What is cryptocurrency?

What is cryptocurrency?

Cryptocurrencies are digital currencies based on technology. Digital currency refers to money that exists only online, and it uses cryptography to secure transactions. Cryptography involves using codes (called 'keys') to scramble data, making it unintelligible to anyone except those who have the code.

Why use cryptocurrencies instead of traditional bank accounts/credit cards?

Traditional banking institutions charge high fees and interest rates. Credit card companies often have hidden charges, which makes their services seem more expensive than the additional banking systems, and are also vulnerable to theft because banks store customer funds electronically. In contrast, cryptocurrencies do not require third-party verification and offer a level of privacy.

How does cryptocurrency differ from Bitcoin?

Bitcoin was first created in 2009. Bitcoins are a type of decentralized digital currency. Decentralized means no single institution controls the creation or distribution of Bitcoins - hence, no central authority can force people to follow any rules. There are currently around 16 million bitcoins circulating in the market. Unlike fiat money (dollars, euros), there is a fixed amount of bitcoin that will ever exist. New bitcoins are produced at regular intervals via a cryptographic algorithm called mining. The rate of mining is controlled by software set in place by programmers known as miners. Miners compete to find a block of transactions. Once a miner finds a block, he or she broadcasts it to the network, which verifies the validity of the transaction records and adds them to the blockchain. A reward of 50 bitcoins is given to the miner for each successful block found. These mined bitcoins are added to the pool of bitcoins owned by the entire network. When transactions occur, they are recorded in the blockchain and a record is kept forever that cannot be changed.

Can I buy cryptocurrencies with my credit card?

You can purchase cryptocurrencies with a debit or credit card; however, merchants may ask if you want to provide ID or proof of address. If you don't meet their requirements, then you won't be able to complete the transaction. You may be able to pay with cash, but this isn't always possible. Some exchanges allow users to obtain cryptocurrency with a bank account. You'll need to verify your identity and determine what kind of exchange service you want to use.

Is buying cryptocurrency safe?

Buying cryptocurrency should be done responsibly. Be sure to research the company selling the coin before investing in it. Do some additional research about its founders, core team members, previous performance, and financial stability. Only invest what you're willing to lose.

Where can I sell cryptocurrency?

There are many places where you can sell cryptocurrencies, including Bitcoin ATMs, crypto brokers, and peer-to-peer trading platforms.

Is purchasing cryptocurrency legal?

It's unlikely that laws governing bitcoin will change anytime soon. However, governments worldwide continue to debate whether or not cryptocurrencies are legal tender and how to regulate them. One thing is certain though, illegal conduct will likely be met with harsh penalties.