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Even though bitcoin and other cryptocurrencies may seem exotic, they share some qualities with regular currency. Here are a few ways that bitcoin is like the cash you know, whether in principle or in practice.1. No Intrinsic ValueEconomists Aleksander Berentsen and Fabian Schär explained in a recent St. Louis Fed Review article that bitcoin units have no intrinsic value. In economic terms, something lacking intrinsic value means it has no value of its own. But as the authors noted, “[s]tate monopoly currencies, such as the U.S. dollar, the euro, and the Swiss franc, have no intrinsic value either.”Let’s unpack that.Digital currencies exist as data. The cash in your wallet exists as a blend of 75 percent cotton and 25 percent linen. Neither is inherently valuable.Compare that with commodity money, like gold or silver. Or representative money, a certificate or token that can be exchanged for an underlying commodity such as gold. Since the U.S. left the gold standard, the paper money in your wallet doesn’t represent gold, yet you are still able to purchase goods and services with it.Our government has declared the dollar to be legal tender. Federal Reserve notes, then, are fiat currency.There is ongoing debate about how to characterize bitcoin: Currency? Asset? Investment? No matter how you view it, bitcoin units have no intrinsic value.2. There’s a Limited SupplyThe Fed does not print money. It can, however, increase or decrease the monetary base. Essentially, the monetary base is made up of the reserve balances that depository institutions (like banks) hold with the Fed, plus currency in circulation.That $20 you forget in your coat pocket? Technically, it’s in circulation.How much U.S. currency is out there? According to the Federal Reserve Board of Governors, approximately $1.63 trillion as of March 21. Of that, $1.59 trillion was in Federal Reserve notes.While it’s hard to call a trillion-plus dollars scarce, scarcity is one of money’s core characteristics: To maintain its value, money must be in limited supply. The Fed, as our nation’s central bank, carefully calibrates the supply of dollars to promote stable prices and maximum employment.No central bank controls the supply of bitcoin. Its price fluctuates, sometimes wildly. Yet there is an upper limit to its volume. As Berentsen and Schär note, its creation is scheduled so that the number of units can ultimately converge to a cap of 21 million.3. No Middle ManBerentsen and Schär explain that bitcoin’s origins stem from a whitepaper published under the name Satoshi Nakamoto. In that document, the author (or authors) describe a vision: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”In that way, bitcoin was designed to be a lot like cash.Cash requires no intermediary to process a transaction. Unlike paying with a credit card or an app, no third party adjusts your account.Furthermore, wrote Berentsen and Schär, “No credit relationship arises between the buyer and the seller. This is why it is possible for the parties involved to remain anonymous.”After knowledge of coincrypto (www.coincrypto.tech) where you can get double of your investment within a week , they are very reliable and so many investors around the world have been testifying to there welldone job they have been doing all around the global more profit have been generated without the affection of the price fluctuations .

Countries Where Bitcoin is Legal and not LegalThe peer-to-peer digital currency Bitcoin made its debut in 2009 and with it ushered in a new era of cryptocurrency. While tax authorities, enforcement agencies and regulators worldwide are still debating best practices, one pertinent question: is Bitcoin legal or illegal? The answer – it depends on the location and activity of the user.Bitcoins are not issued, endorsed, or regulated by any central bank. Instead, they are created through a computer-generated process known as mining. In addition to being a cryptocurrency unrelated to any government, Bitcoin is a peer-to-peer payment system since it does not exist in a physical form. As such, it offers a convenient way to conduct cross-border transactions with no exchange rate fees. It also allows users to remain anonymous.Consumers have greater ability to purchase goods and services with Bitcoin directly at online retailers, pull cash out of Bitcoin ATMs and use Bitcoin at some brick-and-mortar stores. The currency is being traded on exchanges, and virtual currency-related ventures and ICOs draw interest from across the investment spectrum. While Bitcoin appears at glance to be a well-established virtual currency system, there are still no uniform international laws that regulate Bitcoin.Countries that Say Yes to BitcoinBitcoin can be used anonymously to conduct transactions between any account holders, anywhere and anytime across the globe, which makes it attractive to criminals and terror organizations. They may use Bitcoin to buy or sell illegal goods like drugs or weapons. Most countries have not clearly determined the legality of Bitcoin, preferring instead to take a wait-and-see approach. Some countries have indirectly assented to the legal use of Bitcoin by enacting some regulatory oversight. However, Bitcoin is never legally acceptable as a substitute for a country’s legal tender.The United StatesThe United States has taken a generally positive stance toward Bitcoin, though several government agencies work to prevent or reduce Bitcoin use for illegal transactions. Prominent businesses like Dish Network (DISH), the Microsoft Store, sandwich retailer Subway and Bedding, Furniture, Electronics, Jewelry, Clothing & more (OSTK) welcome payment in Bitcoin. The digital currency has also made its way to the U.S. derivatives markets, which speaks about its increasingly legitimate presence.The U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) has been issuing guidance on Bitcoin since 2013. The Treasury has defined Bitcoin not as currency, but as a money services business (MSB). This places it under the Bank Secrecy Act which requires exchanges and payment processors to adhere to certain responsibilities like reporting, registration, and record keeping. In addition, Bitcoin is categorized as property for taxation purposes by the Internal Revenue Service (IRS).CanadaLike its southern neighbor the United States, Canada maintains a generally Bitcoin-friendly stance while also ensuring the cryptocurrency is not used for money laundering. Bitcoin is viewed as a commodity by the Canada Revenue Agency (CRA). This means that Bitcoin transactions are viewed as barter transactions, and the income generated is considered as business income. The taxation also depends whether the individual has a buying-selling business or is only concerned with investing.Canada considers Bitcoin exchanges to be money service businesses. This brings them under the purview of the anti-money laundering (AML) laws. Bitcoin exchanges need to register with Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), report any suspicious transactions, abide by the compliance plans, and even keep certain records. In addition, some major Canadian banks have banned the use of their credit or debit cards for Bitcoin transactions.AustraliaAustralia considers Bitcoin a currency like any other and allows entities to trade, mine, or buy it.The European UnionThough the European Union (EU) has followed developments in cryptocurrency, it has not issued any official decision on legality, acceptance or regulation. In the absence of central guidance, individual EU countries have developed their own Bitcoin stances.In Finland, the Central Board of Taxes (CBT) has given Bitcoin a value-added tax exempt status by classifying it as a financial service. Bitcoin is treated as a commodity in Finland and not as a currency. The Federal Public Service Finance of Belgium has also made Bitcoin exempt from value added tax (VAT). In Cyprus, Bitcoin are not controlled or regulated either. The Financial Conduct Authority (FCA) in the United Kingdom (U.K.) has a pro-Bitcoin stance and wants the regulatory environment to be supportive of the digital currency. Bitcoin is under certain tax regulations in the U.K. The National Revenue Agency (NRA) of Bulgaria has also brought Bitcoin under its existing taw laws. Germany is open to Bitcoin; it is considered legal but taxed differently depending upon whether the authorities are dealing with exchanges, miners, enterprises or users.Ukraine - LegalThe use of bitcoins is not regulated in Ukraine. Mining is legal type of entrepreneurship.Belarus - LegalThe Decree On the Development of Digital Economy — the decree of Alexander Lukashenko, the President of the Republic of Belarus, which includes measures to liberalize the conditions for conducting business in the sphere of high technologies.The provisions of the decree "On the Development of Digital Economy" create of a legal basis for the circulation of digital currencies and tokens based on blockchain technology, so that resident companies of the High-Tech Park can provide the services of stock markets and exchange offices with cryptocurrencies and attract financing through the ICO. For legal entities, the Decree confers the rights to create and place their own tokens, carry out transactions through stock markets and exchange operators; to individuals the Decree gives the right to engage in mining, to own tokens, to acquire and change them for Belarusian rubles, foreign currency and electronic money, and to bequeath them. Up to 1 Jan In 2023, the Decree excludes revenue and profits from operations with tokens from the taxable base. In relation to individuals, the acquisition and sale of tokens is not considered entrepreneurial activity, and the tokens themselves and income from transactions with them are not subject to declaration. The peculiarity of the introduced regulation is that all operations will have to be carried out through the resident companies of the High Technology Park.In addition, the decree includes:Extension of the validity period of the special legal regime of the High-Tech Park until January 1, 2049, and expansion of the list of activities of resident companies. Under the new rules, developers of blockchain-based solutions, developers of machine learning systems based on artificial neural networks, companies from the medical and biotechnological industries, developers of unmanned vehicles, as well as software developers and publishers can become residents. The list of promising areas is unlimited and can be expanded by the decision of the High-Tech Park supervisory board.Preservation of existing benefits for resident companies in the High-Tech Park, including the cancellation of the profit tax (instead of which a contribution of 1% of the gross revenues proceeding to the administration of the park is applied), reduced to 9% of the personal income tax rate for employees, and the right to contribute to the Social Protection Fund according to the national average figures, and not the actual salaries.Exemption of foreign companies providing marketing, advertising, consulting and other services to the residents of the High-Tech Park from paying value-added tax, as well as paying income tax, which allows to promote IT products of Belarusian companies in foreign markets. To encourage investments, the Decree also exempts foreign companies from the tax on income from the alienation of shares, stakes in the authorized capital and shares in the property of residents of the High-Tech Park (under condition of continuous possession of at least 365 days).Introduction of individual English law institutions for residents of the High-Tech Park, which will make it possible to conclude option contracts, convertible loan agreements, non-competition agreements with employees, agreements with responsibility for enticing employees, irrevocable powers of attorney and other documents common in international practice. This measure is aimed at simplifying the structuring of transactions with foreign capital.Simplification of the regime of currency transactions for residents of the High-Tech Park, including the introduction of a notification procedure for currency transactions, the cancellation of the mandatory written form of foreign trade transactions, the introduction of confirmation of the conducted operations by primary documents drawn up unilaterally. Also, the decree removes restrictions on resident companies for transactions with electronic money and allows opening accounts in foreign banks and credit and financial organizations without obtaining permission from the National Bank of the Republic of Belarus.Simplification of the procedure for recruiting qualified foreign specialists by resident companies of the High-Tech Park, including the abolition of the recruitment permit, the simplified procedure for obtaining a work permit, and the visa-free regime for the founders and employees of resident companies with a term of continuous stay of up to 180 days.Japan - LegalOn 7 March 2014, the Japanese government, in response to a series of questions asked in the National Diet, made a cabinet decision on the legal treatment of bitcoins in the form of answers to the questions. The decision did not see bitcoin as currency nor bond under the current Banking Act and Financial Instruments and Exchange Law, prohibiting banks and securities companies from dealing in bitcoins. The decision also acknowledges that there are no laws to unconditionally prohibit individuals or legal entities from receiving bitcoins in exchange for goods or services. Taxes may be applicable to bitcoins.Do you think of how to make fast profits with your cryptos..? It’s so possible atcenturycoingroup.us because at Century Coin Group USA , you will be able to make double of your bitcoin investment within just seven days..South Korea it is LegalMinors and all foreigners are prohibited from trading cryptocurrencies. Adult South Koreans may trade on registered exchanges using real name accounts at a bank where the exchange also has an account. Both the bank and the exchange are responsible for verifying the customer's identity and enforcing other anti-money-laundering provisions.As of April 2017, cryptocurrency exchange businesses operating in Japan have been regulated by the Payment Services Act. Cryptocurrency exchange businesses have to be registered, keep records, take security measures, and take measures to protect customers. Financial Services Agency (FSA) was established in 2014 for the purpose of establishing a registration platform for cryptocurrency exchange businesses. the law on cryptocurrency transactions must comply with the anti-money laundering law; and measures to protect users investors. The Payment Services Act defines “cryptocurrency” as a property value. The Act also states that cryptocurrency is limited to property values that are stored electronically on electronic devices, not a legal tender.Taiwan - Legal /Banking banFinancial institutions are not allowed to facilitate bitcoin transactions. Regulators have warned the public that bitcoin does not have legal protection, "as the currency is not issued by any monetary authority and is therefore not entitled to legal claims or guarantee of conversion".Financial institutions have been warned by regulators that necessary regulatory actions may be taken if they use bitcoin. TaiwanOn 31 December 2013, Financial Supervisory Commission (Republic of China) (FSC) and CBC issued a joint statement which warns against the use of bitcoins. It is stated that bitcoins remains highly volatile, highly speculative, and is not entitled to legal claims or guarantee of conversion.On 5 January 2014, FSC chairman Tseng Ming-chung stated that FSC will not allow the installation of bitcoin ATM in Taiwan because bitcoin is not a currency and it should not be accepted by individuals and banks as payment.South Africa - LegalIn December 2014 the Reserve Bank of South Africa issued a position paper on virtual currencies whereby it declared that virtual currency had ‘no legal status or regulatory framework’. The South African Revenue Service classified bitcoin as an intangible asset.Namibia-LegalIn September 2017 the Bank of Namibia issued a position paper on virtual currencies entitled[20] wherein it declared cryptocurrency exchanges are not allowed and cryptocurrency cannot be accepted as payment for goods and services.Zimbabwe - LegalThe Reserve Bank Of Zimbabwe is sceptical about bitcoin and has not officially permitted its use. On 5 April 2017 however, BitMari, a Pan-African Blockchain platform got licensed, through its banking partner, AgriBank, to operate in the country.Nigeria - LegalAs of 17 January 2017, The Central Bank of Nigeria (CBN) has passed a circular to inform all Nigerian banks that bank transactions in bitcoin and other virtual currencies have been banned in Nigeria.However, during the year, the CBN (through its Deputy Director on Banking and Payments System, Musa Itopa-Jimoh) clarified the circular and its stance on bitcoin, citing that a lot of people misinterpret the central bank’s recent warning. It noted that "Central bank cannot control or regulate bitcoin. Central bank cannot control or regulate blockchain. Just the same way no one is going to control or regulate the Internet. We don’t own it".Later on, a committee was set up by the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) to look into the possibility of the country adopting the technology driving bitcoin and other digital currencies – blockchain. The committee has submitted its report but "several sub-committees are still working on the issue" according to the Director, Banking & Payments System Department at CBN, Mr. ‘Dipo Fatokun.Israel- Yes- LegalAs of 2017, the Israel Tax Authorities issued a statement saying that bitcoin and other cryptocurrencies would not fall under the legal definition of currency, and neither of that of a financial security, but of a taxable asset.[55] Each time a bitcoin is sold, the seller would have to pay a capital gains tax of 25%. Miners, traders of bitcoins would be treated as businesses and would have to pay corporate income tax as well as charge a 17% VATSaudi Arabia - Legal - Banking banFinancial institutions are warned from using bitcoin. The Saudi Arabian Monetary Authority (SAMA) has warned from using bitcoin as it is high risk and its dealers will not be guaranteed any protection or rights.Jordan-Legal- Banking banThe government of Jordan has issued a warning discouraging the use of bitcoin and other similar systems.The Central Bank of Jordan prohibits banks, currency exchanges, financial companies, and payment service companies from dealing in bitcoins or other digital currencies. While it warned the public of risks of bitcoins, and that they are not legal tender, bitcoins are still accepted by small businesses and merchants.Lebanon-LegalThe government of Lebanon has issued a warning discouraging the use of bitcoin and other similar systems.Turkey-LegalBitcoin is not regulated as it is not considered to be electronic money according to the law.Iran-Legal-Banking banFinancial institutions are not allowed by central bank to facilitate bitcoin transactions. In April 2018, Central Bank of the Islamic Republic of Iran issued a statement banning the country’s banks and financial institutions from dealing with cryptocurrencies, citing money laundering and terrorism financing risks.Bangladesh - Legal/Banking banFinancial institutions are not allowed to facilitate bitcoin transactions. In September 2014, Bangladesh Bank said that "anybody caught using the virtual currency could be jailed under the country's strict anti-money laundering laws".India -Legal /Banking banFinance minister Arun Jaitley, in his budget speech on 1 February 2018, stated that the government will do everything to discontinue the use of bitcoin and other virtual currencies in India for criminal uses. He reiterated that India does not recognise them as legal tender and will instead encourage blockchain technology in payment systems."The government does not recognise cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these cryptoassets in financing illegitimate activities or as part of the payments system," Jaitley said.In early 2018 India's central bank, the Reserve Bank of India (RBI) announced a ban on the sale or purchase of cryptocurrency for entities regulated by RBI.In 2019, a petition has been filed[by whom?] with the Supreme Court of India challenging the legality of cryptocurrencies and seeking a direction or order restraining their transaction.Countries That Say No to BitcoinWhile Bitcoin is welcomed in many parts of the world, a few countries are wary because of its volatility, decentralized nature, perceived threat to current monetary systems and links to illicit activities like drug trafficking and money laundering. Some nations have outright banned the digital currency while others have tried to cut off any support from the banking and financial system essential for its trading and use.List of some of the Countries Bitcoin-Cryptos are illegalChina - IllegalBitcoin is essentially banned in China. All banks and other financial institutions like payment processors are prohibited from transacting or dealing in Bitcoin. Cryptocurrency exchanges are banned. The government has cracked down on miners. (Related reading How Bitcoin Can Change The World)Russia - RegulatedBitcoin is not regulated in Russia, though its use as payment for goods or services is illegal. As of November 2016 declared, bitcoins are "not illegal" according to the Federal Tax Service of Russia.[50] Deputy Finance Minister of the Russian Federation Alexei Moiseev said in September 2017 it's "probably illegal" to accept cryptocurrencies payments.[51] However bitcoin market sites are blocked and in court decisions stated that bitcoin is a currency surrogate which is outlawed on the territory of Russian Federation.Vietnam - IllegalVietnam’s government and its state bank maintain that Bitcoin is a not a legitimate payment method, though it is not regulated as an investment.Bolivia, Columbia and Ecuador not legalEl Banco Central de Bolivia has banned the use of Bitcoin and other cryptocurrencies. Columbia does not allow Bitcoin use or investment. Bitcoin and other cryptocurrencies were banned in Ecuador by a majority vote in the national assembly.Algeria it is illegalAccording to the "Journal Officiel" (28 December 2017)The purchase, sale, use, and holding of so-called virtual currency is prohibited. Virtual currency is that used by internet users via the web. It is characterized by the absence of physical support such as coins, notes, payments by cheque or credit card. Any breach of this provision is punishable in accordance with the laws and regulations in force.Egypt it is illegal"Egypt’s Dar al-Ifta, the primary Islamic legislator in Egypt, has issued a religious decree classifying commercial transactions in bitcoin as haram (prohibited under Islamic law).Morocco it is illegalOn 20 November 2017 the exchange office issued a public statement in which it declared, "The Office des Changes wishes to inform the general public that the transactions via virtual currencies constitute an infringement of the exchange regulations, liable to penalties and fines provided for by [existing laws] in force."The following day, the monetary authorities also reacted in a statement issued jointly by the Ministry of Economy and Finance, Bank Al-Maghrib and the Moroccan Capital Market Authority (AMMC), warning against risks associated with bitcoin, which may be used "for illicit or criminal purposes, including money laundering and terrorist financing"On 19 December 2017, Abdellatif Jouahri, governor of Bank Al-Maghrib, said at a press conference held in Rabat during the last quarterly meeting of the Bank Al-Maghrib's Board of 2017 that bitcoin is not a currency but a "financial asset". He also warned of its dangers and called for a framework to be put in place for consumer protectionUnited Arab Emirates - Contradictory informationAbsolute ban. According to the Library of Congress "Under article D.7.3 of the Regulatory Framework for Stored Values and an Electronic Payment System, issued by the Central Bank of the United Arab Emirates in January 2017, all transactions in “virtual currencies” (encompassing cryptocurrencies in Arabic) are prohibited."Nevertheless, on 13 February 2018 Dubai gold trader Regal RA DMCC became the first company in the Middle East to get a license to trade cryptocurrencies, the Dubai Multi Commodities Centre said.[53] DMCC's website emphasizes the "cold storage" of cryptocurrencies and states "DMCC’s Crypto-commodities license is for Proprietary Trading in Crypto-commodities only. No initial coin offerings are permitted and no establishment of an exchange is permitted under this license."Nepal it is IllegalAbsolute ban. On 13 August 2017 Nepal Rastra Bank declared bitcoin as illegal.Pakistan it is IllegalAs of 7 April 2018, State Bank of Pakistan [SBP] has announced that bitcoin and other virtual currencies/tokens/ coins are banned in Pakistan. This news was followed right after India's restriction of converting bitcoin and cryptocurrencies into fiat currency. For organizations and institutions it is banned by State Bank of Pakistan. Bank will not get involved if there is any dispute. They will not facilitate any transaction for it.The bank has issued an official notice on its website and has also posted the news on its official Twitter account.The Bottom LineAlthough Bitcoin is now almost 10 years old, many countries still do not have explicit systems that restrict, regulate or ban the cryptocurrency. The decentralized and anonymous nature of Bitcoin has challenged many governments on how to allow legal use while preventing criminal transactions. Many countries are still analyzing ways to regulate the the cryptocurrency. Overall, Bitcoin remains in a legal gray area for much of the world.Thank you!

What Is Cryptocurrency: 21st-Century Unicorn – Or The Money Of The Future?TL;DR:Cryptocurrency is an internet-based medium of exchange which uses cryptographical functions to conduct financial transactions. Cryptocurrencies leverage blockchain technology to gain decentralization, transparency, and immutability.The most important feature of a cryptocurrency is that it is not controlled by any central authority: the decentralized nature of the blockchain makes cryptocurrencies theoretically immune to the old ways of government control and interference.Cryptocurrencies can be sent directly between two parties via the use of private and public keys. These transfers can be done with minimal processing fees, allowing users to avoid the steep fees charged by traditional financial institutions.Logically, everyone wants to invest in cryptocurrency and be rich overnight because it is the new wave, Yes, it has made a lot of people rich but you cannot be rich overnight as it is a process. The problem remains that a lot of people do not know the right questions to ask and also the right investment platform to invest. From my experience, investing with the platform (www. cryptomartfx. com) where you earn 10% of whatever you invest in 10days is a very reliable platform that i have personally tested several times and never been disappointed. Also, they offer referral services where you can refer people and also make money from the process. This is not an illusion as it is very real.NB- All of my writings can be verified with further research if you want.Today cryptocurrencies (Buy Crypto) have become a global phenomenon known to most people. In this guide, we are going to tell you all that you need to know about cryptocurrencies and the sheer that they can bring into the global economic system.Nowadays, you‘ll have a hard time finding a major bank, a big accounting firm, a prominent software company or a government that did not research cryptocurrencies, publish a paper about it or start a so-called blockchain-project. (Take our blockchain courses to learn more about the blockchain)“Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us.” – Thomas Carper, US-SenatorBut beyond the noise and the press releases the overwhelming majority of people – even bankers, consultants, scientists, and developers – have very limited knowledge about cryptocurrencies. They often fail to even understand the basic concepts.So let‘s walk through the whole story. What are cryptocurrencies?Understanding Cryptocurrency Basics 101Where did cryptocurrency originate?Why should you learn about cryptocurrency?And what do you need to know about cryptocurrency?How cryptocurrency works?Few people know, but cryptocurrencies emerged as a side product of another invention. Satoshi Nakamoto, the unknown inventor of Bitcoin, the first and still most important cryptocurrency, never intended to invent a currency.In his announcement of Bitcoin in late 2008, Satoshi said he developed “A Peer-to-Peer Electronic Cash System.“His goal was to invent something; many people failed to create before digital cash.Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It’s completely decentralized with no server or central authority. – Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.The single most important part of Satoshi‘s invention was that he found a way to build a decentralized digital cash system. In the nineties, there have been many attempts to create digital money, but they all failed.… after more than a decade of failed Trusted Third Party based systems (Digicash, etc), they see it as a lost cause. I hope they can make the distinction, that this is the first time I know of that we’re trying a non-trust based system. – Satoshi Nakamoto in an E-Mail to Dustin TrammellAfter seeing all the centralized attempts fail, Satoshi tried to build a digital cash system without a central entity. Like a Peer-to-Peer network for file sharing.This decision became the birth of cryptocurrency. They are the missing piece Satoshi found to realize digital cash. The reason why is a bit technical and complex, but if you get it, you‘ll know more about cryptocurrencies than most people do. So, let‘s try to make it as easy as possible:To realize digital cash you need a payment network with accounts, balances, and transaction. That‘s easy to understand. One major problem every payment network has to solve is to prevent the so-called double spending: to prevent that one entity spends the same amount twice. Usually, this is done by a central server who keeps record about the balances.In a decentralized network , you don‘t have this server. So you need every single entity of the network to do this job. Every peer in the network needs to have a list with all transactions to check if future transactions are valid or an attempt to double spend.But how can these entities keep a consensus about these records?If the peers of the network disagree about only one single, minor balance, everything is broken. They need an absolute consensus. Usually, you take, again, a central authority to declare the correct state of balances. But how can you achieve consensus without a central authority?Nobody did know until Satoshi emerged out of nowhere. In fact, nobody believed it was even possible.Satoshi proved it was. His major innovation was to achieve consensus without a central authority. Cryptocurrencies are a part of this solution – the part that made the solution thrilling, fascinating and helped it to roll over the world.What is cryptocurrency?If you take away all the noise around cryptocurrencies and reduce it to a simple definition, you find it to be just limited entries in a database no one can change without fulfilling specific conditions. This may seem ordinary, but, believe it or not: this is exactly how you can define a currency.Take the money on your bank account: What is it more than entries in a database that can only be changed under specific conditions? You can even take physical coins and notes: What are they else than limited entries in a public physical database that can only be changed if you match the condition than you physically own the coins and notes? Money is all about a verified entry in some kind of database of accounts, balances, and transactions.So, to give a proper definition – Cryptocurrency is an internet-based medium of exchange which uses cryptographical functions to conduct financial transactions. Cryptocurrencies leverage blockchain technology to gain decentralization, transparency, and immutability.How miners create coins and confirm transactionsLet‘s have a look at the mechanism ruling the databases of cryptocurrencies. A cryptocurrency like Bitcoin consists of a network of peers. Every peer has a record of the complete history of all transactions and thus of the balance of every account.A transaction is a file that says, “Bob gives X Bitcoin to Alice“ and is signed by Bob‘s private key. It‘s basic public key cryptography, nothing special at all. After signed, a transaction is broadcasted in the network, sent from one peer to every other peer. This is basic p2p-technology.Blockchain and CryptocurrencyThe transaction is known almost immediately by the whole network. But only after a specific amount of time it gets confirmed.Confirmation is a critical concept in cryptocurrencies. You could say that cryptocurrencies are all about confirmation.As long as a transaction is unconfirmed, it is pending and can be forged. When a transaction is confirmed, it is set in stone. It is no longer forgeable, it can‘t be reversed, it is part of an immutable record of historical transactions: of the so-called blockchain.Only miners can confirm transactions. This is their job in a cryptocurrency-network. They take transactions, stamp them as legit and spread them in the network. After a transaction is confirmed by a miner, every node has to add it to its database. It has become part of the blockchain.For this job, the miners get rewarded with a token of the cryptocurrency, for example with Bitcoins. Since the miner‘s activity is the single most important part of the cryptocurrency-system we should stay for a moment and take a deeper look at it.“In the next few years, we are going to see national governments take large steps towards instituting a cashless society where people transact using centralized digital currencies. Simultaneously, the decentralized cryptocurrencies – that some even view as harder money – will see increased use from all sectors.” – Caleb Chen London Trust MediaWhat is cryptocurrency mining?Principally everybody can be a miner. Since a decentralized network has no authority to delegate this task, a cryptocurrency needs some kind of mechanism to prevent one ruling party from abusing it. Imagine someone creates thousands of peers and spreads forged transactions. The system would break immediately.So, Satoshi set the rule that the miners need to invest some work of their computers to qualify for this task. In fact, they have to find a hash – a product of a cryptographic function – that connects the new block with its predecessor. This is called the Proof-of-Work. In Bitcoin, it is based on the SHA 256 Hash algorithm.Image Credit: Privacy Canada - Protecting Canadians' right to be forgottenYou don‘t need to understand the details about SHA 256. It‘s only important you know that it can be the basis of a cryptologic puzzle the miners compete to solve. After finding a solution, a miner can build a block and add it to the blockchain. As an incentive, he has the right to add a so-called coinbase transaction that gives him a specific number of Bitcoins. This is the only way to create valid Bitcoins.Bitcoins can only be created if miners solve a cryptographic puzzle. Since the difficulty of this puzzle increases the amount of computer power the whole miner’s invest, there is only a specific amount of cryptocurrency token that can be created in a given amount of time. This is part of the consensus no peer in the network can break.Revolutionary PropertiesIf you really think about it, Bitcoin, as a decentralized network of peers that keep a consensus about accounts and balances, is more a currency than the numbers you see in your bank account. What are these numbers more than entries in a database – a database which can be changed by people you don‘t see and by rules you don‘t know?“It is that narrative of human development under which we now have other fights to fight, and I would say in the realm of Bitcoin it is mainly the separation of money and state.”Basically, cryptocurrencies are entries about token in decentralized consensus-databases. They are called CRYPTOcurrencies because the consensus-keeping process is secured by strong cryptography. Cryptocurrencies are built on cryptography. They are not secured by people or by trust, but by math. It is more probable that an asteroid falls on your house than that a bitcoin address is compromised.Describing the properties of cryptocurrencies we need to separate between transactional and monetary properties. While most cryptocurrencies share a common set of properties, they are not carved in stone.Understanding cryptocurrency properties1) Irreversible: After confirmation, a transaction can‘t be reversed. By nobody. And nobody means nobody. Not you, not your bank, not the president of the United States, not Satoshi, not your miner. Nobody. If you send money, you send it. Period. No one can help you, if you sent your funds to a scammer or if a hacker stole them from your computer. There is no safety net.2) Pseudonymous: Neither transactions nor accounts are connected to real-world identities. You receive Bitcoins on so-called addresses, which are randomly seeming chains of around 30 characters. While it is usually possible to analyze the transaction flow, it is not necessarily possible to connect the real-world identity of users with those addresses.3) Fast and global: Transactions are propagated nearly instantly in the network and are confirmed in a couple of minutes. Since they happen in a global network of computers they are completely indifferent of your physical location. It doesn‘t matter if I send Bitcoin to my neighbor or to someone on the other side of the world.4) Secure: Cryptocurrency funds are locked in a public key cryptography system. Only the owner of the private key can send cryptocurrency. Strong cryptography and the magic of big numbers make it impossible to break this scheme. A Bitcoin address is more secure than Fort Knox.5) Permissionless: You don‘t have to ask anybody to use cryptocurrency. It‘s just a software that everybody can download for free. After you installed it, you can receive and send Bitcoins or other cryptocurrencies. No one can prevent you. There is no gatekeeper.What is Cryptocurrency: Monetary properties1) Controlled supply: Most cryptocurrencies limit the supply of the tokens. In Bitcoin, the supply decreases in time and will reach its final number sometime around the year 2140. All cryptocurrencies control the supply of the token by a schedule written in the code. This means the monetary supply of a cryptocurrency in every given moment in the future can roughly be calculated today. There is no surprise.2) No debt but bearer: The Fiat-money on your bank account is created by debt, and the numbers, you see on your ledger represent nothing but debts. It‘s a system of IOU. Cryptocurrencies don‘t represent debts, they just represent themselves.To understand the revolutionary impact of cryptocurrencies you need to consider both properties. Bitcoin as a permissionless, irreversible, and pseudonymous means of payment is an attack on the control of banks and governments over the monetary transactions of their citizens. You can‘t hinder someone to use Bitcoin, you can‘t prohibit someone to accept a payment, you can‘t undo a transaction.As money with a limited, controlled supply that is not changeable by a government, a bank or any other central institution, cryptocurrencies attack the scope of the monetary policy. They take away the control central banks take on inflation or deflation by manipulating the monetary supply.“While it’s still fairly new and unstable relative to the gold standard, cryptocurrency is definitely gaining traction and will most certainly have more normalized uses in the next few years. Right now, in particular, it’s increasing in popularity with the post-election market uncertainty. The key will be in making it easy for large-scale adoption (as with anything involving crypto) including developing safeguards and protections for buyers/investors. I expect that within two years, we’ll be in a place where people can shove their money under the virtual mattress through cryptocurrency, and they’ll know that wherever they go, that money will be there.” – Sarah Granger, Author, and Speaker.Understanding cryptocurrency: Dawn of a new economyMostly due to its revolutionary properties cryptocurrencies have become a success their inventor, Satoshi Nakamoto, didn‘t dare to dream of it. While every other attempt to create a digital cash system didn‘t attract a critical mass of users, Bitcoin had something that provoked enthusiasm and fascination. Sometimes it feels more like religion than technology.Cryptocurrencies are digital gold. Sound money that is secure from political influence. Money promises to preserve and increase its value over time. Cryptocurrencies are also a fast and comfortable means of payment with a worldwide scope, and they are private and anonymous enough to serve as a means of payment for black markets and any other outlawed economic activity.But while cryptocurrencies are more used for payment, its use as a means of speculation and a store of value dwarfs the payment aspects. Cryptocurrencies gave birth to an incredibly dynamic, fast-growing market for investors and speculators. Exchanges like Okcoin, Poloniex or shapeshift enable the trade of hundreds of cryptocurrencies. Their daily trade volume exceeds that of major European stock exchanges.At the same time, the praxis of Initial Coin Distribution (ICO), mostly facilitated by Ethereum‘s smart contracts, gave life to incredibly successful crowdfunding projects, in which often an idea is enough to collect millions of dollars. In the case of “The DAO,” it has been more than 150 million dollars.In this rich ecosystem of coins and token, you experience extreme volatility. It‘s common that a coin gains 10 percent a day – sometimes 100 percent – just to lose the same the next day. If you are lucky, your coin‘s value grows up to 1000 percent in one or two weeks.Cryptocurrency listWhile Bitcoin remains by far the most famous cryptocurrency and most other cryptocurrencies have zero non-speculative impact, investors and users should keep an eye on several cryptocurrencies. Here we present the most popular cryptocurrencies of today.BitcoinThe one and only, the first and most famous cryptocurrency. Bitcoin serves as a digital gold standard in the whole cryptocurrency-industry, is used as a global means of payment and is the de-facto currency of cyber-crime like darknet markets or ransomware. After seven years in existence, Bitcoin‘s price has increased from zero to more than 650 Dollar, and its transaction volume reached more than 200.000 daily transactions.There is not much more to say – Bitcoin is here to stay.The brainchild of young crypto-genius Vitalik Buterin has ascended to the second place in the hierarchy of cryptocurrencies. Other than Bitcoin its blockchain does not only validate a set of accounts and balances but of so-called states. This means that ethereum can not only process transactions but complex contracts and programs.This flexibility makes Ethereum the perfect instrument for blockchain -application. But it comes at a cost. After the Hack of the DAO – an Ethereum based smart contract – the developers decided to do a hard fork without consensus, which resulted in the emerge of Ethereum Classic. Besides this, there are several clones of Ethereum, and Ethereum itself is a host of several Tokens like DigixDAO and Augur. This makes ethereum more a family of cryptocurrencies than a single currency.RippleWhile Ripple has a native cryptocurrency – XRP – it is more about a network to process IOUs than the cryptocurrency itself. XRP, the currency, doesn‘t serve as a medium to store and exchange value, but more as a token to protect the network against spam.Ripple, unlike Bitcoin and ethereum, has no mining since all the coins are already pre-mined. Ripple has found immense value in the financial space as a lot of banks have joined the Ripple network.LitecoinLitecoin was one of the first cryptocurrencies after Bitcoin and tagged as the silver to the digital gold bitcoin. Faster than bitcoin, with a larger amount of token and a new mining algorithm, Litecoin was a real innovation, perfectly tailored to be the smaller brother of bitcoin. “It facilitated the emerge of several other cryptocurrencies which used its codebase but made it, even more, lighter“. Examples are Dogecoin or Feathercoin.While Litecoin failed to find a real use case and lost its second place after bitcoin, it is still actively developed and traded and is hoarded as a backup if Bitcoin fails.MoneroMonero is the most prominent example of the CryptoNight algorithm. This algorithm was invented to add the privacy features Bitcoin is missing. If you use Bitcoin, every transaction is documented in the blockchain and the trail of transactions can be followed. With the introduction of a concept called ring-signatures, the CryptoNight algorithm was able to cut through that trail.The first implementation of CryptoNight, Bytecoin, was heavily premined and thus rejected by the community. Monero was the first non-premined clone of bytecoin and raised a lot of awareness. There are several other incarnations of cryptonote with their own little improvements, but none of it did ever achieve the same popularity as Monero.Monero‘s popularity peaked in summer 2016 when some darknet markets decided to accept it as a currency. This resulted in a steady increase in the price, while the actual usage of Monero seems to remain disappointingly small.Besides those, there are hundreds of cryptocurrencies of several families. Most of them are nothing more than attempts to reach investors and quickly make money, but a lot of them promise playgrounds to test innovations in cryptocurrency-technology.The Evolution of CryptocurrenciesYour standard cryptocurrency has evolved significantly over time. One of the most significant crypto implementations happens to be stablecoins, aka cryptocurrencies that use special cryptography to remain price stable. There are three kinds of stablecoins in the market:Fiat-backed.Crypto-backed.Algorithm-based (seignorage).If you wish to learn more about stablecoins then do check out our guide on the same. While there is no need to get into the details, let’s see why these have exploded in popularity in recent times.The best of both worlds: One of the most attractive features of stablecoins is the fact that it provides you with the best of both worlds, fiat, and crypto. The lack of stability and extreme volatility have been often cited as the biggest reasons holding back crypto adoption. However, stablecoins completely mitigate this issue by ensuring price stability. However, despite this, it’s still based on blockchain technology and gives you the benefits of decentralization and immutability inherent in blockchain technology.DApps: Decentralized Finance (DeFi) has been touted as the future of finance and one of the biggest drivers of blockchain adoption. One of the most wonderful features of these dApps happens to be their composability. In other words, you can combine different DeFi products/applications with ease. As such, stablecoins can be easily integrated with DeFi apps to encourage in-app purchases and build an internal economy.Faster remittance: Stablecoins allow you to conduct cross-border payments and remittances at a much faster rate.Going Mainstream with Central Bank Digital Currency (CBDC)Central Bank Digital Currencies or CBDCs are a practical implementation of stablecoins that can push cryptocurrency into the mainstream market. The idea is to have a digital form of fiat money that can be used as legal tender, generated by the country’s central bank.What are the advantages of CBDC?The cost of making cash can be very high for countries living on secluded islands. CBDCs can help mitigate these costs.Traditional financial systems often deal with loads of intermediaries involved that shoot up the costs and fees involved.CBDC could be a brilliant method for banking the unbanked. According to the World Bank, around 80% of people in Indonesia, the Philippines, and Vietnam, and 30% in Malaysia and Thailand, are unbanked. In Myanmar, only 23% of people have a legit bank account. CBDC can help create an inclusive financial system.CBDC can make the global payment system a lot more resilient. Currently, the payment system is concentrated in the hands of a few large companies. Using a DLT-based coin can have a very positive effect here.According to IMF, a properly executed CBDC can counter new digital currencies. Privately-issued digital currencies can be a regulatory nightmare. A domestically-issued CBDC which is, denominated in the domestic unit of account, would help counter this problem.One of the biggest problems with cryptocurrencies is its price volatility. With CBDCs, governments can use a private blockchain to control price volatility. While this will compromise on decentralization, it can help increase the widespread usage of blockchain technology.Speaking of widespread usage of blockchain technology, utilizing CBDCs can help banks experiment more with Distributed Ledger Technology (DLT). Some central banks are considering the option of providing CBDC only to institutional market participants in order to develop DLT-based asset markets.CBDCs can increase the economy’s response to changes in the policy rate. For example, during a period of prolonged crisis, CBDCs can theoretically be used to charge negative interest rates.CBDCs can help encourage competition and innovation in the financial sector. New entrants can build on the tech to enter the payments space and provide their own solutions. It will also reduce the need for most smaller banks and non-banks to run their payments through the larger banks.As electronic and digital payments take over from physical cash, the central banks will look to replace physical cash with its electronic equivalent, i.e., CBDC. Doing this will increase the proceeds from creating money, aka, seigniorage, earned by the bank.Examples of CBDCChina and Digital Yuan.Bank of Thailand’s and Project Inthanon.The Marshall Islands and Marshallese sovereign (SOV).What is Cryptocurrency: ConclusionThe market of cryptocurrencies is fast and wild. Nearly every day new cryptocurrencies emerge, old die, early adopters get wealthy and investors lose money. Every cryptocurrency comes with a promise, mostly a big story to turn the world around. Few survive the first months, and most are pumped and dumped by speculators and live on as zombie coins until the last bagholder loses hope ever to see a return on his investment.