What is cryptocurrency?
Cryptocurrency is a digital currency backed by complex cryptography algorithms.
What is trading?
Trading is the activity where you exchange one cryptocurrency for another. By doing this, you can profit.
How does trading work?
Trading happens on special websites called Crypto Exchanges. Crypto Exchanges will host your cryptocurrency and you will be free to exchange by another when you consider it is the right moment.
Trading is a matter of knowing what to trade, and when to trade.
How do I know what cryptocurrency to trade with?
This is a tricky question. There are more than three thousand cryptocurrencies and not all the exchanges provide all the cryptocurrency. Also, not all the exchanges offer all possible pairs (symbols); usually, you will see Bitcoin (BTC) vs any other, or Tether (USDT) verso others. It is up to the exchange you select to decide what symbols to offer.
After knowing what symbols you can trade with, you must reduce your options based on:
- the cryptocurrencies you hold in your portfolio: if you only have Monero (XMR), you can only trade with those symbols that involve XMR;
- the volume that those given pairs have: it is important the symbols have volume, if you want to sell your Dogecoin (DOGE) and change it for Bitcoin, there should be people who are willing to take those DOGEs, meaning volume.
Please note that this trading is not for free. The selected exchange will charge you a fee.
How do I withdraw my earnings?
There are usually two ways to do this:
- By moving out your money to another cryptocurrency wallet, or
- By withdrawing your money to your bank account (if the selected exchange supports it).
Note that many exchanges impose their withdrawal fees and minimum amounts.
Why should I invest in cryptocurrency?
This is a personal choice you have to do. Cryptocurrency, well played, could generate extra revenue.
How the value of the cryptocurrency is set?
Cryptocurrency price is set by the market. There is not a central governor entity. If you hold an account in different exchanges, you will notice that the price of a given cryptocurrency is not the same (close, not the same).
Cryptocurrency price is also affected by external events: an opinion of an influencer (political, celebrity), an action of a government, major event (tragedy, cryptocurrency fork).
Can a cryptocurrency be considered an actual currency (FIAT) such as a USD dollar?
This is another tricky answer. Cryptocurrency is meant to be a digital currency, however, you can't go to Walmart, and pay with cryptocurrency. There are many things that have to happen in order to let cryptocurrency be used as FIAT currency:
- there should be a common cryptocurrency between you and your vendor, if you hold Ethereum (ETH) and the store only accepts Bitcoin (BTC) you won't be able to pay. However, there are some services that may convert them on the spot for an extra fee,
- the transaction has to happen in a few seconds, which is a challenge for many cryptocurrencies,
- you have to agree with the rate the vendor offers for your cryptocurrency, which in many cases won't benefit you.
What are the pros and cons of using cryptocurrency?
Price fluctuation, depending on the time, could be a pro or con.
May I buy cryptocurrency?
Yes, there are many places where you can buy cryptocurrency. Google them, the availability varies depending on the country you are.
What is Bitcoin?
The most famous cryptocurrency.
Is it safe to use Bitcoin?
Yes, as safe as using cash.
How does Bitcoin work?
Bitcoin is a cryptocurrency that is stored in digital wallets. When you send a payment, you make a transfer to a given address.
How do Bitcoins are created?
Bitcoins, or any other cryptocurrency, are created by the process called mining. Miners donate their CPU/GPU to resolve complex algorithms that secure and verify transactions. As miners resolve, verify and find blocks they are rewarded with Bitcoins (or any other cryptocurrency they mine).