Crypto FAQs
Crypto FAQs
Crypto FAQs to help further your understanding of cryptocurrencies, crypto wallets & some of the background on the crypto coins themselves from Your Crypto Guide.
Bitcoin (BTC) – the original cryptocurrency, conceived in 2008 and launched in January 2009. Operates using a proof-of-work consensus mechanism, meaning that computing power is used to verify transactions and generate new blocks in its blockchain. It has a total maximum supply of 21 million bitcoins, making it potentially deflationary.
Ethereum (ETH) – a proof-of-work cryptocurrency launched in July 2015. Originally conceived as a ‘universal computer’ that could function as infrastructure for a decentralized internet, it is capable of running smart contracts, which execute pre-specificed actions when certain conditions are met. It is currently planning a shift to a proof-of-stake consensus mechanism, in which transactions are verified by staking ethereum on them.
Tether (USDT) – a stablecoin launched in July 2014 as RealCoin. It’s pegged 1:1 to the US dollar and backed up by reserves equivalent to the value of its entire supply. Running on the Ethereum blockchain (and also running on other chains), it generally records the highest 24-hour trading volume of any cryptocurrency in the market. This is because traders tend to exit into Tether during dips, although some commentators have claimed that it isn’t fully backed, a charge given weight by the fact that Tether has never undergone a full audit.
Binance coin (BNB) – the native cryptocurrency of Binance, the world’s largest cryptocurrency by trading volume. Launched in June 2017, holding BNB grants users discounts on the trading fees Binance charges.
Cardano (ADA) – a proof-of-stake cryptocurrency launched in 2015 and opened to trading in 2017. Operating as a general purpose utility blockchain like Ethereum, it has witnessed steady development in the intervening years, launching the ability to run smart contracts in September 2021.
Ripple (XRP) – a cryptocurrency launched in 2012 as OpenCoin. It has generally positioned itself as a remittance network, providing cross-border transfers between counterparties and financial institutions. Ripple’s ledger uses neither a proof-of-work nor a proof-of-stake consensus mechanism, instead using its own consensus algorithm that’s capable of more than 1,000 transactions per second, in contrast to around 7 per second for Bitcoin.
Dogecoin (DOGE) – a so-called meme coin launched in December 2013. Featuring a Shiba Inu dog as its mascot, Dogecoin is a fork of Litecoin, which is a fork of Bitcoin. Despite originating as a joke, it commands a large number of loyal fans and supporters, who can often help it rise in price quickly.
Solana (SOL) – A relatively new blockchain platform that launched in 2020 and promised scalability far beyond Bitcoin or Ethereum. SOL is touted for having a small ecologically footprint, fast speeds and extremely low fees. The aforementioned low fees and fast throughput made it a favorite for NFTs, DEX’s and apps. A common criticism of Solana is that it’s heavily influenced by VC funding not as decentralized as its competitors. It’s also experienced several notable outages.
Monero (XMR) – a privacy coin launched in 2014. It helps users to achieve greater anonymity than that offered by Bitcoin and other cryptocurrencies, through a variety of novel features. These include one-time stealth addresses, ring signatures that mix transactions so they can’t be traced, and transactions that hide the amounts transferred. Given its effectiveness, Monero has been delisted by numerous exchanges that don’t want to break anti-money laundering regulations.
The Sandbox (SAND) – along with Decentraland (MANA), the Sandbox is one of the biggest gaming- and metaverse-related cryptocurrencies in the market. Launched in August 2020, SAND is the governance and utility token of the Sandbox gaming platform, allowing holders to buy in-game items, vote on upgrades, and for staking, which earns them rewards.
The process might seem foreign to anyone new to crypto but it’s a relatively straightforward process.
The first time is the hardest but it gets easier once you understand the terminology and concepts.
Remember to start with a small amount of funds, just in case something goes wrong.
Once you’ve set up your wallet experiment with sending and receiving crypto. It’s also a good exercise to delete your wallet altogether and then restore it using a recovery seed just to understand how it works.
A wallet you put in your pocket and put paper money in?
There’s no firm definition for a fiat wallet but fiat, in general, refers to money printed by governments. So regular cash like USD or CAD.
It’s also possible to store stablecoins (which can be pegged to USD) in your crypto wallet if you want something with stable value.
This is a point of contention among crypto purists.
You can technically just leave your crypto on an exchange like Coinbase and never bother with a wallet. Of course if anything happens to Coinbase then you’re in trouble.
Crypto purists believe in self-custody and holding the private keys to your own crypto. Of course, that means you’re responsible and if you lose your private keys, than you’ve lost your crypto.
There are tons of good wallets for beginners.
You might want to try a software wallet first so you don’t have to worry about ordering (and paying) for a physical wallet.
Some of the best beginner wallets include:
Exodus & Trust Wallet
Somewhere safe. If anyone is able to acquire your recovery seed then they can liquidate your crypto funds.
People generally make a few copies of their recovery seed and store them in extremely safe locations. A safe, for instance, might be an optimal location.
There are also extreme individuals who memorize their entire 24-word recovery seed. This is called a brainwallet. It is not recommended.
