What is Cryptocurrency, it is a digital form of exchange that is a decentralized database that can be used for many different reasons. The best known cryptocurrency is Bitcoin. There are hundreds of varieties of cryptocurrencies. However new units being constantly made.
Where do cryptocurrencies come from
Digital currencies have only been around since 2009 when Bitcoins were first conceived. Before that, digital currencies were usually tethered to a central authority that controlled their currency. These central authorities always failed for various reasons.
Bitcoins were the first to use a blockchain to record transactions. A blockchain records all transactions and is spread across a network of decentralized computers.
Computers need to solve equations to grow the blockchain, this is called mining.
Like Bitcoins, all digital currencies are mined using peer to peer computer blockchain equations. In the early days you could mine digital currency with your own computer, these days you need an very beefed up computer.
Mining digital currency is the basis of digital coins, the term mining is actually the solving of equations. These equations become more difficult as the currency grows in popularity, requiring great computer power as time goes on.
Blockchains are now used for many different applications as well as cryptocurrency.
What do you do with cryptocurrency
The type of cryptocurrency that you have determines what you can do with it.
For example, Bitcoins can be used for exchange of goods and services.
Ethereum, Ripple and bytecoin are other digital currencies that aren’t as popular as Bitcoin but can be traded also. Most units of digital currency can be traded for Bitcoin.
There are marketplaces that only accept digital currency, such as OpenBazaar.
You can also invest in digital currencies through exchanges, these exchanges are much like the stock exchange, only more volatile. There are many exhanges around the world offering all sorts of cryptocurrencies. Coinspot is one such exchange.
At Coinspot you can invest from $5.00 in any of the current digital currencies being traded.
Are cryptocurrencies legal
When digital coins were first made, many thought the currency would not survive. Bitcoin has made impressive headway since it’s inception.
Although authorities are sceptic of digital currencies, the marketplace has grow and become more mainstream. Digital currency is not legal tender but this does not stop people trading with digital currency.
Any profits made from digital currencies are still tax by governments around the world. Each government has their own method of calculating the tax required and you need to contact a taxation expert before venturing into digital currency.