Looking to invest in cryptocurrency ? Not sure how and where to get started ? Then we can help. New Zealand investment has all the information and help you will ever need to start investing in cryptocurrency. Get started with the beginners guide to investing in cryptocurrency.
Check out some of the best types of crypto investment in NZ : Cryptocurrency Types
Check out the main advantages with cryptocurrency in NZ : Cryptocurrency Advantages
Crypto Investing 101
Cryptocurrency is the new buzzword that is rocking the internet and social media. You open YouTube and the first ad you see is from a cryptocurrency exchange suggesting you buy some Bitcoin or Ethereum. Cryptocurrencies throughout the globe have forced various governments to seek some action, whether to legalize or ban it.
These digital currencies have gained wide popularity after some celebrities and billionaires like Elon Musk openly endorsed them. But what is a cryptocurrency? What is the technology behind it? And how and where can you buy cryptocurrencies in New Zealand?
Cryptocurrency is a virtual currency (not present in physical form like currency notes) that are decentralized and are free from any regulatory body. The term ‘crypto’ has been derived from the word cryptography which means to send or receive information in a coded or encrypted format.
Main Types of Cryptocurrency
Bitcoin (BTC)- Bitcoin is one of the most popular, most trusted and oldest cryptocurrencies. The advent of cryptocurrency is also credited to Bitcoin. Bitcoin was developed by a person whose pseudonym is Satoshi Nakamoto. The bitcoin that was valued at $0 in 2009 had recently reached its peak when it was trading at $68,000. Its current market cap is $741.62B.
Ethereum (ETH)-Ethereum is the 2nd most popular cryptocurrency in New Zealand and the world with the current value of $ 2,638.86 and it claims itself as the ‘world’s programmable blockchain’. Like other crypto coins, it is also based on Defi (Decentralized Finance). Its current market cap is $315.74B.
Tether (USDT)- Tether was launched in 2014 and currently it has become the 3rd most popular cryptocurrency. It is popular and highly traded because of a special reason i.e. it comes under the category of Stable Coins. These stable coins are considered amongst the safest of cryptocurrencies because they are backed by fiat currencies like the US Dollar. The cryptocurrency prices remain quite stable, unlike Bitcoin. The current market cap of Tether is $79.73B.
Advantages Of Cryptocurrency
Cryptocurrencies are seen as an advantageous alternative to conventional fiat currencies. The following are the main benefits of cryptocurrencies:-
Have you observed that even a small transaction that you perform in your bank can cost you a large service charge? Sometimes this service charge can reduce the real value of the transactions. But cryptocurrencies are generally free of any such service charges. Yes, the brokers or exchanges charge a minimal fee, but most of the time the fees are so less that it appears to be negligible.
Many newer cryptocurrencies boast to transfer money at a faster speed than our traditional financial system. The main reason for this enhanced speed is the use of a high level of computers and lesser protocols.
Decentralized & Secure:
Since no one central authority regulates these assets and all transactions are being recorded in a public ledger, cryptos are secure.
High Liquidity :
Unlike some other assets, cryptocurrencies are highly liquid and you can get immediate buyers from them without any negotiation. Cryptocurrency prices can sometimes range in thousands of dollars in a single day, providing an opportunity for traders to earn good profits.
In 2022, one of the fundamental concerns of us as a citizen is our privacy. We all know how Meta (formerly Facebook) is losing users just because of privacy concerns. So, one of the main advantages of these digital currencies is privacy. Transactions on these platforms are performed anonymously, of course, the user users can see the records of your transaction but no one can identify you as only your wallet address can be seen.
Risk With Cryptocurrency
Crypto markets not only offer high rewards as discussed above but can also be a risky asset class and act as a double-edged sword.
As crypto markets are considered highly liquid market, this liquidity make these cryptocurrency prices very volatile. So, a BTC that was traded at some particular price in the morning, can plummet or rise in a range of thousands of dollars. The fact that Elon Musk’s single tweet made the Dogecoin plummet and lose value is enough to tell you its high volatility.
Since, cryptocurrencies are decentralized assets, which appears as an advantage, this can sometimes be a problem as if a crime is committed it becomes difficult to take some spontaneous action. No one knows whom to complain and look up to.
There’s no doubt that crypto exchanges charge a minimal fee but at the same time many governments including the New Zealand government have started taxing them despite not accepting it as a legal tender. Cryptos can also be used for money laundering & tax invasion evasion which is why the authorities look at them with suspicion.
Just like your Twitter or Instagram account, your online crypto wallet can also be hacked. Some infamous crypto miners are known for hacking wallets and withdrawing your hard-earned money. Hence some caution is necessary.
How To Buy Crypto In New Zealand
To participate in the crypto markets you need a digital wallet. This digital wallet has a unique address that can be used in performing buying and selling transactions. There are hundreds of platforms that are offering free wallets to their new customers, most of whom are even offering free mock trading and investment tutorials.
Simple Steps to Buy Cryptocurrency:-
Choose a Wallet- You can choose any wallet depending on your goals and objectives. For instance, if you want to trade on multiple currencies then you should choose a platform that has many listed currencies. Or you can choose any platform based on the transaction fees. Also, there can be some variation in the cryptocurrency prices on different platforms depending upon their charges.
Sign Up & Do KYC- Once you choose a wallet, the next step is to visit their website or download their application from the AppStore. Now, simply sign up and fill in your details and now you are done. Some of the platforms also want your KYC verification, which requires only ID proof and can be finished in 2 minutes.
Transfer Money & Invest- The final step is to simply add money and buy your favorite currency from the crypto market. You can simply use your bank account or your credit card by just filling in your card details to add money to the wallet.
Even though you can use any of the available wallets, it is suggested that you use the Exodus wallet. Exodus wallet is one of the most popular wallets in the crypto market and lists 155+ cryptocurrencies including Bitcoin, Ethereum& Tether. You can also get 24 * 7 support and community help in the Exodus wallet. It accepts both bank deposits & credit cards.
The Future of Cryptocurrencies
You must be aware of the fact that despite the significant popularity of cryptocurrencies where millions of people are investing and trading on daily basis, there is huge uncertainty about its future.
In nearly all countries, cryptos are not considered as a legal tender which means any investment that you make is at your own risk, unlike stock exchanges where companies can get fined or suspended if they perform some suspicious activity.
Yes, a positive step that our New Zealand government and some other governments have taken is to tax cryptocurrency as a form of property, which is regarded by many cryptocurrency enthusiasts as the first step towards legalizing.
So, it is simply advised to you to make an informed decision and not speculate. Also, try to diversify your investments in multiple asset classes like equity, mutual funds, emergency funds, property syndication &cryptos. Happy investing!