Bitcoin (BTC) is the world’s first digital currency, a cryptocurrency, which operates independently of a central bank and is traded worldwide. In recent years, it has risen in popularity amongst currency traders, mostly due to market volatility; as currency trading allows for maximum yield when volatile. This currency is a high demand, financial trading instrument although it has no association with a particular government or a central bank.
The rise of social media and media awareness has played a large part in the volatility of the Bitcoin currency. Breaking stories seem to increase the volatility of Bitcoin and traders build their strategies around the events.
Frequently Asked Questions
Find below a collection of the most frequent questions we are asked,
- What is cryptocurrency?
The inventor of the most famous cryptocurrency today – Bitcoin – attempted to build a “peer-to-peer electronic cash system”. This had been tried many times before but the main point of difference between Bitcoin and previous efforts like Digicash was that it was to be entirely decentralised. Without an overarching entity controlling the currency, the notion of “trust” would be removed from the system.
To combat “double spending”, the major flaw in all digital cash systems at that point, Bitcoin inventor Satoshi Nakamoto proposed a revolutionary technology known as the blockchain to record all the transactions made with his currency.
For any single balance, transaction, or change to the network to take place, there would need to be consensus amongst those validating the network – the miners. Since Bitcoin’s invent, many other programmers have attempted to use the model and tweak it to provide what they consider to be a more functional form of digital cash.
Other cryptocurrencies include Litecoin, Monero, Ether, and New Economy Movement. Many of these efforts tailor their currency for a special purpose. Speed, price, and privacy, are among the most common.
- What is cryptocurrency used for?
Being such a new technology, it may be that cryptocurrency has not been used for its eventual use case. Still, today it is used for many purposes. These include, but are not limited to the following: remittances, trading, investment, payment for goods and services, private monetary transactions, gambling, and as a hedge against national currencies suffering rapid devaluation (Venezuela, Greece for example).
As the entire cryptocurrency space expands, it is likely that we’ll see additional uses joining this list. Already there are young services like SteemIt, which sets to revolutionise the way content is paid for on social media, as well as services like Musicoin which seeks to find a more equitable way of paying artists without the need of middlemen.
- How to trade bitcoins?
Bitcoin trading the process by which we speculate on future price moves of this coin.
it’s not difficult to trade bitcoins. As with all other financial markets prices have rationalities of their own – controlled by good technical analysis – and the moves in the currencies themselves follow well understood “fundamentals” (total coin supply, technical details, development plans, mission statements, general speculation). To keep track of these moves websites and twitter are essential tools.
- What is the hottest coin to invest in?
Defining a single “best” coin is difficult. There are over a thousand different offerings in the space, and the various prices assigned to them is more than simply a reflection of their popularity. Each token has a different total circulating supply meaning that any changes in market cap will affect them all differently.
Right now, the most popular crypto currency is Bitcoin. This might not be the case in a few years. There are many supposed weaknesses with the current scaling debate being the manifestation of one such issue. Other more modern efforts have focused on tackling problems perceived with the Bitcoin network, whilst some offer entirely new potential – the Ethereum network, for example
- Bitcoin market cap is …
… the relative importance this coin has on the overall market. Market capitalization is the ratio of importance that each cryptocurrency individually on the crypto market. It ranges, therefore, from 0 to 100% and is used to understand who is gaining more relative dominance.
Bitcoin used to dominate this market cap – for many years it maintained 80% of the ratio. But recent changes have been challenging this dominance. It is expected that other coins like ethereum, ripple or litecoin start gaining importance.
- What is difference between bitcoin and ethereum?
All cryptocurrencies have their own characteristics but recently one coin has come to challenge more than ever before bitcoins. This new player on the market is Ethereum and the reasons for the challenge are easy to understand.
Ethereum emerged to try to correct some of the main criticisms that were made towards bitcoin – especially in terms of security.
What it accomplished to do was to provide safer transactions, more flexible contracts that are compatible with any wallet, with short block times to negotiate (where confirmations are easier). Ethereum is more available than bitcoin as well. Whereas more than two thirds of bitcoins have already been mined, access to ethereum is still widely available. Another core difference between these two coins is that Ethereum allows different developers to raise funds for their own projects. It can therefore be in itself a Kickstarter for a number of projects.
The main advantage of Ethereum is that it is a more secure, flexible, easy to use and transact coin. It has also brought innovations in terms of investment and entrepreneurship. And this is posing a serious challenge to bitcoin’s market cap.
- What’s the difference between a broker and exchanges?
Cryptocurrency exchanges are all those platforms that allow traders to buy and sell cryptocurrencies. Because it’s a very recent – and booming – market, most of these platforms are quite new. But, of course, one of the most relevant questions people ask is how to know if a certain platform is safe or not.
The only way to find out is to check whether the exchange provides transparent data of coins in cold storage. In other words, whether it has the reserves needed to provide liquidity to its activities. This can be easily checked by checking whether an exchange is regulated or not.
The other relevant information to extract is to look at reviews and comments that people are making about the platform. Are they positive or negative?
But we have simplified this research for you: the platforms suggested in this page are all fully registered and highly recommended.
- What is cryptocurrency mining?
Without Miners, cryptocurrency market would not work.
Miners provide a two-fold role in cryptocurrency. Firstly, they process complex mathematical problems to “unlock” new coins. Secondly, they validate transactions on the network.
They must have consensus on any change to the network for the blockchain to remain consistent. Non-consensus can lead to forks in the network. Forks are incredibly difficult to make happen on the Bitcoin network, and for many this is one of its strongest attributes.