What is it?
Crypto meaning secret or concealed, there is nothing secretive about crypto currency contrary to the name. They are digital currencies that have no physical form. Beyond the noise and press coverage, they are just entries in a database. So every transaction here is traced by a code. It is not issued by any bank neither controlled by any government or any organization. The value of the currency is determined by the market. It is open to all. It is used by many people but there is no middle man or credit company involved.
How did they come about?
In 2008, a programmer known as Satoshi Nakamoto posted a paper outlining a peer to peer electronic cash system to a cryptography e-mail list. Seeing the failed attempts to create digital money till then, Satoshi tried to build a digital cash system without a central entity. This led to the birth of crypto currency.
Is it legal?
It is not legal in Iceland, everywhere else it is legal though some restrictions are applicable in some countries. You don’t need to put your real name and personal information to buy crypto currency. Transactions done with crypto currencies cannot be traced like bank account or credit card transactions but only with a key that performed it. So this makes for the arguments that it is traceable Vs non-traceable.
Are there more than 1 crypto currency?
Yes, there are 866 currencies. Bitcoin is the by far the most popular but there are others like Ethereum, BitConnect, Bitcoin Cash, Ripple, Litecoin, Monero, Ethereum Classic, Dash, Augur, NEM, Waves, etc
Are they going to replace normal currencies?
That is not likely. They have a niche as a way to buy certain products and obtain certain technical services but nowhere near to threatening the current currency system.
Should I invest in Crypto currency?
Crypto currency has its own advantages like
- Millions of people are already using this choice of investment and many more are joining the bandwagon every day.
- Technology is going forward and is going to have a positive impact on crypto currency.
- It is easy to start of an account in websites like www.coinbase.com and you can have many different wallets/accoutns.
You should treat this as a new field of study with a potential to make a huge difference in the society as it cannot be deemed a safe investment. Even if it is a long way from reaching its true potential, it is on the right track and you can accrue the benefits of early adopter if you jump in now. The transaction fees involved is also low. You can trade with people from different countries but not lose money while exchanging currencies.
How can I buy Cryptocurrency?
Crypto currencies need to mined to be generated in the first place. For example Bitcoin (popular crypto currency) can be created only if miners solve a cryptographic puzzle. Since the difficulty of this puzzle increases the amount of computer power the whole miner’s invest, there is only a specific amount of currencies that can be created in a given amount of time. Nobody can break this consensus. For those of us who are not in to all this mining stuff, there is wallet.
“Wallet” will provide you access to the crypto market and is equivalent to your online currency account. A crypto currency wallet is a software program that enable users to send and receive crypto currency and monitor their balance.
An account becomes useful only when you have currency in it. So you upload funds using bank transfer or credit cards to buy cryptocurrency. Now you can fill your wallet with crypto currencies by using a reputed cryptocurrency exchange like coinbase.com or poloniex.com. You can also buy from someone who is willing to sell the crypto currencies for cash.
Can I realise actual money with it?
Yes, you can exchange it for cash and transfer to your account. But the benefits of anonymity should be given up when you are transferring money directly from your crypto currency account to your bank account. Also, this will subject you to tax laws. Knowledge on the workings of this system is required. The market here is very volatile, hence little extra time and management is required to learn the ways of avoid being hit by this volatility.
Where to spend the crypto currency?
The options are very limited now as no major retailers accept them yet. You can swap them for some software products, gambling, gaming, books, automobiles, liquor, jewelry, music, some website designing, clothing and accessories.
Investing in crypto currency can heap numerous benefits but like any investment with higher profits, the risk is higher. But of course, without the bold move of risking your assets, you cannot multiply them faster.