Frequently asked questions
regarding cryptocurrency in General
What is cryptocurrency?
Cryptocurrency is digital money that can be earned by mining or bought with the help of Fiat currency and other cryptocurrency.
What is mining?
Mining is the process of adding transactions to the blockchain. Mining is conducted in manners (also sometimes called miners). Whenever a new block is added to the blockchain, the miner who added the block to the blockchain is rewarded. Prey can be compared to how everyone should solve the puzzle (adding a block to the blockchain). The one who solves the puzzle first wins the prize (coins). Whenever a miner receives a reward (coin), it is stored in his personal wallet.
What is the blockchain?
Banks and accounting systems use ledgers to track and time stamp transactions. The blockchain also works, but it differs in that it is completely decentralized and in most cases has open source code. This means that people don't have to rely on the Central Bank or institution to track their transactions. Since there is no Central institution, transactions must be confirmed by a multitude of equal participants in the network. They are called manners, they take transactions, check and mark them as legitimate, and then add them to the network (add them as a block in the blockchain). This work, which miners do, is rewarded with a cryptocurrency token.
What is a wallet?
A wallet is an application or software that can store, send, and receive cryptocurrencies. Is analogous to a physical wallet in the real world. There are wallet applications on mobile phones and desktop computers (PCs) that store your cryptocurrency on the Internet. There are also specialized hardware devices that allow you to keep your coins offline or even allow you to print the wallet on paper.
Is bitcoin real money?
As long as people believe in the currency and give it value, it can be legally used for buying and selling. Fiat Currency (Your own coins and banknotes) was once invented. Before the money came, people changed their products and services. As long as people accept the currency, it is currency. The disadvantage of Fiat currency is that banks and governments can print new money whenever they want. This makes inflation and deflation possible. With cryptocurrency, this is much harder to do. In cryptocurrency, the creation of additional currency units is controlled and limited (for example, the Bitcoin limit is set at 21,000,000 million coins).
Where can I buy ETH, BTC and other cryptocurrencies?
There are many exchanges that sell cryptocurrencies. For Example, Coinbase, Kraken, Bitstamp. Once you have purchased the coins, you can store them in the exchange's internal wallet or send them to another (online or offline) wallet. You can also find people who sell cryptocurrency in your region, for example, on the site www.localbitcoins.com, or you can meet someone face to face, give them the QR code of your wallet and pay for the right amount of coins.
What are the advantages of cryptocurrency?
Cryptocurrency can be sent and received anywhere in the world at any time. You are not tied to holidays, Bank holidays, exchange fees and bureaucracy. You have complete control over your money. There is no fee for receiving cryptocurrency, and when you spend cryptocurrency many wallets allow you to control how large the Commission for sending coins will be. Transactions are secure, irreversible, and do not contain any confidential or personal information about the customer or the merchant. This will protect the seller against losses resulting from fraud and fraudulent payments. Cryptocurrency users can protect their money with backup and encryption. Finally, all information concerning the cryptocurrency itself is available on the blockchain, you can view information about any transaction or any wallet in real time. No person or organization can control or manipulate the cryptocurrency Protocol because it is cryptographically secure. In General, cryptocurrencies can be trusted for being completely neutral, transparent and predictable.
What are the disadvantages of cryptocurrency?
There are still many people who do not know about cryptocurrencies. There are some companies that accept cryptocurrencies as payment, but this list remains small. Since this list is so small and the total value of cryptocurrency in circulation is still very small, any activity can significantly affect the price and make cryptocurrencies extremely volatile. The cryptocurrency software is still in beta and has some incomplete features. New tools, features and services are still being developed. Most of crypto-currency enterprises are new and do not offer any insurance. Cryptocurrency is still in the process of maturation.
Whether cryptocurrency is anonymous?
Cryptocurrencies are not anonymous and cannot offer the same level of privacy as cash. The use of cryptocurrency leaves extensive public records (in the form of transactions on the blockchain). Every transaction made with cryptocurrency can be viewed by the public.
Can my coins get lost?
When you lose your wallet and private keys, you lose your coins. The coins will remain in the blockchain, but they will become nobody, because there is no way to restore access to the wallet without a private key. That is why it is extremely important to write down your wallet address and private keys and store them in a safe place (it is better to write them down, print them on a sheet of paper and save them in a safe place than to save them on a computer where hackers can find them).
Are cryptocurrencies legal?
The legal status of cryptocurrencies varies from country to country and is still undefined or changing in many of them. Some jurisdictions restrict or even prohibit foreign currencies, while others may limit the licensing of certain entities, such as the cryptocurrency exchange. Law enforcement, tax authorities, and legal regulators are still trying to figure out how cryptocurrency fits into existing frameworks. Measures are being taken to provide individuals and businesses with rules on how to integrate this new technology with the formal, regulated financial system. The legality of your cryptocurrency activity will depend on who you are, where you live and what you do.
Do you use crypto-currencies for illegal activities?
There were some concerns that cryptocurrencies were used only to launder money by criminals. However, cryptocurrencies are money, and money has always been used for both legal and illegal purposes. Money, credit cards and current banking systems continue to far exceed cryptocurrencies in terms of their use to Finance crime, and these methods are widely used and well established. Cryptocurrency is designed to make money safer, for example, it is absolutely impossible to forge. Users have full control over their payments. Transactions are irreversible and protected from fraudulent charges. Backups, encryption and multiple signatures are used to protect money from theft and loss.
What about cryptocurrencies and taxes?
Regulators only began seriously to study the regulation of cryptocurrencies. There are some countries that view cryptocurrencies as business income or capital gains, but the prevailing international trend is to regulate cryptocurrencies as if they were “assets” or “property.” Most countries have not yet come to the idea of treating cryptocurrencies as real currencies. In the coming years, there will be many more tax updates for cryptocurrency users around the world.