Cryptocurrency For Beginners

Cryptocurrencies for Beginners: Two Experts Tell Us the Most Profitable Way to Start Investing

. Authors of ‘Cryptocurrencies for dummies’, give us the keys to start investing in them

. What is a cryptocurrency for? What role does the Treasury play? How is it better to invest if I am a beginner?

. The experts clear up the main doubts about cryptocurrencies to introduce us to that world and achieve profitability

Until recently, not everyone knew what a cryptocurrency was . Now there are still many who do not know exactly what they are, but they know that they exist and have probably been involved in a conversation about them and about the great investment that putting some money into them can mean. If you are one of those who have not dared to launch into the world of cryptocurrencies, we will give you expert keys to introduce you to them from the authors of the book Criptomonedas para dummies Víctor Ronco and Carlos Callejo . What is a cryptocurrency? What are the most common mistakes? Do I have to declare before the Treasury? And the most important, How can I start investing? Let’s go step by step.

What is a cryptocurrency?

The first big question. “A cryptocurrency is, from the monetary point of view, simply a form of digital money that, thanks to computer methods, is safer, faster and more efficient than conventional money ,” says Víctor Ronco, who also anticipates that there are governments working on theirs. own, “what is known as CBDC (Central Bank Digital Currency)”. Even so, the expert indicates that the concept has many applications , such as “the digital representation of a traditional asset or a digital asset.”

But we cannot finish the first point without talking about blockchain technology , which according to his book can be translated as ‘chain of blocks’. Carlos Callejo, the other author of the book explains it like this. “We can compare it to an accounting book in which each sheet contains the different accounting entries . In this case, each sheet would be a block that contains transactions and, when it is filled, it is validated and updated simultaneously in thousands of computers that support the network. The main characteristics of this technology is that those blocks cannot be changed.”

What are cryptocurrencies for?

It depends. “Depending on the cryptocurrency, it will have one use or another ,” explains Víctor Ronco. On the one hand, there are those that are a digital form of money that are used to pay in the same way as another currency, such as the euro or the dollar. Instead, Bitcoin “is used primarily as a store of value against inflation,” while others “ represent company shares.”

Where can I buy them?

Carlos Callejo indicates that there are several ways to buy cryptocurrencies, although he points out that the simplest way is in an exchange house, called an exchange . “In Spain there are several that offer security, low commissions and good customer service. The operation is similar to opening an account in a bank: we register, verify our identity and from our own bank account we can send euros as a balance to our virtual wallet by bank transfer or instantly with a credit card”, explains the expert.

From the moment the money is available, you can buy cryptocurrencies on the exchange with a single click. If what we want is to sell, “it’s the same process but in reverse.”

Where are they kept?

As we mentioned, there is that virtual purse or wallet , which is where they are stored, although cryptocurrencies can also be left in the custody of an exchange . “These wallets have a public key, like the digits of a bank account, and a private key , which works as a password to access the funds,” says Ronco. In any case, Callejo points out that this technology allows us to be our own bank, but that for a beginner “it is better to trust in a secure platform.”

What are the most common errors?

Callejo is clear: “not knowing the technology and how it works.” As he establishes, it is common for many users to trust their cryptocurrencies in “projects that promise brutal returns and are not transparent. The ideal thing at first is to trust someone you trust who will teach us how this ecosystem works.”

so it time to invest in cryptocurrencies?

Without turning around: yes. Víctor Ronco points out that they are in an initial phase , comparing them with the state of the Internet at the beginning of the 2000s, with a world to discover. Callejo develops more, speaking specifically of Bitcoin, which everything indicates that its value and profitability will continue to increase, in part because there will only be 21 million and there are already 18.5 in circulation. In any case, he also says that there are more than 8,000 cryptocurrencies , each with a project and an economic vision. Therefore, once you have the right knowledge, it is key to study those projects that call our attention and then “ decide if it is a good investment opportunity” that can offer us profitability.

I have 1,000 euros, any advice to invest?

Taking up previous points, Carlos Callejo is clear, “train in technology and know how it works”, from there you can already consider making an investment, always with the money that each one “can afford to lose, financially and emotionally speaking” . To begin with, it would be best to do it with the best-known ones, such as Bitcoin, due to its low risk, and once you get more experience in this world, “you can diversify your portfolio by looking for projects with lower capitalization where the risk-return equation is interesting”.

Why is Bitcoin the best known?

In principle, because it was the first to be born back in 2008, but Ronco gives us other reasons. Bitcoin is supported by a network of more than 10,000 computers and is considered “the most secure payment network in the world , it has never been hacked. Also, having a limited amount makes it a deflationary currency . “ All this leads to Bitcoin occupying more than half of the cryptocurrency market.

The big question: what about the Treasury?
Well, Víctor Ronco offers us the different scenarios. In principle, buying on an exchange does not apply VAT or any other tax . So far so good, but investing in cryptocurrencies is seeking profit. And therein lies the key. “We must pay taxes on the benefits associated with cryptocurrencies as with any other type of investment. In our annual declaration we must report the benefits that we have had from the purchase and sale of cryptocurrencies and pay between 19 and 23% taxes” , explains the expert.

Finally, what are the advantages and risks of investing?

As with other investments, there is always a level of risk , be it lower or higher. But Víctor Ronco warns, cryptocurrencies “present a disruptive, unregulated and highly volatile landscape, so it is not an investment for everyone” . Now, looking at the case of Bitcoin, in the long term it presents “a highly upward trend”, which has led it to “exceed the returns of all world stock indices”. In this way, all kinds of investors “have begun to allocate a growing percentage of their investment portfolios to digital currencies.” And you, are you ready to invest?