Cryptocurrencies are digital and can be used to buy goods and services. Here’s more of what you should know regarding cryptocurrency.
What is Cryptocurrency?
Cryptocurrency is basically a digital or virtual form of cash that is designed to work as a medium of exchange.
Many companies often issue their own cryptocurrency called tokens, and these can be used to purchase the goods and services the company provides. You will need to purchase the cryptocurrency with your real money to purchase the goods and services of the company.
How does cryptocurrency work?
Cryptocurrency works by using a decentralized technology called Blockchain. It allows users to make safe transactions and store money without the need to use their name or go to the bank. Part of the appeal of this technology is its security.
Why is it called cryptocurrency?
Cryptocurrency is the amalgamation of “Cryptography” and “Currency.” This is simply because cryptocurrency ensures safe transactions between users by using extensive cryptographic techniques.
Why are cryptocurrencies so popular?
Some of the reasons as to why cryptocurrencies are gaining popularity are highlighted below:
1) Cryptocurrencies are viewed as the currency of the future. As such, people are rushing to buy them now before their value presumably increases.
2) The fact that cryptocurrency removes central bank from managing the money supply plays in their favor as overtime the banks tend to reduce the value of money through inflation.
3) It is also gaining popularity because the technology, Blockchain, has a decentralized processing and recording system and therefore, can be more secure than traditional payment systems.
Are cryptocurrencies legal?
The legality of the cryptocurrency depends upon each individual country. Law enforcement agencies, tax authorities and legal regulators worldwide are trying to understand the very concept of crypto coins and where exactly do they fit in existing regulations and legal frameworks.
A lot of concerns have been raised regarding cryptocurrencies’ decentralized nature and their ability to be used almost completely anonymously. The authorities all over the world are worried about the cryptocurrencies’ appeal to the traders of illegal goods and services. Moreover, they are worried about their use in money laundering and tax evasion schemes.
Cryptocurrencies are legal but their use has essentially been banned in China. As of November 2017, digital currencies are outlawed in Bangladesh, Bolivia, Ecuador, Kyrgyzstan and Vietnam.
As more and more people get more into cryptocurrency, it is important that you understand the whole thing so that it is easier to spot scams.
Watch out for anyone who:
- guarantees that you’ll make money
- promises big pay outs that will double your money in a short time
- promises free money in dollars or cryptocurrency
- makes claims about their company that are not clear
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