Cryptocurrency is very popular among people nowadays. In addition, this is a topic that often raises many questions. Below we will try to answer the most important of them.
What is cryptocurrency?
What is cryptocurrency? This is a question that has a short and a long answer. In this article, however, we will go for the short version.
Cryptocurrency is a virtual currency. In comparison, the coins and banknotes (or bank card) you carry in your pocket are also a form of currency.
However, what separates cryptocurrency from your coins, banknotes and bank card is that cryptocurrency is not regulated by the authorities in the same way as the money you have in the bank. In other words, cryptocurrency is a decentralized currency.
Cryptocurrency for beginners .
Are there several types of cryptocurrencies?
There are many types of cryptocurrencies. At the time of writing, there are around 1,500 cryptocurrencies, and it is no secret that some of them are more popular than others.
The most popular form of cryptocurrency nowadays is Bitcoin.
If, on the other hand, you do not want to invest in Bitcoin, then there are many alternatives to this cryptocurrency. The alternatives are often called Altcoins , and some examples are Ether and Litecoin .
What controls the value of cryptocurrency?
Cryptocurrency is known for its volatility. This is something all the above cryptocurrencies have in common. Volatility for both Bitcoin, Ether and Litecoin is very high.
The volatility of cryptocurrencies is determined by various factors, including supply and demand.
Supply and demand is about a cryptocurrency (eg Bitcoin) that is in high demand will be very expensive, while a cryptocurrency that is not quite as popular will be much cheaper.
Pros and cons of cryptocurrency?
There are both advantages and disadvantages to cryptocurrency. Some of the benefits of cryptocurrency are:
Cryptocurrency is built on blockchain technology and it minimizes the chance of anyone trying to hack the system.
You can complete transactions quickly, and you avoid the biggest fees. In addition, one can carry out transactions anonymously.
By taking a good strategy as a starting point, cryptocurrency can be a good investment.
For many, the pros undoubtedly outweigh the cons:
The volatility of most cryptocurrencies is very high.
There are still very few players who accept cryptocurrency as a payment method.
In several cases, cryptocurrency has been used in criminal contexts.
10 myths about cryptocurrency .
Hobby or business?
There are many who start cryptocurrency as a hobby, but the extent to which it remains a hobby depends a bit on the situation.
Increased activity may lead the Tax Administration to consider it to be a business:
If you have been dealing with cryptocurrency for a long period of time, and that it has a certain scope.
If the purpose of the activity is for you to get out of it with a profit.
That you operate with cryptocurrency at your own expense and risk.
It is up to the Tax Administration to decide whether what you are doing is a hobby or business.
All about taxes and cryptocurrencies .
Where to buy cryptocurrency?
Cryptocurrency is something you trade online through a cryptocurrency exchange.
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