Crypto assets are unregulated & highly speculative. No consumer protection. Capital at risk.

Crypto assets are unregulated & highly speculative. No consumer protection. Capital at risk.

While you can invest in cryptocurrencies, they differ greatly from traditional investments, like stocks. When you buy stock, you are buying a share of ownership of a company, which means you’re entitled to do things like vote on the company’s direction. If that company goes bankrupt, you may also receive compensation once its creditors have been paid from its liquidated assets. In Australia, you are also paid regular dividends by the company when it makes a profit.

Buying cryptocurrency doesn’t grant you ownership over anything except the token itself; it’s more like exchanging one form of currency for another. If the crypto loses its value, you won’t receive anything after the fact.

There are several other key differences to keep in mind:

• Trading hours: Stocks are only traded during stock exchange hours, typically 9 am to 4 pm AEST, Monday through Friday. Cryptocurrency markets never close, so you can trade 24 hours a day, seven days a week.
• Regulation: Stocks are regulated financial products, meaning a governing body verifies their credentials, and their finances are matters of public record. By contrast, cryptocurrencies are not regulated investment vehicles, so you may not be aware of the inner dynamics of your crypto or the developers working on it. Furthermore, you have very little protection when things go wrong.
• Volatility: Both stocks and cryptocurrency involve risk; the money you invest can lose value. However, stocks are directly linked to companies and generally rise and fall based on those companies’ performance. Cryptocurrency prices are more speculative—no one is quite sure of their value yet. That makes them much more volatile and affected by something as small as a tweet for a celebrity

If you buy and sell coins, paying attention to cryptocurrency tax rules is important. Cryptocurrency is treated as a capital asset, like stocks, rather than cash, which means that you need to pay your marginal tax rates on the crypto when you register your return with the ATO. It also means that if you sell cryptocurrency at a profit, you’ll have to pay capital gains tax. You can read our guide to crypto and tax in Australia.

Don’t succumb to the misconception that cryptocurrencies are anonymous and can’t be tracked. The ATO has data-sharing agreements with all exchanges in Australia, giving them access to the list of taxpayers who own and trade cryptocurrency. Transferring from an exchange to a wallet is also relatively simple to track due to the public nature of blockchain data.

Cryptocurrency is an emerging area with more than 26,000 crypto projects in existence, with very few barriers to entry. The year 2021, in particular, witnessed a crypto market boom, with thousands of new crypto projects added.

While some crypto function as currencies, others are used to develop infrastructure. For instance, in the case of Ethereum or Solana, developers are building other cryptos on top of these platform currencies, and that creates even more possibilities (and cryptos).

When we first think of crypto, we usually think of Bitcoin first. That’s because Bitcoin represents more than 45% of the total cryptocurrency market. So when we talk about any cryptos outside of Bitcoin, all of those cryptos are considered altcoins.

Ethereum, for instance, is regarded as the most popular altcoin.

Part of what makes Bitcoin so valuable is its scarcity. Bitcoin’s maximum supply is limited to 21 million coins. Currently, there are 19 million coins in circulation.

To create supply, Bitcoin rewards crypto miners with a set Bitcoin amount. (To be exact, 6.25 BTC is issued when a miner has successfully mined a single block.). To keep the process in check, the rewards given for mining Bitcoin are cut in half almost every four years.

The cryptocurrency market is highly unpredictable and extremely volatile, with some tokens doing well one day and then falling rapidly the next.

Because of this, the most profitable cryptocurrency changes constantly. Once a cryptocurrency increases drastically in value, buying into the project expecting further gains is not always the best idea.

The profitability of investing in cryptocurrencies is affected by market conditions, supply and demand, regulatory changes, technological developments, and how you manage your investments. It is important to do your own research (DYOR) and consult with a trusted  financial advisor before making any investment decisions.

The future performance of cryptocurrencies is uncertain and depends on various factors, including the recent regulatory uncertainty surrounding the crypto space, as well as the unstable economic climate characterised by high levels of inflation and rising interest rates.

While some investors are optimistic about the potential growth of the crypto market despite these challenges, others may be more cautious or sceptical. It’s important to note that the performance of cryptocurrencies is generally volatile and unpredictable, and is often significantly impacted by external factors beyond the digital asset space. It is essential for anyone interested in this space to conduct thorough research and, if necessary, consult with a financial advisor before making any investment decisions.

Figuring out which cryptocurrencies to invest in can be quite a challenge, but there are some steps you can take to increase your chances of choosing a more promising project. To make well-informed decisions, it’s essential to:

1. Get familiar with cryptocurrency and blockchain technology—understanding the fundamentals is key.
2. Dive into research on various cryptocurrencies, their purposes, and the dedicated teams behind them.
3. Keep an eye on market sentiment and the long-term potential of each cryptocurrency you’re considering.
4. Stay in the loop with the latest news, regulatory updates, and technological breakthroughs in the crypto world.
5. Reflect on your personal risk tolerance and investment goals to ensure you make the right choices for you.

Don’t hesitate to consult with a financial advisor if you’re new to crypto investing or have specific concerns about your investment plan. Just keep in mind that cryptocurrencies can rise and fall in price rapidly, so investing in them comes with inherent risks.

Determining the best cryptocurrency to invest in is not a straightforward task. Cryptocurrencies are a highly volatile and unpredictable asset class, with their values capable of surging or plummeting in a flash. There’s no absolute certainty in predicting which cryptocurrency will offer the most returns or maintain stable growth.

However, there are tools and platforms that can aid in your decision-making process. Websites like CoinMarketCap, CoinGecko, or others provide comprehensive data about a vast range of cryptocurrencies, displaying their current prices, market capitalisation, historical data, and fluctuations over different time frames. Such tools can assist you in understanding market trends and the performance of specific cryptocurrencies.

Yet, despite all these resources, due diligence and caution are crucial. Cryptocurrency investments carry substantial risk and losing your initial investment is possible. Always do your own research, consider your financial situation and risk tolerance, and possibly seek advice from a financial advisor.

Answering the question of which cryptocurrency has the potential to increase 1000x in value is complex and speculative. No one can predict the future of the crypto market with absolute certainty. Several factors can influence a cryptocurrency’s growth potential:

1. Utility and Adoption: Cryptos addressing real-world problems with clear use cases are more likely to gain traction
2. Regulatory Environment: Clear and favourable regulations can boost a crypto’s growth prospects.
3. Community Support: An engaged community can promote awareness and adoption.
4. Technological Innovations: Unique features or solutions can set a crypto apart.
5. Market Capitalisation: Cryptos with a lower market cap have an easier time achieving high multipliers, simply due to their smaller size. 
6. Market Sentiments: Perception and overall market sentiment can swing a crypto’s value.

Always conduct thorough research and consider consulting financial experts before investing. Remember, while some cryptos show promise, predicting 1000x returns remains inherently risky.