Cryptocurrency refers to digital currency, a growing technological worldwide trend. Digital currency is separate from traditional government-backed currency (also known as fiat currency) and offers greater reward in exchange for greater risk. For instance, bank fees don’t play a role here, but the institutions charging them also offer zero protection to cryptocurrency transactions. In fact, there is no consumer protection at all, however, the IRS does tax digital currency transactions as well as owned currency.
Digital currency relies on a concept called blockchain to process and secure transactions. Bitcoin, which debuted in 2009, is probably the most commonly known digital currency, and many novices probably have heard of (or suffered) unfortunate experiences related to Bitcoin in the form of ransomware, in which an unknown attacker encrypts business or consumer data and demands a payment in bitcoin(s) to release the lock on the data.
However, Bitcoin—and cryptocurrency overall—is much more than a hacker’s form of payment. It’s commonly used for investing, and users of cryptocurrency rely on digital wallets which utilize public and private keys to secure transactions.
Be forewarned, scams can and do occur in this space, as with any other incoming earning avenue, so make sure to do your research before committing to anything.
TechRepublic Premium’s glossary of cryptocurrency terms can be useful in navigating these waters. Here are 50 common cryptocurrency terms and their corresponding definitions.