According to a research study, it was found that despite more than 2 million Britishers investing in cryptocurrency, over a third of those do not fully understand how cryptocurrency works. According to a survey conducted by a leading fintech community, it was found that 33 percent of the people who have invested in cryptocurrency only roughly understand the concept and only one in four people can explain it to other people. In this article, we are going to provide the 10 most important things that everyone should know about cryptocurrency.
1. What exactly is a cryptocurrency and why it is becoming increasingly popular
A cryptocurrency is a virtual system of money that can be exchanged for goods and services, in the same way, the traditional currency like dollars is used but online. The first cryptocurrency Bitcoin was introduced over 10 years ago and since then there have been alternative coins like Dogecoin and Etherium that have gained popularity.
While traditional currencies fluctuate due to various factors depending on the country’s economic and political factors, cryptocurrencies are dictated by demand and supply from the stakeholders of the cryptocurrency. This is associated with certain risks like the value of the coin can fall rapidly within a few days. Cryptocurrencies are gaining popularity more than ever in recent times and are ranked as the most popular investment choice.
2. What can I buy with cryptocurrency?
Most lenders do not accept Bitcoin as payment due to the volatility of its value. Has recently announced that it would accept Bitcoin as payment once it gets environmentally sustainable. Other big companies like Amazon and Walmart have also discussed plans to accept Bitcoin in the future.
The cryptocurrencies like Bitcoin and dogecoin fluctuations depending on Elon Musk tweets and Reddit forums make it a less stable investment for some people.
3. Is Crypto associated with the dark web?
Cryptocurrency transactions are protected by a secure encryption process. However, there are significant risks associated with it as Bitcoin relies on passwords. Moreover, cryptocurrencies are decentralized. It means that any government authority is not responsible for any virtual currency failure.
4. Elon Musk and Bitcoin
The CEO of Tesla, Elon Musk has an investment in Bitcoin and he tweets about it on Twitter. According to research, it was found that 31% of Britishers between the age gap of 18 to 24 invest in cryptocurrency based on social media platforms. This data can show how influential an Elon Musk tweet could be.
5. What is the blockchain and who has created it?
Blockchain is the container where cryptocurrency digital transactions are verified and stored. Every time a transaction is recorded using bitcoin they are grouped into blocks forming a chain that builds over time.
But due to the complexity of the processes behind collector transactions, the percentage of people who have invested in cryptocurrency say that they only roughly understand blockchain.
6. What is cryptocurrency mining and why is it so bad for the environment
Cryptocurrency mining is the process to create new coins. When a miner verifies the legitimacy of 1 MB worth of Bitcoin transaction known as its block, the miners are awarded Bitcoins. The verification of the transactions involves solving very complex mathematical problems and to receive a bitcoin reward for verifying 1MB of the transaction, they must be the first miner to solve the problem.
This could be harmful to the environment due to the amount of energy it consumes to run the powerful computer needed for mining. Although 62 % of Britishers say that sustainability is very crucial to them, only 40 percent of those who invest in cryptocurrency say that sustainability is important. However, 42 percent of the investors do not even know the negative environmental impact of mining.
7. What are the differences between cryptocurrencies like Bitcoin and Ethereum?
NFT is on the rise in popularity in recent times. It was found that 60 percent of the investors do not even know about NFT and 40 percent are on at least one NFT or have bid on one and feel comfortable explaining it to others.
8. Which cryptocurrency is safe to invest in
No cryptocurrency is a safe investment to be precise. Cryptocurrency investment is so volatile that one does not know when the value of the currency rises or when the value falls. According to the research, about 90 million dollars in cryptocurrency were stolen from retail investors after the top Japanese exchange got hacked.
9. What is meant by cryptocurrency exchange?
A cryptocurrency exchange is a marketplace where you can buy and sell cryptocurrencies using Bitcoin, altcoins, etc. It is similar to traditional stock exchanges where cryptocurrency exchanges match buyers and sellers.
10. Can cryptocurrency ever replace mainstream currencies like dollars in the future?
It is extremely difficult to confirm it at present due to the volatility of the cryptocurrency. It is a risky option to make a high investment in the current landscape and it is too difficult to transact in cryptocurrency.