Home Crypto 101: A Complete Cryptocurrency Guide

What is Cryptocurrency?

A cryptocurrency is a decentralized digital cash enabled by cryptography technology. It’s designed to work over the internet. The key terms you need to understand to make your crypto education journey easy are “digital, decentralized,” and “cryptography.”

  • Crypto is “digital,” as it only exists as software. Although people commonly refer to them as “coins,” it doesn’t have a physical form.
  • It’s also “decentralized,” meaning organized authorities like the government or central banks do not issue or control it. Instead, it operates in a peer-to-peer network.
  • Lastly, “cryptography” refers to the mathematical function for securing each crypto unit to prevent double spending, creating duplicates, and copying existing units.

Now that you understand the three building blocks, you also need to learn about another common term: “Blockchain.” It refers to a distributed ledger system on a vast network of computers, made up of information blocks. In most cases, cryptocurrencies use blockchain technology. More on this in the next section.

Cryptocurrencies perform all functions of fiat money, such as storing value, facilitating transactions, and offering solutions for deferred payments. Since they are part of the more extensive blockchain network, you will soon find out that, unlike fiat, crypto is more sophisticated in many ways that make life easier. You will need a crypto wallet to store your digital coins. Since the coins are software, their wallets are also digital. In addition, they come with more safety features than physical wallets to keep you safe from online threats.

The idea of digital currencies dates back to the 1980s when American cryptographer David Chaum developed a cryptography-secured virtual coin referred to as a cyber currency. There was not much development afterwards until 2009 when the anonymous Satoshi Nakamoto launched Bitcoin, the first fully developed and functional cryptocurrency. Bitcoin was created to offer an alternative payment method that would function like traditional finance but is decentralized. It was actually meant to completely replace the fiat system.

There are over 21,000 digital currencies today including Ethereum, Litecoin, Dogecoin, Bitcoin Cash, Cardano, Tether, Tron, and Solana. The total market cap for all virtual currencies exceeds $1 trillion. Each of them was developed to offer a unique solution. For example, Ethereum was created to be a digital world computer that would offer smart contract execution and also allow developers to build apps on it. Litecoin was built to improve on the weaknesses of BTC, mainly, slow transaction speed and mining monopolies. Even as new coins emerge, the original tenets of blockchain have been maintained. Privacy, lightning-speed transactions, security, and cost-effectiveness are some of the key drivers behind the adoption of these coins.

How Does Cryptocurrency Work?

Owning virtual currencies doesn’t give you anything tangible to hold on to, unlike fiat money. Instead, they are digital and live on the internet. What you hold, however, is a key, which allows you to transact the coins associated with it.

The original idea of cryptocurrencies was to eliminate cartels, monopolies, and authorities that tend to overcontrol the money industry. To achieve that, they were created to function independently, through a decentralized technology called the blockchain. This is a distributed network of ledgers or computers that keep records of all transactions and coins held by currency users. In doing so, it helps secure the entire system and keep it autonomous. No government or authority can hence exercise control over digital currencies in any way. Even the team that developed them can’t freeze your funds, or access them.

The process of creating new coins is called mining. It involves using computer power to verify complex mathematical problems and verify transactions. Mining can be compared to digging out gold, but instead of shoving the ground, you solve cryptographic problems. The puzzles were put there by the developers of the network to help secure it through a consensus mechanism. There are mainly two types of consensus, also called block-chain verification

  • Proof-of-Work (PoW): This method involves a network of miners who allocate computers to verify transactions. All blocks must be regarded as valid for the transaction to be considered complete. That is proof that work took place. Bitcoin is an example of a virtual coin that uses PoW.
  • Proof-of-Stake (PoW): On the other hand, proof-of-stake uses a token staking system where the staked capital acts as collateral. Validators then check new blocks on the network to confirm their validity, as they propagate themselves.

Through decentralization, the entire crypto network is secured. This is possible since each member of the blockchain has the same records of transactions. If one member alters their data or introduces a corrupted record, it will be automatically rejected by the consensus of the other validators.

Cryptocurrencies, like fiat money, require a wallet for storage. Since they are software, they also need a digital platform to store them. Crypto wallets are software compatible with different digital coins and can be used to send, secure or receive tokens. They come with a receiving and sending address called the public key and private key respectively.

cryptocurrencies

What Makes Cryptocurrency Valuable?

Money has some distinct characteristics that give it value. Let’s unwrap them.

Acceptability

People recognize and accept money as money all over the world. You can travel with a dollar to Asia and it will be accepted as a means of exchange. You can still take it to Africa and it will perform the same purpose.

Fungibility

All money is the same. One unit of a 100-dollar bill is the same as all the other $100 bills across the world. This means it can be used as a proper standard of value measurement since it remains identical. Compare that to batter trade where one item, let’s say a horse wouldn’t be exactly like the other.

Durability

Money is durable. It doesn’t perish after five days like roses. So you can store it and use it in the future.

Divisibility

Money is divisible. Unlike cows and horses, money can be broken down into smaller units without destroying its value.

Stability

All the characteristics of money are important, but stability is one of the strongest features that drive the demand for money. People either spend or save money. You don’t want to get out of the house when the price of food is $5 and get to the market when it is $9. The stability function of money enables it to be a proper means of current and deferred payment, as well as to store value.

What is Blockchain and How does it Work?

A blockchain is a distributed database that records transactions across a vast network of randomly distributed computers known as nodes. To avoid single-point failure, each node in the network keeps a copy of the dealing ledger. Blockchain is constantly growing as new records, known as “blocks,” are added, and nodes are validated and updated simultaneously. It’s no surprise that the term “blockchain” was coined. It employs a type of distributed ledger technology (DLT) that prevents anyone from hacking the system or duplicating data; thus, it is immutable. Furthermore, because it is decentralized, it is not controlled by any authority, such as the government or regulatory bodies. Here are the main features of a blockchain:

  • Decentralization
  • Immutability
  • Transparency

While blockchain has grown famous for recording and securing digital coin transactions, it has also found value in many other industries. Some of its alternative uses are.”

  • Fast and affordable money transfer
  • Supply chain management
  • Internet of Things Network Management
  • Digital IDs management
  • Securing and moving enterprise data
  • Record keeping in the healthcare sector

So, how does blockchain work? Every blockchain is only complete after there is a record, a block, and a chain. The chain contains all blocks interconnected, and each of the blocks has three basic features:

  • Data: This is the information including timestamps and every other detail of the transaction.
  • Nonce: Nonce is a randomly generated whole number used only once, to yield what is called the block header hash.
  • Hash: The hash is a permanent nonce number. They come in different formats. For example, for BTC, all start with several small body-sized zeros.

The following simple steps explain the block-chain transaction process

  • Step 1: Authorized persons initiate a transaction with the necessary inputs.
  • Step 2: The trade or transaction is simultaneously recorded across distributed ledgers.
  • Step 3: Eligible nodes/computers verify the transaction and ensure it’s valid
  • Step 4: Transactions are accepted as real through a process called hashing, then added to a block. A block can contain many transactions.
  • Step 5: Once the block is completed, it’s added to the previous blocks, creating a long digital chain of blocks.

Note: When the chain of a block is created, the nonce produces a cryptographic hash, which is considered the final signature of the block.

Types of Cryptocurrency

Let’s now get deep into the major types of digital coins. There are over 12,000 cryptocurrencies as of writing this. However, they all fall within the following four main categories:

  1. Payment crypto
  2. Utility tokens
  3. Stablecoins
  4. Central Bank Digital Currencies

Classification Of Cryptocurrencies

Altcoins

The term altcoin originates from the phrase alternative to bitcoin, and it refers to all cryptocurrencies other than Bitcoin. Some popular altcoins include crypto assets like Cardano (ADA), Litecoin (LTC), Dogecoin (DOGE), Ripple (XRP), Ethereum (ETH), Binance Coin (BNB), and Tether (USDT).
The majority of altcoins follow the same framework that Bitcoin was built on. As a result, they share several similarities with Bitcoin. However, altcoins differ from Bitcoin in many ways, and in many cases, they offer investors financial products that are different from Bitcoin.
Regarding their differences from Bitcoin, some altcoins use a different process to produce and validate transactions on their blockchain. In other cases, some cryptocurrencies may use innovative features like smart contracts on their network, while others may help investors control high volatility by providing stability. Altcoins can further be divided into coins and tokens.

Coins

Coins are crypto-assets built on their own blockchain, meaning that they act as the native currency of their blockchain. For example, Ether (ETH) is the native currency on the Ethereum blockchain. Similarly, Cardano (ADA) acts as the native currency on the Cardano network.

Tokens

Tokens are crypto assets that are built on an existing blockchain. However, unlike coins, tokens do not act as the native currency on a blockchain. Rather, they are programmable digital currencies that allow for the production and execution of smart contracts.
Tokens share many similarities with fiat currencies. For example, they can be used to purchase goods and services. They can also stand as a measurement of value for real-world items.

Are Cryptocurrencies Legal?

The question of legality always comes up when discussing cryptos. Unlike fiat currencies, which are known to derive their authority from government-recognized monetary authorities, digital coins are 100% decentralized. Apart from a new type called stablecoins, cryptos are not backed by any entities like the US dollar bill. Currently, it’s challenging to build a case for the legal status of digital coins in different jurisdictions. It doesn’t matter that they have been around for over a decade now. Most governments still don’t regulate them. However, the trend has gradually started changing, with authorities in different parts of the world either completely banning or adopting formal legalization.

As of February 13, 2023, the only countries that had legalized crypto transactions for daily use were El Salvador and the Central African Republic. Bitcoin is formally accepted in those two nations as a medium of exchange. Apart from that, there are other jurisdictions that have allowed citizens to own virtual coins, but not to transact with them. For example, Japan legally recognizes BTC as property and not a currency. That means you will pay capital gains tax for holding it, just like stocks or land. China, on the other hand, has totally outlawed virtual coin exchanges and digital coin mining within its territory. The UK, India, and Russia, recently announced steps towards regulating the sector. The common trend among all these nations coming up with a legal framework is the categorization of cryptocurrencies as financial instruments, and not a means of value transfer. The US has yet to create any regulations for this sector. President Biden, however, recently talked about the need for a regulatory framework in the industry. For now, exchanges and service providers are licensed, but there is no law that directly touches digital money.

Are Cryptocurrencies Safe Investment?

Cryptocurrencies are synonymous with safety, so this is not a question. All payments are distributed, unanimous, decentralized, and immutable. There is no risk of government censorship unless you use a CEX. As an investment, digital coins can be attractive with quick, insane profits. On the other hand, it is still possible to lose money when the prices plummet suddenly. There are also risks associated with volatility, which could see your capital depreciate dramatically.

You don’t need to be scared, as thousands of investors globally are swimming in wealth courtesy of cryptos. These ordinary people were once doing average jobs but are now loaded because they invested in Bitcoin or other virtual coins.

  • Javed Khan first bought bitcoin in 2018, when it was worth $3,000 at the time. He continued buying more coins whenever the price fell. In 2020, only two years later, he cashed out part of his profits to buy a Bentley.
  • Norwegian student Kristoffer is perhaps one of the grandest success stories you will encounter. He came across Satoshi Nakamoto’s BTC white paper during his master’s degree research and decided to buy some coins. He invested only $26 then, which gave him a whopping 5000 BTC. He forgot about the investment until 2013 when he heard about it for the first time in the news. His quick math made him realize that he was already becoming a millionaire. So he sold 1,000 bitcoins and bought an apartment. He’s now worth millions of dollars.

Simply put, digital currencies fall under “high risk, high reward” opportunities. That said, one needs to evaluate different factors, such as risk tolerance, before pumping funds into these opportunities. Remember, cryptocurrencies have insane volatility compared to other assets like stocks. You also need to understand that one might earn a fortune investing in digital currencies and still lose the gains to fraudsters. So make sure you are familiar with securely storing your coins. Cold wallets are always the safest crypto storage option. Lastly, don’t invest without reading some fundamental factors about your favorite crypto asset. If you have the skills, conducting some technical analysis may help too. You want to make sure you’re getting in at the right time. Like in stock trading, buying low and selling high is the secret to profitability.

Market Risks

User Risk

Crypto users are prone to making mistakes that could see them lose their funds. Because the blockchain is immutable, it is impossible to reverse transactions. So you will most likely lose your funds if you send them to the wrong address. In addition to that, the loss of your private keys or crypto wallet password could result in the permanent loss of your money.

Regulatory Risks

Governments play a big role in any market. While it’s clear that digital coins are decentralized, they operate in territories controlled by different governments. A change in the law governing virtual currency transactions, or a sudden crackdown similar to what occurred in China in September 2017 could cause prices to plummet.

Counterparty Risks

The virtual coin industry is highly interdependent. Individuals, merchants, and different service providers depend on each other to fulfill different aspects. There is a risk that the party you’re depending on could cause you to lose money. For example, in 2014, Mt. Gox was hacked, leading to the loss of over 840,000 investors’ BTC.

Management Risks

In 2022, FTX, the fourth-largest exchange then, collapsed, causing investors to lose more than $8 billion. This might not be the last case. The lack of proper regulation allows anyone to operate as a service provider, even without relevant experience. This exposes users to the risk of losing huge sums of money due to bad management decisions.

Programming Risks

Virtual currencies are software. All platforms used in the industry, including wallets and exchanges, are digital too. A mistake in a program’s code could issue the wrong command, triggering huge losses. You may also experience bugs, which might expose you to hacking risks.

Market Manipulation

The blockchain sector is perhaps the most manipulated. Many investors have lost funds to pump-and-dump schemes, where token prices are hyped up with artificial demand to cause an increase and attract investors. As soon as the projects receive substantial amounts, the organizations or influential investors behind the manipulation cash out huge sums of money, causing prices to drop to near zero.

cryptocurrencies for beginners

Advantages & Disadvantages of Using Cryptocurrencies

Just like coins have two sides, digital currencies have several advantages and drawbacks. You need to understand them before making any investment. Here are the most important ones everyone should know.

Advantages

Anonymous Betting

Players remain anonymous when using crypto to bet. This is because they don’t disclose their identities. If you are using a decentralized wallet, even the company that created it wouldn’t know who you are, as these sites don’t ask for your private information.

No Transaction Fees

The decentralized nature of blockchain greatly reduces transaction fees that would have been incurred if intermediaries were involved. The only costs you will incur when using decentralized wallets are a slight slippage and normal network fees, which go to reward validators and miners. CEXs are mostly profit-making and may have transaction fees, but they are still very insignificant compared to sending fiat money.

Gains Cannot Be Seized

The government does not have the luxury of controlling decentralized coins in the same way that it does fiat money. Unless you are using centralized exchanges that keep custody of your private keys, there is no way the government can freeze your money when it is in digital currencies.

Fast Transactions

Money transfers can be faster than traditional fiat payment methods since there are no intermediaries involved. For example, in decentralized finance, flash loans are processed 100% without middlemen and can only take a few seconds to be disbursed.

Decentralized

Blockchain is decentralized, meaning centralized bodies or persons, such as the central bank, and any other monetary regulatory institutions do not control transactions. The system is also distributed in such a way that it eliminates monopolies and creates a self-efficient market based on a peer-to-peer model.

Secure and Private

The decentralized, unanimous, and immutable properties of blockchain-based payments make them highly secure. Any corrupt files or invalid data would be instantly declared void. In addition to that, your bank will never know when you use virtual currencies to gamble. Your bank statements won’t show these transactions.

Easy Transfer of Funds

Digital coins simplify transactions due to their trustless nature. There are no long procedures like opening a bank account. No one will need you to explain the reasons for transactions or provide documents to show where the funds are coming from.

Self-governed and Managed”

The crypto ecosystem is self-managed through a decentralized and distributed system of nodes. Decentralized autonomous organizations (DAOs) are governed by community members using a voting system. That means they make laws that are fair and best for the success of the platform.

Disadvantages

Volatile

Digital tokens are the most volatile in the entire financial industry. They can experience rapid surges and crashes without a warning. In 2021, BTC skyrocketed to $65,000 before dropping sharply to about $23,000. Something worse was experienced with the Luna coin, which lost over $2 billion in one day, before finally crashing to almost zero. Investors lost an estimated $60 billion.

Scalability

While blockchain technology is evolving immensely, the maximum number of transactions most networks can process per second is still way less than its fiat competitors. The speed of some traditional money systems like Visa is also higher than BTC and many other virtual coins.

Cybersecurity Issues

Hackers are always on the lookout for their next prey. Despite the high security of blockchain transactions, fraudsters still find ways of stealing money. Centralized exchanges and custodial wallets can easily be hacked. Sometimes, even cold wallet users can lose money to well-orchestrated phishing scams.

Rules and Regulations

Regulation in the industry is still not widespread. Investors are left in the dark, fearful that the government might enact positive or negative legislation at any time. This hinders the sector from achieving its full potential.

Illegal Transactions

Although digital coins have done a lot of good, criminals have also found a way of using them to transact and promote their illegal activities, such as money laundering. They can also be used to purchase outlawed products like drugs. It is widely alleged that terrorists may also be using BTC and other coins to fund their activities.

How to Protect Your Cryptocurrency?

To protect your cryptocurrency, follow the best practices below:

Use a Cold Wallet

Cold wallets are not connected to the internet unlike hot wallets, therefore they also not prone to cyberattacks.

Use Secure Internet

Make sure your internet connection is secure and use a secure VPN connection. Avoid public networks.

Maintain Multiple Wallets

Diversify your crypto investment across multiple wallets. Use cold wallets for funds you do not need to access and multiple hot wallets for the crypto you use for dApps, buying NFTs etc. Do not put much of your crypto in online wallets – only what you want to use. Store the rest of your crypto in a hardware wallet. Split your funds among many hot wallets (online wallets) and cold wallets (hardware wallets).

Protect your Passwords

Never ever share your passwords or passphrase. Choose strong passwords and do not use the same passwords. Change your passwords regularly. Store your passwords and passphrase offline – safe and secure.

Beware of Phishing

Avoid any unknown or suspicious links. Do not click on links, sent via Discord/Email/etc.

Protect your Devices

Keep your antivirus software active – on your computer as well as your mobile device.

How Crypto Opened Up a New Online Gambling World

The betting industry was initially dominated by fiat service providers. While the industry was popular, players started losing faith in the system due to the rise of unfair operators. When blockchain was first introduced in 2009, it was met with slow adoption, with critics looking for any reason to dismiss it. In 2012, on SatoshiDice, a BTC slot machine was rolled online, triggering the idea of virtual currency casinos. However, no further development happened until 2014, when forward-thinking company Moon Technologies B.V. officially launched Bitcasino.io as what would be the world’s first fully-fledged online BTC gambling site. In the same year, the industry exploded with new entrants such as mBit, 7Bit, BitStarz, and Fortune Jack. While it appears as though operators made a sudden paradigm shift to blockchain-based gambling, it was actually players who stimulated the demand from players. Bitcoin gambling is considered safe and anonymous.

The advent of “provably fair” games, where players could verify the outcome of their results using blockchain technology, further fueled gamers’ migration from traditional online operators to crypto-based. Everyone was excited about being able to play with 100% assurance of fairness. Soon, more casinos started streaming in with huge bonus offers to lure clients. Today, we have hundreds or perhaps thousands of such platforms. It doesn’t end there. The virtual currency casino industry just seems to be getting started as decentralized finance and Web3 become more popular. We are likely to see more innovative blockchain-based gambling methods in the coming days, utilizing sophisticated technologies such as augmented reality to offer players deep immersion.

Best Cryptocurrency for Gambling

Some digital currencies are more popular than other crypto assets because of the unique features they offer. This section of our guide will briefly consider some of the most popular cryptocurrencies in the iGaming industry.

Bitcoin (BTC) Casinos

Bitcoin (BTC) Casinos

In 2009, Satoshi Nakamoto created Bitcoin, the world’s first cryptocurrency. Bitcoin is the first decentralized cryptocurrency, meaning that it relies on blockchain technology to function.
The Bitcoin blockchain makes use of a decentralized public ledger to record all Bitcoin transactions. Bitcoin was also the first cryptocurrency to implement robust cryptography and consensus verification (Peer-to-Peer). The basic framework of Bitcoin has been adopted by several other cryptocurrencies today.

BTC miners are tasked with the verification of transactions on the Bitcoin network. These miners make use of powerful computers to verify each block of transactions on the Bitcoin network. The verification process also leads to the creation of new Bitcoin, which serves as a reward for miners.
The verification process is commonly referred to as the proof-of-work system. Transactions on the POW network are permanently recorded on the blockchain, ensuring the validity and security of every bitcoin in the network and the entire network. There have been many concerns regarding the activities of Bitcoin miners due to the vast amounts of energy the mining activities consume.

Currently, there are more than 18.8 million BTC tokens in circulation. However, this digital asset has a maximum supply capped at 21 million coins. When writing this guide, BTC has a total market cap worth over $1 trillion, making it the world’s largest cryptocurrency in terms of value. Bitcoin has become a widely accepted payment option in the iGaming Industry. All of our listed Bitcoin crypto casinos and gambling dApps offer Bitcoin as a payment option.

Ethereum (ETH) Casinos

 Ethereum (ETH) Casinos

Ethereum is a blockchain technology platform that enables developers to create, publish, monetize, and use decentralized applications (or dApps) in a programmable way. Ether (ETH) is the primary payment option available to users of the Ethereum network.

Ether is currently the second most popular digital currency behind Bitcoin. Like Bitcoin, Ethereum also runs on a proof-of-work system, but the devs team is working to move to a proof-of-stake network. Unlike Bitcoin, more Ether coins can be produced. The Ethereum blockchain has served as a platform for the creation of many new crypto projects. These include initial coin offerings and non-fungible tokens (NFT). Similar to Bitcoin, all listed Ethereum casinos on dappGambl.com offer Ethereum as a payment option to bettors.

Bitcoin Cash (BCH) Casinos

Bitcoin Cash (BCH) Casinos

Bitcoin Cash is a digital asset that is very similar to the top crypto asset Bitcoin. This digital asset was developed after a hard fork to Bitcoin’s blockchain in 2017. Like Bitcoin, this digital asset’s maximum supply is capped at 21 million tokens.

Bitcoin Cash transactions are decentralized and anonymous. Additionally, this digital currency uses public ledgers to record all transactions on the Bitcoin Cash network. Due to the transaction speed of Bitcoin Cash, many of our listed gambling offer this digital asset as a payment option to bettors, just like our list of Bitcoin Cash Casinos does.

Tether (USDT) Casinos

Tether (USDT) Casinos

Tether is a stablecoin whose value is backed and sustained by the American dollar. As a result, Tether maintains a 1:1 value with the dollar (USD). As a result, USDT always retains a constant value of $1. Stablecoins are cryptocurrencies that are pegged to the value of fiat currencies. As a result, all stablecoins correspond to the value of the fiat currencies that back them.

Tether was the first stablecoin in the crypto space, and it performed its primary function well by controlling the volatility of digital assets. The token has also been adopted as a payment option and is offered as a payment option on most crypto casinos and gambling dApps. Due to its popularity and wide acceptance in the gambling community, our listed Tether gambling sites offer this stable coin as a payment option to bettors.

Litecoin (LTC) Casinos

litecoinLitecoin is a virtual currency that Charlie Lee created in 2011. This digital currency is was created to rival Bitcoin and shares several similarities to the crypto asset. Like Bitcoin, Litecoin is decentralized and can not be issued or controlled by central authorities like central banks or government regulators.
Litecoin also has a fixed supply of 84 million tokens.

Litecoin used to be very popular but has dropped in popularity with the creation of many other crypto assets. Currently, Litecoin is ranked as the 16 most popular cryptocurrency in the world. Litecoin is a very effective payment option, and many of our Litecoin gambling sites accept it as a means of payment on their sites.

Dogecoin

Dogecoin

Dogecoin is a popular meme coin that was launched in 2013. Like Bitcoin and Ethereum, Dogecoin runs on a proof-of-work system for recording its transactions. Doge has an unlimited supply of tokens in circulation.

Despite being a meme token, Doge has a large community of supporters that hold and trade the digital currency. Among a long list of supporters is Elon Musk, CEO of Tesla. Currently, Dogecoin has been adopted as a payment option by several top gambling platforms. As a result, you will find this digital on many of our listed crypto casinos and gambling dApps such as on Dogecoin Casinos.

Cardano (ADA) Casinos

Cardano (ADA) Casinos

Cardano is a third-generation public blockchain platform that relies on a proof-of-stake system (PoS). Compared to the Bitcoin and Ethereum blockchain, Cardano offers more stability. Additionally, the Cardano blockchain is more efficient and uses smaller amounts of energy for its activities. However, the Cardano gambling sites are not as popular as Bitcoin and Ethereum casinos.
The native token of the Cardano network is called ADA, named after 19th-century mathematician Ada Lovelace. Cardano (ADA) supply is capped at 45 billion coins.

Binance Coin (BNB) Casinos

Binance Coin (BNB) Casinos

The Binance Coin is the native token for the Binance exchange and can be used as a medium of exchange on the crypto platform. Originally developed on the Ethereum blockchain in 2017, the Binance coin has been migrated to the Binance blockchain.

BNB has a maximum supply of 200 million tokens. However, half of the total supply was sold during the coin’s initial coin offering. To drive demand, Binance buys back some coins it holds every quarter before permanently burning them.

At its inception, BNB allowed crypto traders to receive discounts on trading fees in the Binance exchange. However, the coin is now used as a payment option. These include payment for travel, entertainment, online services, and in some cases, financial services. Explore our list of Binance Coin casinos to find the one you like.

FAQs

Following the Howey Test from the 1946 Court ruling, something is considered an asset when (1) people invest money (investors), (2) the money is invested in a common enterprise, (3) investors expect to make a return, and (4) investors earn money from the efforts of other people. Although people invest in virtual coins, cryptocurrencies fail to meet these conditions because there is no common enterprise and investors don’t make money off the efforts of others. At the same time, there is a fine line between which cryptos are securities and which are not. Therefore, it’s best to stay up to date on your country’s laws so you can be the first to learn about any changes that may classify some tokens as securities.

Cryptocurrencies are taxed differently globally. Most countries classify them as property, hence attracting capital gains tax. The IRS also does the same. That is, if you hold them for more than a year, you will be taxed 0% to 20%, whereas a shorter investment period will attract 10% to 37%, depending on your tax bracket. Remember that you only pay tax on gains when selling your tokens. In that case, if you bought BTC for $20,000 and sold it after two years for $33,000, you will only pay capital gains tax on the $13,000 gain. Profits earned from gambling may be taxed or not, depending on your country. Make sure to talk to a tax advisor in your country to find out what the law says about taxation, as this varies globally.

While digital coins have been around for about two decades now, they are still new from a legal perspective. Many countries still lack proper regulatory frameworks for crypto and do not even mention them in their laws. The absence of restrictions is usually interpreted as legally acceptable since you won’t be breaking any laws using them. However, some countries like China, Egypt, Iraq, and Tunisia have clear regulations outlawing their use. It’s best to check with a legal professional in your country to learn about the legal status of virtual currencies.

You can get started with crypto by simply creating a wallet, signing up with an exchange, and buying your first digital coins. However, if you are entirely new, visit our “Cryptocurrency” section for more guidance. You will find all the guidance you need.

Like fiat money, the value of digital coins is derived from forces of supply and demand. Each currency has a unique use case that drives its market. The value of every coin goes up when more people demand it than those selling it. On the other hand, the value drops when sellers exceed buyers.

Anyone with access to the internet and a computer or mobile device can buy cryptocurrency. Most exchanges require KYC (know your customer) verification to confirm that you are of legal age before you can transact on their platform. Of course, there are many others where you can buy bitcoin without any form of verification. However, make sure you are not breaking any laws by doing so.

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Eugene Abungana

Eugene Abungana

Author | Investment Analyst, Financial Analyst, and Institutional Trader

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Fact checked by Josip Putarek