Most Frequently Asked Crypto Investing Questions by Beginners

Most Frequently Asked Crypto Investing Questions by Beginners

There are 1 BILLION crypto users in the world right now.

That figure is growing all the time.

Eighteen thousand businesses are currently accepting payments in cryptocurrencies.

There is no doubt that figure will rise rapidly too.

That is why people have been clamouring to invest in cryptos – like prospectors dashing to get rich during the Gold Rush years of the 1800s.

Two hundred years later, this new “digital gold” has the same modern effect on investors.

Are You Too Late? Have You Missed The Boat?

One of the most frequently asked crypto investing questions, especially by beginners who want to learn crypto trading.

The answer is simple – NO, you are not too late.

Cryptocurrencies have only existed since 2009, with the launch of Bitcoin.

It was never intended to be an investment asset. It was a few years before it started to gather momentum as one.

In the space of one month in 2013, the price went from $350–$1,242.

A massive leap.

And it has continued in the same vein ever since.

Fast forward to 2021, and Bitcoin hit an all-time high of $69,000 before sliding dramatically to $17,500 within a few months.

There is a word for such swings – VOLATILITY.

As a beginner investor in cryptos, volatility is one of the most important things to understand and get used to.

You might wonder why people are still investing if cryptos are so volatile.

Again, the answer is simple – this volatility can be very profitable.

And with new cryptos entering the market all the time, you never know which one might become the new Bitcoin.

Here Are Some More Of The Most Frequently Asked Crypto Investing Questions:

What Is The Difference Between Cryptos And Blockchain?

A cryptocurrency (crypto) is a digital currency (electronic cash).

The blockchain is the network or system where cryptos exist.

Transactions and investment trades take place solely on the blockchain.

The blockchain also acts as a public ledger.

Everything that occurs with cryptos is recorded and visible to all within the network.

What Is Fiat Money?

Fiat money is what we have been using before cryptos came along.

It’s the physical currency, such as metal coins and paper notes.

There is a possibility that fiat money will disappear altogether. Digital currencies and cryptocurrencies could replace it.

What Is A Trading Account?

It is an online account you must have before you start investing and trading in cryptos.

You cannot invest without one.

You need a trading account even if you are investing and trading stocks.

What Is A Crypto Wallet?

A crypto wallet is like a traditional bank account.

You use a wallet to store all your cryptocurrencies, regardless of how many different ones you have.

Two types of wallets exist a hot wallet and a cold wallet.

You access a cold wallet offline. A hot wallet is accessed online only.

Cold wallets are preferred as they are less open to hacking and other cybersecurity threats.

What Is A Crypto Exchange?

A crypto exchange is any website, or service, that allows you to purchase, trade, or convert fiat currency into digital currency.

There are various cryptocurrency exchanges and wallets available on the internet.

It is good to check them out to understand how they operate.

Is My Crypto Wallet And Account Safe From Hacking?

The answer to this is, Yes and No.

No, because crypto cybercrime and hacking are often happening, your wallet and trading account are open to hacking.

Scamming is also a problem.

The good news, most account and wallet holders will receive their money back from trading exchanges if they fall victim to crime. 

Security is an issue, so it is essential to make sure you trade and invest with the best and most reliable exchanges and brokers.

You can learn more about this with a suitable blockchain course.

Are Cryptocurrency Profits Taxable?

The simple answer – is yes.

Even though it is a decentralised domain, the powers that be – i.e., governments – are taxing cryptos as income and capital gains (in the UK).

The exact nature of how and when taxes are applied can vary between countries.

Check your relevant government tax website for details.

As of 2022: Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Binance Coin (BNB), U.S. Dollar Coin (USDC), XRP (XRP), Cardano (ADA), Solana (SOL), Polkadot (DOT), Dogecoin (DOGE).

How Eco-Friendly Are Cryptocurrencies?

There used to be only one way to create and validate cryptos.

Blockchain miners use the Proof of Work (PoW) system.

PoW takes up masses of energy because high-powered computers are required to solve puzzles. It can take ages to “mine” crypto and add it to the blockchain.

A new system was introduced in 2012 called Proof of Stake (PoS).

PoS is a lot more environmentally friendly but has only recently seen an increase in adoption.

Energy consumption is a lot less because validators are chosen randomly using PoS.

Transaction times are quicker too, which saves energy.

Who Controls Cryptocurrencies?

No one person is supposed to control cryptos.

That was the point of decentralizing it when invented and launched.

It is peer-to-peer, a community network with no one person in charge.

However, now that governments are stepping in with regulations, everything could change in the next few years.

For now, the blockchain and cryptos still operate free from middle-man interference.

What Kind Of Fees Apply In Crypto Trading And Investing?

You will most likely pay fees when trading and investing in cryptos.

It could be a service or a miner’s fee (if your transaction relates to the blockchain).

Crypto exchanges take a service fee for handling your investment trade.

It’s no different from other fees you might pay for a service.

Fee amounts vary, so it is wise to check them out thoroughly before signing up for an exchange.

Miner’s fees are deducted because blockchain miners are volunteers.

They are computer experts and work to keep the blockchain secure and validate transactions. 

The fees paid to them give them the incentive to do what they do.

How Risky Are Cryptos To Invest In?

This takes us back to our introduction and volatility.

The highly volatile crypto market makes investing in cryptos inherently risky.

But, like anything risky, managing it is vital.

You can learn about risk management with proper expert coaching and an online trading course.

Mitchel Wicking
Mitchel Wicking
A big believer in the individual and independently-minded, balanced with a sense of the collective team spirit. As a former journalist and Independent Councillor, Mitch has first-hand experience fighting corporate and public service corruption and is therefore full of admiration for what Investment Mastery are achieving through their trading and investing “education for the everyday person.” If his words help someone, in some small way, on their journey to financial independence, he would be more than happy.

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