Cryptocurrency In a Nutshell

Aximetria answers 7 main questions about crypto.

What is the legal status of cryptocurrencies?
Media headlines often focus on cryptocurrency transactions being banned or restricted. This is not true. In fact, cryptocurrencies are legal in most countries worldwide.

All countries can be divided into three groups according to the degree of cryptocurrency regulation.

1. Countries where cryptocurrencies are legalized.
It means that all operations, such as possession, purchase/sale and investment are allowed for both individuals and legal entities.

This group includes Switzerland, Singapore, El Salvador and other countries.

2. Countries with a partial crypto ban.
It means that the status of the cryptocurrency remains legal, but there are restrictions to use it.

This group includes, for example, Indonesia, where individuals can buy and trade cryptocurrency but are prohibited from using it as a payment method.

3. Countries where cryptocurrency is prohibited.
There are only nine countries where you can't use cryptocurrency: Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh, and China.
How are blockchain and cryptocurrency related?
Blockchain is a technology.
Crypto is a currency.

What: blockchain is a decentralized distributed database of sequential and continuous chains of blocks.

Simply put: Blockchain is a huge database without central management. Imagine an endless Google Excel file where every transfer is typed in, and several file owners confirm that the filled cell is correct, that is blockchain. Cryptocurrencies run on blockchain.

Blockchain is an independent technology that does not need cryptocurrencies to exist. Cryptocurrency requires blockchain. Blockchain technology can be used not only for making cash payments; any information can be encrypted and used: electoral lists, medical cards, and so on.
What is cryptocurrency?
Cryptocurrency is a currency that does not exist in a physical equivalent and that works only with the help of blockchain technology. Bitcoin is a cryptocurrency.

Who created Bitcoin? No one knows for sure. Satoshi Nakomoto is credited with the creation of Bitcoin, but people still debate whether he is a person or a group of anonymous programmers behind the name.
Why do we need cryptocurrency?
1. For payments.
Some people may doubt, criticize and prohibit it, but it is already evident that cryptocurrency is the future of money. The crypto itself is as revolutionary as the Internet was once.

Cryptocurrency does not seek to replace traditional fiat money (dollars, euros, etc.) but will eventually become (and has already become) a new means of payment in the digital space.

2. For investment and trade.
Cryptocurrencies have the best rate of return among all existing investment instruments. In 2020, the Bitcoin exchange rate increased by 220%, the Ether - by 330%.

3. Granting access.
Cryptocurrency can be used as access to services within a company. For example, the Meta (ex. Facebook) has many internal services: analytical sites, editing programs, etc. Cryptocurrency allows you to pay online within the company.

Why was it necessary to invent a new payment system? If the old ones serve us perfectly. Actually, not really. Let's compare.
In the table above we used the word 'fiat'. What does it mean?
"Fiat" or "fiat money" is the traditional money we are all familiar with, including the US dollar, Euro.

The term "Fiat" (from Lat. fiat - decree, instruction, "so be it") was borrowed by the crypto community from economic theory. This word denotes currencies not backed by gold or other precious metals, whose nominal value is determined by the state.

You can often come across the concept of "fiat" from the crypto industry people. Usage examples: from fiat to crypto, "fiat transfers are available".
Where do cryptocurrencies come from?
Money is printed = and cryptocurrency is mined. While traditional money is printed on a machine, cryptocurrencies are mined by powerful computers.

How it works: Let's go back to the infinite Google Excel spreadsheet. The file owners confirm the filled cell is correct. If the cell is correct, another cell is created. So it turns out to be a chain of cells or a chain of blocks.

In the blockchain, special algorithms check and create new blocks. As soon as computer algorithms have verified the correctness of the transaction on the network, a new block is formed in the blockchain. The algorithms "thank" for checking the transaction and give a commission in the form of cryptocurrency. For the algorithms to work correctly, serious computing power is needed, and only powerful computers are capable of handling such tasks.

A miner is a person whose computers are engaged in checking the network.
How many types of cryptocurrencies are there?
The upper-level division is:
  1. Bitcoin is the first cryptocurrency, it's the oldest and most famous one.
  2. Altcoins are any cryptocurrency alternatives to Bitcoin.
What are altcoins?
There are more than 14,000 different altcoins.

The most famous alternative is Ethereum (ETH) or "Ether", the second most capitalized and most popular cryptocurrency after Bitcoin. Its goal is to fix all the disadvantages of Bitcoin and make transactions using ETH instant and with a low commission. The two founders are Vitalik Buterin and Joseph Lubin.

There are separate subspecies of altcoins: stablecoins. They attempt to peg their market value to external reference like the state currency's real exchange rate. Consequently, their exchange rate on the crypto exchange depends on the behavior of the state currency in real life.
Where can you buy cryptocurrencies?
There are different ways available to purchase cryptocurrency: from crypto exchanges, crypto brokers, and cryptowallets.

Crypto exchanges provide the most extensive opportunities for trading crypto assets: numerous coins, various trading instruments, margin trading.

Cons: overloaded interface, high probability of funds theft, and many hidden fees.

Crypto brokers are intermediaries that provide the client with more convenient interfaces for active crypto asset trading compared to exchanges. They eliminate the need for the clients to store the cryptocurrency themselves.

Cons: the client gets too bound to a specific broker and cannot transfer their assets to another one, a limited set of altcoins.

Crypto wallets are where your crypto assets are stored. The main advantage of crypto wallets is the isolated asset storage, i.e. each client can create a separate wallet (or crypto account) for each cryptocurrency. This increases the asset security level.

Cons: impossibility of trading; complex interface.
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The AML policy of Aximetria GmbH complies with the following laws and regulations of the Swiss Confederation.
Federal Act on Combating Money Laundering and terrorist financing of 10 October 1997

Ordinance on Combating Money Laundering and Terrorist Financing of 11 November 2015

FINMA Circular 2016/7 on "Video and online identification" of 3 March 2016

Regulations of the Self-Regulatory Organisation pursuant to the Anti-Money Laundering Act VQF Financial Services Standards Association regarding the Combating of Money Laundering and Terrorist Financing of 28 September 2015
VQF-Circular 2016/1 concerning Applicability of regulations issued by FINMA of 14 June 2016

VQF information leaflet for the engagement of third parties for the performance of duties of due diligence and / or as AMLA Special Department

VQF Information leaflet for issuing internal directives

Swiss Criminal Code of 21 December 1937