If you’ve just ventured into the cryptocurrency space, then there are certain facts you need to know. Some basic knowledge about the industry will help you to make informed decisions. Therefore, check out the top 10 cryptocurrency questions and answers outlined below.
1. How Do Cryptocurrencies Differ from other Forms of Payment
In comparison to dollars, pounds, and other fiat currencies, cryptocurrencies take advantage of blockchain technology. Thus, they are decentralized, allowing its users to have full control over how funds are sent, received, and stored. All cryptocurrencies payments are recorded on the blockchain which makes them traceable and viewable by anyone across the world. However, the transacting parties remain anonymous.
2. Which Cryptocurrency is Best to Buy Today?
Bitcoin, Ethereum, XRP, and Litecoin are some of the most popular cryptocurrencies in 2019. Nonetheless, their popularity should not be used as a yardstick for which is the best to buy. The best should be determined by what you’re out to get. Do you want a cryptocurrency that can make you a few dollars profit within a matter of weeks or an asset that has many use cases and a higher potential of being around 10 to 20 years from now?
3. What’s the Worst That Can Happen While Using Cryptocurrencies?
The worst that can happen while using cryptocurrencies is losing your own private keys. Private keys or passwords secure your wallet and once lost, they cannot be recovered. However, some wallets come with passphrases that will help to unlock them, but not very many people are of the habit of storing such phrases.
4. How Much Should I Invest in Cryptocurrency?
As a rule, never invest more than you’re ready to lose no matter how green or promising the market looks. The cryptocurrency market is a volatile one and as such, even the unexpected can happen. Predictions by professionals are only accurate to a certain degree, thus, invest wisely. One way to go, is to focus on long term investments instead of capitalizing on the short run since the level of risk is higher.
5. What are the Best Websites to Buy Bitcoin Using Fiat
Coinbase and Binance are some cryptocurrency exchanges that enable you to buy Bitcoin using a credit card. You can then trade your Bitcoin for other currencies on these exchanges. If you’ll rather use bank transfers with individuals in your region, peer-to-peer platforms can be used. You can check out our guide on how to get Bitcoin from P2P exchanges.
6. Are my Coins Safe on Exchanges?
Virtual currency exchanges have some level of security and are constantly being updated to tackle security flaws. However, it is not advisable to leave your coins on them since they are one of the most susceptible to attack. Store your cryptocurrencies in an offline wallet which are considered the safest.
7. How is the Price of Cryptocurrencies Determined?
The price of Bitcoin, Ethereum and other virtual currencies are determined by their demand and supply. Ethereum, for instance, in 2017 controlled about 30 percent of the total market cap due to its high demand by investors of ICOs at that time. Asides from high demand influencing cryptocurrencies’ price, these are assets that have a limited supply which is aimed at improving their value.
8. How Can I Check the Value of Cryptocurrencies?
Just like a book has an index page that enables you to navigate, there are also cryptocurrency indices. These are platforms that display the price, price change, daily trading voulme, market capitalization, and other data pertaining to a digital currency. Some instances of websites where you can get these data in real-time are CoinMarketCap and Trading View.
9. What are the Most Exciting Reasons to Become Involved with Digital Currencies?
Digital currencies like Bitcoin and Bitcoin cash can be used for the payments of goods and services without distance barriers. They are also non-refundable which prevents chargebacks as would be the case of PayPal and other centrally controlled means of exchange. Cryptocurrencies are decentralized and as such, you have full control on how you access, store, and transact with your funds.
10. What are the Meaning of Some Cryptocurrency Terminologies?
Like most industries, the cryptocurrency industry also has its own terms or slangs which are used to describe events. Some of the popular ones which you’ll find thrown around on Reddit, BitcoinTalk, Twitter, and other community where you’ll find cryptocurrency enthusiasts are:
- FOMO – Fear of Missing Out
- DYOR – Do your own research
- FUD – Fear, Uncertainty, and doubt
- Dapps – Decentralised Applications
- Dump – Sharp decline in the price of a cryptocurrency
- Pump – Manipulated increase in a cryptocurrency’s price
- Spike – Sharp increment in the price of a cryptocurrency
- Altcoin – A name for any Cryptocurrency besides Bitcoin
- Fiat – A country’s local currency such as dollar, pounds, euros, lira, etc.
- REKT – A crypto trader who buys at a higher price to experience falling prices is getting wrecked
- BTFD – Buy the fucking dip (advice to buy when crypto prices have declined)
- Bagholder – An investor who is still holding a cryptocurrency that has devalued and is now worthless
- HODL – Altered version of the English word ‘Hold’; used to advise a person not to sell off their cryptocurrency