Cryptocurrencies allow people to transfer value without the need for a bank or payment processor. They are based on decentralised technology where transactions happen directly between peers and are underpinned by a public ledger called a blockchain. This means there are no central authorities overseeing and regulating the transaction process, which is one of the main reasons why people invest in them.

People trade cryptocurrencies by buying and selling them on a cryptocurrency exchange. They do this in the hope that their price will rise, netting them a profit. The price of a crypto can be highly volatile, so it’s important to do your research and understand the risks before investing any money. Source theinvestorscentre.co.uk

The UK tax landscape around cryptocurrency investment is evolving. For example, if you sell or exchange your cryptoassets for cash or another type of crypto, you may be liable for Capital Gains Tax. You’ll also need to consider how you store your crypto. Some people choose to keep their crypto on the exchange platform, while others use a personal digital wallet for added security.

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Choosing a reputable cryptocurrency exchange, prioritising security, conducting thorough research, diversifying your portfolio and seeking professional advice are all good practices when considering a cryptocurrency investment. However, the regulatory environment surrounding cryptocurrencies is still evolving, so there are inherent risks to consider, such as hacking incidents, cybersecurity threats and potential scams. In addition, the crypto market can be illiquid, which can impact your ability to buy or sell assets at desired prices.