What is cryptocurrency and what is it used for?
A cryptocurrency a digital currency that is not backed by any central bank like fiat currency would and is instead decentralized and global. An algorithm controls the supply of cryptocurrency and blockchain-backed encryption techniques are used to regulate the generation and verify any action on the system, such as fund transfer between the parties as well as update of any data.
A lot of cryptocurrencies were issued and designed as financial securities, or a form of investment. However, there are several popular cryptocurrencies, such as Bitcoin, that are accepted online as payment for various products and services. There are also so-called utility tokens, or cryptocurrencies used by certain communities as a part of a system that were set up as independent ecosystems in which the token can be used to pay for certain goods or servides. The rules of currency generation are outlined in a whiteopaper, a document issued before a co-called Initial Coin Offering (ICO) which generates the initial amount of coins; the coin will continue its generation subject to the mechanism set out in the initial whitepaper.
What are they popular and will we be seeing more of them?
Bitcoin, of course, is a major one.
Besides Bitcoin, the second largest one is Ethereum.
Then there are other so-called Altcoins, alternative coins issued after the success of Bitcoin, by such companies as R3, Ripple, Litecoin, Zcash and others.
Future remains to be seen. The regulation around cryptocurrency tightens every day. Most experts agree that utility tokens will play a role in the future economy; however, most also agree that cryptocurrencies will not replace fiat currencies and that the case of replacing financial intermediaries with all their security measures isn’t even the most interesting use of blockchain-based technologies, and cryptocurrencies in particular.
How does a person buy cryptocurrency?
It will be easier to buy cryptocurrencies with fiat money and crypto wallets will be much more secure and accessible.
Are they a good investment?
As with any investment, it’s best to diversify and cryptocurrency investors are known for buying and trading various securities just as investors do in the stock market. Many investors look at the overall performance of certain cryptocurrencies, as well as their predicted longevity. It may also be worth considering the purpose of the cryptocurrency in question – some focus on funding for specific technologies, while others on things like social advocacy. But ensure that our crypto keys are safe and never share them with anyone. There are various technologies availoable for storage of the keys; however, for the time being, the safest way to keep your keys safe is to keep them written down on a simple sheet of paper.
Are they legal?
Cryptocurrency is a new innovation that has not yet been fully implemented into the legal framework. The legality on crypto currencies depends on where you are and what you wish to do with it. Generally western economies are using soft touch principle based regulation to encourage innovation.