The digital world is ever growing and ever changing — and now new ways of paying for things in the digital world are expanding, too.
Here we look at cryptocurrencies* — what they are, if they are legal, if they are here to stay, and how you can use them.
What are cryptocurrencies?
Cryptocurrencies are digital tokens, they are not physical coins or cash. They are a type of digital money that allows people to make payments directly to each other through an online system. They were set up to allow person-to-person transactions without the need for banks.
Cryptocurrencies have no value set by law. They are simply worth what people are willing to pay for them in the market*.
How many cryptocurrencies are there?
Just as there are many different traditional currencies in the world (Australian dollar, Euro, Japanese yen), there are many different cryptocurrencies. In fact, there are more than 1300 with the most well-known of these is Bitcoin.
A new cryptocurrency can be created at any time. Bitcoin is the world’s largest cryptocurrency followed by Ethereum, Ripple, Bitcoin Cash, Cardano, and Litecoin.
Activity in cryptocurrency markets has increased a lot and prices of cryptocurrencies have risen quickly.
The fascination with these currencies appears to have been more about making money (buying them to make a profit*) rather than their use as a new and unique system for making payments.
Ups and downs of cryptocurrency.
The prices of many cryptocurrencies have been like a rollercoaster. Up and down, up and down.
For example, the price of Bitcoin increased from around US$1000 at the start of 2017 to around US$20,000 at the end of 2017 before falling to around US$7000 in early 2018.
Who invented cryptocurrency?
No one knows.
In October 2008, a group of geniuses named Satoshi Nakamoto officially unveiled a report detailing the workings of a new form of currency: Bitcoin.
Nakamoto, who was once…