Cryptocurrency is getting a lot of attention these days. You can hardly turn on TV or get online without hearing or reading about it.
If you need some help understanding cryptocurrency, you're not alone. Cryptocurrency is a form of digital currency that's not issued or regulated by a government. It's built on a technology called blockchain and monitored by computer scientists and stakeholders around the world. You can buy it online and, once purchased, you typically store it in a secure digital wallet.
But what can you actually do with it?
More than you think. In fact, over the past decade, cryptocurrency has become more and more popular, and today it can be used for purchasing, investing, trading, and more.
Cryptocurrency can be used to purchase a vast range of goods and services. Some of the retailers that accept cryptocurrency include giants like Amazon, Starbucks, Overstock, Home Depot, and Whole Foods.
However, these companies don't accept cryptocurrency payments directly. Buyers use third-party payment apps—like PayPal or Venmo—or digital wallets to make most cryptocurrency purchases.
Payment apps like Cash App, Zelle, and Google Play also process cryptocurrency payments. Considering that these apps allow users to make purchases from thousands of companies around the world, it's fair to say that today you can buy just about anything with cryptocurrency.
When the value of cryptocurrency skyrocketed in the late 2010s, crypto investing became all the rage. Some people got wealthy investing in cryptocurrency, but that was more the exception than the rule. Even so, today many people are investing in cryptocurrency.
Investing in cryptocurrency works much like any other investment: you buy it and hope it increases in value so when you sell it, you make money.
However, since cryptocurrency is relatively new, it's typically considered a risky investment. But there are some synergies between the two. The whole idea behind investing is that it's long-term, as in you hold on to your investments for a while to allow them to increase in value. The same holds true for cryptocurrency.
The opposite of investing in cryptocurrency is trading cryptocurrency, which is buying and selling cryptocurrency quickly to make a profit. While it's possible to make money trading cryptocurrency, this is also considered by many to be a risky endeavor.
If you're interested in trading cryptocurrency, you'll need to open a brokerage account, which you can do online. It's advisable you do your research and even consider taking a cryptocurrency trading course before you get started. You could also opt for automated trading, which allows you to trade without having to constantly monitor changes in the market.
Cryptocurrency donations to non-profit organizations have increased tremendously over the past several years. This is because donating cryptocurrency can be more beneficial to the donor and the charity than donating traditional currency.
It has to do with taxes, which are always complicated. Basically, if an investor makes money on cryptocurrency investments, they have to pay capital gains taxes on the money they make. But if they donate the cryptocurrency to a nonprofit, they do not pay capital gains taxes, which means the charity gets more money than it would with traditional currency.
Also, the donor gets a tax deduction for donating the cryptocurrency. And, if the charity holds on to the cryptocurrency they could see its value increase, giving them even more money. One important note: The donor must have owned the cryptocurrency for one year to receive the full benefit of donating it to a charity.