You’ve heard people say over and over again that “knowledge is power.” This maxim applies to just about every facet of everyday life, but even more so when it comes to cryptocurrencies. Every journey begins with a single step, and what better place to start than here at CoinFalcon’s crypto basics? From the fundamentals of crypto assets to the many exciting applications of blockchain technology, and even why we believe cryptocurrencies are the future of money, we provide simple answers to your top cryptocurrency questions. Ready to explore? Let’s do this!
What is cryptocurrency?
In simplest terms, cryptocurrency is digital cash for the digital age. It possesses many features of regular money — think €, $ or £ — except that it is completely digital, so there are no coins or bills to carry around in your purse. Instead, they are stored in digital wallets. As a digital medium of exchange, cryptocurrencies use cryptographic functions to conduct financial transactions. They also leverage blockchain technology to gain decentralization, transparency, and immutability.
How does cryptocurrency work?
Not many people know this, but cryptocurrencies actually emerged as a side product of another invention. Satoshi Nakamoto, the unknown inventor of Bitcoin, the first cryptocurrency, wasn't trying to invent a currency. In late 2008 when he announced Bitcoin, Satoshi said he developed “a Peer-to-Peer Electronic Cash System.“ Basically, he had found a way to build a digital cash system without a central entity.
This was the beginning of cryptocurrency -- the missing piece Satoshi found to actualize his idea of digital cash. Like with regular money, realizing digital cash meant the need for a payment network with accounts, balances, and transactions. However, one major problem facing every payment network is how to prevent the so-called double spending, where one entity spends the same amount twice. This is usually done by a central server which keeps record of the balances.
In a decentralized network, this server doesn't exist, so you need every single entity of the network to keep track of transactions and balances. This decentralized system needed absolute consensus, such that every peer in the network has a list with all transactions to check if future transactions are valid or are an attempt to double spend. This is what Satoshi Nakamoto solved with his invention. Nobody believed it was possible to achieve consensus without a central authority until Satoshi emerged out of nowhere. Cryptocurrencies are an integral part of this solution through a process called mining.
What is cryptocurrency mining?
This is the process of validating transactions with a computer and then adding them to the long, public list of all transactions, which we call the blockchain. As a reward for this service, miners earn cryptocurrency. You can become a miner too as long as you have a good computer and an internet connection. However, before you get all giddy with excitement, you should note that mining is not always profitable. Depending on which cryptocurrency you’re mining, the processing speed of your computer, and the cost of electricity in your area, you may end up spending more on mining than you earn back in cryptocurrency.
What makes cryptocurrency so special?
Cryptocurrencies have the potential to be the fastest, easiest, cheapest, and safest way to exchange value all over the world. What’s more, crypto also provides equality of opportunity, regardless of your nationality or where you live. You have the same access to cryptocurrency as everyone else as long as you have an internet-connected device.
Another exciting prospect lies in the different ways crypto can tackle the shortcomings of our current financial system. Issues like high fees, identity theft, and extreme economic inequality are an unfortunate part of our current financial system, which cryptocurrencies have the potential to address.
Where do cryptocurrencies get their value?
Unlike regular money whose value is based primarily on the confidence in the government that issues it, the economic value of cryptocurrencies primarily comes from demand and supply. Demand refers to people’s desire to own crypto assets — how many people want to buy Bitcoin or other cryptocurrencies and how strongly they want it. Conversely, supply refers to how much is available — how many Bitcoins are available to buy at any moment in time. Cryptocurrency value is basically a balance of both factors.
There are also other types of value, such as the value you get from using a cryptocurrency. Many people enjoy using bitcoin to buy stuff or gifting it because it gives them a sense of pride to support an exciting new financial system.
Who manages/regulates cryptocurrencies?
No one entity manages cryptocurrencies. Instead, it is dependent on a network of computers running open-source code that verifies every transaction. Anyone with an internet connection can participate. It is also not regulated by any single party as its value is primarily dependent on the interplay between demand and supply. In 2017, the demand for bitcoin was so high that the price of one bitcoin rose from around $6000 to almost $20000 in less than three months.
Is cryptocurrency legal?
Yes, it is legal to buy, sell, send, receive, and own crypto in most parts of the world, including all of the countries where CoinFalcon is available.
What crypto is available on CoinFalcon?
We currently support the following cryptocurrencies on our platform:
Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ripple (XRP), Tron (TRX), IOTA (IOT), Dogecoin (DOGE) Electra (ECA), Data Transaction Token (XD), Litecoin (LTC), TetherUS (USDT), EOS, GreenPower (GRN), and Cardano (ADA).
Over time, one of the most common questions we’ve been asked is what cryptocurrency to buy. While we can’t recommend one crypto over another, we can still share some insight to help you decide which one is right for you.
One option is to simply buy some of each cryptocurrency. This way, you can get started without playing favourites. You should also ask yourself what you’re hoping to do with crypto and go for the one that best achieves your goals. For example, if you want to do some online shopping with crypto, then Bitcoin is a good option because it is currently the most widely accepted cryptocurrency. On the other hand, if you want to play a digital card game, then Ethereum and EOS are popular choices.
Is CoinFalcon a trusted platform?
Yes. CoinFalcon is based in the UK and offers industry-leading legal compliance and security. Since we were founded in 2017, we’ve helped over 100,000 customers across Europe buy, sell, and exchange millions of euros of cryptocurrencies.
When can I buy and sell cryptocurrency?
Unlike the stock market, crypto markets are open 24/7 so you can buy or sell cryptocurrency at any time. If you’re a CoinFalcon customer, simply log in to your account and choose what crypto you want to buy or sell. We offer different payment methods like using your credit card to buy crypto or through SEPA bank transfers.
Is my cryptocurrency secure?
No doubt you’ve heard about exchanges being hacked or ICO scams here and there. That’s why as part of our commitment to customer security, CoinFalcon stores 98% of its cryptocurrency in unhackable offline storage. The remaining 2% is protected by high-grade security systems that continually evolve to meet the challenges of an ever-changing security landscape.
Ready to own the future of money? Get Started on CoinFalcon now!
Our mission at CoinFalcon is to put the future of money, in the pockets of the world. And it's never been easier to get started. Simply sign up for your FREE account and you’re good to go. You can even start with as little as €5. Want to learn more about crypto? Check out our resources page or get in touch with us for any questions you may have.