Exciting PayPal news!

Wednesday 10th March 2021

With Elon Musk announcing that Tesla had bought $1.5 billion of Bitcoin and major banking institutions such as JP Morgan creating the JPM coin on blockchain technology, it is becoming ever more clear that cryptocurrency is not the monopoly money everyone once thought it to be. With so much money being invested into crypto, it must be worth understanding how it works.

PayPal to Accept Bitcoin

PayPal has announced that it will accept cryptocurrencies as payment on its platform. This means that you will be able to pay for purchases with cryptocurrency and PayPal will convert your digital money into fiat money (dollars) and use it to settle your bill.

It is speculated that this will be launched in the US sometime in March 2021 and gives crypto yet another thumbs up from a major institution. It may be early to say, but moves like this suggest that crypto could eventually be accepted on the high street.

Crypto terms

Below is a breakdown of some of the most common terms you’ll come across while researching cryptocurrency.

What is cryptocurrency?
A cryptocurrency (or “crypto”) is a currency like the pound sterling (£) but the difference is that it only exists digitally on a blockchain ledger.

Bitcoin
Bitcoin is a form of cryptocurrency. All Bitcoin (BTC) is cryptocurrency but not all cryptocurrency is Bitcoin. There are thousands of cryptocurrencies in existence such as Ethereum (ETH), Polkadot (DOT), Cardano (ADA) and Litecoin (LTC) to name a few.

Blockchain technology
What is revolutionary about the cryptospace is the technology that secures it. This technology is called Blockchain. Blockchain is a decentralised and distributed digital ledger that keeps record of all transactions.

Ledger
According to the Cambridge dictionary, a ledger is a book in which things are regularly recorded, especially business activities and money received or paid.

Blockchain’s other applications
Blockchain technology has many applications, not just cryptocurrency. Some game changing applications of blockchain are smart contracts, Non-Fungible Token NFTs and electronic voting.

The difference between a token and a coin
Coins are ‘native’ to their blockchain and tokens run on top of another blockchain.
i.e. Ether (ETH) is the native coin of the Ethereum blockchain and Tether (USDT) is a token on the Ethereum blockchain.

How do you buy and sell cryptocurrency?
The simplest way to buy and sell cryptocurrency is through a trusted cryptocurrency exchange such as Binance or Kraken. (These are not recommendations just examples).

How do you make real life money with cryptocurrency?
There are a number of ways people earn from crypto but some of the most popular ways are:

IMPORTANT NOTICE: None of this is financial advice and is being shared for educational purposes

  1. Day trading – Buying low and selling high. Cryptocurrency prices can be very volatile so there is a lot of opportunities for this
  2. Medium term trading – Buying and holding. Buying a cryptocurrency before it becomes popular or when the price dips and then selling it when the price gets higher months or years down the line
  3. Staking cryptocurrency – Very simply put, you can put your crypto into a staking pool with others and earn interest on it. Amounts (%) vary but if you staked Cardano ADA for instance, the average return from the crypto you staked would be around 4%
  4. Defi aka Decentralised Finance – Again, to put it simply, but these are applications that allow you to act like a bank or traditional financial institution. Companies such as Compound allow you to loan your crypto to a liquidity pool and earn interest, from borrowers. The rates tend to be significantly higher than that of an ISA or traditional savings account.

 

It is speculated that this will be launched in the US sometime in March 2021 and gives crypto yet another thumbs up from a major institution. It may be early to say, but moves like this suggest that crypto could eventually be accepted on the high street.

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