Cryptocurrency is taking the world by storm. It’s almost impossible to watch the news or read magazines without encountering new details about various types of cryptocurrencies. And cryptocurrencies stand to make a greater impact on people’s lives in the future.
Despite its popularity, many people are still confused by the ins and outs of cryptocurrency. So test your own knowledge about cryptocurrencies by answering the questions below.
1. What is cryptocurrency?
Cryptocurrencies are daunting to understand for many people. However, they are not difficult to understand.
Take a look at the word “cryptocurrency” and you’ll realize that it has connections with cryptography and currency. Cryptocurrency can function as an alternative to cash. Its technology enables you to send it to other people without the help of banks or another third party. So cryptocurrencies are cheaper and more direct methods of transferring money between parties.
This digital money and exchange medium stands out because it is not controlled by anyone. Its decentralized nature makes it immune to government oversight, interference, or control.
2. Why use cryptocurrency?
One reason why cryptocurrency is gaining millions of users around the world is because of its many benefits. You may not realize it, but cryptocurrencies can help you in many ways.
With cryptocurrency, you can erase your worries about fraud. You also will not encounter problems such as credit card chargebacks.
Your bank charges you ATM fees, check fees, transfer fees, credit card fees, among many other bank charges and fees. Cryptocurrency eliminates these expensive problems. Since there are minimal to no transaction fees associated with exchanges, you can save a lot of money.
Have you ever had to call your credit card company or bank prior to purchasing something online? With cryptocurrencies, you also benefit from immediate settlement. When you purchase items, this process can be delayed due to third parties. However, since cryptocurrencies eliminate third party approvals, your transaction will process more quickly.
3. What is the difference between cryptocurrency and blockchain?
Cryptocurrency and blockchain are two of the most commonly used words in the market. Blockchain is the platform which makes cryptocurrencies work. The blockchain serves as the distributed ledger that makes up the network where you can transact.
Since Blockchain is the ecosystem where cryptocurrencies are part of, there would be no means to record and transfer cryptocurrencies without it.
4. What is the right cryptocurrency for you?
Choosing the best cryptocurrency for you can seem overwhelming. After all, there are over 2,000 cryptocurrencies to choose from. Some of the most popular options include Bitcoin, Monero, Ripple, Litecoin, and Ethereum.
The best cryptocurrency is difficult to determine because nobody knows what the future holds. If you want to invest in a cryptocurrency, seek help from a professional to better asses which cryptocurrency is best to hold or increase in value.
Be sure to choose a cryptocurrency that is easy to acquire. If you are unsure, it is better to get help from a broker that will make your job easier.
5. How can you buy cryptocurrency?
When buying cryptocurrencies, accept that you will not make millions of dollars overnight. There are many ways to buy a cryptocurrency such as using Coinbase. However, if you want your experience to be hassle-free, it is best to contact a broker.
This professional will not only help you make the most of your money, brokers will also offer great advice. So a professional allows you to make better decision and make more money on your investments.
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6. How can you choose a cryptocurrency broker?
Interest and opportunity in cryptocurrency develops every year. More people becoming interested in cryptocurrency has coincided with an increase in trading brokers to help you make investing in cryptocurrency a breeze. Here are a few things to consider when hiring a broker.
When choosing a broker, consider their reliability. Brokers who deal in cryptocurrency should employ a fantastic
trading platform. Do not be afraid to ask for more information about trading methods and strategies. This way, you remain updated on your investment.
It is also important to research customer reviews and ask your broker about all related charges. By going with a reliable broker, you are sure they will not fail in serving your best interests.
Next, a broker should be transparent with their fees. After all, the brokerage is still a business and they will be earning a return for their time and effort.
Brokers can also answer questions regarding funding procedures. You should be presented different account types that tailor to your needs. It also helps to factor in the minimum initial deposit, and withdraw caps and intervals.
Cryptocurrency trading should not be hard. This is why you should also consider the broker’s efficiency and responsiveness. Setting up accounts should be straightforward even for beginners. Also look for a broker which allows you to start trading with the shortest delay.
7. Can I buy everything I want with cryptocurrency?
Since more people are using cryptocurrencies, more major businesses now accept it as a legitimate method of payment both offline and online. One of the most commonly-accepted cryptocurrency in the world is Bitcoin.
8. Is cryptocurrency legal?
The answer to this question depends on your location. Cryptocurrency is legal to buy, own, send, and receive in most countries such as Australia, Canada, the UK, Switzerland, Sweden, Slovenia, Ireland, Italy, Denmark, and many other countries.
The USA also displays a positive stance on cryptocurrency. However, many government agencies aim to prevent the use of cryptocurrencies, especially Bitcoin, for illegal transactions. Cryptocurrency has also made its way to the US market, which cements its legality.
Some countries have banned Bitcoin due to its decentralized nature, including Vietnam, Afghanistan, Saudi Arabia, Pakistan, Algeria, Bolivia, Republic of Macedonia, Bangladesh, and Vanuatu. Other countries like China, India, Indonesia, Qatar, and Egypt place restrictions on the use of Bitcoin.
9. Where can you spend cryptocurrency?
One of the most common things you can do with your cryptocurrency is to use it for tips and charity. There are also many causes which accept donations through cryptocurrency.
Whatever you can think of, you can buy it using cryptocurrency. Examples include common household items, plane tickets, gift cards for your loved ones, video games, and your favorite dessert.
Paying for something using cryptocurrency is as easy as sending a text. You just simply send a message containing the amount of money to the key of your receiver. However, the process speed and steps might depend on the type of wallet they are using.
10. What’s the worst thing that can happen using cryptocurrrency?
The worst thing that can happen is to make a mistake in a transaction. This experience is similar to sending money to the wrong person. Of course, the chances of getting it back are very slim.
Another thing you need to remember is to not lose your password. Cryptocurrencies are unforgiving with people who make this mistake. There have been countless wallets that can no longer be accessed because its owners lost the password.
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11. Is the use of cryptocurrency taxable?
Similar to the question of cryptocurrency legality, the answer depends on which country you are in. For the USA, the Internal Revenue Service treats cryptocurrencies such as Bitcoin as a property and not a currency.
Therefore, you need to file tax for any gains since it is a virtual currency investment and not a capital asset. Every time you make a transaction, you have to determine the amount of your taxable gain.
12. How can you store cryptocurrency?
Your cryptocurrency of choice is stored in a cryptocurrency wallet. However, this wallet won’t be similar to the one you have in your bag. Since you are storing digital currency, you need a software program designed to securely store your public and private keys, send and receive currencies, interact with different blockchains, and monitor your balance.
On the distributed ledger, everyone can see your transactions. However, you do not need to have a pseudonym. Your public and private keys will function as your digital identity.
There are two varieties of cryptocurrency wallets: hot and cold. A hot wallet can be accessed anytime and is online. This includes mobile and software wallets, and online cloud wallets.
On the other hand, a cold wallet only allows you to store cryptocurrency offline. Although you can still receive funds any time, you cannot transfer it out. Cold wallets include USB, hardware wallets, physical Bitcoins, and offline kept paper wallet.
The majority of cryptocurrency holders use both wallets. Hot wallets are essential for people who often trade, while cold wallets are popular for long-term investment options.
13. Can I purchase less than 1 Bitcoin?
If you can’t afford to buy 1 Bitcoin yet, don’t worry. The most popular cryptocurrency can be split into 100,000,000 parts called Satoshi. You can obtain as little as 0.00000001 Bitcoin. Your Satoshi can also be stored in multiple wallets.
14. What is the future of cryptocurrency?
Cryptocurrency has increased in value in recent years. With more people purchasing and taking interest in cryptocurrencies, it is expected to expand into more practical uses, products, and niches. In fact, cryptocurrencies can become a universal alternative to fiat currencies.
Not too far from now, you can probably go into your favorite pizza store and pay for your favorite pizza using cryptocurrency.
15. How can I learn more about cryptocurrency?
Cryptocurrency developments constantly keep important details in flux. So it is important to stay abreast of progress.
Two ways to remain informed include reading books as well as consulting a cryptocurrency broker.
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See? Cryptocurrency is not as hard as you once thought. These digital coins that run on distributed ledger systems have a huge potential to change the way financial institutions work in the future.