All The Cryptocurrency FAQs

To super simplify this answer, A currency owner uses their wallet software and their “private keys” to initiates a transaction (represented by messages) to send money to someone else’s cryptocurrency address. That message is queued for verification by “mining” computers. Once verified the transaction is recorded in a public ledger called blockchain. At this point, the receiver becomes the new owner of that amount sent and he/she can now use that cryptocurrency for some other purpose. The entire transaction uses a super high-grade encryption to ensure that no one can hack the transaction

Cryptocurrency is made through the mining process. Read “How cryptocurrency mining works”. The process is very expensive and time-consuming. As a reward for performing this costly yet critical task miners are rewarded with new cryptocurrency when they successfully perform their work. After receiving their rewards miners then spend their new currency which brings it into general circulation. Usually, (depending on the exact cryptocurrency) generation of these rewards is designed to occur at a fairly regular rate no matter how many miners are at work at the same time – this can make mining a very competitive process. Some currencies reduce the amount of the reward amount every few years. Many cryptocurrencies (like bitcoin) have a maximum number of coins which can ever be mined. Once that limit is reached no new coins will ever be mined again.

This question has a highly debatable answer. Many fiat currency “experts” would argue that it will never happen. But it is highly likely (in our opinion) that cryptocurrencies will continue to operate alongside fiat currencies for now. The varied reactions by different governments and the banking industry to cryptocurrency raise questions as to whether a complete replacement will ever be possible any time in the near future. In the long-term future, it seems inevitable that cryptocurrencies will ultimately replace fiat currencies – but that could be a long time from now. Someday physical money has got to be eliminated. Furthermore, several considerations would need to be made and thus there could be different replacement scenarios in different parts of the world.

The question of whether cryptocurrency can be considered a form of money is largely dependent on the country under consideration. This is because in some countries there is a total ban on cryptocurrency. In other countries, depending on the regulations in the country, cryptocurrency is either considered as property, security, commodity, or money.

While cryptocurrency, in general, will probably survive, not all coins will survive in the long term. The survival will greatly depend on the widespread adoption and acceptability of the coins as methods of payment and/or investment. This acceptance must be by both the general public and governments. If they are not accepted then they will not survive. Furthermore, innovation is required in maintaining the software that is the basis of cryptocurrencies and cryptocurrency projects with limited resources might find it hard keeping up and thus end.

Yes, cryptocurrency can be insured, but generally (and currently) this is only available for institutional investors and currency exchanges, not for individuals. There are a few insurers such as Mitsui Sumitomo Insurance, Chubb, XL Catlin, and even Lloyds of London that offer insurance against cryptocurrency exchange losses such as theft. The cryptocurrency insurance market is potentially a big opportunity for insurance companies in the future as the market matures. Insurance will be one more piece of the puzzle that will drive further adoption of cryptocurrencies. See Bloomberg report on cryptocurrency insurance.

Cryptocurrency can change the world in its own sphere i.e. the financial sector but it is the underlying technology (blockchain) that may change many more things in the world. Blockchain may be used for 1000s of applications. Cryptocurrency will change the traditional methods of controlling, storing, and transacting money. It will also liberate those who live in countries with fragile economies and/or banking systems. Projects such as Substratum and Golem are some examples of how cryptocurrency can revolutionize the computing industry in addition to the financial sector.

Cryptocurrency isn’t dead, but the price is highly volatile. The price swings are often driven by news of the day and emotional reaction of buyers and sellers. It is still anyone’s guess if cryptocurrencies will survive, but we think it will. The underlying technology is still intact and cryptocurrency acceptance for payments is increasing by the day. Furthermore, cryptocurrency is slowly finding acceptance in countries where there was a total ban on the cryptocurrencies.

This question is subject to enormous debate. There are many experts who will answer “YES, for sure!”, while an equal number of others will answer: “NO, it is one huge scam”. We here at this website feel that it is inevitable that some form of one or more cryptocurrencies will survive the test of time and come into common use.

Each unique cryptocurrency logo will have its own answer to this question. But here are some examples: The original unaltered bitcoin logo is free of copyright. There are also many variants of the original that are also free. Other related alt-coins based on bitcoin may have copyrighted their own version of the original logo. And in fact, anyone can copyright their own altered version of the original bitcoin logo if it is sufficiently different from that original. Other cryptocurrencies do have specific guidelines, such as Ripple’s logo usage guidelines here.  The Ethereum logo usage guidelines can be found here.
For any other cryptocurrency logos, you will have to do your own digging.

The safety of a cryptocurrency faucet depends on what information you send to the faucet source. Faucets requiring only your cryptocurrency deposit address are safe since no one can steal your currency knowing only this address. Other faucets require your email addresses. Faucets that ask for your email might be just collecting email addresses which could later be used for phishing attacks. An email address is not required to get coins from a faucet, only your cryptocurrency deposit address.

Halal is an Arabic word meaning lawful or permitted under Islamic law. It usually applies to food, but can also apply to cryptocurrency. Cryptocurrency’s “halal”ness depends on the intention of the user. The Muslim religion prohibits ‘usury’, i.e. lending money at unfair rates. As such, according to a study by a renowned Muslim scholar, cryptocurrency is halal as long as it is not used in this way. Cryptocurrency, in and of itself, is halal. It is also halal if used as a digital form of payment. FYI: The opposite of halal is haram.

Cryptocurrency disrupts the global economy by providing a method to decentralizing global financial transactions. Those transactions are today mostly centralized on the US dollar standard and controlled by various governments. The global payments and the crowdfunding processes are among the major aspects of the global economy disrupted by cryptocurrency. The cryptocurrency ecosystem eliminates the middleman, particularly international banks and the SWIFT network, which is a method to allow major banks to transfer fiat currencies such as dollars, Euros, Pounds, … Cryptocurrency will bypass this system and make international transfers faster, cheaper, and more private. Cryptocurrency also allows the tokenization of an idea and its direct sale to the public, thus simplifying the crowdfunding process. Generally, cryptocurrency challenges the dominance of the dollar and other major fiat currencies in the global economy.

The working of the cryptocurrency exchange mostly depends on whether or not an intermediary needs to be involved in a financial transaction. Where an intermediary isn’t involved, the exchange can be decentralized which allows the buyer and seller to exchange cryptocurrency directly. These types of exchanges are limited to only exchanging cryptocurrency, not fiat. When an intermediary is involved, the exchange adopts the fiat exchange approach which allows the exchange of cryptocurrency to and from physical government printed currency. The intermediary, normally a cryptocurrency exchange company, mediates between the seller and buyer and profits from the exchange by collecting some fees.

Cryptocurrency transactions denote the transfer of funds from a sender to a receiver. A transaction is a message which has the destination and source addresses, and the amount to be transferred (plus some other less interesting details). In addition, each transaction has a hash value of the previous transaction, which is used to ensure the integrity of the transaction. Every transaction is signed (encrypted) using the sender’s private key. It is then broadcast to the cryptocurrency network, where it is verified and confirmed using the corresponding public key before being added to the ledger as an accepted transaction. The amount to be sent is known, but the sender’s and receiver’s personal details remain confidential.

Centralized exchanges charge fees for transacting in cryptocurrency and for interacting with banks. A common transaction fee can be the “spread” that is charged above the actual value currency to be transferred is one avenue used by the exchanges to make money. In addition to the spread, other exchanges will charge flat commissions on a per transaction basis. Other exchanges may charge signup fees and/or annual account “maintenance” fees. Be sure to understand all these fees before you use an exchange.

The Photon cryptocurrency, abbreviated as PHO, was released in February 2014 is the cryptocurrency measured in “photons”. (Note that the word “photon” is also the name for a quantum of electromagnetic radiation, which has nothing to do with cryptocurrency. But it is a cool name and that is probably why PHO chose its name.) The original intent of the PHO developers was building a blockchain-based economic infrastructure meant for the video games, unlike most other cryptocurrencies. PHO is an in-game currency for payments between game users or making purchases from the game.

Generally, cryptocurrency is a decentralized digital currency which can be used for purchases and/or can also be exchanged for other digital or traditional (fiat) currencies. As opposed to the case with fiat currency, there isn’t a central authority for issuing new cryptocurrencies, nor controlling them. Instead, cryptocurrencies are normally generated by solving complicated mathematical problems. Cryptocurrency isn’t like regular fiat money as its value is highly volatile and can’t be controlled. Read this for a very in-depth explanation of what is cryptocurrency.

Cryptocurrency means a digital currency that employs cryptography as its inherent security system. Cryptography is a very complex mathematical equation that makes it nearly impossible to determine the magic secret keys which are used to unlock each individual’s cryptocurrency. This cryptography is also an element that allows cryptocurrencies to be semi-anonymous. Cryptography is also used by all banks and even the US military to guard secrets.

In addition to Bitcoin, Overstock works via the ShapeShift exchange to now accepts most of the major altcoins (at the time of this writing, about 40 currencies). Among the major coins acceptable for payments at Overstock include bitcoin, ether, Dash, Litecoin, NEM, etc.

As of February 2021, there are 4081 cryptocurrencies or tokens that are currently listed on the coinmarketcap.com website. The vast majority will probably never have much value and will probably disappear someday. Bitcoins are the major cryptocurrency; the altcoins are alternatives to the Bitcoin cryptocurrency while the tokens are cryptocurrencies that are built as decentralized “applications” i.e. they don’t have their own blockchain, but they use the blockchain of some other true cryptocurrency.

While the 90’s saw attempts to build digital currencies such as the Bit Gold and B-Money, they were never adopted by enough people and so they faded away. It was Satoshi Nakamoto’s announcement of his Bitcoin design in late 2008 that marked the start of a well-established cryptocurrency era. He was able to solve the one previously intractable problem of double spending. It is widely believed that bitcoin was invented by Satoshi as a response to the world-wide banking crisis of 2008. The very first bitcoin was created in early 2009. The first altcoins started in 2011 with the earlier ones being Litecoin, Namecoin, and Swiftcoin.

Cryptographic electronic money was first conceived in 1983 by David Chaum, an American cryptographer. This design never caught on due to some important technical limitations. There have also been a few other attempts to create a widely adopted electronic money after that but they also didn’t catch on.  It was not until 2009 that the first truly decentralized and successful cryptocurrency, Bitcoin, was created by Satoshi Nakamoto. One of the defining pieces of the bitcoin software that made it different from all previous versions of electronic currency is that it solved the “double spend” problem so that the same coin could not be spent twice.  Bitcoin spawned 1000s of other cryptocurrencies.

Although cryptocurrencies are slowly being used by more people and accepted by more vendors year by year, they are still not mainstream yet. Cryptocurrencies will only truly go mainstream when their price stops being so volatile and when it is easier to keep the currency safe from theft. It will be at that time that mass adoption will occur by consumers, vendors and financial institutions. This will make cryptocurrencies a mainstream currency to compete head-to-head with fiat currencies in every way. 2019 COULD be that breakout year…. Or it could still be many years away.

Cryptocurrency can be used in many ways.  Common uses today are:

• Used to purchase products from participating sellers. (such as www.overstock.com)
• As an inexpensive way to transfer funds to friends, family, and strangers.
• As a store of wealth (like gold)
• To invest in innovative early-stage startup companies (Can be like getting stock in a new business)
• Pay salaries
• Pay taxes (in some US states)
• Donate money (to some charities)

In each of these cases, the destination must be a person, organization or business that is willing and able to receive these funds.

But it is important to also know that cryptocurrency is not universally accepted by everyone.

Each unique cryptocurrency logo will have its own answer to this question. But here are some examples: The original unaltered bitcoin logo is free of copyright. There are also many variants of the original that are also free. Other related alt-coins based on bitcoin may have copyrighted their own version of the original logo. And in fact, anyone can copyright their own altered version of the original bitcoin logo if it is sufficiently different from that original. Other cryptocurrencies do have specific guidelines, such as Ripple’s logo usage guidelines here.  The Ethereum logo usage guidelines can be found here.
For any other cryptocurrency logos, you will have to do your own digging.