FAQ About About Crypto
How does it works?
Cryptocurrency comes under many names. You have
probably read about some of the most popular types of
cryptocurrencies such as Bitcoin, Litecoin, and Ethereum.
Cryptocurrencies are increasingly popular alternatives for
online payments. Before converting real dollars, euros,
pounds, or other traditional currencies into ₿ (the symbol
for Bitcoin, the most popular cryptocurrency), you should
understand what cryptocurrencies are, what the risks are
in using cryptocurrencies, and how to protect your
investment.
What is cryptocurrency? A cryptocurrency is a digital
currency, which is an alternative form of payment created
using encryption algorithms. The use of encryption
technologies means that cryptocurrencies function both as
a currency and as a virtual accounting system. To use
cryptocurrencies, you need a cryptocurrency wallet. These
wallets can be software that is a cloud-based service or is
stored on your computer or on your mobile device. The
wallets are the tool through which you store your
encryption keys that confirm your identity and link to your
cryptocurrency.
What are the risks to using cryptocurrency?
Cryptocurrencies are still relatively new, and the market
for these digital currencies is very volatile. Since
cryptocurrencies don't need banks or any other third party
to regulate them; they tend to be uninsured and are hard
to convert into a form of tangible currency (such as US
dollars or euros.) In addition, since cryptocurrencies are
technology-based intangible assets, they can be hacked
like any other intangible technology asset. Finally, since
you store your cryptocurrencies in a digital wallet, if you
lose your wallet (or access to it or to wallet backups), you
have lost your entire cryptocurrency investment.
Follow these tips to protect your cryptocurrencies:
Look before you leap! Before investing in a
cryptocurrency, be sure you understand how it works,
where it can be used, and how to exchange it. Read
the webpages for the currency itself (such as
, or ) so that you fully
understand how it works, and read independent
articles on the cryptocurrencies you are considering as
well.
Use a trustworthy wallet. It is going to take some
research on your part to choose the right wallet for
your needs. If you choose to manage your
cryptocurrency wallet with a local application on your
computer or mobile device, then you will need to
protect this wallet at a level consistent with your
investment. Just like you wouldn't carry a million
dollars around in a paper bag, don't choose an
unknown or lesser-known wallet to protect your
cryptocurrency. You want to make sure that you use a
trustworthy wallet.
Have a backup strategy. Think about what happens if
your computer or mobile device (or wherever you
store your wallet) is lost or stolen or if you don't
otherwise have access to it. Without a backup
strategy, you will have no way of getting your
cryptocurrency back, and you could lose your
investment.
Resources
Lean more about cryptocurrencies from the FTC
article " ."
Read the Forbes article "
" to learn about Bitcoin exchanges and
wallets.
View
infographic.
/ / THE BASICS ABOUT CRYPTOCURRENCY CTS
ADDITIONAL NAVIGATION
Ethereum Bitcoin Litecoin
What to Know About Cryptocurrency
Guide to Top Cryptocurrency
Exchanges
A Beginner's Guide to Cryptocurrencies
