What is cryptocurrency?
Paying, receiving payments and investing in cryptocurrencies is easy and accessible to everyone
What are Cryptocurrencies?How to Choose a Wallet?How to Buy Cryptocurrency?What Can You Do with Cryptocurrency?
What is cryptocurrency
Cryptocurrencies are a type of digital or virtual money. They exist only in electronic form. The main feature of cryptocurrency is that it uses encryption for secure financial transactions and the control of creating new units. It's important to understand that cryptocurrencies are not controlled by central banks or governments like regular money. They operate based on blockchain technology, which allows records of all transactions to be maintained in an immutable database. People can use cryptocurrency for various purposes, including purchasing goods and services, investing, or transferring money between individuals anywhere in the world without the need to go through banking systems. The most popular cryptocurrencies include:
- BTC, or Bitcoin — the first cryptocurrency, still having the largest market capitalization.
- ETH, or Etherium — is a cryptocurrency and a platform for smart contracts that allow developers to create and deploy decentralized applications on the blockchain. A large number of services have been built on Ethereum, such as decentralized exchanges and debt services.
- USDT, or Tether — is a cryptocurrency pegged to fiat (traditional) currencies, such as the US dollar, providing price stability and ease of use in cryptocurrency transactions.
Something You Need to Know
If you are going to study Bitcoin or Ether, there are a few things you should know. Cryptocurrencies allow you to exchange money in a different way than with regular banks. You need to take the time to understand them before using cryptocurrencies for any serious transactions. Cryptocurrencies should be treated with the same attention as a regular wallet, or even more carefully in some cases!
Securing Your Wallet
Just like in real life, your wallet must be protected. Cryptocurrencies allow you to easily transfer amounts anywhere and give you full control over your money. Such great capabilities also come with significant security challenges. At the same time, cryptocurrencies can provide a very high level of security if used correctly. Always remember that it is your responsibility to use best practices to protect your money.
Bitcoin Prices are Volatile
The price of cryptocurrencies can unpredictably increase or decrease over a short period of time due to the young economy of cryptocurrencies, their novel nature, and market illiquidity. Therefore, we do not recommend keeping all your retirement savings in unstable cryptocurrencies. Bitcoin should be considered a high-risk asset.
Crypto Payments Are Irreversible
No crypto transaction can be reversed. Only if the recipient returns the funds to you, will you be able to get them back. This means that you should only do business with people and organizations you know and trust, or those with an established reputation. Organizations need to control their payment requests sent to clients.
Complete confidentiality requires effort.
To protect your privacy when using cryptocurrencies, some effort is required. All crypto transactions are public and instantly distributed across the network, meaning everyone can see the balance and transactions of any crypto address. However, the identity of the user behind the addresses remains unknown until information is revealed during a payment or under other circumstances. This is one reason why Bitcoin addresses should only be used once. Always remember that using best practices to protect your privacy is your responsibility.
Unconfirmed transactions
A transaction on the Bitcoin network can take from 10 minutes to 1.5 hours. On the Ethereum network, it takes 1-10 minutes. Unconfirmed transactions in crypto are transactions that have been initiated but not yet included in the blockchain and confirmed by the network of miners/validators. This means that until these transactions are added to the blockchain, the transfer amount will not be available for use by the recipient, and the transaction can be canceled or returned to the sender. The rule: after any transaction, you need to wait until your transaction is confirmed at least 2 times for the Bitcoin network and 30 times for the Ethereum network. Only then can you be sure that the transaction will not be reversed.
Bitcoin is Still an Experimental Currency
Bitcoin is an experimental new currency that is in active development. And while it is becoming less and less experimental as its popularity grows, it should still be noted that Bitcoin is a new invention using previously untried principles. Therefore, the future of this currency is unpredictable.
Taxes and Government Regulation
Bitcoin is not an official currency. However, most jurisdictions require you to pay income tax, which may also apply to Bitcoin, Ether, and other cryptocurrencies. It is your responsibility to ensure that you comply with the tax and other legal or regulatory requirements of your government and/or local authorities.
