Blockchain and Cryptocurrencies
Cryptocurrency is a relatively new term that appeared in 2008. Broadly speaking, it is a digital currency. The core principles of almost all cryptocurrencies are:
- decentralisation of issuing / supervisory bodies;
- the use of various cryptographic methods;
- collective systematisation.
Cryptocurrencies usually have no common issuing or supervisory authorities. No national bank or other government body has direct control over the issuance and value of a cryptocurrency. This explains why its value and overall status are determined solely by the theoretical consensus of all its holders.
Modern blockchain technology
Blockchain is a system that records all transactions involving a cryptocurrency. The system consists of modules, each called a "block". Each block is a decoded record of a particular cryptocurrency transaction. It also contains an encoded reference to the previous block, which in turn holds the record of the previous transaction. As a result, all information about the transactions and operations performed with particular units of a cryptocurrency can be traced back to the original record. By tracing it back, you can verify its authenticity. Bear in mind that blocks and records cannot be altered once registered, which makes it impossible to influence / alter the whole chain and makes it a secure and elegant solution for digital transactions.
Cryptocurrency trading
Although there are several different cryptocurrencies, each serving different purposes and using somewhat different methods, there is a common set of rules worth following when trading cryptocurrency:
- learn as much as possible about blockchain and its core principles;
- study the most popular cryptocurrencies and their advantages;
- carefully assess your capabilities and potential risks;
- keep up with financial news and cryptocurrency-related news;
- open an exchange account specifically for cryptocurrency trading;
- start with small amounts to learn the market;
- always research and keep improving your knowledge;
- over time, try trading larger volumes and implementing sophisticated solutions.
Cryptocurrency mining
Crypto mining is a general term for the process of verifying a transaction. It is usually done by using computing power to perform specific calculations within a shared mining system. For taking part in the calculations, miners are usually rewarded with newly mined units of the cryptocurrency. Such mining increases the total amount of cryptocurrency in circulation, affecting its public value.
Cryptocurrency payment solutions
Because cryptocurrencies emerged rapidly only a decade ago, national governments have so far had little chance to respond properly and adopt bills and regulations on the use of cryptocurrency; as a result, most government services could not be paid for in cryptocurrency. However, as the value of many cryptocurrencies grew, the governments of many countries began to show increased interest in BitCoin and some other cryptocurrencies. Many companies and financial institutions began actively developing and deploying crypto-based payment platforms and other solutions, some of which were commissioned by official governments.
Initial coin offering (ICO)
An ICO is an unregulated crowdfunding-based joint venture aimed at raising funds for a newly created cryptocurrency. It is often used by new companies to avoid the capital-raising process of finding investors that traditional investors or banks often require. During an ICO campaign, a certain percentage of the new cryptocurrency is bought by early investors in exchange for legal tender or other cryptocurrencies.
Cryptocurrency exchange licence
To set up and run a cryptocurrency exchange business, one first needs a licence. The procedure to follow depends largely on the jurisdiction in which your company will operate. However, there is usually a set of general requirements that must be met in any jurisdiction regardless.
- establishing the identity of the party;
- full compliance with anti-money-laundering rules and policies;
- a partnership with a bank or financial institution to arrange exchange into fiat currency.
Many jurisdictions offer several different licences: one for cryptocurrency exchange and another for operating cryptocurrency wallets. Before obtaining a cryptocurrency licence, it is important to understand your end goals and the operations you want to carry out.
Banking with cryptocurrencies
When it comes to cryptocurrency payments, traditional banking is still trying to offer effective legal solutions. General trends and current practice show that some economies are rapidly integrating cryptocurrencies into their national payment platforms.
Contact us now to learn more about our solutions or to get a tailored offer for trading bitcoin and other cryptocurrencies legally!