If you’re like me—someone who’s not a tech expert but wants to get a handle on the world of cryptocurrency—then you’re in the right place. A few years ago, I started exploring crypto to add another income stream to my portfolio. Between raising three boys and running my own handyman business, I didn’t have time for complicated, confusing jargon, and that’s all I kept finding online.
So, I decided to break things down and make it simple for others like me—people who want to understand crypto without all the fluff. Here are 50 of the most common questions I get asked about cryptocurrency, along with straightforward answers that’ll help you get started.
1. What is cryptocurrency?
Cryptocurrency is digital money. It’s like cash on the internet, but it’s not controlled by any government or bank. It uses something called blockchain technology to secure transactions.
2. What is blockchain?
A blockchain is a digital ledger, like a big public record book, where every transaction is recorded. It’s decentralized, so no one person or organization controls it. It’s what makes crypto safe and transparent.
3. How does cryptocurrency work?
Cryptos work by using blockchain technology to record transactions. When you make a transaction, it’s verified by a network of computers (called nodes), which ensures everything’s legit.
4. Is Bitcoin the only cryptocurrency?
No, Bitcoin is the most well-known, but there are thousands of other cryptocurrencies—each with its own features. Ethereum, Litecoin, and Ripple (XRP) are a few examples.
5. What is Bitcoin?
Bitcoin is the first cryptocurrency, created in 2008 by an anonymous person (or group) called Satoshi Nakamoto. It’s like the grandfather of all cryptocurrencies.
6. Why is cryptocurrency valuable?
Cryptocurrency is valuable because it’s limited in supply, decentralized, and can be used for a variety of purposes, like buying goods or investing.
7. What is mining?
Mining is the process of using powerful computers to solve complex puzzles and validate transactions on a blockchain. Miners get rewarded with cryptocurrency for their efforts.
8. What is a cryptocurrency wallet?
A wallet is like your digital purse for storing cryptocurrency. You can have a hot wallet (online) or a cold wallet (offline) for extra security.
9. What is a public key?
A public key is your “address” on the blockchain. If someone wants to send you crypto, they use your public key.
10. What is a private key?
A private key is your password that lets you access your cryptocurrency. Keep it safe—if you lose it, you lose access to your crypto.
11. How do I buy cryptocurrency?
You can buy crypto through an exchange, like Coinbase or Binance, using regular money (like Australian dollars) or other cryptos.
12. Can I lose my cryptocurrency?
Yes, if you lose your private key or forget your wallet password, your crypto could be gone forever. It’s important to keep that info safe.
13. What is an exchange?
An exchange is a platform where you can buy, sell, or trade cryptocurrencies. Examples are Coinbase, Binance, and Kraken.
14. What is a stablecoin?
A stablecoin is a type of cryptocurrency that’s designed to maintain a stable value, often pegged to a traditional currency, like the Australian dollar.
15. Is cryptocurrency legal?
Cryptocurrency is legal in many countries, but some governments have restrictions. Make sure to check your local laws before diving in.
16. What is Ethereum?
Ethereum is a popular cryptocurrency and blockchain platform. It allows developers to build decentralized applications (dApps) and create smart contracts.
17. What is a smart contract?
A smart contract is a self-executing contract where the terms are written in code. It automatically runs when certain conditions are met—no middleman needed.
18. What are altcoins?
Altcoins are any cryptocurrencies that aren’t Bitcoin. They include Ethereum, Litecoin, Ripple, and many more.
19. How do I store my cryptocurrency safely?
You can store crypto in a secure wallet. Cold wallets (offline storage) are the safest option for long-term storage. Always use two-factor authentication (2FA) for extra security.
20. What is a decentralized exchange (DEX)?
A decentralized exchange allows you to trade cryptocurrencies directly with others, without a middleman. It’s more private and gives you control over your funds.
21. What is DeFi?
DeFi stands for “Decentralized Finance.” It refers to financial services like lending, borrowing, and trading that operate on blockchain technology, without banks or brokers.
22. What is a cryptocurrency scam?
Scams can include fake investment opportunities, phishing attacks, and Ponzi schemes. Always do your research before investing in any crypto project.
23. What is a gas fee in Ethereum?
Gas fees are the transaction fees you pay to send or receive Ethereum. These fees can fluctuate based on network demand.
24. What is staking?
Staking involves locking up a certain amount of cryptocurrency to help maintain a blockchain network. In return, you can earn rewards, like more coins.
25. What is a hard fork?
A hard fork is when a blockchain splits into two separate chains, often due to a disagreement in the community about changes to the system.
26. What is a soft fork?
A soft fork is a change to the blockchain that’s backward-compatible. It doesn’t split the network but can still introduce changes to the system.
27. What is a whale in crypto?
A whale is someone who owns a large amount of cryptocurrency. They can sometimes influence the market by making big trades.
28. How do I track my cryptocurrency portfolio?
You can use portfolio tracking apps like CoinGecko or CoinMarketCap to keep an eye on your investments and monitor price changes.
29. What is FOMO in cryptocurrency?
FOMO stands for “Fear of Missing Out.” It’s when people buy crypto impulsively because they don’t want to miss a potential price increase.
30. What is a pump and dump?
A pump and dump is a market manipulation tactic where the price of a cryptocurrency is artificially inflated (pumped) before being sold off (dumped), causing the price to crash.
31. What is HODL?
HODL is crypto slang for “hold.” It’s the strategy of keeping your crypto instead of selling it, even during market volatility.
32. What is a bull market?
A bull market is when the price of crypto is rising, and investors are optimistic about the future.
33. What is a bear market?
A bear market is the opposite of a bull market, where the price of crypto is falling and investors are generally pessimistic.
34. How do I sell cryptocurrency?
You can sell crypto through an exchange, converting it to regular currency (like AUD) or another cryptocurrency.
35. What is a whitepaper?
A whitepaper is a document that explains the details of a cryptocurrency project, including its purpose, how it works, and the technology behind it.
36. What are security tokens?
Security tokens represent ownership in a real-world asset, like stocks or real estate, and are regulated by the government.
37. What is a ledger in cryptocurrency?
A ledger is a record of all transactions in a blockchain. It’s what makes cryptocurrency transactions secure and transparent.
38. How do I pay with cryptocurrency?
You can pay with crypto at merchants who accept it. You’ll need a wallet and a public address to make the payment.
39. What is a gas war?
A gas war happens when many people are trying to make transactions at once, driving up the gas fees on the Ethereum network.
40. What is airdrop in crypto?
An airdrop is when a crypto project distributes free tokens to people, usually as part of a promotional campaign.
41. What are NFTs?
NFTs (Non-Fungible Tokens) are unique digital assets that represent ownership of things like art, music, or collectibles.
42. How do I avoid cryptocurrency taxes?
Cryptocurrency transactions are taxable in many countries. It’s best to consult a tax professional who understands crypto tax laws.
43. Is cryptocurrency a good investment?
Cryptocurrency can offer high returns, but it’s also volatile and risky. Always do your own research before investing.
44. Can I make money with cryptocurrency?
Yes, you can make money by trading, mining, or staking, but the market can be unpredictable, so proceed with caution.
45. What is the future of cryptocurrency?
The future of crypto is exciting, but uncertain. Many believe it will disrupt traditional finance, while others are more cautious.
46. What is a DAO?
A DAO (Decentralized Autonomous Organization) is a group governed by smart contracts, where decisions are made through voting.
47. What is liquidity in cryptocurrency?
Liquidity is how easily you can buy or sell a cryptocurrency without affecting its price.
48. Can I use cryptocurrency for everyday purchases?
Some businesses accept cryptocurrency, but it’s not as widely used as traditional payment methods yet.
49. Should I invest in cryptocurrency?
It can be a great investment if you’re willing to learn and take risks. Always start small and only invest what you can afford to lose.
50. How do I get started with crypto?
Start by researching, opening a wallet, and buying a small amount of crypto on an exchange. Learn as you go, and don’t rush into anything you don’t understand.
My final words
That’s it, 50 common questions and answers to help you get started in crypto! It’s all about making things simple and breaking through the confusion. If I can do it, so can you.
