What is Cryptocurrency

In simple words, a cryptocurrency is a digital or virtual currency designed to function as a medium of exchange. Cryptocurrencies utilize cryptography techniques to secure and verify transactions, prevent double-spend, and control the creation of new units.

Transactions in cryptocurrencies usually take place on a distributed ledger technology (DLT) known as the blockchain. Typically, blockchain consists of several computers that are interlinked and whose sole purpose is to verify transactions on the chain by storing transaction records in blocks.

Just because of the nature of blockchains, especially their decentralized characteristic, virtual currencies seem to exist out of the control of national governments and restrictive monetary regulations.

The initial idea that birthed cryptocurrency was to create a fully digital system for secure payment online where users can control their money. However, cryptocurrencies’ functionalities and use cases have gone beyond just a means of payment or asset control.

There are now several types of cryptocurrencies in existence. As of August 2021, the cryptocurrency market value is estimated to be worth more than $2 trillion.

Types of Cryptocurrency

Since the creation of the Bitcoin cryptocurrency in 2009, there has been a rapid increase in the total number of digital currencies in circulation globally. Data from Statista shows that the number of virtual currencies has been increasing since 2013. According to the statistics, there are more than 6,000 cryptocurrencies in the world.
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The most common types of cryptocurrencies in circulation include Bitcoin (BTC), Ether (ETH), Litecoin (LTC), Bitcoin Cash (BCH), Cardano (ADA), Polkadot (DOT), Solana (SOL), and Dogecoin (DOGE).

Cryptocurrencies are grouped into different categories. The Bitcoin cryptocurrency still retains its class as bitcoin. Other types of coins that came afterward are referred to as Altcoins. Asides from altcoins, some cryptocurrencies fall into the stablecoins category. These coins are called stablecoins because they are pegged against existing fiat currencies like the US dollar. Examples of such coins include USDT and USDC.

Till date, bitcoin still stands as the top currency and pacesetter in the cryptocurrency market.

Major Milestones in Cryptocurrency

31 October 2008
‍The birth of Bitcoin (BTC), the first cryptocurrency. A pseudonymous developer, alias Satoshi Nakamoto, published a white paper called “Bitcoin: A Peer-to-Peer Electronic Cash System”, describing the functionality of the blockchain network. This day in Bitcoin history has shaped the events that followed.

3 January 2009
‍Satoshi Nakamoto mined the first block of the Bitcoin network (the Genesis Block), effectively piloting the blockchain technology.

2 May 2010
The first recorded purchase of goods was made using Bitcoin when Laszlo Hanyecz bought two pizzas for 10,000 BTC. The crypto community celebrates this day as Bitcoin Pizza Day.

The beginning of a cryptocurrency market

March 2010
The first crypto exchange, bitcoinmarket.com (now defunct), was launched. Two months later, Mt.Gox was launched as well.

2011–2013
Bitcoin managed to attain the value of the USD. During this period, alternative coins (AltCoins) were issued. By May 2013, the crypto market comprised ten cryptocurrencies, including Litecoin (LTC).

30 July 2015
‍Ethereum and the introduction of the ERC-20 tokens. The Ethereum blockchain, currently the second crypto-asset in market capitalization, was launched. It unveiled smart contracts to the crypto world.

2015 to present
‍More and more ERC-20 tokens have been issued. There are currently more than 200,000 ERC-20 tokens in the market.

What Can You Do with cryptocurrencies?

Buy goods

‍Cryptocurrency continues to gain momentum globally. Numerous merchants accept cryptocurrencies as forms of payment. They range from giant online retailers like Overstock and Newegg to small SMEs, local shops, bars, and restaurants.

Invest/Trade

‍Many people hold that cryptocurrencies are the hottest investment opportunities currently available because of their volatile nature. Indeed, there are real stories of people becoming millionaires through trading and investing in cryptocurrencies.. We delve deeper into this more later in the article.

However, it is worth noting that digital currencies are high-risk investments! Before you invest any money in cryptocurrencies, you should learn the ins and outs of crypto.

Mining

‍Miners are the single most essential group of any cryptocurrency network, and just like trading, mining is an investment too. Miners offer bookkeeping services for their respective networks by contributing their computing power to solve complex cryptographic puzzles.

Evolving Use Cases of Cryptocurrencies

Over the years, cryptocurrency's meaning has shifted from a mere means of online payment settlement. It has broadly expanded that many projects have emerged to define use cases for crypto and the blockchain.

Yes, payment and transactions are still an integral part of crypto, but it is nothing to the variety we have currently. Decentralized Finance, NFTs, Decentralized Autonomous Organizations, derivatives crypto trading are just some of the new definitions of what cryptocurrency is used for.

A project like BlockX specializes in building real-world value to all users on the back of the decentralized nature of cryptocurrencies. By specializing in asset tokenization, payment settlement, and CBDC. BlockX provides a way for everyday users to invest in tangible assets like real estate, hedge funds, arts, and more. You can read up on the benefits of asset tokenization and how blockX is driving efficiency in real estate.

How Do You Buy Crypto?

‍If you are ready to get into crypto, there are plentiful options you can choose from where you can buy cryptocurrencies. You can decide to buy cryptocurrencies through crypto exchanges, Peer-to-Peer networks, and BTC ATMs.

To purchase cryptocurrencies, you will need a “wallet”. A crypto wallet is an online app that allows you to store your digital assets. You can create an account on an exchange like Tokenizer and trade several pairs of cryptocurrencies.

Can Crypto Currency be Taxed?

Yes, cryptocurrency is considered taxable in some countries. In such countries, crypto assets are considered “property”. As a result, trading crypto and making gains or losses are subject to tax. All taxes that accrue to the traditional stock exchange market directly apply to crypto-assets.

Also, taxes can apply when you use cryptocurrencies for the purchase of goods. Miners who receive cryptocurrencies as rewards are also not exempted from tax payment. The amount you pay as tax on your digital assets will be determined by the kind of transaction you make.

Can Cryptocurrency Crash?

It is implausible that cryptocurrencies will cease to exist. It has come to stay. Although, there may be continuous fluctuations in the cryptocurrency market. Right now, the market is highly volatile, and prices can skyrocket or plummet in hours.

As more and more users - governments, institutions, and citizens - continue to trust and adopt cryptocurrencies, it is expected that cryptocurrencies will become more stable and resilient over time.

Summary

Cryptocurrency has moved beyond being a tool for payment settlements. As more use cases are adopted to cryptocurrencies, it is evident that cryptocurrency will ultimately come mainstream. For this reason, the crypto space can only get better with time.

About BlockX

BlockX is a cryptocurrency blockchain that specializes in CBDC, payment settlements, and asset-backed tokenization. BlockX aims to make investment accessible to everyday people while giving projects a conducive atmosphere to raise capital.

Check out the links below for further information.

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