Remember the cringy talk you had with your mum and dad about the birds and bees? Well, it’s high time you had another one. This time, however, you are the one who is going to be doing the educating.
Dad may have heard about it from the “millennials” in his office and someone may have mentioned it on Facebook, but does he know what it really is? And would he dare to ask you if he didn’t?
First up – the basics.
Bitcoin is one of a range of virtual currencies that have been created over the past decade or so.
You can use Bitcoin either to buy and sell things online or to hold as an investment.
You cannot draw Bitcoins out of a cash machine or use them in physical shops to pay for things – at least probably not where your dad shops.
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Cryptoassets are unregulated. Your capital is at risk.
Unlike national currencies, Bitcoin is not controlled or overseen by a central bank. It has no monetary policies and its value moves up and down based on market sentiment.
This market movement can be quite volatile and, unlike stock market routes that are usually based on economic or political news, there is often no indication of why or when a rise or fall might happen.
To illustrate this, at the end of 2017, one Bitcoin was worth around $22,000. It is now closer to $9,000.
Bitcoin and other cryptos do not respect borders – one Bitcoin is worth the same in the UK as it is in Korea, Australia and Brazil.
When using Bitcoin in certain jurisdictions, there are tax considerations though. And, just like normal cash, if you make a return on either a sale or an investment there may be tax to pay.
Bitcoin is created by “mining” or using your computer power to carry out complex algorithmic equations.
eToro has a range of education materials, including a beginner’s guide to blockchain, which looks at the technology that underpin cryptoassets.
BUY CRYPTO NOW
Cryptoassets are unregulated. Your capital is at risk.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework. Your capital is at risk.