What you should know about using cryptocurrencies

What you should know about using cryptocurrencies


In an increasingly technologically dependent age, it can be useful to keep up with new forms of currencies in the digital space. Cryptocurrency is internet-based, digital money that is not controlled by any central authority. Currently, the most prominent cryptocurrency is Bitcoin, which has a market capitalization of over 155 billion U.S. dollars.

How do you buy cryptocurrencies?
There are a number of popular websites and apps that simplify the process of buying cryptocurrencies. In Australia, you can register for accounts to do so on exchange websites such as Swyftx, Coinbase, CoinSpot, or Independent Reserve where you can pick from various cryptocurrencies to purchase.

When choosing a form of cryptocurrency to start with, it is important to do research to ensure the currency is legitimate and trustworthy. Most of the time, it is a good idea to choose a popular one that is already widely used and trusted by other crypto users, such as Bitcoin, Ethereum, Ripple, or Litecoin. Once you have purchased cryptocurrencies, you can store them in a digital crypto wallet for security and easy accessibility.

Benefits:
Some may wonder if cryptocurrencies are just another pointless internet fad, however, there are a number of advantages to using cryptocurrencies.

  • Fast: Transaction speeds are usually fast, making things like paying bills and shopping online easier.
  • Low Fees: There are generally minimal to no transaction fees in crypto exchanges, so using cryptocurrencies can be a good way to avoid online banking fees and charges.
  • Anonymity: Making transactions online with traditional banking methods generally requires information such as your name, credit card number, phone number and address. However, cryptocurrencies allow you to be anonymous in these transactions by only showing your crypto ID or a nickname of your choosing.

Drawbacks:
Despite the benefits of using cryptocurrencies, it is also important to be aware of their disadvantages before diving too deep into crypto investments and purchases.

  • Security risks: While it is harder and more technical to steal digital money as opposed to physical cash, cryptocurrencies are still susceptible to skilled hackers and scams. Because cryptocurrencies are decentralised with no authoritative control, any loss of cryptocurrency due to theft or scams cannot be recovered.
  • Value instability: Cryptocurrencies tend to fluctuate in price and value, which can reduce their reliability as you can never be certain how much they will be worth the next day.
  • Lack of merchants: Many companies have not taken the step to adopt cryptocurrencies as a form of payment, so it can lack usefulness in everyday transactions.
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If you believe the matters discussed above are relevant to your business, please contact Darren Smith of our office to discuss further.


Darren is a Chartered Accountant with extensive experience, including working in the big 4 and medium sized firms before becoming a partner of a city based firm in 2000.

He has gained much experience and has extensive knowledge in providing business and taxation advice, superannuation planning, negotiation of sales and acquisitions of businesses and property development. His client base covers a wide range of industry groups.

Darren works with business owners to grow their businesses and create personal wealth within and outside of their business.


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