- Cryptocurrency is a virtual currency and does not exist in physical form.
- It is a collection of binary data to be used as a medium of exchange, wherein individual coin ownership records are stored in a ledger, keeping a track of units and their ownership.
- It is secured by cryptography, hence the word ‘crypto’ currency.
- Cryptocurrency does not require a central authority and are hence immune to government interference.
- Each cryptocurrency works through decentralized networks/ blockchain, that serves as a public financial transaction database.
- These were formed to ease financial transactions/ fund transfers using public and private keys, without the need for a third party like a bank. The owner has a private key while public key is open to all who would like to own the currency. It is important to properly safeguard/ backup the private key to ensure the safety of cryptocurrency else balance can be wiped out by destruction of the hard drive. Also, read How Cryptocurrency Trading Robots Work
- It involves minimum processing fees.
- Cryptocurrency has a history dating back to the 1980s but the popular Bitcoin the first blockchain-based cryptocurrency) was launched in 2009.
- El Salvador became the first country to accept Bitcoin as legal tender, followed by Cuba.
- China is the largest market for cryptocurrency. However, cryptocurrency transactions are considered illegal there.
- If two different instructions for changing the ownership of the same cryptocurrency are entered together, it performs only one of them.
- Given, their easy ownership and no government interference, cryptocurrency are being increasingly used for illegal activities, tax evasion, money laundering, exchange rate volatility, etc. A cryptocurrency is susceptible to online theft as hackers are always in the look-out to crack the network system.
- Once you buy a cryptocurrency you can store it on an exchange or in a digital wallet.
- Tranparency and inflation resistance are a few of its pros.
- One can easily buy goods and services, or trade them for profit. All you need is the app and a digital wallet to hold the money.
- Many investors regard them as speculative.
- There are numerous cryptocurrencies with various functions and specifications at present.
- It is estimated that there are over 18 million bitcoins in the market at present.
- Some of the other popular ones include Litecoin, Peercoin, and Namecoin, as well as Ethereum, Cardano, and EOS.
- The IRS has declared cryptocurrency as an asset/ property and the U.S. Department of the Treasury proposed to report any cryptocurrency transaction of $10,000 to the IRS in May’21.
Also, read Should I Buy DOT Cryptocurrency?
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