Have come across terms like Ethereum and Bitcoin and do not know what they are about? Are you confused about the cryptocurrency world? Well, you are not alone and before leaping to invest in cryptocurrencies, there are some key things you need to know about the whole thing. The truth of the matter is that there are so many scams that have come up in the name of cryptocurrencies and it may be hard to tell them apart from the real thing. Let us look at some of the frequently asked questions about cryptocurrencies.
What is Cryptocurrency?
If you have been wondering what type of currency is referred to as crypto, this is a digital currency. There are no bills or physical coins of cryptocurrency as it only exists as digital entries. There are various crypto exchanges that allow you to trade and exchange your coins and tokens with other users. All these transactions are carried out on the internet, without the help of any intermediary like a bank. Over the years, there are so many cryptocurrencies have been created with Bitcoin and Ethereum being some of the most popular coins.
How can I use cryptocurrency?
Cryptocurrency like Bitcoin has become an acceptable mode of payment on various platforms. Most people prefer to use cryptocurrency to avoid transaction charges and also enjoy anonymity. You can trade on the Big Money Rush website with cryptocurrency or can choose to hold your coins in the hope that the value will increase.
How can I acquire cryptocurrency?
Buying cryptocurrency through various exchanges is one of the ways through which you can get digital currency. However, there are other methods that are used like crypto mining, which is more complicated. In such cases, supercomputers are used to solve complicated puzzles and the miners are rewarded using crypto coins or tokens.
How do I store my cryptocurrencies?
Since we have already established that cryptocurrencies exist electronically, you can only store them as digital entries. There are digital wallets that you can make use of to keep your coins safe. Crypto wallets can be through online platforms or external drives. When choosing the type of wallet to use, it is important to understand all the possible risks. For instance, online exchanges are prone to hacks and other cybersecurity breaches. As for the external storage, once you forget or lose the private key, you may not recover your funds.
What is the difference between U.S Dollar and Cryptocurrency?
One of the key differences between USD and cryptocurrencies is the fact that dollars are tangible currencies while crypto is a digital currency. In addition, dollars are backed by the Federal Reserve and the central bank. However, cryptocurrencies are not backed up or regulated by any financial institution or bank. You can insure your dollars and have them deposited in a bank account, which is not possible with cryptocurrencies.
The value of cryptocurrencies is not stable as it keeps changing. The prices are volatile and they can change in a matter of minutes. Dollars are stable and the factors that affect their value are somewhat predictable.
Can I Use Cryptocurrency to Make Payments?
You can make payments with cryptocurrencies to merchants who accept this mode of payment. However, it is worth noting that cryptocurrency payments do not have any legal protections. This means that you cannot expect to get your money back if something goes wrong with your purchases.
Final Word
There is so much that is still unclear about cryptocurrency. However, we hope that these few questions give you an idea of what to expect in the crypto market. It is advisable to keep researching and looking for more information about cryptocurrencies before making an investment decision.
