Blockchains

  • Cryptocurrencies work in a decentralized form due to the technology engine called Blockchain.
  • Digital ledgers add on to all the transactions happening digitally, and they can be having tons of information stored, due to them being digital.
  • The problem of security is handled by encrypted signatures used to confirm ledger transactions.
  • People transacting in cryptocurrencies have unique secret keys and public keys, both acting as handles to identify and verify the transactions.
  • Each ledger transaction also has a unique secure handle to ensure it is approved and cannot be forged.
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Cryptocurrencies have been in the news for the wrong reasons, leading to many attempts to demolish or regulate them.

The underlying technology of cryptocurrencies makes it undeniably powerful and disruptive, and this will increase as technology moves forward.

The Value of Cryptocurrency 

Digital currencies are tricky when it comes to their value.

Initially, they had value due to their being encrypted and secure, and now there is some fluctuation. 

Cryptocurrencies have an intrinsic value mainly because of the mass adoption of the currency and the buyers, who spent old-school money to buy cryptocurrencies, have jointly agreed and decided that there is a value.

Cryptocurrencies are a new, digital, and secure form of currencies. They have special encryption techniques that make them virtually impossible to be tracked or be stolen.

Cryptocurrencies use a revolutionary method of encrypted digital distribution known as 'blockchain'.

The process of 'mining' is used to add new capital in the cryptocurrency database.

Mining is a verification process that works on the blockchain using a massive amount of computing power. The 'miners' who use such strong computing power 'earn' cryptocurrency for each verification.

Cryptocurrencies are new and constantly improved due to their digital nature.

Blockchain, the revolutionary technology is now being applied to increasingly complicated work.

Example: Ethereum Blockchain work is a decentralized verification process for contracts.

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Bitcoin was born from a crisis

In the middle of the 2008 banking crisis, a group of anarchists, libertarians, and other tech-savvy true believers created digital cash.

In August 2008, bitcoin dot org was registered as a domain. On Halloween the same year, Satoshi Nakamoto put up a whitepaper describing a decentralised system of electronic transactions that did not involve a financial institution.

The Proof of work concept existed even before bitcoin , but Satoshi Nakamoto applied this technique to the digital currency revolutionizing the way traditional transactions are set.

In fact, PoW idea was originally published by Cynthia Dwork and Moni Naor back in 1993, but the term “proof of work” was coined by Markus Jakobsson and Ari Juels in a document published in 1999.

But, returning to date, Proof of work is maybe the biggest idea behind the Nakamoto’s bitcoin white paper – published back in 2008 – because it allows trustless and distributed consensus.

Do I have to pay taxes when I buy or sell crypto?
  • Your taxes will depend on your location, how long you've held your crypto, the type of activity you're doing, and other factors. 
  • In general, you'll probably need to pay taxes or offset losses for selling but not when you buy.
  • As a fairly new asset, tax authorities are still developing crypto regulations. 
  • It's your responsibility to keep track of your taxable gains and losses and pay the right amount of tax, according to your country’s regulatory framework.

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