The cryptocurrency market is attractive and exciting but with the excitement also comes quite a few risks. People entering the cryptocurrency market are often not aware of the many different types of coins or tokens that exist and do not know how to track their portfolio. An increasing number of cryptocurrency projects are doing a lot about this problem by adding their own portfolio tracking applications for their cryptocurrencies. Most of the time these tokens have their own websites that allow you to easily track the progress of your tokens. There is no shortage of these sites either and most are good looking with statistics that are easy to understand.
1. Do Not Leave Your Passive Income In The Hands Of An Exchange
It makes sense to have your cryptocurrency portfolio with an exchange because you can easily trade your tax on crypto in india to other digital assets. At the same time you are taking a significant risk. The exchanges could be hacked and your coins stolen. If the exchange does not have enough liquidity an order that you place may not be executed at a desirable price and your profit evaporates. You also have to pay for these services and there is very little transparency about how an exchange determines who receives their trading fees.
2. Never Forget Cryptocurrency Exchanges Are For Trading
The purpose of using an exchange is to trade your cryptocurrency portfolio between different currencies and other digital assets. You can also use it to sell your portfolio when you want to cash out some or all of your coins for fiat currency. While this is a convenient way to sell your tokens there are many drawbacks too. The main disadvantage is that you do not know how much exactly you will receive from an exchange when you ask them to convert the value of your portfolio into Bitcoin or any other currency.
3. Know Which Exchanges Take The Highest Fees
Every exchange takes a certain percentage of the income made from trading fees. The more volume an exchange has, the lower the fees you will have to pay. There are also some exchanges that give discounts to people who hold a certain amount of tokens on their platforms. This incentivizes you to buy and hold the token on the exchange. This method is effective because a person can increase the value of their portfolio with time but would still be able to take advantage of exchange discounts.
4. Remember Every Transaction Is A taxable event
It is essential that you know what taxes are applicable in your country and make sure that you pay them. In some countries cryptocurrencies are considered a commodity instead of currency and that has huge tax implications for any person using it. The decentralized nature of cryptocurrencies means that there is no central authority to pay the taxes so you will have to do it yourself. Tracking your transactions will be essential because every time you trade there is usually a profit or loss associated with each transaction.
Binocs is a crypto portfolio management that is designed to allow cryptocurrency users to keep track of the performance of their entire portfolio. The platform also has various tools and graphs that display statistics about the entire cryptocurrency market on a single screen.