What exactly are cryptocurrencies?

What does it mean?

At its core, cryptocurrency is an alternative form of payment to cash, credit cards and cheques. The technology behind it gives you the ability to transfer directly to others without going through a third party such as a bank. This method of sending cash means you don’t have to use your credit details as collateral and allows you to be almost anonymous, in a sense.

There are many exciting uses for cryptocurrencies. For example, if you’re working abroad, you can send money back home to your family without having to deal with hefty international fees. Cryptocurrency is handy for merchants too, as it means they no longer have to worry about payment fraud or invalid checks, as people are only capable of spending what they currently have.

What types of cryptocurrencies are there?

Bitcoin, first released in 2009, is widely considered the first instance of cryptocurrency. Since the release of Bitcoin, over 4,000 alternative cryptocurrencies have been created, such as Litecoin, Dogecoin and Ethereum.

All of these different platforms offer unique benefits, such as faster transaction speeds and other general uses, so it’s best to have a proper read up on them before deciding which platform you want to invest in.

Should I use cryptocurrencies or stick to what I know?

If you’re already someone who makes a lot of online purchases and bank transfers, investing in a cryptocurrency might be the next step for you. As well as protecting you from fraud, you can also be secure in the knowledge that no one else has access to your online wallet, meaning you know exactly which transactions you’re making, when you make them, and how much they set you back.

Lots of people who have access to the internet don’t have the rights to transfer money through more traditional exchange systems, so using cryptocurrencies can make it easier to sort transactions for things you might not be able to get otherwise. Transactions made through cryptocurrencies are also often much quicker than bank transfers, cutting your waiting time down from 48 hours to mere minutes.

Where can I use cryptocurrencies?

There are a handful of UK websites and services where you can pay for items with cryptocurrencies as opposed to actual cash. Takeaways have been known to allow payment through Bitcoin, and popular retail site CeX also used to give you that option.

If you’re unsure on whether it’s worth using cryptocurrencies in your area, Coinmap is a handy website that allows you to search for places nearby that accept cryptocurrencies as payment.

Should I use them?

That really is entirely up to you and this article should be used as an initial guide that’s followed up with additional research. If you’re still unsure, there’s no harm in contacting a financial advisor to get their tuppence worth… or should that be Bitcoin worth?