A new revolution in how businesses and creators interact with customers is being sparked by Web3. NFTs, the Metaverse, cryptocurrency, and DeFi provide fresh business prospects across a range of industries. As we all know, marketing plays a significant influence in how well businesses provide their consumers with services, goods, and experiences.
What is Web3 Marketing?
With the growth of the World Wide Web, marketing patterns have also changed. In order to better comprehend the possibilities presented by web3 and what the marketing landscape may look like in the future, let’s quickly review how marketing operated in web1 and web2.
Marketing in Web1 and Web2
Digital marketing was in its infancy at the dawn of the internet era, often known as web1. Although some users owned their own static web sites, the majority were consumers. Gathering email addresses and using email marketing as a means of advertising was the only method to promote online.
Digital marketing surged with the emergence of social media and search engines as we entered the web2 age. Marketers may now gather information from these internet platforms and utilize it to develop highly targeted marketing campaigns and gain a deeper understanding of their target audiences. Geo-targeted advertisements, influencer marketing, SEO, mobile ads, and many other types of ads have become increasingly popular in web2.
The New Era of Marketing Is Web3
We now come to web3 marketing. In contrast to web2, where the emphasis was on improving the front end, web3 is more concerned with back end innovation. It is common knowledge in web2 that the platforms we use control the data we provide them with in exchange for access to their services. However, with web3, individuals rather than private businesses may now own and regulate this data. Instead than being housed on centralized platforms like Google and Facebook, the data is kept on a dispersed network that is owned by no one.
Marketers will be significantly impacted by data privacy since they will now need to devote more time to determining what issues matter to customers most and creating communities around them. Since “community marketing” is becoming more and more popular, you will hear a lot of web3 businesses and initiatives stress the value of community.
This is not to imply that web2 marketing strategies will disappear; they will still be used, only in conjunction with web3 innovations like NFTs and the Metaverse. These changes will help businesses build devoted groups that can serve as brand ambassadors.
Web3 is particularly effective for content producers since they will finally have complete control over their material and income rather than being at the whim of the platforms they utilize.
Web3 Marketing Strategies
NFTs and the Metaverse are the two main components of web3 marketing. How can you leverage the Metaverse, one of the industries that is now growing at a rapid rate, to strengthen your marketing initiatives, increase brand recognition, and grow your clientele?
Let’s look at a few web3 marketing strategies you might implement in your campaign.
The Metaverse’s 3D billboards
Due to the fact that you are not constrained by geography, metaverse marketing enables you to communicate with a global audience from anywhere in the globe. Your advertisement will be visible to everyone browsing the busiest virtual environments, including Decentraland, Voxels, and Somnium Space.
Businesses looking to promote in the metaverse can take use of numerous services provided by Metaverse Residents. One choice is to display your own specially created advertisement on a 3D billboard in a prime area in Decentraland. Due to the interface’s high degree of simplicity and intuitiveness, which serves as a bridge between web2 and web3, businesses may accomplish this without knowing any coding or web3 concepts. In real life, this functions similarly to conventional roadside billboards.
Metaverse’s Virtual Events
Another way to promote your company in the Metaverse is to host an event in a computer-generated structure. In the Metaverse, you may host live video streams, prerecorded videos, artwork displays, audio playback, communicate with your visitors in real time, and more!
Hosting an event is the ideal method to draw both devoted Metaverse users and new consumers who are eager to learn more. The best thing is that you don’t have to construct your own location, which calls for technical expertise, takes a lot of time, and entails purchasing your own virtual property, which is sometimes extremely expensive.
Hosting a virtual event offers a variety of creative opportunities, from selling NFT tickets to developing interactive experiences and rewarding people for taking part.
Sell NFT-Gated Access
The key to innovation and success in web3 marketing is the combination of NFTs and the Metaverse. NFTs work as a creative channel that may assist companies and artists in growing their online product lines and giving existing or potential customers additional interesting ways to connect with the business. As a result, a thriving community will grow around your business, which is very much in line with the idea of community marketing.
This may entail offering a loyalty program based on NFTs or selling access to your premium content. NFT holders get access to unique benefits including one-time releases, membership, and even monetary awards for taking part in specific events. The options really are unlimited.
By making digital assets that can be collected, exchanged, and sold, you may attract fans and collectors for your products and services. Customers may become fervent advocates at this level of connection, which is something that traditional marketing tactics have struggled to do.
Another choice is to reward your consumers for attending a Metaverse event by giving them a free NFT or even a POAP (Proof of Attendance Protocol) badge. POAPs are NFT badges that participants of Metaverse events get as identification of their attendance. Particularly for individuals who frequently attend Metaverse meetings and wish to keep a record of their virtual experiences, each badge is completely unique and makes a wonderful collection.
Make gaming-related experiences
The new Metaverse marketing strategy of offering interactive and immersive experiences is consistent with the web3 sector. Although it may provide a significant ROI over time, it does call for an initial increase in marketing spending, a strong creative team, and a web3-savvy tech team. If you can provide your consumers a unique experience, the buzz it will generate will be worthwhile.
Gucci’s partnership with Roblox is a prime illustration of this. Together, they developed a Gucci-themed setting where users could spend real money on in-game goods. Depending on the virtual world, budget, and business objectives, there are several approaches to use in order to create a distinctive experience.
Every day, the way we interact with businesses changes. The moment is right for marketers to use this new technology and participate in innovation as Web3 is rapidly expanding!
With the increase in popularity that NFTs have attained, there has also been a noticeable rise in the variety of NFT marketplaces. Some of them provide basic trading services, while others focus on particular niches. In this article, we’ll discuss the Binance NFT marketplace, a centralized platform that is a part of the biggest crypto-related ecosystem in the world.
The majority of people who have heard of Binance probably relate it to the cryptocurrency exchange. The fact that Binance does have a fully developed ecosystem centered around all things crypto is less well known, though. NFTs on Binance are also not an exception.
The Binance NFT market, however, is still a new endeavor, so it is unclear who it will best serve. Are there any unique features to take into account? On the platform, is it possible to create NFTs? Is it challenging to sell them?
What does Binance NFT Marketplace stand for?
Let’s start at the beginning and provide an explanation for the seemingly basic question, “What is the Binance NFT market, exactly?” before moving on.
Binance is a very well-known name in the cryptocurrency industry, as was mentioned in the introduction to the guide. The majority of people know it as a cryptocurrency and token exchange, and it’s one of the biggest—if not the biggest—on the market.
Additionally, the aforementioned exchange is connected to the Binance Wallet, which is owned by Binance. It’s a very well-liked location to keep and store your NFTs, which fits in flawlessly with the marketplace itself.
A centralized marketplace where you can buy, sell, and create various non-fungible tokens is the Binance NFT market. The final step, which involves creating NFTs, is still a little challenging, but we’ll get there eventually.
Observe the word “centralized.” Because it has successfully completed all “Know Your Customers” procedures, Binance provides its users with the opportunity to trade NFTs in a centralized manner, in contrast to many of its rival projects (in other words, having verified your identity). Additionally, there are some advantages connected with this very fact.
To begin with, Binance has the ability to remove a sizable number of malicious players from the game. This is due to the fact that the trading processes aren’t completely anonymous; before using a particular NFT’s marketplace, every creator, buyer, and seller had to submit identification documents to Binance. In conclusion, your non-fungible trading experience should be significantly safer overall!
The Binance NFT market then benefits from some of the best fees and liquidity thanks to its centralized nature. Both of these factors are crucial for anyone who intends to trade NFTs for profit or who merely wants to avoid the expensive gas fees associated with Ethereum.
However, the Binance NFT market provides users with NFTs that are based on the Binance Smart Chain. When compared to Ethereum, these tokens’ minting is significantly more affordable, which is their main advantage. You could frequently mint a BSC NFT for just pennies.
In addition to other advantages, this makes it possible for people to create NFTs on a budget and serves as a very welcoming entry point into the world of NFT production and sales.
Later in the guide, we’ll discuss the fee and liquidity aspects, but there is one more thing to think about: the reputation that Binance has built up over the years and how that reputation translates to the NFT market side of the platform.
The respect and confidence of millions of users worldwide are due to Binance. This naturally applies to any other projects the business may be working on; if Binance is listed as the owner or operator of a service, you can assume that it is trustworthy as well. This undoubtedly applies to the Binance NFT market.
Even though it might be one of the more recent NFT markets, it has already drawn a number of big-name brands and influencers from around the world to develop their own, exclusive NFT drops for the platform. Using the Binance NFT market actually has advantages, which brings us to our next point.
What Advantages Come with Making Use of the Binance NFT Marketplace?
Each unique NFT market on the internet will have a variety of features that it offers to its users, as was mentioned in the introduction to this article.
Some offer fantastic royalties for subsequent sales. Others are specialized markets that only house a few NFTs and help their owners stand out more. What are the actual advantages of the Binance NFT market, then?
Actually, there are quite a few. Some of them, such as centralization, dependability, and general reputation in the cryptosphere, were covered above. However, there are also some elements that are unique to NFT.
Different Types of NFTs
You can find several different kinds of non-fungible token sale points in the Binance NFT market. This means that you won’t be constrained by, say, being able to instantly purchase just one NFT or place a timed auction bid on it.
Instead, Binance does provide fans of NFT with some exclusive events. These gatherings feature a variety of unique, limited-edition NFTs from some of the most well-known brands and artists worldwide. These high-end events give you the chance to purchase unique and limited-edition NFT art if you’re keen on owning some.
Additionally, the Binance NFT marketplace does contain a variety of Mystery Boxes. For those who are willing to buy them, they can offer a surprise element and contain some valuable and rare NFTs.
It’s important to note that the mystery box feature is exclusive to the NFT marketplace Binance. While some mystery boxes may be sold on other marketplaces, they aren’t enabled by those platforms and are instead distributed by lesser-known independent creators. An important thing to think about!
Many Features – One Account
High Liquidity, Low Transaction and Gas Fees
One of the most crucial factors when it comes to trading cryptocurrencies and NFTs is liquidity. It’s a metric that can demonstrate the accomplishments of particular coins and tokens as well as the trading platform (in this case, the marketplace) that houses them.
High liquidity, to put it simply, means that you won’t have any trouble trading and exchanging the aforementioned coins or tokens into cash (fiat money), and vice versa. It denotes that the project has support and that you won’t be left “holding the bag.”
So, if you’re concerned about liquidity, Binance has you covered. The most liquid statistics are found on the Binance NFT exchange! Again, this is a result of how well the exchange has become established within the sector.
Another important consideration when selecting an NFT marketplace is transaction fees. If they are too high, they can seriously reduce your profits or drive up the price of some NFTs beyond what was originally intended. Your transactions on the Binance NFT marketplace, however, will incur a 1% fee. That is so, so low!
However, royalties follow the same rules. You will receive 1% royalties from each subsequent sale of an NFT you create on Binance if it is sold and then sold a few more times.
However, NFT Binance gas fees are where you’ll most likely be able to save money. The majority of the current NFT markets deal with non-fungible tokens based on Ethereum. Even though these NFTs are the most common, they frequently have high minting costs. This is due to a combination of several additional factors as well as the Ethereum network’s congestion.
Many Features – One Account
It’s probably safe to say that the majority of NFT enthusiasts are also fans of cryptocurrencies in general, even though there are some who are only interested in the world of non-fungible tokens.
People who invested in the cryptocurrency market and are currently hoarding coins are referred to as “fans” in this context. Additionally, there are active day traders in this group.
If you’re interested in cryptocurrency, you’re probably already aware of the fact that there are numerous services and products you’ll need to subscribe to in order to enjoy yourself. At least if you don’t use the Binance NFT marketplace, this is the case.
You see, convenience is everything with Binance. This is due to the fact that the entire Binance ecosystem can be used with just one account!
To put it another way, if you opened an account on the Binance NFT exchange, you could use that same account to buy cryptocurrency on the company’s trading platform and to access their wallet.
One thing is certain: convenience is always appreciated, whether you’re a novice in the cryptocurrency world who isn’t all that interested in opening five different accounts on various crypto-related platforms or an experienced trader. And using Binance, you get exactly that!
How to Begin Using the Binance NFT Marketplace
You should, at the very least, have a basic understanding of the NFT Binance scene by this point. Let’s now delve a little deeper and examine how you ought to use the platform itself and make your initial NFT purchases.
Authentication and Registration
It is absolutely necessary for you to register on the platform in order to begin using the Binance NFT marketplace. Most likely, that wasn’t a surprise.
Start the registration process on Binance’s official website if you have never used the service before. The registration wizard will walk you through the entire process and is fairly self-explanatory.
However, you’ll also need to pass some KYC checks before you can begin using Binance’s services. Since Binance is a centralized cryptocurrency platform, they are required to verify their customers’ IDs to make sure there is no fraud going on.
However, if you already have a Binance account, you can skip this step. The Binance NFT marketplace and the exchange side of the platform share a single account, as was mentioned in the chapter above; if you have access to one, you have access to the other.
You will then need to deposit some fiat money and buy set-specific crypto coins after your account has been fully settled. Specifically, you must purchase BNB, BUSD, or Ether coins. This is due to the fact that when trading NFT on Binance, these three cryptocurrencies are the only ones that are accepted payment methods.
Purchasing NFTs
It’s actually quite easy to purchase actual NFTs on the Binance NFT marketplace, and the procedure is similar to any other online shopping you might be doing. However, there are a few different approaches you can take.
First of all, buying a select NFT right away is the quickest and easiest way to get one. Tokens with set prices can be used for this. In other words, this won’t be possible if you come across an NFT landing page and see the word “bid.”
However, fixed-price NFTs are among the most common, so you don’t need to worry about being limited in your options. Once you have decided on the ideal non-fungible token for you, all you need to do is click the sizable “Buy Now” button and make the full payment.
NFT auctions are up next. You can place a bid on these particular tokens to compete with other NFT enthusiasts. When the time allotted for the auction expires, the highest bidder, just like in conventional auctions, will be given the NFT.
However, the actual bidding process is simple. You must first locate a token that you want to bid on. You must select “Place a Bid” once you are on the page.
You must enter the amount of cryptocurrency you wish to bid on the relevant NFT in the pop-up window that appears. You’ll be placing your bids with a different cryptocurrency depending on the token, so keep that in mind!
All bids also have a minimum markup that must be included. You can submit a bid by either increasing the markup by the minimum amount or entering your own number (which, of course, must be higher than the minimum markup).
All that’s left to do is wait after looking over all the numbers and determining that the bid amount is acceptable to you. Just click “Place a Bid” one more time after that.
For the duration of the auction or until a higher bid is placed on the NFT, the amount of cryptocurrency you have bid will be frozen on your account.
Finally, you can purchase Mystery Boxes, which are exclusive to the Binance NFT market and are special NFT events. Mystery Boxes have set prices. Additionally, you have the option to buy them in bulk. To do this, choose a box, specify the number of boxes you want to buy, and place an order. The boxes will then appear in your NFT inventory where you can choose to open them or add them to your collection.
Each Mystery Box has a predetermined chance of containing NFTs of varying rarities. The landing pages for each box contain the specific percentage.
Your order is non-refundable once you’ve placed one, so you can’t return it and get your money back. However, they can also be opened to reveal a random NFT, which can then be sold, or they can be sold to other people.
All things considered, there are many different ways to purchase NFT on Binance. Each approach will work for a different person, so it’s wonderful to have the option to select the one that will work the best for you.
Selling the NFTs
For the sake of consistency and since we’ll discuss the NFT creation process in a moment, let’s assume that you want to sell an NFT that you already own.
Users can easily sell their NFTs on the Binance NFT marketplace. Go to your “NFT Asset” section and select the collection page to get started. Select the NFT that you want to sell from this list.
You must then list the NFT on the market after making your decision. This is where you can choose all of the particular specifications for your listing.
First, decide what kind of sale you want to list. Either set up a timed auction or sell your NFT for a set price. If you select the first option, you will be prompted to set a price for your NFT and select the cryptocurrency you want to be paid in.
However, if you select the auction option, you will then be prompted to enter the lowest bid that a potential buyer can place on your NFT.
After completing the aforementioned steps, you will need to select a time frame for how long your NFT will be listed on the Binance NFT marketplace. Up to a week can pass from your listing during this time.
After that, you must create a category for your tokens and write a description to aid prospective buyers in recognizing and learning more about the NFT that you are offering for sale. You’ll be able to submit your NFT so that it can be listed once all of that is finished!
A team at Binance that has been assigned to check the listing process is required to do so.
Depending on the time you submit your NFT and the quantity of tokens being submitted for verification, this verification typically takes up to 8 hours.
All done! The token will be available for everyone to browse, view, and buy (or bid on) once your NFT listing has been verified by Binance.
Making an NFT
Although it might seem counterintuitive, I left the discussion of the NFT creation process until the end of our guide. This is due to the fact that, as of the date this article was written, individuals need to be invited to the Binance NFT marketplace in order to mint their own tokens.
Even though Binance says that everyone will soon be able to use the service, minting BEP-based NFTs is still restricted. Despite this, it is still wise to become familiar with the creation process beforehand so that you can quickly and easily create your own NFT once it becomes available.
You must visit the Binance NFT market and click the “Create” button in the top-right corner of the screen as your first action. After doing so, a prompt asking whether you want to create an image, an audio file, or a video will appear.
You must also choose whether to issue a single NFT or a series of NFTs at this point. For those who wish to mint a large number of non-fungible tokens, the latter choice will be particularly noteworthy.
The next step is to upload your file, give it a name, and add a description. Make sure you have enough BNB to cover the minting fee once you’ve completed all of those steps because you’ll be able to see it at the bottom of the page. The BNB fee, however, should be considerably less than Ether’s gas fees (it is currently 0,005 BNB).
You can locate your newly created NFT in the “Collection” tab of your profile after the minting process is finished and you are shown the congrats pop-up. You can view the token’s history as well as some additional information right here.
Even though this has already been covered in the tutorial, it’s important to note that the Binance NFT marketplace offers a 1% royalty on any subsequent sales in which your NFT may take part. To put it another way, you will always get 1% of whatever someone else sells of your NFT.
The best part about this is that you can take advantage of this 1% royalty without even having created a non-fungible token. Instead, you will be qualified to receive the same 1% royalty if you deposit (bring in) any kind of external non-fungible token into the Binance NFT marketplace!
All things considered, Binance streamlines and expedites the creation of NFTs. Even if you’ve never minted an NFT or have no prior experience with cryptocurrencies in general, the entire procedure ought to be simple and quick, with no confusion or frustration.
Be aware that the Collection section of your Binance NFT marketplace profile is where you can find all of your NFTs, including those you’ve created and acquired as well. You’ll be able to easily manage your tokens from here!
Since NFTs came to the attention of the public around the summer of last year, a false undercurrent has prevented them from becoming widely accepted. Stories of art theft are common, which harms the industry’s reputation in the public and provides a platform for discontent to grow.
Truth be told, though, the questionable employment of NFTs speaks more to humans than it does to the underlying technology. Before NFTs, it was challenging for digital artists to succeed in a harsh environment. Basically made more difficult by people’s propensity to “right click and save” every image they came across online.
With the introduction of NFTs, a fresh method of commercializing digital art emerged. However, many undesirables started to do the unpardonable before they even knew about the technology, searching websites like DeviantArt for works that weren’t their own in an effort to make a few Ether in the developing Web3 economy.
Since then, the business has grown a little, and good safety mechanisms like DeviantArt’s Protect Protocol are now helping to protect artists online. But the anger brought forth by the widespread art theft persists, and many people are afraid of the technology that made it all possible.
NFTs Provide an additional layer of security for Creators
Despite this, artists may utilize NFTs as a force for good to safeguard their creations from these rapacious tycoons. In essence, NFTs are entries in a secure, unhackable digital ledger, each with a distinct, unchangeable data print that is date-stamped and signed by a different wallet address. As a result, NFTs can offer undeniable evidence of the NFT’s creation date and author information. As a result, should an artist mint before making their work public, they now have the ability to demonstrate when it first appeared online.
These days, people may easily and cheaply mint products to quick and efficient chains thanks to Web3 systems like OpenSea. Consequently, this makes it possible for artists to get a start on illegal activity and demonstrate with absolute certainty that they have a work’s very first iteration permanently stored on the blockchain.
So, instead of hating the NFT for the harm done in its name, digital artists everywhere should embrace the technology and enable it to offer an additional layer of protection to their work.
The basics need to be addressed: what are NFTs employed for in the first place? It’s not surprising that many people still identify NFTs with financial speculating given the amount of high-value NFT sales that have continued to dominate the market despite the current weak market. The easiest approach to explain why individuals ever purchase NFTs in the first place seems to be to include them into this category.
However, NFTs are far more than that.
The need to educate more people with the technology involved in Web3 is one of the reasons brands are flocked to it. Of course, that includes NFTs, which in recent years have essentially provided creatives with a means of completely freeing themselves from intermediaries in terms of generating income from their work. Here is a rundown of some of the top real-world applications for NFTs and how they can make your life a little more convenient in the future.
Gaming
NFT integration offers players a method to maintain all of their achievements and assets across all of their games, independent of platform, whereas most modern games demand you to interact digitally with some sort of screen or device. But for the time being, this still has to be understood and put into practice by big-name game creators.
So how will this work perfectly? Players will be able to keep and genuinely own all of their in-game awards, assets, and collectibles if a game integrates blockchain technology into its range of services. A player’s in-game accomplishments are preserved through many generations of consoles by systems like PlayStation and Xbox, but the same cannot be true for any in-game trinkets or skins they may acquire. The same is true for consoles that were released before the internet revolution that swept the seventh generation of gaming consoles.
Ownership by the player, usefulness, interoperability, and transferability. In a previous interview with nft now, Michael Rubinelli, the president of Wax’s gaming division, stated that these are all things that consumers have demonstrated a desire for for thirty years. “We’ll demonstrate how it functions for [players and developers. Because they failed to adapt free-to-play, it’s 2010 all over again. The firmly established groups have fought every change to a business strategy or platform because they lack operational knowledge.
Rubinelli thinks Wax is well-positioned to serve as an example for other participants in the blockchain gaming market given its engagement in that industry. “We’re creating a north star that demonstrates to the rest of the world how to get player ownership, NFT usefulness, and participation. We’re bringing to light participation options for our economy that have never been legalized for gaming, he added.
Real estate
NFTs didn’t merely open up the market for virtual properties. They might also be advantageous for the IRL real estate market. It also makes total sense. After all, most people’s homes wind up being the only significant financial commitment they ever make. How do NFTs fit into this long-standing sector, then?
Let’s examine precedent first. The first real estate NFT sale was made in 2017 when TechCrunch founder Michael Arrington bought a blockchain-backed apartment on Propy. Real estate NFTs aren’t a completely new concept. He later auctioned off this property on the blockchain in 2021 for 36 ETH, which at the time was worth around $93,000.
This has major implications for the real estate sector. And it mostly comes down to how NFTs can include smart contracts, which might possibly shorten the often months-long process of purchasing and selling real estate. It could only be a matter of time until this new comfortable reality becomes the standard in the real estate industry, given the successful transactions enabled by Propy.
Other parties, like Roofstock, want to make it easier for more forward-thinking homebuyers to purchase NFT real estate. They were able to effectively arrange the one-click sale of a single-family rental home to an investor in October 2022. Real estate investor Adam Slipakoff claimed in a news release shared with nft today that he was able to purchase a fully title-insured, rent-ready property with just one click rather than having to wait months for underwriting, appraisals, title searches, and deed preparation. However, how does this operate? A potential homeowner must first mint a membership token once, after which Roofstock gives these users the ability to complete real estate transactions with only one click.
NFTs in the real estate sector have the potential to increase the number of individuals who see buying a property as a realistic goal. In an interview with nft today, Roofstock’s Web3 chief Sanjay Raghavan stated, “With DeFi, we have the possibility to offer less expensive and quicker asset-based financing choices [to consumers]. “We envisage NFT-powered real estate transactions becoming increasingly relevant for investment properties due to speedier and less expensive purchase and financing possibilities.”
Permanent Records
In a sense, one of the most significant obstacles to establishing the legitimacy of assets with unchangeable lifetime is being overcome by NFTs. Which of these is the best? Sacred Tokens (SBTs). These are a brand-new class of NFTs that Vitalik Buterin, a co-founder of Ethereum, has suggested. They are intended to serve as an all-inclusive toolkit for internet users to maintain and safeguard their identity. So how does this technology that seems to be built for the digital age fit into actual NFT use cases?
SBTs have the potential to significantly alter everyone’s online and offline life if they go live as planned. Users have access to a variety of utilities through SBTs, including the capacity to mint NFTs of their academic records, work histories, medical information, and more. SBTs, on the other hand, cannot be traded, setting them apart from standard NFTs. SBTs are also intended to be immutable, permanent records so that everyone may continue to be connected to both their physical and digital life.
The fact that SBTs are totally opt-in experiences is arguably their most promising feature. To put it another way, you don’t need to have every piece of newly created information associated with your physical identity (or stored away where you might lose it). Users won’t be required to mint every aspect of their life and successes into the blockchain, either. Just the components you wish to keep.
Government documents
One enduring problem persists in today’s largely cashless culture. the trouble that results from losing your wallet. Not your cryptocurrency wallet—although that would certainly hurt just as much, if not more—but your real physical wallet. Debit cards, credit cards, and priceless Polaroid pictures are all missing. Your driver’s license, though, can be the loss that hurts the most in this situation.
But what if replacing it didn’t have to be so difficult? That’s exactly what motivated the Romanian government to create an official NFT market. The Romanian government intends to dramatically reduce the amount of paperwork required to replace or update these papers by allowing citizens to mint their official state documents and ID cards into the blockchain as an NFT. Although it’s not the most fascinating NFT application out there, it could undoubtedly simplify things considerably. The ability to simplify society as a whole acquires credibility when you combine that with the possibility of minting property titles as NFTs.
Voting
Unfortunately, despite the significant advancements in electoral vote recording technology, fraud continues to be a major threat to these systems. Election-related concerns aren’t the biggest issue facing the world right now, but massive voting system fraud is still a possibility. The cause? The shortcomings and vulnerabilities of the electronic voting systems that democratic nations rely on have been extensively discussed online ever since these pieces of equipment first gained notoriety.
However, the idea of conducting elections digitally may not be wholly absurd. Introducing NFTs and the blockchain, of course. Votes may be registered on the blockchain, which ensures that they cannot be altered and will be kept on file eternally.
One Filipino person saw the potential of this and established an online voting system that was supported by the blockchain and, of course, NFTs in time for the 2022 elections in the Philippines. The problem? He was a young man of twelve. However, he could have had a point. His online voting system produced results that were consistent with official pre-election polls and even with the actual outcomes of the Philippine election in 2022.
A cryptocurrency exchange is an online marketplace where you may buy and sell digital money. Exchanges can be used to swap one cryptocurrency for another, such as exchanging Bitcoin for Litecoin, or to purchase cryptocurrency using fiat money like the US dollar. Dollar. Exchanges reflect current market values of the cryptocurrencies they provide. Additionally, you may exchange cryptocurrency for dollars. To leave as cash within your account (if you wish to trade back into cryptocurrency later) or withdraw to your standard bank account, you can use a dollar or another currency on an exchange.
Tyrone Ross, a financial adviser and the CEO of Onramp Invest, a cryptocurrency investing platform for financial advisors, claims that there isn’t a single cryptocurrency exchange that’s suitable for every user. Instead, he advises considering your personal cryptocurrency interests and selecting an exchange that supports them. For instance, you could be searching for a certain currency or wish to keep studying as you begin investing in cryptocurrencies.
“Are you looking for something similar to Casa, which handles a lot of the work for me and eliminates the need for a public and private key? Will I visit Gemini in order to purchase this peculiar currency they have that I want? Or am I going to Coinbase because it has such awesome features that let me learn about and earn cryptocurrency? ”
What to Consider Before an Exchange
Accessibility
Due to local or international legislation, you might not be able to purchase or sell cryptocurrency where you are due to specific exchanges. Some nations, like China, have outright forbidden its citizens from using cryptocurrency exchanges.
There is a lot of regulatory ambiguity around cryptocurrencies in the US, and several states have implemented their own rules. For instance, New York only permits licensed businesses to provide specific recognized currencies and needs exchanges to get a BitLicense before they can operate within the state.
Although most other states don’t have laws as rigorous as those in New York, several of them do or are attempting to. The National Conference of State Legislators estimates that 31 states will consider legislation relating to digital currencies during their legislative sessions in 2021.
On an exchange’s website or in the terms of service, you may frequently discover details regarding its geographical restrictions as well as associated accessibility aspects, including the national currencies it accepts.
Security
Your cryptocurrency assets are not safeguarded the same way that bank deposits or conventional investments are since cryptocurrencies are not backed by any centralized authority. Some exchanges, including Coinbase and Gemini, retain any funds in the United States. dollars that you have in FDIC-insured bank accounts with them. However, the FDIC does not cover bitcoin holdings.
Some exchanges provide insurance plans to shield customers’ digital currency from fraud or hacking in order to secure their crypto. For instance, Coinbase has a $255 million insurance coverage. Therefore, account holders would be safeguarded if Coinbase’s reserves were compromised and any cryptocurrency up to $255 million was stolen. Others, like Kraken, depend more on their security procedures than insurance plans to safeguard their consumers.
The security of the exchange should be your top concern whether you want to retain your cryptocurrency holdings there or merely have them there for a short period of time before transferring them into your own wallet. Consider, for instance, how much of the exchange’s assets are kept offline in hard storage.
Given that rising cryptocurrency values make them more valuable targets for potential criminals, this becomes even more crucial. 2020 saw a total of 28 assaults against cryptocurrency exchanges, the biggest of which saw the theft of more than $200 million in bitcoin assets from KuCoin, a Singapore-based exchange.
Look at the exchange’s offline asset retention rates. While it is necessary for exchanges to keep a portion of their crypto active in order to allow trades, it is wise to keep the bulk of holdings offline or in cold storage, where access by hackers is more difficult. For instance, Coinbase claims that just 2% of user assets are regularly exchanged, with the remaining 98% being stored offline. The combination of that storage and its $255 million insurance coverage gives you even more assurance that your crypto assets will be protected in the event of a hack.
Additionally, you may search for standard online security features like two-factor authentication that you may already be familiar with from other sites.
This means that each time you log in, in addition to your username and password, you will also need to authenticate your identity in some other way, such as by entering a code you get by text message.
Generally speaking, you might feel safer staying with more well-known exchangers with a sizable client base. Doing business with smaller or younger exchanges that don’t have clear web descriptions of their security precautions and products may put you at greater danger.
According to Douglas Boneparth, a financial counselor and the head of Bone Fide Wealth in New York, “Size counts here.” He mentions Coinbase, which recently made its Nasdaq stock market debut. There are advantages and disadvantages to it, but now that financial information is publicly available, you can genuinely assess the company’s health, which is crucial when deciding whether to use an exchange or make an investment in any business or purchase their goods or services.
Fees
Another item to think about is fees, but you shouldn’t automatically disregard an exchange because of a hefty cost structure. Uinta Crypto Consulting, a course for novice investors to learn about cryptocurrency, was founded by Spencer Montgomery. Montgomery claims that the easier they make it for you to acquire it, the more the charge that you’re going to be paying. The extra safeguards and insurance that the larger, more well-known exchanges offer can potentially make up for higher rates.
Although they frequently take a cut of your deal, exchange fees might be a predetermined amount. Some exchanges, like Cash App, have variable fees dependent on the volatility of the market. Depending on whether you’re the buyer or the seller, fees are frequently assessed each transaction. Additionally, the costs might vary based on the currencies you trade. Before giving over your money, be sure you know exactly how and when an exchange intends to charge you for your cryptocurrency transactions.
Liquidity
The exchange you pick should have significant transaction volume if you intend to purchase, sell, or trade your cryptocurrency in order to guarantee that your holdings are comparatively liquid and that you may sell them whenever you want. Again, in this case, size may be important. The exchanges with the highest trade volumes are sometimes the ones that are most well-known.
According to Montgomery, you have a better chance of purchasing or disposing of the cryptocurrency you own at the best price when a lot of deals are taking place inside a specific exchange at any one moment. Since cryptocurrency values fluctuate rapidly, using an exchange with low transaction volume may result in you paying more than you would on exchanges with greater trade volumes.
Let’s take a scenario where you decide to purchase Bitcoin when its price drops to below $32,000. If your purchase doesn’t really go through until the price has gone back up, if you’re on an exchange with a low transaction volume, you can actually wind up paying a different amount than you believe.
A cryptocurrency price tracking website called CoinMarketCap continuously monitors the number of trades on the hundreds of active exchanges. At the moment, it counts Binance, Coinbase, and Huobi as the top three exchanges globally in terms of volume.
Coins offered
There are dozens of cryptocurrencies, but not every exchange supports them all.
Any exchange you examine is likely to have a popular coin you’re interested in, such as Bitcoin or Ethereum. However, you might need to do a little more research before choosing younger altcoins, currencies with a little market size, or meme coins.
Just keep in mind that these coins, on top of the already extremely speculative, more established cryptocurrencies, are frequently much riskier bets. Because of this, many professionals advise sticking with well-known currencies like Bitcoin and Ethereum. If you’re thinking about purchasing a cryptocurrency on an exchange, only trade in money you’re willing to lose.
Educational tools
The chance to learn more about various currencies, digital assets, and blockchain technology, according to Ross, is a top consideration for crypto newbies when selecting an exchange.
“What do they do to make sure you’re always being updated in terms of your education?” He enquires.
Through its Coinbase Earn program, for instance, Coinbase compensates users for learning about new coins. Coinbase will provide you with a tiny percentage of the cryptocurrency, which you may subsequently keep or convert to anything else, in return for viewing videos and doing tests about various coins. Others, like Gemini’s Cryptopedia or Binance Academy from Binance, provide online courses and articles to assist you in learning about the crypto markets, past, and present.
Storage
A contentious issue among supporters of cryptocurrencies is storage. Many adhere to the maxim “not your coins, not your keys,” or the idea that you should have the public and private keys connected with your cryptocurrency holdings personally rather than leaving them in your account for the exchange to maintain safekeeping.
However, as a newbie, a nice option would be an exchange that lets you retain your cryptocurrency in your online account. You could decide to retain your cryptocurrency in your own wallet later, once you’ve learned more about storage possibilities or expanded your holdings. Ross, however, advises against using exchangers like PayPal that only let you store on their network.
Recently, Robinhood made the announcement that it will develop a cryptocurrency wallet so users could move their money off-platform.
Ross advises moving your money to a different location whenever you have some experience. If you select an exchange without that option, you could find yourself in a bind if you later decide that you want to move your coins off that exchange—perhaps after learning more about storage choices, you want to retain your holdings in your own cold wallet, for example.
Tax information
Reporting cryptocurrency can make your tax return much more confusing, as if taxes weren’t hard enough anyway. It will be crucial for consumers to ensure that their personal tax status is current as the tax law around crypto assets changes, according to Ross.
Any cryptocurrency trades you make must be reported as capital gains on your tax return. Therefore, you must be aware of the worth of your cryptocurrency both when you buy it with dollars and when you sell it.
A Form 1099-B recording your cost basis, profits, and losses is provided by Robinhood since you can only transact on its platform; this is not the case on other conventional exchanges.
“They don’t offer you that form when you use cryptocurrency exchanges like Binance, Kraken, CoinBase, etc.,” claims Shehan Chandrasekera, CPA, head of tax strategy at CoinTracker.io, a provider of tax software for the cryptocurrency industry. This is so that exchanges that let you move your assets off of their platform can’t keep track of every transaction you make in your own wallet or on other exchanges. When consumers need to utilize a program to reconcile their full picture, gather the data, and submit their taxes, that’s when things get complicated.
For NFTs, several individuals have discovered innovative application cases. Digital art is the most well-known, and most of us have heard of it at this point. The first professions to be linked to NFTs were digital artists.
You could have assumed that NFTs have little to offer you if you are the kind of person who suffered in art school or who, for the love of God, cannot draw a cup on a table without it appearing like a horse. You’re mistaken, though.
Since its development, NFTs have been applied in a wide variety of contexts, demonstrating that anybody may find employment in this quickly expanding sector.
Gaming NFTs
After art NFTs, gaming NFTs are the most common type of NFT. These NFTs are a significant component of the web3 gaming ecology, although they don’t differ all that much from classic games. The key distinction is in how much power they provide you over the possession of virtual goods and the opportunity to make money while you play.
This could be the ideal way for gamers to enter the NFT ecosystem. The market for tradable in-game things is quite competitive, so if you have one of these special items, you might be able to sell it for a profit. Check out our post on the top free-to-play games if you’re not sure where to begin.
NFTs for Real-World Assets
One of the fundamental features of NFTs is proof-of-ownership. They are immutable, one-of-a-kind, and an ongoing evidence of ownership because of the blockchain on which they are based. As a result, the chain will always have records of who has had an object or who is now in possession of it.
Real-world asset ownership has always had a problem with proving ownership. Running through files and certificates over extended periods of time is frequently required to determine genuine ownership. However, with NFTs, it can be verified in a matter of minutes along with a history of prior owners and the price at which the asset was transferred.
The blockchain may be used to transfer these real-world assets by creating tokenized digital assets from them. Consider a tokenized house deed that is accessible to prospective buyers on the blockchain. Additionally, it may be used as a sales record where prospective purchasers could verify the expenses and prior owners of the property.
Due to current restrictions that govern some transactions, authorities haven’t demonstrated much support for this, yet it is a utility that will generally benefit people. Therefore, there is a possibility that it will receive greater attention in the future.
NFT Domains
Another intriguing use for blockchain technology is NFT domains. These domains are distinct from the conventional domains we are usually accustomed to. Domains are the names we type into our browsers while browsing the internet.
These addresses have a neat purpose, but they are capable of much more. Unfortunately, purchasing these addresses just grants you a permission to use them rather than an ownership interest. A small number of people have the authority to fully exploit them. But with NFT domains, everything is different.
This class of NFTs, which are based on the blockchain, provide users more power over their addresses rather than just acting as addresses. You may log in to many addresses instead of using your lengthy, convoluted wallet addresses, and even earn money and tokens.
The best thing is that this domain class’s popularity hasn’t yet peaked but will undoubtedly increase over the next years. Making domain names that you believe will be worthwhile for someone to pay for in a few years is one of the finest ways to use them. The Ethereum Name Service (ENS) is one of the greatest channels via which you may obtain one for yourself if you’re unsure of where to start.
Finance NFTs
Many individuals occasionally believe incorrectly that an NFT is solely comprised of digital goods. But in reality, everything that can be sent, accessed, and verified may be turned into an NFT.
One industry where NFT technologies are used in the real world is banking, particularly when loans are tokenized in the DeFi (Decentralized Finance) arena.
Users of finance NFTs can tokenize their loans and trade them on NFT exchanges. In addition, the NFT holder has the ability to decide the interest rates on the loans from which they would benefit during the loan’s term. This easily addresses the issue of loan migration across networks and does not impose network restrictions on users.
Last but not least, NFTs may be used in DeFi’s cover protocol as tokens for insurance to protect customers against losses or unforeseen catastrophes.
NFT Collectibles
Whether it be automobiles, watches, stamps, or paintings, people have always enjoyed collecting various items. NFT collectibles have become quite well-liked since collectors frequently concentrate on the rarity and distinctiveness of the items they own in their collections.
The fact that practically all NFTs are collectors makes the situation more interesting. NFT memorabilia have been more well-liked recently, particularly in the sports world. However, there are more factors at play than just the advantages of having an NFT.
NFTs often give their holders a more exciting experience. It serves as a method to demonstrate your ownership of the gathered object as well as a key to a private club or community.
The Bored Ape Yacht Club (BAYC) collection of NFTs is maybe the most well-known in the entire globe. Owners of the BAYC NFT benefit from exclusivity and practical advantages like invites to special events and parties. These unique NFTs are also in high demand, making them valuable investments and collectibles.
This can be the best course of action for you if you have the resources and the drive.
Music NFTs
One of the NFT ecosystem’s fastest-growing use cases is music. It’s a brand-new method to own a song or album, take pride in it, and earn royalties from sales. These NFTs also address a number of issues that musicians are now facing with regard to royalties and income creation. Musicians are frequently at the whim of powerful businesses that siphon off the majority of their earnings.
Links to the corresponding song’s or album’s visuals and audio files are included into the NFTs to create music NFTs, which are then made available for purchase. They are then offered for sale as individual songs, as part of a smaller collection, or as a full album that you can subsequently resell.
The music will still be accessible on services like Spotify or Apple Music even though you now have sole ownership of it. The finest NFT music markets are a good place to start if you’re unsure how to go.
A unique coin called ADA will be used to handle transactions on the Cardano blockchain platform.
While the Cardano platform can handle any type of transaction, its ultimate objective is to establish an ecosystem that enables smooth interoperability across various blockchains, or the “Internet of Blockchains.”
Let’s compare Cardano (ADA) to the other leading cryptocurrency competitors to see how it performs.
What exactly is Cardano?
The token that drives the Cardano network is called ADA, and Cardano is a blockchain. This resembles ether and the Ethereum blockchain in certain aspects.
Consider Bitcoin to be Crypto 1.0. It is essentially digital gold, however there are scalability problems with the technology. Then there is Ethereum, sometimes known as “Crypto 2.0.”
Cardano, a version 3.0 of Crypto, was introduced in 2017 with the intention of enhancing the capabilities that Ethereum initially lacked.
Cardano was established by Charles Hoskinson, who also co-founded Ethereum. Hoskinson’s disagreement with co-founder Vitalik Buterin in 2014 about whether the Ethereum project could be considered commercial led to a rift with the Ethereum team.
Hoskinson then introduced Cardano, a blockchain designed to be more sustainable, scalable, and interoperable than Bitcoin and Ethereum.
Henrik Gebbing, co-CEO and co-founder of Finoa, a digital asset custodian, described Cardano as “referred to by supporters as a ‘Ethereum killer,'” adding that “Cardano’s ongoing development is supported by the Cardano Foundation and the IOHK research institute, which engage in [resources and development] and peer review via a formal development model.”
The fact that Bitcoin and other well-known cryptocurrencies’ blockchain networks, which rely on proof-of-work consensus processes, waste a significant amount of energy is one of the main accusations leveled against them. Cardano offers a more resilient and scalable blockchain by using a proof of stake consensus process.
What Is ADA?
The money used by the Cardano platform is called ADA. Ada Lovelace, the first computer programmer and mathematician of the 19th century, is honored by having her name on Cardano’s coin.
ADA tokens are used by users to pay the platform’s transaction fees. In addition, it is distributed to the validators as payment for maintaining the proof of stake system.
How Does Cardano Operate?
A blockchain network needs a method of transaction verification to prevent double spending of tokens. Due to decentralization, no centralized organization, such as a bank, is in charge of carrying out the task.
Bitcoin and Ethereum 1.0 miners use computers to conduct proof-of-work consensus procedures, solve difficult equations, and add new data blocks to the blockchain in return for cryptocurrency This takes a lot of time and consumes a lot of power.
Cardano makes use of staking, a method in which network users deposit predetermined amounts of cryptocurrency in exchange for the opportunity to take part in blockchain operations.
According to Daniel Hill, president of Hill Wealth Strategies, “the [Cardano] procedure is meant to limit energy expenditure during the block creation process to a minimum.”
How to Purchase Cardano?
Not Cardano itself, but its alternative coin, ADA, is what you purchase. You may open an account with one of the top cryptocurrency exchanges in order to purchase ADA. The ADA can then be kept in a cryptocurrency wallet or on the network itself.
Where to Buy Cardano?
You may purchase ADA for the Cardano network from the majority of the leading cryptocurrency exchanges as it is one of the most widely used cryptocurrencies. Among the top companies selling ADA are Binance, Coinbase, Gemini, and Kraken.
How to Use Cardano
As with every cryptocurrency, ADA is usable. You may keep it as an investment, spend it on things, or trade it. Additionally, you may stake ADA to get extra tokens by covering transaction costs on the Cardano network. Pay attention to the wallet you use if you intend to store Cardano for a long time.
The Daedalus wallet [full node] and the Yoroi wallet [light node] are the two authorized Cardano wallets. Both wallets enable users vote in Project Catalyst, a fund that grants ADA to Cardano initiatives, as well as earn new Cardano by staking their holdings, according to Gebbing.
Gebbing said that even if they don’t directly utilize the ADA currency, institutions and developers may still leverage the Cardano network for their initiatives. The Atala Prism initiative, which aims to provide digital IDs to students all throughout Ethiopia and includes verified information about academic performance, is perhaps the most remarkable, he continued.
The Cardano ecosystem also hosts a number of DeFi and non-fungible token (NFT) initiatives. Decentralized exchange Sundaeswap (SUNDAE) and decentralized and trustless lending protocol Meld (MELD), to mention a couple, are examples of such initiatives.
Benefits of Cardano
Better for the environment. One of the most ecologically friendly blockchain systems is Cardano. Hoskinson asserted in a 2021 interview with Forbes that Cardano is 1.6 million times more energy-efficient than bitcoin.
Quicker transactions Compared to Bitcoin and Ethereum 1.0, often known as Classic Ethereum, Cardano processes transactions far more quickly. Cardano has a transaction processing speed of over 250 TPS compared to bitcoin’s 4.6 TPS and Ethereum 1.0’s 15–45 TPS range. The Cardano network is incredibly scalable as a result. The Ethereum network has since been upgraded to Ethereum 2.0 in order to solve previous scalability and security concerns.
Network with peer review. The Cardano team collaborates closely with academics to provide peer-reviewed research that serves as a roadmap for blockchain innovation. The fact that it is an open-source blockchain with peer review enables it to survive and develop independently of its parent company, according to Gebbing.
Drawbacks of Cardano
Catching up to more seasoned rivals. Cardano is working to improve the blockchain, but Ethereum has the advantage of having been around longer and seen higher developer adoption. In reality, a proof of stake methodology is one of Ethereum 2.0’s updates that may counteract a significant Cardano advantage.
Could have a hard time standing apart. Being noticed in the increasingly competitive bitcoin industry is difficult. There are many rivals in the same market, and it’s not meme-able, claimed Hill. For instance, Dogecoin demonstrated the potential growth of a cryptocurrency based only on a viral meme, something the more reserved Cardano brand lacks.
Why Cardano?
Thanks to its cutting-edge and green technology, Cardano’s supporters think it may rank among the top cryptocurrencies. Despite having a lot of research and resources behind it, Cardano is still a high-risk investment.
“ADA should be treated like any other cryptocurrency if you’re thinking about it. Don’t expect significant returns immediately at this time, and only invest what you can afford to lose, Hill said.
If you appreciate the concepts underlying Cardano, Gebbing advises starting with minimal deposits.
“It’s advised to gather experience as a user, experiment with a modest amount by transferring between wallets, staking on the network, and utilizing it to engage in governance, before investing in any blockchain’s token,” said Gebbing.
Make research. Cardano can make a good addition to your cryptocurrency portfolio if you agree with its view on blockchain technology.
2021 was a big year for cryptocurrency, with everything from laser eyes to record highs. If you’re one of the more than 10% of Americans who traded cryptocurrencies in the last year, you undoubtedly have questions about how your transactions and other cryptocurrency activities will affect your taxes.
Cryptocurrency has propelled many investors to the moon, but as they say, everything that rises must eventually fall. For cryptocurrency profits, taxes are the dark side of the moon. Fortunately, there are legitimate and intelligent methods to avoid your cryptocurrency taxes. How? Read on.
Hold on
What is the simplest approach to avoid cryptocurrency taxes? All you have to do is HODL. You must retain your cryptocurrency investment for at least a year before selling it in order to use this tax avoidance approach. If you do this, you will often be eligible for a long-term capital gains rate, which is lower than the rate you would pay on a short-term gain. Nowhere is hodling more profitable than in Germany, where cryptocurrency sales made after a year-long holding period are tax-free.
While US cryptocurrency investors benefit from a lower capital gains tax rate for assets held for more than a year, a 50% capital gains tax reduction is available in Australia. Depending on their individual or combined marital income, investors can pay reduced tax rates of 0%, 15%, or 20% here as contrasted to short-term profits, which are taxed at Federal Income Tax bracket rates and have a maximum tax CGT of 37%.
Utilize the tax-free thresholds
The British tax payers are fortunate. Every person is entitled to a free CGT allowance of up to £12,300 per year. Profits under €600 are tax-free in Germany, meanwhile.
Unfortunately, Australia does not offer such a deduction, but US investors do. If your year total income is less than $41,676, you won’t have to pay any capital gains tax, according to the IRS. The annual cap for married couples filing jointly is $83,351. The annual cap for the head of household is $55,801. Knowing your possible tax-free maximums can help you plan your crypto disposal strategy and, as a result, actively minimize your taxable position.
Incorporate losses into profits
You may benefit from cryptocurrency profits by deducting losses from other investments in the year you realize your profit, just like with any other investment. Accordingly, if you made $30,000 from selling Bitcoin but lost $30,000 from selling Ethereum, you would have broken even and wouldn’t have to pay any taxes.
Other cryptocurrencies are not exempt from these losses, either. Check the remainder of your portfolio whether there are any other losing assets you may sell to balance your profits if you are ready to cash in a sizable crypto investment.
In the US, if your capital losses are more than your capital gains, you can deduct the smaller of $3,000 ($1,500 if you’re married and filing separately) or the entire net loss listed on line 21 of Schedule D from your income (Form 1040). You may roll over a net capital loss that exceeds this threshold into future tax years. Tax-loss harvesting is the practice of using this to your advantage.
Invest in a cryptocurrency IRA, pension, or annuity fund
Investing in cryptocurrency as part of a retirement, pension, or annuity investment is one of the best ways to avoid paying cryptocurrency tax.
Self-directed IRAs are specialized IRAs available in the US that let you invest in unusual assets including cryptocurrency, real estate, and precious metals. Taxes would only apply when money was removed from the account, not during any trade of bitcoin or other cryptocurrencies within the account.
Although these plans are far more sophisticated than standard annuity plans, you can delay or completely eliminate crypto investment profits in the UK by utilizing a retirement plan like a typical IRA, Roth IRA, or individual retirement account (IRA).
Investing in cryptocurrency and using self-managed superannuation accounts both have advantages for Australian investors (SMSF). Long-term profits are effectively taxed at a rate of 10% under existing SMSF regulations, whereas income is only taxed at a rate of 15%. Gains from cryptocurrency assets are taxed at 0% when included in a retirement pension. A SMSF will require its own wallet, which must be kept completely apart from any accounts used for individual bitcoin investments.
Utilize the yearly gift tax exemption
United States-based? Consider yourself fortunate because, unlike in nations like Australia and the UK, cryptocurrency gifts to anybody under $16,000 are tax-free.
Instead, American taxpayers benefit from a $16,000 yearly gift tax exception, which is applicable to every recipient of a gift. If you are over the $12.06 million lifetime gift tax exemption, gifts worth more than $16,000 might possibly be subject to gift taxes of 40%. You may intentionally avoid paying capital gains tax on the bitcoin you sell of by giving it away.
Changing your tax rate
You may always try to wait out a lower tax rate if you have the luxury of time on your side. You could be preparing to retire, have strategically reduced your pay, or be returning to school. Timing your crypto disposals to coincide is an efficient tax-reduction strategy if you can switch to a reduced tax rate.
Make a charitable contribution
Your bitcoin gift is deductable from your taxes. If you donate at least some of your cryptocurrency to charity and don’t require the entire benefit from your investment in cryptocurrencies, you can reduce your capital gains tax burden. The whole value of your cryptocurrency, including any capital gains, will be deducted from your taxes if the charity is registered.
In the US, use the IRS’s database of exempt organizations to verify a charity’s 501(c)3 eligibility. If you want to claim your gift as a tax deduction on your federal taxes, the charity must be 501(c)3-registered.
Donations to organizations in Australia that have DGR status—deductible gift recipient status—can only be deducted from your taxes.
Give your spouse your cryptocurrency assets
Coupled up? Depending on the nation in which you pay taxes, you might be allowed to transfer some of your cryptocurrency assets tax-free to your spouse, civil partner, or other domestic partner. Transfers between spouses, for instance, are now excluded from CGT in the UK due to a tax-free gift loophole.
As a result, assets can be transferred between partners, allowing you to offset profits using both of your yearly CGT allowances. The CGT allowance for married couples and civil partners is virtually doubled as a result. The HMRC states that you cannot be divorced or live apart in order to receive this payment.
Because the receiver gets the asset’s base cost, the transfer is said to occur at “no gain, no loss.”
Invest in a fund for opportunity zones
By investing in an Opportunity-Zone fund, US investors can postpone a portion of their cryptocurrency tax obligation. A provision in the 2017 tax legislation allows taxpayers to transfer the proceeds from the sale of, say, a stock or business, into a fund established to encourage investment in an economically underdeveloped area. This allows taxpayers to postpone and potentially cut capital gains taxes. Typically, investors have six months to relocate their money. The law also allows you to postpone paying capital gains tax until 2026 and, if you retain the investment for a further two years, to reduce your tax liability by as much as 10%.
Similar to the US, UK investors who hold their earnings through Enterprise Investment Scheme (EIS) and Social Investment Tax Relief (SITR) investments for three or more years are exempt from capital gains tax.
To find unrealized losses, use a cryptocurrency tax calculator
If you don’t know how your portfolio is doing, it’s doubtful that you’ll be able to identify possibilities to minimize your cryptocurrency taxes. The HRMC in the UK, the ATO in Australia, and the IRS all advise cryptocurrency investors to utilize a crypto tax software like Koinly to pay the appropriate taxes. But when used wisely, cryptocurrency tax software may be just as effective in assisting you in paying less tax.
An illustration. Let’s imagine you anticipate paying a hefty capital gains tax bill. Look at your unrealized losses by entering your Koinly portfolio dashboard. You can sell at a loss if you have underperforming assets. As a result, they become realized losses that you can use as an offset against your capital gains to pay less in taxes. Another name for this is tax loss harvesting.
In some nations, losses can also be offset up to a specific level against regular income. To see if this is the situation where you reside, be sure to review the cryptocurrency tax legislation of your nation.
These days, it’s difficult to avoid talking about NFTs. Non-fungible tokens have finally made it into the mainstream, either as a result of multimillion dollar sales or heinous cyberattacks. But while the majority of us may assume that the primary applications of this technology are in the fields of digital art, music, fashion, and the metaverse, physical NFTs are also making a name for themselves in the world of cryptocurrency. Here is a closer examination of what they truly represent and how they are currently being applied.
What Is An NFT?
Let’s dissect the notion of “fungibility” before getting into the specifics. A fungible object is one that may be traded for another object of the same precise value. Money serves as an excellent illustration of fungibility since, for instance, a $10 bill may be traded for another bill of the same value or even for smaller ones that still sum up to $10.
It is impossible to trade a non-fungible item for one of equivalent value since it is fully unique. Finding the cause of NFTs will be simpler now that you are aware of this. Because no other asset will ever have the same value as it has, a non-fungible token, or NFT, is a kind of digital asset that can be shown to be distinct and is not interchangeable. These tokens are non-fungible because of this. Typically, a blockchain is used to store and protect the record of the NFT’s uniqueness.
NFTs can be seen as either a digital asset in and of itself or as the digitized information on a physical or digital asset. An artist may, for instance, make replicas of their actual creations, like as paintings or sculptures, and sell them as NFTs in a special market. Non-fungible tokens are now most often utilized in gaming, digital art, music, sports souvenirs, and the metaverse, but there are a broad range of other possible uses as well (and yet unexplored).
What Is A Physical NFT?
Although non-fungible tokens (NFTs) are most often linked with the art world, they have also been created and traded as a digital representation of off-chain assets such as sports memorabilia, antiques, and even consumer items. If the buyer really needs a tangible representation of their property, the NFTs can serve as a warranty of ownership over that object. A physical NFT is a non-fungible token that is connected to a tangible asset, to put it simply. Famous digital artist Beeple is a fantastic example of this, as he himself explains. His tangible tokens for his works often include a high-resolution screen art display, a signed certificate of authenticity, cleaning supplies, and a hair sample (supposedly; don’t take our word for it). In the end, physical NFTs may be exchanged for the physical thing they are linked to or sold like any other non-fungible token.
Examples of physical NFTs
Here are some of the greatest (and most successful) instances of physical tokens taking off, despite the fact that the focus on physical NFTs has not yet gained the traction found elsewhere in the cryptocurrency space:
With a collaboration with Bored Apes Yacht Club, a project whose NFTs have sold for millions of dollars and are the cryptocurrency darling of stars like Jimmy Fallon, Eminem, and Paris Hilton, the German sportswear giant entered the metaverse head-on in 2021. Customers who purchased Adidas Originals were entitled to special tangible goods, such as sweatshirts, tracksuits, and beanies.
Mike Winkelmann, a pioneering digital artist also known as Beeple, co-founded WENEW, an NFT platform that specializes in selling “iconic” historical events and cultural landmarks like Andy Murray’s 2013 Wimbledon victory. Collectors can now obtain a tangible museum-quality screen that shows their NFT in addition to the digital tokens.
The virtual shoe giant RTFKT (recently bought by Nike) has long gambled on tangible NFTs, making it simple for holders of non-fungible tokens to exchange them for actual shoes. They refer to tangible NFTs as the “blueprint” for real-world products. RTFKT routinely works with other cryptocurrency entrepreneurs to design a variety of tangible goods.
Mike Winkelmann, a pioneering digital artist also known as Beeple, co-founded WENEW, an NFT platform that specializes in selling “iconic” historical events and cultural landmarks like Andy Murray’s 2013 Wimbledon victory. Collectors can now obtain a tangible museum-quality screen that shows their NFT in addition to the digital tokens.
GAP, a fashion shop, just debuted its first NFT collection, which unlocks actual hoodies. The non-fungible tokens are the result of a collaboration with Brandon Sines, a Frank Ape artist. Fans must gather Common and Rare level tokens, according to GAP, in order to obtain a Frank Ape collector sweatshirt.
Together with businessman Gary Vaynerchuck, renowned toy manufacturer Mattel joined the NFT space by releasing a real UNO deck with VeeFriends NFT trademark characters. With its intention to continue examining the “intersection between gameplay, digital art, and collectability,” Mattel has hinted that further drops may be in the works.
How Can You Connect An NFT To A Real-World Object?
How would you go about connecting an NFT to a tangible object, supposing you were intrigued in the idea?
Let’s use a real artwork for the purpose of simplicity. You must first take a photo of it with your phone, or better yet, with a professional camera, to create a “digital twin” of it. After digitizing your work, it’s essential to double-check that all the meta-data—information on the painting’s dimensions, medium, creator, and other details—is accurate and correctly attached to the virtual file.
From here, you’ll pick a reliable NFT marketplace, like OpenSea (here’s a brief introduction), to mint your painting. Smart contracts assign ownership and control the NFTs’ transferability for the majority of Ethereum-based tokens. This aids in defining the parameters of any transaction, and any data relating to the digital asset is saved on the blockchain where the NFT is controlled. You connect your digital painting, or NFT, to the original piece using this code.
While Nike, for instance, has experimented with digital shoes having a unique identification that belongs linked a real pair, QR codes and NFC tags are frequently used as the visual link.
It’s important to bear in mind that once minted, an NFT cannot be changed, therefore you should work out all the specifics, including the coding, before minting and connecting digital to physical assets.
Physical NFT advantages
The ability to demonstrate authenticity and provenance is the primary benefit of producing tangible NFTs. Physical NFTs can be a useful tool for buyers and sellers in a world where the market for counterfeits is thought to be worth more than $500 billion. Blockchain technology makes it impossible to ever edit, forge, or tamper with the data associated with virtual assets or their real equivalents, creating a reliable data trail.
Cutting out the middlemen from transactions gives consumers and sellers alike freedom and financial incentives. This is another significant benefit.
Last but not least, physical NFTs can be connected to recurring royalties; as a result, the seller may get a commission each time an asset is transferred.
The difficulties in tying together physical assets with NFTs
Physical NFTs may have drawbacks, much like any newly developed technology. The buyer of a physical NFT might not have access to the asset’s true copyright, making it possible that they cannot sell, share, or even publicly display it. As a result, there may be legal concerns to deal with. Additionally, it is feasible to construct a physical object, such as a sculpture, and sell the NFT to one buyer while keeping the actual asset separate from the non-fungible token. Additionally, there is the issue of false sales, dubious vendors, and hackers, all of which marketplaces are working to address but still have a long way to go.
It is obvious that NFTs may be used for a variety of physical and digital assets. Non-fungible tokens, or NFTs, are typically associated with well-known brands like CryptoPunks, the Bored Apes, or NBA Topshot collectibles. However, physical NFTs can also be used in more commonplace, everyday contexts like the supply chain, where blockchain technology can guarantee traceability, authentication, and certification. One of the most compelling arguments for the adoption of NFTs and blockchain technology, according to some, is the connection between non-fungible tokens and tangible assets.
Numerous blockchain applications need for communications with off-chain and real-world external data. This information can reflect anything, including weather conditions or the results of actual sporting events.
But blockchains are unable to access outside data. They are purposefully built as closed systems to support dependable, secure, and tamper-proof transactions. A blockchain oracle can be useful in this situation. It is a program that links blockchain networks with external data.
Types of oracles
Oracles can be used in two different ways, to start. Smart contracts receive external data from inbound (or input) oracles. The reverse of inbound oracles, outbound oracles push events that occur on the blockchain to the outside world.
Oracles may be divided into two categories: hardware and software oracles. Data is transferred from the physical world using hardware oracles. They can be used, for instance, to read data from RFID or NFC tags in supply chain activities. Smart contracts get off-chain data from software oracles that is still digital. In other words, oracles may be used to get data from servers, websites, or online databases. Using the values of financial assets to place buy or send orders on cryptocurrency exchanges is one example of an application area.
The oracle issue
Oracles can also be divided into centralized and decentralized groups. A centralized oracle is one that is run by only one person or thing. The procedures may be carried out very quickly since this form of oracle just relies on one source. However, centralized oracles may not be accurate or accessible owing to server malfunctions.
The blockchain’s oracle problem is the term used to describe these problems that might occur when centralized oracles are used to connect external resources with on-chain networks.
Because of this, the oracles that we use to link the outside world with the blockchain must also be decentralized, just like we need a decentralized web3 for a dependable, impenetrable, and censorship-resistant internet. Otherwise, we run the danger of depending on skewed and erroneous data.
A distributed peer-to-peer network that employs a number of data sources from a decentralized oracle to reach consensus on external data before uploading it to the blockchain. As a result, they provide greater degrees of accuracy and security.
Chainlink is the most widely used blockchain oracle solution. Link, the project’s native cryptocurrency, is now the top oracle coin according to Coingecko statistics, with a market valuation of $3.7 billion. Blockchain-based smart contracts may be connected by cryptocurrency firms using Chainlink technologies to pricing data, payment processors, healthcare providers, verified randomness, automation features, or external APIs.
UMA, which enables oracle integrations for incentive-aligned liquidity mining and DAO fundraising, and API3, which offers beacons as data feeds to increase transparency and airnodes middleware to connect web APIs to any blockchain application, are two other top blockchain oracle solutions by market cap.
Applications for blockchain oracles
Chainlink collaborates with a lot of industry pioneers. Partnerships are particularly prevalent for tying oracles together to create dynamic NFTs. For instance, the oracle service provided by Chainlink is used by the play-to-earn card-collecting game Aavegotchi to provide existing NFT avatars with uncommon traits. The same approach is used by Polychain Monsters, another blockchain game, to demonstrate the unpredictability of its NFT pack distributions.
Decentralized weather coverage is another area of use. Blockchain oracles are used by the data-driven climate risk ecosystem Arbol, for instance, to extract data from rainfall databases provided by the National Oceanic and Atmospheric Administration.
In order to appropriately distribute prizes to the winning users, the information markets platform Polymarket employs Uma’s oracles to put the answers to bets onto the blockchain.
Another typical use for oracles is the integration of off-chain pricing feeds into DeFi protocols. For instance, Trader Joe incorporates off-chain price information into their Avalanche financing platform. It becomes feasible to provide safe, scalable loans at true market values as a consequence.
