Cryptocurrency

Wikipedia – Cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. Cryptocurrencies use decentralized control as opposed to centralized digital currency and central banking systems.
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Cryptocurrency is a modern accounting system that works in a distributed manner, stores all information about ownership in specific units. The main advantage of cryptocurrency or virtual currency is that its owner stores it on his computer or smartphone using an application called “wallet”, thanks to which only the owner has access to the cryptocurrency. At the time of the transaction, the cryptocurrency, e.g. Bitcoin, is automatically downloaded with the consent of the owner from his “wallet”, payment is made electronically, directly between his device and the payment terminal. Each cryptocurrency unit has a special, unique code, which is a security key, contains information that prevents it from being copied or re-issued. It is a much safer payment method than standard transfers and contactless payments, cryptocurrencies do not have a physical form, such as paper, they occur only in electronic form.

The most important factor for the success of cryptocurrencies was the fact that they are not regulated by any financial institution or supervised by state authorities. There is no organization or banking system that could change their market value, e.g. reduce the supply of cryptocurrency and thus artificially increase its value, in the case of ordinary currencies we often face the tendency to print money and artificially weaken a given currency. The main idea of cryptocurrencies was to make this type of payment independent of external factors. The value of each cryptocurrency is its actual price resulting from supply and demand. At the stage of creating a new cryptocurrency, only its creator decides what amount will be introduced to the market, if the cryptocurrency remains in circulation, its value is determined only by the free market.

We can distinguish the most popular cryptocurrencies:

  • Bitcoin
  • Ethereum
  • Litecoin
  • Ripple XRP
  • IOTA
  • Stellar
  • Cardano
  • Tron
  • Monero

Trading cryptocurrencies takes place electronically, without the participation of any banking system, the transaction takes place directly between the cryptocurrency owner (e.g. Bitcoin) and its buyer or service provider, if it is used in the form of payment. All cryptocurrency transactions take place in peer to peer technology. This ensures that the transaction is not supervised by any external institutions in any way. No bank or financial organization has any influence on the flow, value or amount of cryptocurrency available on the market at any given time. Cryptocurrency users are protected from account lockout, also no government official, such as a bailiff, has access to information about the possible possession of cryptocurrencies by an entity, which is why cryptocurrencies are becoming increasingly popular. In the case of cryptocurrencies, taxes apply as for any other currency, but no organization has information about the number of cryptocurrencies sold and owned, so it is not possible to enforce unpaid tax through e.g. a tax office, as is the case with traditional supervised currencies.

Cryptocurrencies guarantee users ‘freedom’ and security in every aspect, there is no control over their flow, there is no organization that could artificially affect their market value . Cryptocurrencies are not considered as a means of payment in most countries, making unit creation under the algorithm (i.e. mining cryptocurrencies) completely legal. Among other things, for the same reason, cryptocurrencies do not receive a trade tax credit as ordinary currencies, despite this, in the European Union, according to the ruling of the Court of Justice of the EU, cryptocurrencies have been officially recognized as a means of payment, they are therefore free of VAT.

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