Everything You Need to Know About Cryptocurrency

Cryptocurrency simplified

Very simply put, crypto currency is a digital form of currency. It is primarily used in online financial transactions and is based on the newly-emerged technology of blockchain. Now blockchain, as the term implies, literally refers to a chain of blocks containing transaction data secured by cryptography or encryption.

In other words, cryptocurrencies are those encrypted entries into a database which can only be read or altered upon fulfilment of specific terms and conditions. This is primarily done to ensure the security of all financial transactions online. Bitcoin and Litecoin are the two most popular forms of cryptocurrencies currently used. To proceed we need to have proper knowledge of cryptocurrency exchange.

Where can one trade in cryptocurrency?

The answer is in a cryptocurrency exchange – a website that facilitates easy buying, selling, and exchanging of cryptocurrencies with other forms of digital currencies such as Ethereum or Ripple, or even the conventional currency as in USD, AUD, or Euro.

These websites that help connect buyers of cryptocurrencies with their sellers are called trading platforms and they operate on the system of collecting a fee from each cryptocurrency transaction that takes place on the website.

Cryptocurrency trading is also possible on a direct person-to-person basis, wherein people from different parts of the world can exchange currencies on the basis of their own respective exchange rates rather than on a fixed market price. This is called direct trading.

And then as is the case with any other currency exchange system, there exists brokers for cryptocurrency too – websites which allow access to anyone for buying cryptocurrencies at a price that is determined by the broker. These brokers function in a similar manner as foreign exchange dealers.

Cryptocurrency in India – legal or illegal?

The answer to this is far from being simple, what with the Indian government having adopted a wait-and-watch policy on cryptocurrency in India. The year 2018 witnessed a huge blow to cryptocurrency investments as the RBI issued directives to all its banks and financial institutions to stop lending support to cryptocurrency exchange in the country. Now the reasons offered by the government for its decision might be valid: risk of money laundering, cryptocurrency used for financing terrorism, and weakening of government-authorized currency in light of cryptocurrency gaining momentum. Following RBI’s ban, investors can no more deal in buying, selling and exchanging of cryptocurrencies for Indian rupee though banks in India. Yet, the option of cryptocurrency trading on websites that serve as cryptocurrency exchanges still remains open.

Buy cryptocurrency with credit card

To facilitate easy trading in cryptocurrency, most of the cryptocurrency exchanges provide investors the facility of buying Bitcoins using their credit card. The process is fairly simple: you would first be required to create your account on the cryptocurrency exchange website, then verify your account by uploading some official documents such as a passport or any other national ID, before proceeding to buy cryptocurrency. Once you’ve been verified, you can place your order for cryptocurrency and pay for it using a credit card and you’re all done!