What Do I Need To Know About Cryptocurrency – We are seeing a lot of growth in the use of cryptocurrencies. What are they and how do they work?

Cryptocurrencies, or “crypto”, are billed as the future of money. While some people see them as having unlimited potential and applications, others are not so convinced.

What Do I Need To Know About Cryptocurrency

What Do I Need To Know About Cryptocurrency

Cryptocurrencies are not yet mainstream, but a growing number of companies and financial institutions are buying them and their growing influence around the world.

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Let us help you understand what cryptocurrencies are and why they will be important in the near future.

Cryptocurrencies are like any other currency. You can buy goods and services with them or trade with them. What makes them different from the traditional paper currencies we carry in our wallets is that there are no physical coins or notes – the money is completely virtual.

Cryptocurrency units can be purchased from brokers or generated through an online process called “mining” and used to make payments or store money anonymously.

Although they are popularly depicted as coins that look like casino chips, the physical coin is worthless without the code printed on it.

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According to Investopedia, there were more than 4,000 cryptocurrencies in circulation at the beginning of 2021. More and more are being launched.

Bitcoin, which you may have heard of, is the original cryptocurrency and remains the most recognizable to people. Due to its success in global recognition, Bitcoin became the benchmark for all other altcoins or “alternative coins” that came after.

However, as of March 2021, Bitcoin has become only the second most traded cryptocurrency, having been dethroned by Tether. Both coins are the only coins that reach a value above $100 billion (€85 billion), making them the most bought and traded cryptocurrencies at the moment.

What Do I Need To Know About Cryptocurrency

Let’s take Bitcoin as an example. Each coin is basically a computer file stored in a digital “wallet” and accessed by smartphone apps or internet-enabled devices. These files can be transferred (in whole or in part) from person to person via blockchain.

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Blockchain is the underlying cryptographic technology that secures the transfer of coins. Each transfer is recorded in a virtual public ledger, effectively adding blocks to a chain (hence the term “blockchain”). Each block is a record of a transaction, and with each added block it becomes harder to counterfeit coins by duplicating them or transferring coins that aren’t yours.

You can buy Bitcoin or other cryptocurrencies with traditional money ie. tender issued by a bank. You can also ask to be paid in crypto when you sell goods.

The more publicly recorded transactions or blocks added to the blockchain, the more secure the system. This does not mean that cryptocurrencies are not vulnerable to cyber attacks, cash register fraud, theft or money laundering.

Cryptocurrencies can be volatile due to speculative trading – as with trading any commodity – so there can be risks associated with investing in them.

Crypto Vs. Cash

Like gold or diamonds, cryptocurrencies are just another commodity. Many people who use cryptocurrencies prefer them over traditional currencies because they are not controlled or regulated by governments or banks and transactions are anonymous.

While some countries such as North Macedonia and Algeria have banned the use of Bitcoin, others are more receptive to its use. The Bank of Singapore, for example, has signaled that it may replace gold with bitcoin as a store of value.

Cryptocurrencies are also not yet widely used by businesses or stores. But an ever-growing list of companies choose to accept cryptocurrencies as legal tender, with car manufacturer Tesla and credit card company Visa announcing in March 2021 that they will recognize them as a payment method. At the same time, the airline airBaltic also announced that it has expanded its list of accepted cryptos.


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