.tax allows crypto traders to calculate their capital gains or losses without much time or effort. CryptoTrader.Tax has a UI that makes it easy to import your purchase and sales history and ensure you do not overpay your taxes. Their platform currently supports a plethora of currencies that include Coinbase, Bittrex, Gemini, Binance, and Poloniex.

Cointracker

CoinTracker is known as one of the best tax reporting calculators out there. Its platform syncs your balances and transaction history from your exchange accounts.

The interface displays your digital assets and the associated trading history.

CoinTracker also has a performance tracker, which gives you an accurate picture of your investment performance.

Bitcoin taxes

Known as one of the earliest and most trusted tax calculators for crypto traders, its platform enables users to import cryptocurrencies and transaction history throughout the year from multiple crypto exchanges.