Spot cryptocurrency
Rules, protection and tax below are for Brazil.
What it is
Direct ownership of a digital token recorded on a public ledger. You buy it on an exchange with ordinary money and either leave it there or move it to a wallet you control. Bitcoin and ether dominate; thousands of smaller coins exist and most of them have gone to nothing.
There is no income, no earnings and no promise from anyone. The price is set entirely by what people will pay, which has produced enormous gains, several falls of more than half, and a long tail of frauds and collapsed exchanges. FTX in 2022 took customers' coins with it.
Legal status varies sharply: fully regulated in Brazil, banned for mainland Chinese residents, taxed at a flat 30 percent with no loss relief in India, and treated as property almost everywhere for tax.
How it works
- You open an account at a regulated exchange, pass identity checks, and buy coins with a bank transfer or card.
- You can leave coins at the exchange, which holds the keys, or withdraw to your own wallet and hold the keys yourself.
- Selling reverses the process; the exchange takes a fee and a spread each way.
- Gains are taxed as property or capital gains in most countries, sometimes on every swap between coins.
The honest pros and cons
For
- Direct ownership with no fund, bank or custodian in the middle, if you self-custody.
- Can be moved anywhere in minutes.
- Some countries now regulate exchanges properly, which removes the worst operators.
Against
- Falls of 50 to 80 percent are part of the record, not an exception.
- Exchanges fail and are hacked; lost keys are lost forever.
- No income, no cash flow, no floor under the price.
- Tax rules are harsh in some countries and every coin-to-coin swap can be a taxable event.
Getting it in Brazil
Spot cryptocurrency available
Wherever you are
- Decide what size of total loss you could accept without it changing your life, and cap the holding there.
- Use a regulated exchange in your country and enable every security option it offers.
- If you hold more than a small sum, learn self-custody properly before moving coins, and keep the recovery phrase offline.
Try it
Go deeper
Also called
bitcoin, crypto, digital assets, virtual assets, coins
Often confused with
- Crypto ETF: An exchange traded fund tracking a cryptocurrency without you holding the coins yourself.
- Margin forex: Trading currency pairs with borrowed money, where small moves create large gains or losses.