What is cryptocurrency? – Telegraph.co.uk

Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complicated maths problems that generate coins. Users can also buy the currencies from brokers, then store and spend themusing cryptographic wallets.

Cryptocurrencies and applications of blockchain technology are still nascent in financial terms and more uses should be expected. Transactions including bonds,stocks and other financial assetscould eventually be traded using the technology.

Cryptocurrencies are known for being secure and providing a level of anonymity. Transactions in them cannot be faked or reversed and there tend to be low fees, making it more reliable than conventional currency. Their decentralised nature means they are available to everyone, where banks can be exclusive in who they will let open accounts.

As a new form of cash, the cryptocurrency markets have been known to take off meaning a small investment can become a large sum over night.

But the same works the other way. People look to invest in cryptocurrencies should be aware of the volatility of the market and the risks they take when buying.

Because of the level of anonymity they offer, cryptocurrencies are often associated with illegal actvity, particularly on the dark web. Users should be careful about the connotations when choosing to buy the currencies.

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What is cryptocurrency? - Telegraph.co.uk