What is Crypto?
One of the greatest challenges we've faced with physical currency is that it’s prone to counterfeiting, theft and fraud. Cryptocurrencies are digital currencies designed to help solve these issues. What makes cryptocurrency different is the fact that it’s using cryptography as a way to boost security.
Crypto tokens are built on a blockchain which keeps a decentralised record of all transactions, who owns every token as well as other information. The blockchain can be defined as a distributed ledger, and it's spread across many different computers worldwide. All the transactions are kept in blocks and they are all linked to the previous transaction.
In order to prevent fraud, every transaction has to be validated. There are multiple different validation methods, and varies per crypto. This can be either proof of work or proof of stake. Proof of work involves an algorithm which delivers a math problems, and the computers are racing to solve it, this is called mining - mining requires a lot of processing power and has received some criticism regarding its impact on the environment. There’s also proof of stake, instead, this requires the user to lock some of their cryptocurrency in order to add and verify transactions.
Since its initial conception, there are now thousands of crypto currencies in existence. Cryptos have different usages. Bitcoin, for example, is a store of value but also has payment potential using the lightning network. XRP, XLM, and XDC are changing the way decentralised financial (DeFi) services will be offered. Meme coins (such as SHIBA, DOGE) are valued based on their virality. Gaming coins e.g Axie Infinity, Decentraland and Sandbox provide currency and rewards for their respective game.
You can also find forks/clones of popular cryptocurrencies like Bitcoin such as Bitcoin Gold, Bitcoin Cash, Terra Classic and Etherieum Classic.
Are cryptocurrencies legal? The legality of crypto is hard to identify because they are not backed by public or private entities. For the most part (with the exception of some countries / tokens), crypto trading is legal and has seen global adoption, however due to the private nature of transactions and a lack of government oversight, it can be difficult for crypto to be accepted as a payment method. Most people agree that crypto regulation is needed to provide guidance and protection to retail users.
Where to buy crypto currency? Crypto currencies can be purchased on crypto exchanges such as Binance, Crypto.com and Coinbase. Different exchanges have varying benefits such as spreads, new customer bonuses and amount of cryptos they sell.
What are spread fees? Spreads, on exchanges, are the difference between the buy and sell prices for different assets. No-commission style exchanges will add a small markup to these prices to make profit themselves.
Cryptocurrency can be used for a large variety of purposes, more and more online stores are now supporting it, and you can even buy food with Bitcoin. In some cases, people have even purchased homes with crypto!
Crypto can be very volatile and you should only invest what you can afford to lose. If you'd like to learn more about crypto or view our signup bonuses (new accounts only) - check out our partner sites.
