Wij response the significant questions about digital money and give you the low-down on the major players
DESPITE it being ter the news on an almost hourly fundament, there are still many of us fighting to get their goes around the cryptocurrency explosion.
Ter this guide, wij explore the significant questions behind the cybercash surge, the potential risks of investing ter it and whether it is all just a bubble.
What is cryptocurrency?
Cryptocurrency is a digital money system designed to make transactions super secure.
The sophisticated tender uses cryptography – a form of secret coding originating from the 2nd World War – to process transactions securely and to verify them.
A host of different currencies exist under the cryptocurrency banner. The most well-known, Bitcoin, wasgoed created te 2009 spil a form of digital money and world payment system.
Mining Bitcoin involves a pc solving a difficult mathematical problem with a 64-digit solution. For each problem solved, one block of Bitcoin is processed and the miner is rewarded with fresh Bitcoin.
Overheen the past year, Bitcoin has exploded te value and seen a drop-off afterwards – with a single coin worth 12,908 on December 20 sloping to 9,802.77 on January 1.
Unlike regular money, the cybercash has no physical presence and differs from regular transactions by using decentralised control spil opposed to central banking systems.
Normally ter banking, corporate boards or governments control the supply of money by printing units of money or requiring additions to digital banking ledgers.
But ter the world of cryptocurrency, the production of currency is generally capped. Bitcoin’s junior brother Litecoin consists of 84 million units, for example, spil opposed to its sibling’s 21 million.
The same is true of ",altcoins", – similar currencies which have bot launched ter Bitcoin’s wake that include Ethereum and Ripple, a system to connect different payment systems together.
What risks are involved with investing ter Bitcoin, Iota and Ripple?
The legal status of cryptocurrencies varies substantially from country to country and is still undefined or switching te many of them.
Only yesterday, the head of the US Securities and Exchange Commission warned bitcoin and other cryptocurrency investors to be aware of scams and criminal activity te the sector.
Ter the financial regulator’s strongest statement yet, SEC chair Jay Clayton said: “If a promoter ensures comebacks, if an chance sounds too good to be true, or if you are pressured to act quickly, please exercise extreme caution and be aware of the risk that your investment may be lost.”
Anyone thinking of investing ter Bitcoin or another cryptocurrency should be very careful.
Their values are volatile, with the capability to plummet spil quickly spil they shoot up.
And investors are frequently targeted by hackers and other criminals who seek to steal their crypto-cash online.
Be especially careful if you are using ongezouten, peer-to-peer platforms to sell and buy cryptocurrencies.
Thesis are the omschrijving of something like Gumtree for Bitcoin – you never know who you might be dealing with.
How can you buy or mine it?
You can purchase Bitcoins either from exchanges, or directly from other people via marketplaces.
There are a few marketplaces users te the UK can sign up to online or lightly, including Bittlyicious. This restricts unregistered users to buying a maximum of 50 worth of the currency, however registered users can invest more.
Another is CoinCorner, which you can also sign up to for free.
Once you’ve purchased some Bitcoin, you can trade it online using wallet software or an online trading service.
Most likely the easiest way is to sign up to My Wallet, so that you have the capability to use and make transactions.
There are also an enlargening number of Bitcoin and Litecoin ATMs across the UK, including 17 te London. Here you can buy Bitcoins directly using contant or credit/debit cards and buy Bitcoin wallets at the same time if you don’t have one already.
Alternatively, you can attempt and mine the currency yourself.
Miners – members of the public with the abilities to navigate thesis elaborate computers – have a financial incentive to help validate and timestamp transactions.
Mining involves running software on your pc that processes sophisticated mathematical equations.
The problem is, you’re up against many other users also attempting to solve the problem before you – making it difficult to get a payout.
It’s recommended for novices to join a mining group, to up the chances of success – tho’ the payout will be smaller.
The popular mining pool Bitcoinz has more information on the process.
Annoyingly, buying Litecoin is different to purchasing Bitcoin.
But like Bitcoin, it’s helpful to buy a wallet to get some of the currency.
Some popular Litecoin wallets include Coinbase, Leegloop and Jaxx.