Crypto By The Numbers: FAQ for the Crypto Newbie
Although we may be reaching a point of inflection where the bullish crypto market gets front page news, there are still many people who don’t know the first thing about Bitcoin and cryptocurrency.
Cryptocurrency can often feel like an exclusive club for those who have been involved for years and know what is going on. This guide was written specifically with these individuals in mind and will walk you through some of the basic and frequently asked questions about cryptocurrency.
What is cryptocurrency?
As mentioned in a previous article, cryptocurrency is a digital payment system that utilizes cryptography to secure transactions. It is decentralized, meaning it does not have a central governing body or authority. Instead, it is run across a network of computers that function as nodes in a peer-to-peer setting. What this means is that information is not stored on one central server. This is a useful model because it eliminates single points of failure and typically makes data more secure (although there are always exceptions).
How many cryptocurrencies exist?
There are currently over 5,000 different cryptocurrencies out there today, although the top 100 by market cap account for over 95% of the total market cap. Some are more well-known than others (such as Bitcoin
There’s a lot of information out there about cryptocurrency. Some of it is useful, some of it is not. The goal of this FAQ is to answer the most important questions that people tend to have about the crypto market.
1. What are cryptocurrencies?
Cryptocurrencies are simply digital forms of value that use cryptography for security and can be either centralized or decentralized. They can also be used as a medium of exchange, a unit of account, or a store of value. Bitcoin (BTC) was the first cryptocurrency created and it has been around since 2009. Since then, many other cryptocurrencies have been created such as Ethereum (ETH), Litecoin (LTC), Ripple (XRP), and Stellar (XLM).
2. How are new cryptocurrencies created?
New cryptocurrencies are created either by “mining” them or by launching an initial coin offering (ICO). Mining involves using computing power to solve complex math problems in order to verify transactions on the network and add new blocks to the blockchain. As a reward for validating transactions and adding new blocks, miners receive more units of the cryptocurrency they are mining. New cryptocurrencies created via ICOs may be pre-mined which means that all tokens/coins already exist at launch time and will be
The crypto market is a vast and complicated place. Newcomers often get confused by the amount of information and jargon thrown their way.
There are many resources to help you understand how the crypto market works, but it can still be quite daunting for beginners. To make it easier, here we have compiled a list of some frequently asked questions about the crypto market.
How does crypto trading work?
Cryptocurrency trading works in much the same way as stock market trading. When you want to buy or sell cryptocurrency, using an exchange is your best option. There are hundreds of exchanges across the world that allow you to trade your fiat currency (the Australian Dollar) for cryptocurrency (Bitcoin and other cryptocurrencies).
What are Fiat currencies?
Fiat currencies are government-backed national currencies such as the Australian Dollar (AUD), United States Dollar (USD), Euro (EUR), etc. Fiat currencies have no intrinsic value, unlike precious metals like gold or silver which do have some value outside of being a currency used by nation states to conduct commerce. Our money is only valuable in that our government has decreed it so, and everyone else in our community accepts this arrangement. This gives fiat currency its value.
What are cryptocurrencies?
Cryptocurrencies are digital assets that
The Crypto market is up over 8,000% since the beginning of 2017. Some people are talking about it as a bubble, others think this is just the beginning. A lot of people are also really confused about what’s going on.
This post isn’t meant to be an in-depth analysis of all things Crypto (the Internet is full of those), but rather an overview for the person who may not know what Bitcoin, Ethereum and others are, and why they have so much value.
What is cryptocurrency? Is it Bitcoin?
A cryptocurrency is essentially a digital currency that runs on a decentralized network. If you’ve been around the Internet for a while you might remember something called Napster, which was a peer-to-peer file sharing service that let any person on the network share files with anyone else on the network. This was done without any central server or administrator — instead all parties had their own copy of the data and could download copies of it from any other node connected to the network. This is similar to how cryptocurrencies work. Cryptocurrencies run on decentralized networks called blockchain networks. These networks don’t have one centralized database (like your bank account), but rather all participants on the network have
The world of cryptocurrency has been growing at a rapid rate. With the growth we are seeing more people getting interested in this space. Many of these new users aren’t familiar with the jargon surrounding cryptocurrencies and blockchain technology, so I’ve put together a list of common terms to help you better understand what you might come across.
1) What is Blockchain?
A blockchain is a database. It is used to store information that cannot be altered or changed. A blockchain database is stored on many computer nodes (servers) at once and can be accessed by anyone on the internet.
2) What is Bitcoin?
Bitcoin is a type of digital currency called a “cryptocurrency.” Bitcoin was invented in 2008 by Satoshi Nakamoto, who’s real identity remains unknown. It was created as an alternative to traditional currencies like the US Dollar or Euro, which are controlled by banks and governments. Like other cryptocurrencies, bitcoin allows people to send money without having to use their own name or go through a bank.
3) What are Altcoins?
An altcoin is any cryptocurrency other than bitcoin. There are over 1,300 altcoins that have been launched since 2009, when bitcoin started trading on exchanges (you can see all of them here). Many altcoins were created
@ The market cap of all cryptocurrencies is $127B (as of writing this on May 18th, 2018), which is about a third of the current valuation of Apple Inc.
@ There are over 1,600 cryptocurrencies listed on CoinMarketCap, but the vast majority of these have very little trading volume.
@ The Top 10 cryptocurrencies by market cap account for over 80% of the total crypto market cap.
@ Bitcoin’s market dominance (the % of the value of all cryptocurrencies held in Bitcoin) has declined from its peak of 85% to 40%.
@ About $2B worth of Bitcoin is traded each day across global exchanges.
@ There are currently ~17M Bitcoins in circulation out of a maximum supply of 21M (this will take until 2140 to reach).
@ Every day, new coins are issued through mining, and each week a set number of new coins are awarded to founders and investors as part of initial coin offerings (ICOs).
@ Bitcoin mining requires specialized hardware and software that can cost thousands.
@ Only 21M Bitcoins will ever be mined because that’s how the system was designed. No one knows who Satoshi Nakamoto is or whether he/she/they still hold any Bitcoins.