What are cryptocurrencies?

A form of digital asset or money that can be exchanged in a similar way to normal currency. There’s no physical money attached to a cryptocurrency, so there are no coins or notes, only a digital record of the transaction.

This digital record is often referred to as a blockchain. A blockchain is a historical record of each transaction verified by each computer in the network. The verification is done after every transaction, for example when a cryptocurrency was sold and which account was credited. Each cryptocurrency has its own blockchain. Cryptocurrencies are only a digital representation of value which isn’t issued or guaranteed by a central bank or public authority. This means it doesn’t hold the same legal status as money.

They are generally not backed by any kind of tangible asset and are currently unregulated – meaning if something goes wrong, you won’t get any compensation. So, if you’re looking to buy or invest in Bitcoin or other types of cryptocurrency, you’ll have limited legal protection and a high risk of losing some or all of your capital.