Frequently Asked Questions About Cryptocurrency

Unless you’ve been living under a rock for the last year or so, then
cryptocurrencies are probably on your radar. After all, you ended up on this
page, which means that you’re looking to learn more about digital currencies. We
can’t blame you, as it’s exciting to see how quickly cryptocurrency has become
popular and is reshaping our economy in ways that many never thought possible.

We’ve built this detailed cryptocurrency FAQ guide with the goal of helping
individuals increase their knowledge on the subject. It doesn’t matter if you’re
brand new to crypto or a seasoned veteran; we’ve got details below that will
help you expand your understanding. We’ll build your knowledge from the ground
up with basics like what a cryptocurrency is, and we’ll build up to more
advanced topics, including whether it is legal to own these digital currencies.

Below, you’ll find a list of all of the questions that we’ll answer. If you’d
like to jump to a certain one to dig in, just click on that question, and you’ll
head directly to that portion of the page.

What is Cryptocurrency?

Simply put, cryptocurrency is a digital currency that’s been created from
computer code. Unlike traditional paper and coin money, cryptocurrencies don’t
have any physical coins. Instead, everything is all handled in the digital
space. As you’ll see in the next question, there are many benefits to
cryptocurrencies which may make you think about using them.

If you’d like a much deeper dive into what cryptocurrencies are, check out
this link from Blockgeeks.
On their page, you’ll find additional detail on
how cryptocurrencies came about and where they are heading.

What are the Benefits of Cryptocurrency?

There are many different benefits to these digital currencies. In this
section, we’ll give a high-level overview of some of the most significant
advantages of cryptocurrencies.

Secure

One of the most substantial benefits of cryptocurrency is the security of the
digital currencies. The reason that they are so safe is thanks to the
cryptography system that is utilized. Think of cryptography like a massive
digital puzzle system that’s impossible to crack. Unless you have a private key
for your cryptocurrencies, you won’t be able to sell it or send them elsewhere.

Fast

Cryptocurrencies are also extremely fast. Unlike some payment methods like
bank transfers and checks that can take days or weeks to clear, the majority of
crypto transactions are concluded within a matter of minutes. Thanks to this,
cryptocurrency can be an excellent choice when you need to send or receive money
in a flash.

Global Currency

When you take a trip to England, you’ll have to deal in their local currency,
the Great British Pound (GBP). While there, that currency will get you
everything you need. However, if you head back to the United States, the money
isn’t useful for much other than exchange. If you try to go into your local
grocery shop to buy groceries with GBP funds, you’ll get a funny look from the
cashier. The same is true for all global currencies out there. Unless you’re in
a region that accepts that currency, you can’t purchase anything with it.

However, with cryptocurrencies, that’s not the case. Cryptocurrency is a
global currency that can be sent and spent around the globe. There are all kinds
of different places around the world that will accept digital currency. We’ll
cover some of the more popular ones in a later question below.

In-Person and Remote Capable

Much like credit cards and PayPal, cryptocurrencies can be used both for
in-person transactions as well as remote ones. The beauty of these digital
currencies is that they will work just as well for you at a local restaurant as
they would sending funds to someone on the other side of the globe. Thanks to
these properties, cryptocurrencies are very versatile banking options.

Decentralized

One of the main properties of traditional money is that it is tied to some
form of government. US dollars fall under the US government, while the Euro
currency falls under the European Union. Because of the relation to countries or
unions, these standard currencies are overseen by the governments. That means
that the governing bodies are in control of things like supply and rates.

However, cryptocurrencies are decentralized. One of the best perks of these
digital currencies is that no governments have a say in what’s happening with
them. Instead, cryptos are overseen through a peer-to-peer internet-based
protocol.

How Many Cryptocurrencies Exist?

At the time we prepared this FAQ guide, there were over 2,100 different
cryptocurrencies available. However, this number is ever growing as new
cryptocurrencies are showing up regularly. As an example of the rapid expansion,
nearly 500 new cryptocurrencies have been added in the last five months before
our preparation of these FAQs. This represents an increase of almost 30% in that
short timeframe.

What was the First Cryptocurrency?

The first ever cryptocurrency to make it to market was Bitcoin. Launched in
January of 2009, Bitcoin came about with the idea of being a peer-to-peer
electronic cash system. Unfortunately, the early years of Bitcoin saw the
currency used for many shady activities on the dark web, such as ransom payments
and drug trafficking. However, these days, Bitcoin can be used for many
above-board things like buying homes and food.

How Can I Buy Cryptocurrency?

If you’re interested in buying a cryptocurrency, there are a couple of
different ways for you to go about it. The most popular method is to purchase
the digital currencies from an exchange. Cryptocurrency exchanges operate much
like a stock exchange. It’s a place where you can buy and sell digital
currencies. If you’d like to check out one, we’ve included a link below to
Coinbase, which is one of the most popular crypto exchanges in the industry.

Another option for buying cryptocurrencies is through the use of ATM
machines. Much like you would use a regular ATM to access cash, cryptocurrency
ATMs have been popping up around the world. Instead of being given actual coins,
you’ll receive the private key that will provide you with access to the funds
that you’ve purchased. According to Coin ATM Radar, there are currently over 3,500 of these ATMs around the globe located in over 70 countries.

Where Should I Store my Cryptocurrency?

Our suggestion for you would be to utilize a cryptocurrency wallet. Many
people make the mistake of leaving their digital coins on the exchange where
they purchased them. However, this is a risky move. By leaving them on the
exchange, there is a chance that your coins could be hacked or stolen or that
the exchange itself could go out of business and the access to your funds could
disappear forever.

After purchasing your crypto funds, you should then go ahead and transfer
them to a wallet. This is where you’ll store your funds for access and
transactions later on. Crypto wallets come in both hardware and software
formats. Software ones operate on your desktop or via a website, while hardware
ones are specialized USB sticks that protect your valuable keys.

What are the Most Popular Cryptocurrencies?

While there are over 2,000 different cryptocurrencies out there, only a
handful of them have become household names. The vast majority of the remainder
are relatively unknown to most individuals. Below, we’ll give you some insight
into some of the most popular cryptos in the market at this time.

Bitcoin

It’s only fitting that we kick things off with the first-ever cryptocurrency,
Bitcoin. Initially released in 2009, Bitcoin now has nearly a decade of history
under its belt. While it was a mostly quiet start,
Bitcoin is now the standard in the crypto market. Thanks to its rise in popularity,
Bitcoin has positioned
itself as the go-to cryptocurrency payment method around the globe. By far,
you’ll find more folks accepting Bitcoin than any other option out there.

Ethereum

With a start date in 2015, Ethereum has a much shorter track record that
Bitcoin. However, Ethereum has quickly ascended to the second-most-popular
cryptocurrency in less than three years of existence. Similar to Bitcoin,
Ethereum operates on an open-source blockchain platform.

Ripple

With roots dating back to 2012, Ripple is one of the oldest cryptocurrencies
out there. While it was originally launched under the name OpenCoin, it was
renamed Ripple Labs in 2015. Ripple has gained success recently by having banks
adopting their payment system. Most notably, American Express partnered with
Ripple in 2017 on a joint venture. We’ve included a link to Ripple’s
website if you’d like to view more information about their platform and
cryptocurrency.

Litecoin

 Another popular cryptocurrency is Litecoin. It was founded in 2011 by a
Google employee. The main difference between Litecoin and Bitcoin is that
Litecoin often has a much faster transaction confirmation process thanks to
their shorter block processing times. You can check out Litecoin’s website using
the link below if you’d like to learn more about what they have to offer.

Can I Cake Money Investing in Cryptocurrency?

It is possible to make money investing in these currencies. However, you
should be aware that cryptocurrencies are highly volatile when it comes to
pricing. That means you’re likely to face substantial and wild swings once you
buy and hold onto one for investment.

Due to these large swings, it’s possible that you’ll have the chance to make
significant returns or see massive losses depending on which way the pendulum is
swinging. As you consider buying cryptocurrency as an investment, you’ll want to
determine if you’re planning to hold the coins for a short or long period of
time. If you think that you’ll keep them for an extended period, then you don’t
need to watch things as carefully as someone that’s doing more short-term
investing.

What Determines the Price of Cryptocurrency?

As with any other currency around the world, the primary driver for the value
of a cryptocurrency is supply and demand. Basic economics teaches that as there
is increased demand or lower supply available for something, the value of it
will rise. Conversely, if there is an increased supply or lower demand, the
value will drop.

With cryptocurrencies, they all have a relatively low market cap. The market
cap is the total estimated value of all coins collectively. Why this matters is
because with a smaller market cap, the price of the coins is more likely to
fluctuate significantly compared to a more traditional stock like Apple that has
a considerably larger market cap. In short, if you’re going to invest in
cryptocurrencies, be prepared for a bumpy ride along the way. If you can’t
stomach it, then you may want to look at investing in more traditional
investment vehicles like stocks, bonds, and mutual funds.

What Can I Buy with Cryptocurrency?

You might be surprised to know that you can buy many different things with
cryptocurrency. Currently, the most widely accepted crypto for transitions is
Bitcoin. We expect that we’ll see other currencies gain broader acceptance for
purchases in the future. Below, we’ve listed out some of the things that you can
buy with Bitcoin right now.

Online Purchases

While doing your online shopping, you may be able to make some purchases with
Bitcoin and other cryptocurrencies. Currently, some major websites like
Overstock, Expedia, and Etsy allow patrons to pay using Bitcoin. Along with
those sites, there are many other online stores and websites accepting payment
via crypto funds. We expect that the number of major retailers accepting
cryptocurrency will continue to expand as time goes on.

Unfortunately, Amazon.com has yet to begin accepting Bitcoin as a form of
payment. However, many folks believe that we’ll see Amazon offer this ability
sooner rather than later. If Amazon does approve Bitcoin use on their website,
we’ll be sure to update this page with that significant information.

Store and Restaurant Purchases

If you’d like to pay for regular in-person store purchases, that’s also an
option at select retailers. In addition, some restaurants around the globe are
also accepting cryptocurrency payments. Currently, it’s mostly smaller retailers
and restaurants that have adopted this trend. However, the list is expanding
weekly. We’ve included a link to CoinMap. Using their website, you can
find local retailers and restaurants willing to accept cryptocurrency funds.

Real Estate

Another more recent development has been the ability for folks to scoop up
real estate using their Bitcoin funds. This has been very popular with Bitcoin
millionaires that invested in the currency early on. Now, we’re seeing more and
more real estate companies open to accepting Bitcoin as payment for a new home.
You can scope out some incredible properties
around the globe that are currently able to be purchased with Bitcoin and other
cryptocurrencies.

Cars

If you’re in the market for a new car, and you have an extensive collection
of Bitcoin, then you can actually purchase a new car using your funds. There are
many examples of early Bitcoin investors that hit it big buying up high-end
luxury cars like Lamborghinis using Bitcoin funds.

Currently, in the United States, many different car dealerships will accept Bitcoin as a form of payment.

Is Cryptocurrency Anonymous?

In short, the answer to this question is both yes and no. In theory, buying
and selling cryptocurrencies like Bitcoin is anonymous, as the system doesn’t
know who you are. However, the system can trace things back to your digital
profile which may be attached to things like your email address or other
identifying factors.

Unless you’re involved in some shady business, it shouldn’t matter much if
your crypto dealings are anonymous or not. We expect that many governments
around the globe will press for more clarity about who owns what in the digital
world so that they can better trace things and tax it. We’ll be sure to keep a
close eye on this, and we’ll be sure to update you if we see significant
changes.

Is it Legal to Own Cryptocurrency?

It’s a bit of a grey area when discussing the legalities of owning
cryptocurrency. The reason for this is that most governments around the globe
have not implemented any regulations yet that speak specifically to cryptos like
Bitcoin and Ethereum. In short, governments have yet to update their laws to
clearly state what is or isn’t allowed.

From what we can tell, as long as you’re not spending or receiving cryptos in
exchange for illicit activities like selling drugs, then you’re going to be
okay. However, if you are involved in anything shady, then you might be flirting
with disaster. If you just own some cryptocurrency as an investment play, we
don’t expect that you’ll have any issues.

Moving forward, we do expect that we’ll see some governments work to regulate
cryptos a bit more. For many countries, they are not a fan of the anonymity that
comes with many of these coins. This makes it hard for governments to handle
taxation and tracking of the currency. If significant changes happen to the
regulation and legality of owning cryptocurrency, we’ll be sure to cover it on
our website so that you’re always in the loop on the latest news.

Can Cryptocurrency Become Worthless?

Unfortunately, it is possible for cryptocurrencies to become worthless. The
same is true for any currency around the world. If we look at history, there
have been many significant currencies that became worthless at one point.
Notable ones include the German Mark and the Zimbabwean dollar.

Many different things could cause a currency’s value to become worthless.
Some of the potential impacts specific to cryptocurrencies include competition
from other cryptos, technical failures, political issues, and government
regulation. In general, you should never assume that any currency is safe from
failures or bumps in the road along the way.

What Happens if I Lose the Private Keys to my Cryptocurrency?

Think of your private keys much like you would a physical dollar bill. For
example, if you lose a $100 bill and can’t ever locate it again, it’s gone
forever. The same is true for your cryptocurrency private keys. If they are
lost, you’ve unfortunately lost the ability to sell or transfer the crypto funds
attached to those keys.

To help you limit the likelihood of losing your private keys, we have a
couple of suggestions for you. First, never store your private keys unsecured on
an internet-connected phone or computer. If you do this, there is a chance that
hackers can access your keys and then use them to steal your digital currency.
Unfortunately, this happens commonly, which is why we stress for you not to do
this.

Instead of storing them unsecured on a digital device, we’d urge you to write
the keys down on pieces of paper. Ideally, write down your private keys on more
than one sheet. Then, place the sheets of paper in a few different secure areas.
By doing this, you’ll be less likely to misplace things than if you only have it
in one location. Suggested safe storage places include home safes, bank safety
deposit boxes, or a home lock box.

Another option is to utilize a cryptocurrency wallet. These come in both
hardware and software formats. Hardware ones look like small USB memory sticks.
However, they are encoded to help protect your data. On the software side, many
different online wallets function via websites or your desktop to provide safe
storage for your private keys.

Additional Resources

If you’d like to gain more knowledge about cryptocurrencies, then we’ve got a
collection of other resources that you can utilize. Below, we’ve included some
of our top guides on the topic. Using these, you’ll be able to expand your
knowledge base about cryptos.

Beginner’s Guide to Cryptocurrency

For those of you that are new to the cryptocurrency realm, you’ll be able to
gain a substantial amount of understanding about cryptocurrencies through our
detailed beginner’s guide. Using the link below, you can view this page that is
packed with loads of helpful information. Even if you know nothing at this
moment, we’ll get you quickly up to speed.

Guide to Cryptocurrency Wallets

If you decide that you’re going to buy and hold cryptocurrencies, then you
should find a wallet that you can use to store your digital coins securely.
Unlike traditional money, cryptocurrencies don’t have any physical properties.
Instead, everything is digital. Below, we’ve included a link to our
cryptocurrency guide page. Here, you can learn about what these wallets are,
where to find them, how to use them, and more.

How to Mine Cryptocurrency Guide

Another hot topic in the cryptocurrency realm is mining. Instead of actually
buying and holding the digital currencies, some folks are actually using
computing systems to help manage the transactions themselves. If you participate
in the mining of cryptocurrencies, you’re actually paid in the currencies
themselves. For those of you thinking about mining or just interested in
learning more about it, check out the link below to our detailed guide on how to
mine cryptocurrency.

Conclusion

Thanks for stopping by to check out our cryptocurrency FAQ guide. We hope
that it helped you answer all of your questions relating to digital currencies.
If this is your first time visiting our site, consider taking a few moments to
check out some of the other great cryptocurrency-related guides that we listed
in the section above. We’ve built this site with the intention of aiding folks
to learn as much as possible. If you decide that dabbling in cryptocurrencies is
for you, we wish you the best of luck in your investment future.