Introduction to Cryptocurrency

Author: Jamie Carnarvon | Accounting Manager | HFB

Introduction to Cryptocurrency

Cryptocurrency is reshaping the world of finance, offering decentralised, digital assets powered by blockchain technology. Bitcoin, the first cryptocurrency, introduced this new system, and Ethereum expanded its possibilities with smart contracts and decentralised applications (dApps).

While Bitcoin and Ethereum remain the most well-known cryptocurrencies, a wide range of other major coins (such as Binance Coin and Solana) and altcoins exist, each serving unique purposes in the ecosystem.

A variety of income opportunities also arise from crypto, including staking, mining, trading, and yield farming, allowing users to earn rewards from their holdings.

Cryptocurrencies can be traded on platforms like Binance, CoinSpot and Swyftx, or privately through off-market exchanges, with cold storage providing a secure solution for long-term holdings.

The rise of decentralised finance (DeFi) has introduced concepts like liquidity pools and crypto loans, giving users the ability to access financial services without traditional banks.

Additionally, non-fungible tokens (NFTs) have emerged, offering digital ownership of unique assets like art, music, and virtual real estate.

Forks in blockchain protocols also play a role, leading to the creation of new cryptocurrencies, as seen with Bitcoin Cash splitting from Bitcoin.

As the cryptocurrency landscape evolves, investors and traders alike need to be aware of tax implications, whether they’re holding crypto for long-term investment or engaging in active trading. Each of these factors contributes to the exciting, dynamic nature of the crypto world.

Bitcoin, Ethereum, Main Coins, and Altcoins

While Bitcoin and Ethereum dominate the cryptocurrency space, other major coins such as Binance Coin (BNB), Cardano (ADA), and Solana (SOL) have gained significant traction. These coins often focus on solving specific blockchain challenges, such as transaction speed or energy efficiency, while supporting DeFi and NFT ecosystems.

In contrast, thousands of altcoins exist, each catering to niche purposes or experimental technology. Privacy coins like Monero aim to enhance transaction anonymity, while stablecoins such as Tether (USDT) are pegged to fiat currencies to reduce price volatility. Although these altcoins can offer higher growth potential, they come with greater risks due to their smaller market caps and varying levels of adoption.