Frequently Asked Questions about Cryptocurrency
The rapid growth of cryptocurrency in the digital ecosystem cannot be stopped. So we decided to compile the most of the frequently asked questions about Cryptocurrency on the internet.
Cryptocurrency is basically a virtual exchange medium that uses a cryptography in order to secure transactions and control the creation of the system units. Meaning, cryptocurrency simply represents money in the digital marketplace nowhere else. It is based on an open-source software, cryptography and networking. It lets people or users avoid fees or the lowest fees as compared to what your banks are charging. The system takes part in the non-cash transactions that are anonymous while guaranteeing secure transactions.
Cryptocurrency uses complex mathematical calculations converting legible information into an uncrack-able digital code, impossible to track or crack.
In history, cryptography was born during the Second World War in order to enhance and secure international communications. Has more recently evolved and promulgated by the advent of the new freedoms facilitated by cryptocurrency.
For most people, cryptocurrency leaves people with a difficultly to fully comprehend how it works and most of all is it safe. Often people simply do not understand the mechanics of the process. With this, there are cases in which people who purchased cryptocurrencies in the market, but in the end left them in others as the holder, the worst scenario is that the balance will be lost to an insider theft or some hackers. Cryptocurrency is subject to pump and dump and this is normal, this is similar to the penny stocks. Because no one knows what scale will be adopted by the currencies, and there is uncertainty about how the community will maximize them, any cryptocurrencies are volatile relative to the traditional fiat currencies.
Basically, cryptocurrencies are known for its extreme security and anonymity to the highest level. Transactions made by this system cannot be reversed nor faked and compared to what your local bank are doing in its client charging high transaction fees. In cryptocurrency the fees are to the lowest level, making it reliable than the conventional currency in the marketplace. Its decentralized nature means they can be available to everyone, in which banks can only be available to those they permitted to open accounts.
Cryptocurrency is a new generation cash, the cryptocurrency marketplace known this that currency that could take off high value even overnight. But same works the other way around. People who invest on cryptocurrencies must be aware on its volatility in the market and the possible risk when buying it.
The high level of anonymity of cryptocurrencies make experts think that they are associated with the illegal activities on the digital marketplace, this is more to say specifically on dark web. Users should take extra careful when choosing currencies to keep.
There is no exact number of existing cryptocurrencies exist in the ecosystem, this is because the code of the cryptocurrency is an open source, this means that anyone has the chance to create their own version of cryptocurrency by just using the code. But as to this moment, the estimated cryptocurrencies in the marketplace is about more than 900, along with the data embedded on them, which can be seen on the list of registered coins.
The first cryptocurrency that was recorded in the digital data was bitcoin, created in the late 2009 and still as of now the best cryptocurrency known in the marketplace. A creation of cryptocurrencies has started emerging in the past decade and now more than 1000 cryptocurrencies can be found on the internet.
Bitcoin: This cryptocurrency was the first in the ecosystem and the most commonly traded cryptocurrency until today. In 2009 Satoshi Nakamoto developed Bitcoin, a mysterious digit who developed blockchain. For the record it has a market capitalization of $45 billion dated 2017 of July.
Ethereum: 2015 is the year Ethereum was born, a token based currency used in Ethereum blockchain, it is placed in the second in rank on the most valuable and popular cryptocurrency in the marketplace. Ethereum has market capitalization of $18 Billion as of 2017 of July. Ethereum had a very turbulent journey. After a major hole causing it to be hacked in 2016, as result it split into two currencies, the value of Ethereum in recent months has reached high as $400 but crashed to as low as 10 cents.
Ripple: a cryptocurrency uses a distributed ledger and it was created in 2012. Ripple has a feature to track the type of transaction made, not just cryptocurrency. Ripple has been used by UBS and Sandander, it has more than $6.3 billion market capitalization.
Litecoin: Litecoin is a cryptocurrency that is similarity with bitcoin, but move quickly on its developments, this includes more faster payments and processes more transaction at a time. The estimated overall value of Litecoin is more than $2.1 billion.
A cryptocurrency is an alternative way if you want to transact something besides from the use of international or national currency. This currency is created by individual, organization or corporation, it can also be created by national, local or even state governments, or they can simply arise naturally as people agreed to use them as their common currency in the marketplace.
This depends on some factors. But in general, if the kind of cryptocurrency was just recently introduced in the marketplace, the computing power needed in order to mine the coin is obviously low compared to the highly established crypto currency in the market.
These are list wherein you can acquire cryptocurrency coin.
• Accept payment for a certain goods and services offered in the market.
• Purchasing specific coins on legitimate exchangers online.
• By simply exchanging coins to someone you know or some that is near you.
• Earning it by simply mining.
Mining any type of cryptocurrencies basically needs powerful hardware and the right software. The value of the currency highly depends on the units available in the marketplace, they are carefully monitored in a very accurate process. Mining cryptocurrency is the process of generating units in the cryptocurrency.
To understand better, let us assume a large economy with billions of dollars in banks altogether. Now, since this situation is not physically possible for them to store these currency notes in banks, so they store it in a digital format with central reserve bank. The reserve bank then maintains a digital record of what it was owed to bank but doesn’t keep the notes in physical form. So whenever it needs to push money into the system and short of its notes, they will be printed and issued.
Despite the fact that the reserved bank has the capability to print as many notes, it does not do without a valid reason. This is because when more currency is printed, more money is circulated in the market, therefore this will not make people richer, this will only devalue the existing currency. The more the units in the market the more it is divided and it becomes less.
The situation is the same when it comes to cryptocurrency, the mining of cryptocurrency is monitored carefully to ensure the value of existing coins will not depreciate.
Why should I get involved in cryptocurrency?
Because most people believed that it is profitable. Anyone has the option to mine its coins or simply invest into them. The expanding ecosystem provide a multiple opportunities on the possibility of doubling or even more your current assets.
What was more convincing was that, cryptocurrency value are evaluated constantly and then re-evaluated as more people join the network. At beginning, cryptocurrency revolution was at 100$ initial investment that could brought hundreds or even thousand profits. Till date, this kind of opportunity is still available.
This is all about storing a cryptocurrency, wallet concept can be daunting a bit for the uninitiated. Basically, there are wallet software (this can be desktop, online or mobile), hardware based wallets, and of course the paper wallets. Talking about the “best” wallet in the ecosystem will be different for each one of us, it depends on a particular needs.
Wallets don’t just store cryptocurrency directly. It is accurate to think wallet as storing private keys. The Public key cryptography allows cryptocurrency to function, and uses a specific algorithms in order to generate pairs of keys. Public key is the address to which anyone can send its cryptocurrency balance. The private key allows owners spend funds from the specified address. Without the private key, public address becomes bottomless pit that you can only see; money still be sent there, but lost without a private key.
The type of wallets simply represents various ways a certain can secure their secret private key. There are two main types of cryptocurrency wallet, the hot and cold, these refers to the level or internet connectivity of the wallet. Paper wallet and hardware wallets are not actively connected to internet and considered as cold storage. Hot wallet is internet connected wallet, easy to spend, but vulnerable to cyber-attacks. A cold storage protects you from cyber-crime, but still it will be the owner’s responsibility to secure their property.
A cryptocurrency market and exchange are both service in web, allowing cryptoccurrency token holder to trade to other currency or conventional monetary to their system. According to record, there are more than 2000 cryptocurrency exchangers in the ecosystem, among the largest are Bitstamp, Cryptsy, and Coinbase.
How is the cryptocurrency value determined?
The value of cryptocurrencies are ranked in a value or unit times and the cost of exchange to buy equals the capitalization in the market. For instance 1 Steem coin is worth $1.50 on Poloniex this rate was in the previous month. But the price can move at any moment, the market capitalization is only an estimate of the overall value of the digital currency.
What are the exciting reason for you to get involved with the digital currency?
With the ability to immediately transfer cash in just a matter of seconds to anyone around the globe from its wallet without having any fees or at lowest rate. Digital currencies enables spending and receiving money 20 times easier compared to your traditional wire transfer, western union and Paypal.
The digital currencies are just like real cash, meaning this can be used to merchants that received this kind of currency that you are holding, some merchants prefer to receive cryptocurrencies. Because in in cryptocurrency ones the payment is send, there is no chances the sender can get it back compared to PayPal or Strip in which customer can perform chargeback in which merchants loose the funds.
There is a higher possibilities that in the near future, all transaction will be done in a user to user system with the help of cryptocurrencies.
Like any other reasons on the digital world, losing your password or make mistake in your transaction then you will lose your funds or the account itself forever with no chance of getting it back. Cryptocurrencies are extremely serious and there’s no second chance at all, so make sure to take extra careful to everything you do with your wallet. Once locked then it’s a good bye to your account. To make worse, your cryptocurrency wallet are easy to rob compared to a what bank has. For instance your wallet is open on a computer then anyone has access with it, your overall balance could be washed out without any trace.
Even Law enforcement at less than NSA level is not able to help out unless the thief itself is sloppy beyond belief because of its convenience of moving the funds to any cryptocurrency through anonymous transaction makes tracking nearly impossible to those individual that has no access to the real time worldwide electronic monitoring system which is no one is going to allow use in case of a stolen cryptocurrency.
The best cryptocurrency to purchase is the one that you want to hold on, whether the value goes down and goes up. I believe Bitcoin is the type of crypto that I am willing to hold even it totally goes down and will buy more eventually when the price goes really down. I don’t have any intention to sell these tokens and continue to invest in the long term because I believed that there are community behind it. One more thing focus on the established one. And only invest to what you can afford to lose.
The best time to sell a cryptocurrency is when you get 25% increase from the original purchase of your token. If it goes down, the option is to hold and wait till it gets back to higher price. As mentioned cryptocurrency are extremely volatile, you can lose 95 percent of your asset anytime or earn 95 percent.
When is the right time to invest? The best strategy that most successful people did was consistently investing over time, this strategy minimizes the strong impact of volatile prices. For instance, you want to invest on Monero, but don’t have the idea if this currency is going to go down in the next days, buying every week instead of buying them at once is the ideal way because you will have a track of the changes in the marketplace, and with the strategy you will get a higher chances of getting a good deal. In short, investing in time is ideal, because this helps you adjust on the ups and downs of the prices effectively.
At this moment, BTC or Bitcoin is experiencing an extreme volatility that may cause the SEC barrier to formulate the first ever BTC exchange traded fund or ETF.
Most people in the digital marketplace crypto community were strongly confident about United States SEC or Securities and Exchange Commission on its positive decision to drive the BTC price, allowing it to reach high record.
After international SEC announced its decision on the rejection of Winklevoss proposal that affected Bitcoin and other cryptocurrencies in the market, but on its first drop, most digital cryptocurrencies are experiencing ultra-high record in the ecosystem.
Bitcoin or BTC, the first every cryptocurrency in the digital marketplace, has gone from its media sensation to quite a few years. But upon its wake, an estimate of more than 800 new cryptocurrencies sprung in the digital market, just like mushrooms after a strong thunderstorm.
Only a few Bitcoin alternatives can be considered legit. All others can be considered as just a traditional mushroom which was used mainly as food.
It is very much understandable to have this question regarding its legality, e.g. using Bitcoin or BTC. This platform introduced a new paradigm which is away from traditional regulations and regulators that is govern by the fiat currency.
Not like counterfeit money, illegal, which is blatant example of “currency” that slants as legal, tender. But BTC is totally different. It operates in an ostensibly gray area when talking about regulation. But all of these issues boil down due to lack of rules that governs a cryptocurrency like Bitcoin, Ethereum, etc. rather than the blatant law violation.
All the questions regarding cryptocurrencies and the law depends on how these digital currency in the ecosystem are being utilized in the marketplace.
For instance, Bitcoin regulators have been concerned with its semi-anonymity and its decentralized nature in the digital marketplace. Not just in United States but the same situation towards other countries, authorities fear that the system could be used or already been used for such money laundering activities and purchase of these forbidden goods without having traced.
These activity are not helping out Bitcoin’s reputation with establishments that was prevalence of using it as major payment services in the digital marketplace, in which customers purchase illegal goods. Whether people uses Bitcoin or not as long as you are doing illegal activities it’s always be illegal. The issue here is the illegality of the activity, whether you paid something in cash, gold, Bitcoin, or any other forms of currency.
According to U.S. Treasury department Network. As 2013, purchasing well natured goods and services using cryptocurrencies like Bitcoin are not illegal. But those people or organization who mine Bitcoins and then trade them for a traditional currency or establish an exchange services on which BTC are bought and sold are then labelled as money transmitter and could subject to a special laws govern by that activity.
The legality of these cryptocurrencies, for instance Bitcoin is viewed differently by experts, but one thing that is sure, as long as it is not connected to any illicit activities, then you don’t have to worry about it. These cryptocurrencies do not exist on the list of sanctioned list currencies, its status could somewhat place a user at risk but no violation of any laws.
Every day of each year cryptocurrency is getting known by people, of course it is made to exchange secure information, in the year 2009 the first cryptocurrency was created in the name of Bitcoin. In the preceding years new cryptocurrencies follow namely, Dash, Ripple, Litecoin, etc. But among those list of cryptocurrencies in the marketplace, Bitcoin has not been beaten.
These cryptocurrencies are obviously safe and more and more people are trusting it, this is because of its decentralized feature, the transparency and how the system works.
Almost more than three million Bitcoin users are in the marketplace right now, most are doing investment in the said currency. Even though there are risk in investing this currency, because of its fluctuation, there are around more than 6,000 companies and organizations accepting Bitcoin payments.
One reasons why we should consider cryptocurrency safe is that wallet holder or buyer doesn’t need real information like credit card numbers etc. That alone ensures that you will not be known to someone. Years from now it is expected crypto currency like Bitcoin will become a bridge towards secure payments and will expand more.
Cryptocurrencies has many benefits. Basically, it is the best alternative for any transactions and even investment. In cryptocurreny you can even open an account by using fake data just to make sure and make sure that your personal data will not be embedded with your account during the deal.
Everything in cryptocurrency works in codes. Cryptocurrency like Monero, is more secure and 99.9 percent untraceable. And there are easy way to get cryptocurrency by dealing on exchanging platforms in the marketplace.
As what we keep saying, cryptocurrency is a decentralized payment system in which it allows its user to exchange even without the help of internet or the involvement of a financial institution. It has a superb authentication system and unique design to send payment at almost instant at the lowest cost anywhere in the world. Therefore, the answer the question is obviously yes!
Sending via cryptocurrency is simple yet fast, just log in on your wallet on the computer with internet connection and immediately send funds to someone that you want to send. Every account has no geographical borders and does not take country regulations, shall we say this is the easiest way to move your asset around the globe.
One’s a transaction is over, the receiver can check his/her wallet and go with another transaction. When transaction is completed, it would only take 3 seconds to 50 minutes and the coins will be received. It only need at least 6 confirmation before the transaction will be process. Fast and simple right? The transaction cost is also low to around 0.30% fee.
All cryptocurrencies are basically computer generated currencies. They exist by “mining” as its main function, its purpose is confirming record of movements and accounts known as blockchain. Coins as token are given to those miners who successfully completed a problem.
One’s a cryptocurrency is generated, they are stored in a completely secured wallet that is impossible of hacking. The coins can then be send to another wallet. Every transaction gets appended on the blockchain and verified by mining activity in the ecosystem.
Producing this coins are not unlimited, meaning they are limited and its generation velocity of the coin is variable. At first, it will be fast and in the long run it becomes slower. In case of BTC or Bitcoin, it is already known that the value of its coins is now record high, as network expands. More and more users compete a similar coins meaning coin price goes up.
There are lot of things to say about cryptocurrency, but they are usually divided into:
Completely decentralized – “Decentralization” the most common words used in crypto-economics space, and often viewed as blockchain’s, No one controls it.
Digital assets provided by something or someone – a user asset that is only to one.
Dubious currencies are controlled and emitted by one company but not supported by the community.
While most of the cryptocurrencies in the marketplace re relatively new, the potential opportunities for potential player to join the making good money are still at stake. For crypt-followers, you have seen emerging new cryptocurrencies in the market.
But, these opportunities is believe to be just temporary and wont not last forever, though market matures, it will become harder for new player to enter the game and gets money from it.
Basically, a cryptocurrency exist because there are demands, what’s the use of it if people could not maximize its function?
Now here the twist: don’t think of existing needs but needs manufacture, or any needs that people haven’t realized it yet. Just imagine if you have a good chat to Justine Bieber and he agrees to sell his prelove items using the recently created newcoin. Now you have a change of monopoly and keen purchaser, so this time it’s hard to commit mistake.
Another situation, in which some big players charges magic fees, (credit card fees and currency transfer), or long processing of the transaction because of clearing. There are even organization that process currency transfer at a long period of time. Even though everything in the system is working fine. With the use of cryptocurrency all of those alibis, secret fees, delays, etc. will be forgotten.
From what most people define, when we talk about currency, this is a generally accepted form of money, this can be paper notes, coins, which is naturally issued by the government and then circulated in the economy.
Cryptocurrency on the other hand is not that different from tokens. These tokens are issued by enthusiastic developers and someone in the community bought it (or received it for something in return) and can obviously trade them, then it becomes a cryptocurrency.
But, these tokens are more than just a cryptocurrency. They can be used in some cases in the operation of smart contracts in the network that accepts the specific token. Let us say for instance, BAT or the Basic Attention Tokens are used in advertising related service. This means that BAT value are useful for those who want to increase their engagement and will buy this type of token.
So therefore, cryptocurrencies helps the transfer of value in the community that accepts it and function as what a physical money does, as token this can be used for some cases in the blockchain.
What is the difference between cryptocurrency and digital currency? Are they both same?
Like US dollar and most currencies in the world would qualify as a digital currency. Because only a little of them exist as a physical bills. When the community is talking about them “creating” more money. What they just actually did was to ad numbers in the system.
A cryptocurrency is extremely secured cryptography, in which dollars are secured by, nothing really. Governments and banks can make money when they feel like making one, and rules should be applied on the amount of funds to be created, but in reality of life, there’s no limit at all.
As holder, you need to trust entities to transfer digital currency any time using your WU, Wire transfer, debit card, check, money-gram or just anything other than cash. They can manipulate or stop your transfer, or take your money, or fail to deliver if they feel like the transaction was incompetent.
A cryptocurrency uses a cryptography in order secure every transfers so the function of third party will not be needed anymore, because transfer can be directly send to the receiver without any interception from other.