Frequently Asked Questions
1.) Is cryptocurrency and Bitcoin the same thing?
No, Bitcoin is one type of cryptocurrency. There are thousands of cryptocurrencies.
2.) What are the risks involved in cryptocurrencies?
There are many risks involved in investing in cryptocurrencies. Many people forget their password or private key and lose access to their cryptocurrency wallet. This risk is preventable by writing down your password and private key and storing them in a safe place, such as a safety deposit box or fire safe. Phishing links are another risk to investors. When a user clicks on the phishing link or button, code or another process may be activated that allows a hacker to access your information or even take over your computer. Often these links come to individuals via email, but they can also occur on social media and in message groups. Only click on links you completely trust. Another risk is investing in alternative (alt) coins. Anyone can create a coin that others can invest in. These altcoins may seem like desirable investments because individual coins can cost just cents or even a fraction of one cent. These alternative coins can be very volatile and have a high risk of price collapse. Encryption hacks are another risk. An encryption hack can happen to a device, an app, or a website. While a hack is possible, the current 256-bit encryption protocol used for security in devices, apps, and websites means that this risk is extremely unlikely. The computing power required to test all of the possible keys to secure encryption is significant and it would take years to successfully hack.
3.) What is blockchain?
When a sale or purchase of cryptocurrency occurs a transaction file is created and stored in a block. When one block is full then another block is created and linked to the previous block. This is called a blockchain.
4.) Who invented Bitcoin?
Bitcoin was created by an individual or group of individuals called Satoshi Nakamoto. While it is known that Satoshi Nakamoto is a pseudonym, it is not known who they are. The original whitepaper that was published by Satoshi Nakamoto where the technology and mathematics behind Bitcoin was first described here: https://bitcoin.org/bitcoin.pdf
5.) Where can I learn more about cryptocurrency?
There are many resources available to learn more about cryptocurrency topics such as investment strategies, creating tokens, security, and more. Free resources include Coinbase’s Crypto Basics guides. There are many other free guides, blogs, and videos online as well. Paid services include one on one tutoring on topics and questions of your choosing from CryptoTutors.com. Other companies offer similar paid learning opportunities and can be found online.
6.) Is my investment in cryptocurrency FDIC insured?
7.) Is it possible to lose all of your invested money in cryptocurrency?
8.) Is there a cryptocurrency that isn’t as volatile as Bitcoin?
Stablecoins are not volatile and many peg their market value to the US dollar. This means that one Stablecoin has the same value as one US dollar.
9.) Why is there so much demand for cryptocurrency?
The demand for cryptocurrency has risen as the interest in the cryptocurrency monetary standard has risen and as the process of purchasing and trading cryptocurrency has become more accessible. Historically, monetary systems used the gold standard which pegged the value of currency to the value of gold. The current Fiat monetary system does not back currency with a physical commodity, such as gold. Rather, the value is established by the government that issues the currency. The cryptocurrency standard does not rely on a commodity or a government to create its value. It eliminates the middleman (banks or the government) and allows people to conduct transactions like buying and selling privately and securely. Interest in this type of system has risen as people look for ways to conduct transactions quickly and directly. It has become easier to buy, sell and complete transactions with Bitcoin and cryptocurrencies as new platforms and exchanges are introduced to consumers. This increases the demand as more people are able to participate in the monetary system. Additionally, demand has increased as some cryptocurrencies, such as Bitcoin, have a cap on the total number of coins that can be mined, limiting the amount of the currency available.
10.) I am having trouble with the Coinbase app or another cryptocurrency exchange, how do I get help?
Contact Coinbase’s customer service directly or the customer service for the cryptocurrency exchange you are using.