Meaning…

In the simplest terms, cryptocurrency is a form of digital money. But unlike the money in your bank account, which is controlled by a central bank and a government, crypto is decentralized. This means it doesn’t rely on any single bank or authority to operate.

How It Works…

• Crypto: This refers to the use of powerful encryption and computer code to secure transactions and control the creation of new units. This security is what makes it nearly impossible to counterfeit.
• Currency: This refers to its function as a medium of exchange. Like traditional money, you can use it to buy, sell, and trade. However, it’s a completely digital asset—you can’t hold it in your hand.

Main Idea of Crypto

Think of a blockchain as a shared, public digital ledger. Every time a transaction is made, it’s added to a “block” and then that block is added to a chain of all previous transactions. This chain is stored and verified across a huge network of computers around the world. Because the ledger is shared and its contents are constantly verified, it’s incredibly secure and transparent.

What Makes Crypto Different from Traditional Money?

• Decentralized: No single government or bank controls it. Its value is determined by the market, not by a central authority.
• Secure: The use of cryptography makes it highly secure against fraud.
• Transparent: All transactions are publicly recorded on the blockchain, creating a clear and permanent record.
• Volatile: The price of many cryptocurrencies can change dramatically and quickly. This is one reason they are often seen as high-risk, speculative assets rather than a stable form of money.

It’s easy to get overwhelmed by crypto, especially when it comes to taxes. But you don’t have to navigate it alone. Our team at PSACPA can help you handle the complexities, so you can invest with confidence.
Call us at (301)-879-0600 or email contact@psacpa.com