Digital currencies are a comparatively new form of money that is decentralized, and that promises to put the power in the hands of the people who use the currencies, rather than in the hands of the banks. With digital currencies, when you buy or sell money, you are buying or selling virtual coins. Each time you spend or receive those coins, the transaction is recorded on a ledger that everyone who uses the coin is sent a copy of – this means that it’s almost impossible to commit fraud, and transactions are much more secure.
Digital currencies are anonymous – you have a wallet address, but others who deal with the transactions don’t know who you are – all they know is the wallet address.
There are a few different types of digital currency. Some are coin based, and some are token based. With the coin based currencies, you can ‘mine’ for money by donating your computer processing power to the network.
With token based currencies, you simply buy the currency, and can then use it. There is no mining.
Digital currencies are good for buying things online anonymously. They are also good for people who want to invest in something that has a potential for a high rate of return. The currencies are incredibly volatile, and can move several percent per day, which makes them quite high risk compared to more traditional instruments, however for those who are able to invest money that they can afford to lose, there is the potential to make some good money.
Digital Currency Resources from Paul McCarthy, Irish Digital Currency Investor –
Paul McCarthy at Wix
Digital currencies are held in a digital wallet, and this wallet also works as a tool for processing transactions, holding the ‘blockchain’ data. Wallets are typically encrypted, and you will have an address, and a complex passcode. You should save these, because if you lose them then you will lose access to the wallet – and there is no getting it back. A huge number of people have lost coins because they have either lost access to the wallet, or destroyed the hard drive that it’s on. Because of the anonymous, secure and concensus-based nature of the main cryptocurrencies, there is no ‘customer service’ that you can call to get your wallet back. There are no ‘password resets’. The responsibility falls to you to keep your account secure, and to keep an accurate record of all of that information so that you don’t lose your assets.