On the other, it is completely transparent and trackable. On the one hand, cryptocurrency is entirely anonymous. Today, there are thousands of alternate cryptocurrencies with various functions and specifications. The addresses which money is sent to and from, the date & time and value of each transaction is all tracked, the only thing which isn’t is the identities of the people behind those addresses.īitcoin was the first blockchain-based cryptocurrency and remains the most popular and most valuable. Every single transaction that takes place in Bitcoin is accessible to anyone who is on the network. The paradox of cryptocurrency is that its associated data creates a trail that can suddenly make your entire financial history public information. This essentially means there is nothing to stop one user opening hundreds of ‘addresses’ and use them to transfer money between accounts without encountering any red flags, which is a reason cryptocurrencies have quickly become a preferred method of money laundering for criminals as we explored in a recent blog post. In fact, a number of exchanges legally operate in jurisdictions that do not mandate KYC, placing them in a grey area in terms of legal obligations. However, it is not mandatory to use a KYC cryptocurrency exchange to trade. When you open a traditional bank account, the bank takes record of your KYC data.
It is similar to real-world currency but for the fact it does not have any physical embodiment and uses cryptography, which makes it nearly impossible to counterfeit or double-spend.
A cryptocurrency is a digital or virtual currency which is used as a medium of exchange.