Frequently asked questions
For anyone who wants to learn detailed information about the world of "crypto". This world includes not only the CryptoCurrencies themselves, but also CryptoExchanges which facilitate the process of buying and selling cryptocurrencies. And we shouldn’t forget Hardware Wallets either – they are the safest way to store your cryptocurrencies.
Cryptocurrency is a type of digital currency or electronic money. Its main characteristic is the lack of a central authority typical for regular money (so-called FIAT money) where central banks govern the circulation of money as well as the amount of money available (these days, this is done exclusively by printing new banknotes which devalues your savings). At the same time, concensus exists regarding the cryptocurrency’s value and the will to accept its value.
Cryptocurrencies usually have a fixed maximum number of coins and/or a timetable for their release, which is not the case with classic money.
In a wider sense of the word, tokens could also be classified as cryptocurrencies, but their function is quite different. More information about individual cryptocurrencies as well as tokens and what makes them different can be found in the CryptoCurrencies section.
Cryptocurrencies can be purchased at cryptocurrency exchanges. These can be divided into two groups.
CryptoExchanges that offer the sale and purchase of cryptocurrencies directly from them - they operate on a principle similar to when you exchange regular money [except that you receive a pre-determined amount of cryptocurrency at the address (your wallet) you entered or at the user interface from which you will then transfer the cryptocurrency to your own wallet]. One such exchange is Coinbase, which operates worldwide. Simply stated, Coinbase sells you cryptocurrencies and also buys them from you. Also Coinmate works on the same principle.
CryptoExchanges that mediate the purchase and sale of cryptocurrencies (like classical exchange) - these are intermediaries who sell and buy cryptocurrency; they are a place where demand meets supply (in a way that the stock market acts as an intermediary). Their user interface is typically quite easy to navigate so you don’t have to worry about it being too complex. Everyone can register there. Cryptocurrency exchanges have the advantage of lower markups than if you purchase directly from cryptoexchanges mentioned in the previous paragraph.
Information about proven cryptocurrency exchanges which can be used safely and effectively by users can be found of the page CryptoExchanges.
The safest way is to store cryptoccurencies in Hardware Wallet. You can of course leave your cryptocurrencies at the cryptocurrency exchange. But the rule is that if you don‘t trade a lot, you should use either the desktop (computer) wallet(s) each cryptocurrency provides for storing them, or ideally a hardware wallet which represents the most secure method for storing cryptocurrencies.
No investment, due to their very nature, can be absolutely secure. However, if you follow certain rules, you can minimize potential losses and maximize profits.
Cryptocurrencies are characterized by big price fluctuations, where the increase or decrease of price by up to 10% is not an exception. If you are planning on buying cryptocurrencies, carefully consider your financial means as well as the purpose for which you are buying them. Also, try to limit your urge to sell when prices drop (and then buy again when they increase). This is related to what was already said – invest only as much as you can afford, and, cryptocurrencies should only form a part of your investment portfolio. Of course you can buy them for trading purposes or use them as payment for goods and services as well.
Be patient. Don’t look at cryptocurrencies as a means of getting rich quickly (you can’t go thinking, I’ll buy Bitcoin now and next month I’ll be driving around in a „Lambo“), no one knows where Bitcoin will be in a month, a year, in five years. Nonetheless, the "crypto" technology is constantly developing (no one could have imagined today’s internet possibilities when internet was just starting and very few people would have bet on its practical uses).
Read detailed information about each cryptocurrency and project, look at their websites and once you know more about each project, then you can decide whether you want to make a purchase.