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A lot of cryptocurrencies, such as Bitcoin, Ethereum, Litecoin and Ripple, have emerged over the last 10 years and have become popular investments, but how safe are they? Here we explain what cryptocurrencies are and the risks involved with trading or investing in them.

Cryptocurrencies, also known as virtual currencies or digital currencies, are a form of electronic money. They do not physically exist as coins or notes. A cryptocurrency unit, such as a bitcoin or ether, is a digital token created from code using an encrypted string of data blocks, known as a blockchain. There are usually only a fixed number of digital currency tokens available. Cryptocurrencies are not only used as payment systems but can also be used to execute contracts and run programs.

Anyone can create a digital currency, so at any given time there can be hundreds, or even thousands, of cryptocurrencies in circulation. Virtual currencies can be bought or sold on an exchange platform using conventional money.

Some popular digital currencies, like Bitcoin can be bought or sold for cash through special ATMs. Digital currencies use blockchain technology. A blockchain is simply a decentralised database that all users share. There is no central server and nobody owns the data but everyone in the blockchain has access to all the data in the blockchain.

Users earn or create blocks units in a digital currency by solving complex cryptographic puzzles and verifying transactions, also known as mining. This is a difficult process that requires significant computing power. Blocks are then added to a blockchain where they can be used for electronic peer-to-peer payments. The blockchain tracks ownership of each bitcoin mining programs i use and lending token risks trading markets unit and holds a history of every transaction ever made on the blockchain.

Cryptocurrencies are kept in a digital wallet and can be used to pay for actual goods and services from any person willing to accept them as payment. However, they are not legal tender and may not be accepted in many places. Digital currency payments are made online, but some merchants can accept payments in store using mobile devices. Cryptocurrency networks generally have no or low transaction fees.

The relatively anonymous nature of digital currencies has made them very attractive to criminals, who may use them for money laundering and other illegal activities. Digital currencies are a popular choice of payment for transactions conducted on the dark web. Each cryptocurrency has different capabilities depending on the purpose for which it was developed.

Although digital currencies have been traded for profit, most were not created as investment vehicles. Bitcoin is primarily a digital currency. Users in the Bitcoin network, known as bitcoin miners, use computer-intensive software to validate transactions that pass through the network, earning new bitcoins in the process.

Bitcoin was developed as a decentralised global payment system; however, it has also been bought and sold in bitcoin mining programs i use and lending token risks trading markets volumes as a speculative investment. Ethereum uses blockchain technology to run an open software platform. It can process transactions, contracts and run other programs, which allow developers to create and run any program, in any programming language, on a single decentralised platform. In the Ethereum blockchain, miners work to earn ether, which is the crypto token that drives the bitcoin mining programs i use and lending token risks trading markets.

Ether can also be used to pay for fees and services within the network. Litecoin, like Bitcoin, was created as an electronic payment system; however, transactions on the Litecoin network are processed faster and there are more litecoins in circulation than there are bitcoins. Some users see Litecoin as a 'lighter' version of, or backup for, Bitcoin. Ripple was designed to complement Bitcoin by allowing any currency to be transferred between users.

Ripple is really a database where users can store and transfer value in any currency, including other cryptocurrencies, on a protected network. Ripple uses tokens that are created and distributed by the developers, rather than mined or earned like other digital currencies.

For this reason some users don't see Ripple as a true cryptocurrency, but the technology has been popular with financial institutions. The exchange platforms on which you buy and sell digital currencies are not regulated, so if the platform fails or is hacked, you will not be protected and will have no legal recourse.

Cryptocurrency failures in the past have lost investors significant amounts of real money. In most countries cryptocurrencies are not recognised as legal tender and are only regulated to the extent that they fit within existing laws, such as tax laws. A cryptocurrency is not guaranteed by bitcoin mining programs i use and lending token risks trading markets bank or government. Its value is based on its popularity at a given time, which is influenced by factors such as the number of people using it, the ease with which it can be traded or used and the perceived value of the currency and its underlying blockchain technology.

Investing in virtual currencies is considered highly speculative, as values can fluctuate significantly over short periods of time.

Just as your real wallet can be stolen by a thief, the contents of your digital wallet can be stolen by a computer hacker. Your digital wallet has a public key and a private key, like a password or a PIN. However, digital currency systems allow users to remain relatively anonymous and there is no central data bank.

If hackers steal your digital currency you have little hope of getting it back. However, according to the Australian Taxation Office ATOif you are using virtual currencies, such as bitcoins, for other purposes, you will be taxed. Here is an outline of the ATO's proposed tax treatment of crypto-currencies:.

If you decide to trade or use virtual currencies you are taking on a lot of risk with no recourse if things go wrong. Borrowing to invest Complex investments Crowd-sourced funding Financial advice International investments Invest smarter Investment warnings Company director fraud Cryptocurrencies Illegal managed investment schemes Initial coin offerings ICOs Investment seminars Investment trading software Land banking Sports betting systems Unexpected offers to buy your shares Investments paying interest Managed funds Property investment Shares.

How cryptocurrencies work Digital currencies use blockchain technology. Digital wallets Cryptocurrencies are kept in a digital wallet and can be used to pay for actual goods and services from any person willing to accept them as payment. Popular with criminals The relatively anonymous nature of digital currencies has made them very attractive to criminals, who may use them for money laundering and other illegal activities.

Bitcoin Bitcoin is primarily a digital currency. Ethereum Ethereum uses blockchain technology to run an open software platform. Litecoin Litecoin, like Bitcoin, was created as an electronic payment system; however, transactions on the Litecoin network are processed faster and there are more litecoins in circulation than there are bitcoins. Ripple Ripple was designed to complement Bitcoin by allowing any currency to be transferred between users. The risks of investing in cryptocurrencies Fewer safeguards The exchange platforms on which you buy and sell digital currencies are not regulated, so if the platform fails or is hacked, you will not be protected and will have no legal recourse.

Values fluctuate A cryptocurrency is not guaranteed by any bank or government. Your money could be stolen Just as your real wallet can be stolen by a thief, the contents of your digital wallet can be stolen by a computer hacker. You also have no protection against unauthorised or incorrect debits from your digital wallet.

Here is an outline of the ATO's proposed tax treatment of crypto-currencies: Investment bitcoin mining programs i use and lending token risks trading markets If you hold digital currencies as an investment you will pay capital gains tax on any profits bitcoin mining programs i use and lending token risks trading markets you sell them. Trading - If you trade virtual currencies for profit, the profits will form part of your assessable income. Carrying on a business - If you use cryptocurrencies to pay for or accept them as payment for goods or services, the transactions will be subject to goods and services tax GST.

Mining bitcoin - If you are mining bitcoins or other digital currencies, any profits you make will be included in your assessable income. Conducting bitcoin mining programs i use and lending token risks trading markets exchange - If you are buying and selling cryptocurrencies as an exchange service you will pay income tax on the profits and transactions will be subject to GST. Quick links Unclaimed money Publications Financial advisers register Financial counselling Payday loans Unlicensed companies list Report a scam How to complain Other languages eNewsletter.

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In the coming weeks, we will be sending out a special invitation to a limited number of people to join our pre-sale white list. You need to be on the list to be considered for a closed pre-sale of OXG tokens. Would you like to be on that list? If so, we will need to learn a little bit more about yourself. A repo is an agreement to sell assets and repurchase them on a specified future date "maturity" at a pre-agreed price.

In a CryptoRepo transaction one party borrows digital tokens from another party and commits to return these assets with interest at a future date. The Borrower provides crypto assets to the Lender as collateral, creating a secured digital transaction. Enjoy standarts of GMRA — market protocol of real world repo. It has stood the test of time, including the Lehman bankruptsy. Consider me for pre-sale White List i. Make your assets work harder. Your collateral is held safely by smart contract as escrow agent.

Raise liquidity against your holdings Get liquid assets without selling your long-term holdings. Expand your portfolio without additional equity. Borrow crypto assets to go short Crypto assets are volatile. Make money from market going down - in any asset not just the most liquid ones. Use B2C and B2B liquidity to reduce short-squeeze risk and asset-lending price re-rating. Enjoy tested financial instrument in crypto world Repo Classic.

Economically repo is as a loan secured against collateral. Collateral is custodied by a smart contract, that also acts as a clearing and settlement agent. Welcome to the future. Decentralized Connect to all market players in a secure way. Reduce risk and cost. Future-ready Use of source Ethereum crypto assets to start with.

Bitcoin and other to follow, as cross-chain technology develops. Regulated Trust and verify. Regulations ensure fair dealing and transparensy. Oxygen is to be regulated under the DLT regime in Gibraltar. The launch of Oxygen is a fresh development in a market that has seen astronomical price gains but left many mainstream investors skeptical or bewildered.

Alex Grebnev, a former Wall Street investment banker, is launching a platform, called Oxygen, that will allow cryptocurrency Holders of a cryptocurrency—institutions or private individuals—will earn money from lending it out via the Oxygen platform