The most frequent questions asked about Bitcoin & Crypto Exchanges !
What is Bitcoin ?
Bitcoin is a decentralized digital currency, meaning we can’t physically hold it in our hand. You can either use it as an investment or forms of payment.
- Bitcoin is the first decentralized currency ever created.
- The system is powered by a peer-to-peer global payment network.
- Payments are irreversible.
- It has a limited supply ( Only 21 million coins can be mined)
- The price is determined by supply and demand.
- Powered by blockchain technology.
It’s also portable, divisible, fungible, and irreversible.
What determines bitcoin’s price ?
Bitcoin’s price is determined by supply and demand. Prices rise when bitcoin demand increases, and prices fall when demand declines. The number of bitcoins in circulation is limited, and new bitcoins are created at a predictable, decreasing rate, meaning that demand must follow this rate of inflation to keep the price stable.
What is Ethereum ?
Ethereum is a distributed public blockchain network that focuses on running the programming code of any decentralized application.
It is a platform where information can be shared across the globe without being manipulated or changed.
What is Gas fee (ETH) ?
The term gas refers to the unit that indicates how much computational effort is required to conduct a particular operation on the Ethereum network. Using Ethereum requires computational resources, so every transaction has a fee.
The gas fee is the cost required to conduct a successful Ethereum transaction and it also depends on how busy the network is at the time of the transaction.
What is the difference bewteen Bitcoin and Ethereum?
It was Bitcoin that led the blockchain revolution by creating a public, permissionless, distributed ledger system that validated, stored, and replicated transaction data all over the world.
Ethereum extends these concepts by harnessing the same block chain capabilities for computer code. Bitcoin is a peer-to-peer electronic cash system that is based on block chain technology.
Ethereum, on the other hand, allows scripts of code to run as a global computational network. Many possible applications exist for this technology, including voting, global supply chains, medical records, the financial system, making the possibilities endless.
Who Created Bitcoin ?
A developer named Satoshi Nakamoto wrote an academic paper in 2008 that led to the creation of bitcoin.
It described a peer-to-peer electronic cash system that would be efficient, secure, affordable, and more affordable than any conventional banking system. The Satoshi system was implemented in open-source software and the first bitcoin transaction (also known as the Genesis Block) was confirmed on January 3, 2009.
Is Bitcoin secure ?
Bitcoin technology is mostly safe because it is built on secure technology which is blockchain. Bitcoin is also decentralized, cryptographic, public, and permissionless.
Although Bitcoin may not be a safe investment because of market volatility. But remember, every investment is a risk.
What is a NFT ?
A non-fungible token (NFT) is a unit of data stored on a digital ledger, known as a blockchain, that is unique and cannot be exchanged for another.
NFTs can represent photos, videos, audio, and other types of digital files. However, access to any copy of the original file is not restricted to the buyer of the NFT. Despite the fact that anyone can copy these digital items, they are tracked on blockchains to provide the owner with a proof of ownership distinct from copyright.
NFTs sold for over $2 billion in the first quarter of 2021, exceeding the $250 million market value in 2020.
What is Blockchain technology ?
The term “blockchain technology” typically refers to the transparent, trustless, publicly accessible ledger that allows us “regular people” to securely transfer the ownership of units of value using public key encryption and proof of work methods.
Every block in the chain contains a number of transactions, and whenever a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger.
What is the difference between a centralized & decentralized network ?
- In a decentralized network, anyone can transact on the ledger. Bitcoin’s network uses mining and proof-of-work to maintain the integrity of the ledger and stop users from corrupting it.
- In a centralized network, only known and identified parties can transact on the ledger. They can therefore be audited.
What are the best crypto exchanges for beginners ?
Coinbase, Gemini, Robinhood and eToro are some of the most popular bitcoin exchanges and are perfect for beginners, with millions of users regularly.
Read this article to find out what is the best crypto exchange for you !
What is the safest way to store bitcoins ?
Even though bitcoin is a purely digital currency, it can be kept secure in an a physical form like a hardware wallet such as Ledger.
Cryptocurrencies can be stored offline using paper wallets, which eliminates the possibility of theft by hackers or computer viruses.
What is Bitcoin “Mining” ?
The mining process operates by using computing power to process transactions, secure the network, and synchronize everyone in the system. Like Bitcoin data centers, it is also totally decentralized, meaning that miners are located all over the world, and no individual has control over the network.
As with gold mining, bitcoin mining is also a temporary mechanism used to create new bitcoins. however, it provides a reward in exchange for valuable services required to operate a secure payment network.
Bitcoin will still need to be mined after the last one is issued.
What are the most popular cryptocurrencies ?
- Bitcoin (BTC)
- Ethereum (ETC)
- Dogecoin (DOGE)
- Stellar (XLM)
- Binance coin (BNB)
- Cardano (ADA)
- Ripple (XRP)
- Litecoin (LTC)
- Chainlink (LINK)
- Bitcoin Cash (BCH)
- Uniswap (UNI)
- Polkadot (DOT)
- Vechain (VET)
- Shiba Inu (SHIB)
- Safemoon (SAFE)
- Solana (SOL)
- Tron (TRX)
How hard is it to make a Bitcoin payment ?
A bitcoin payment is easier to process than a debit or credit card payment, and it can be received without a merchant account.
Paying for goods and services can be done from your computer or smartphone using a wallet application. Input the recipient’s address and the amount of the payment and press send. Many wallets can obtain a recipient’s address by scanning a QR code or by touching two devices together with NFC technology.
What is a cryptocurrency exchange ?
Cryptocurrency exchange is an online marketplace where you can buy, sell and trade one type of digital asset for another based on their market value. Coinbase is the most Popular crypto exchange platform in the US.
What are fiat to crypto exchanges ?
Buying cryptocurrencies with fiat money (USD, GBP, EUR, etc.) is referred to as fiat to crypto. A few years ago, online trading platforms were only permitted to trade crypto for crypto, which is why this even exists.
What are crypto to crypto exchanges ?
Trading cryptocurrency for cryptocurrency is termed crypto to crypto. Cryptos have different values: 13 Ethereum = 1 Bitcoin.
Most exchanges that only offer crypto to crypto tend to be for more advanced and experienced traders.
Which crypto exchanges has the lowest fees ?
Binance has the lowest fees, with 0.02% to 0.10% purchase and trading fees and 3% to 4.5% for debit card purchases.
How do crypto exchanges make their money ?
Exchanges generate revenue from a variety of sources, including:
- Trading Commissions
- Market making
- Listing fees
- Fund collection
- Deposit fees
- Withdrawal fees
- Initial Coin Offerings
- Initial Exchange Offerings
- Tokens, etc.
Does Crypto have any impact on federal income tax?
Cryptocurrency is treated as property and general tax principles applicable to property transactions apply to transactions using virtual currency.
If you are not really sure how to legally file your taxes for Cryptos you may want to use a Cryptocurrency tax report tool such as Cryptotrader.tax (they partnered with famous platformTurbotax) or Koinly to help you with your Crypto tax return.
