Unless you’re living under a rock, or you’ve truncated your career planning prolonged trip to Antarctica, you must’ve come across news headlines about cryptocurrency that have sparked your curiosity.
Since you’ve landed on this page, this would exclude both odds and the chances are that you’ve turned to Google for answers. Worry not dear reader, AlBawaba Business is here to decipher!
Whether you are a crypto fanatic or an utter skeptic, the wait-and-see approach is no more an option.
In this article we’ll walk you through the 10 most googled questions about crypto!
- What is a Cryptocurrency?
A method of payment that only exists in digital form only so it is neither physical nor tangible like fiat coins. For the first time ever in history, the creation of cryptocurrency brought the power back to people and took away the centralized monetary authority withheld by governments by allowing us to exchange value through the internet without the need of any central authority, such as a government or bank, to uphold or watchover it or even approve it.
- What is Bitcoin? (How does it work)
Bitcoin is the world’s first digital currency that was created in 2009 by a person or a group of people under the name Satoshi Nakamoto. As a response to the global financial crisis in 2008, Bitcoin promises lower fees than traditional payment methods and is operated by a decentralized system as it’s not backed by a government nor any commodity. For the first time in history, BTC network allowed us to conduct peer to peer transactions free of any oversight of any centralized authority or any middleman.
To make a transaction via bitcoin, simply, all you have to do is install a Bitcoin wallet on your computer or smartphone, and it will generate your first Bitcoin address, which you may use to create additional as needed. You can share with your pals your addresses so they can pay you or vice versa. In fact, it functions in a similar way to email, except that Bitcoin addresses should only be used once.
- What is Blockchain?
A distributed ledger system consists of a sequence of blocks (units) that contains digital information which is stored in a decentralized public database. Data stored in the blockchain is immutable; meaning it cannot be altered or changed and irreversible. Blockchain is the technology on which a cryptocurrency is created.
- What is Bitcoin Mining?
Mining bitcoin means creating it. Bitcoin is created through a process called mining in which a network of decentralized computers compete to solve very complicated mathematical problems to approve and verify transactions of the cryptocurrency on the network. The miner who verifies more transactions gets rewarded 6.25 bitcoins, a share of the mined bitcoin.
To avoid such high costs and maximize the returns, miners joined resources, computer forces and capabilities to create what is called mining pools.
- What is Crypto Staking?
Crypto staking is a process that is used to verify cryptocurrency transactions on a blockchain that utilises consensus mechanism called the Proof of Stake (PoS). Staking your crypto is excellent for obtaining additional value from your crypto assets.
PoS involves committing some of your crypto holdings to support that blockchain network and confirm the transactions and as reward the participants will earn passive income on the holdings that they risked or put on stake to insure the safety of the network. Blockchains like Solana, Polkadot, Ether, and Cardano use PoS. It is somewhat similar to earning interest from a regular bank account.
- How to Get Bitcoin?
There are many ways you can buy crypto, for example you can buy them from crypto exchanges, which are businesses that provide a marketplace in which users can buy, sell, and trade their crypto assets in exchange for fiat money or other cryptocurrencies. Some of these exchanges allow customers to buy bitcoin with credit cards like Binance, CoinMENA, and CEX.io. Also, you can buy from any Bitcoin ATM which are kiosks where users can buy bitcoin using cash mainly, however, some allow you to buy bitcoin with credit card for the transaction. But to be honest, it is cheaper to use an exchange as most bitcoin ATMs charge a fee of 6-12%. Nevertheless, if there are no bitcoin ATMs around you or no crypto exchange is regulated in your country, you can buy crypto from someone that is in your area who accepts cash and is willing to transfer BTC to your wallet. Make sure that you know this seller personally or is known to be trustworthy with positive feedback on previous trade history. If none of the above was possible, you can always take advantage of CPUs that you’re not using anyway and turn it into a money-making opportunity by mining some BTC! Well, if you can’t buy it … EARN IT!
- What is a Blockchain Fork?
A fork occurs when a blockchain splits creating an alternative version of the blockchain, thus making 2 blockchains run simultaneously. Forks happen when a radical change in the blockchain code occurs and there are two potential coding paths forward. As a result, blockchain users must decide and show support for one chain over the other. This might cause a huge rift in the crypto community leading to a permanent split thus creating a different currency. Example: Bitcoin cash coin resulted from a fork on Bitcoin’s blockchain.
- Why Does Bitcoin Have Value?
Bitcoin has certain characteristics of a currency, but just like gold, BTC’s value mainly comes from two things: its scarcity (limited supply) and rising demand. Bitcoin has a maximum supply of 21 million, while dollars or any other fiat currency doesn’t. Bryan Routledge, associate professor of finance at the Tepper School of Business at Carnegie Mellon University says that Bitcoin has value “because people think it does,”, so people who believe in BTC’s vision for money are spiking the demand for it.
- Are Bitcoin and Crypto the same thing?
Bitcoin and cryptocurrency are not the same things. In other words, bitcoin is not a synonym for crypto whatsoever. Bitcoin is the first-ever cryptocurrency created. Bitcoin, which was solely created to transfer money as it simplifies and increases the speed of transactions without any government restrictions or third-party mediation, is considered a trendsetter for the whole crypto market due to its large dominance but however, that's not always the case.
While other cryptocurrencies, dubbed as altcoins, may have use cases in their ecosystem other than merely trading. For example, Ethereums native coin, Ether, can be used for trading and exchanging value but that's not the sole purpose of the Ethereum blockchain, as Ether is used as gas to run the whole network.
- Who Controls Bitcoin?
The short answer to this is no one!
Although it was created in 2009 by a person or group of people working under the pseudonym Satoshi Nakamoto, Bitcoin is controlled by all its users around the globe. Bitcoin protocol developers are working to improve the software, however, it is not possible for them to force a change in the Bitcoin code because “all users are free to choose what software and version they use”.
© 2000 - 2022 Al Bawaba (www.albawaba.com)