You have questions, we have answers!
We get it, the world of crypto is a new one and could be confusing. Here are some answers to the most commonly asked questions we get when people visit the lounge.
What is Bitcoin?
Bitcoin is a decentralized peer-to-peer cryptocurrency. Bitcoin operates on top of what is called blockchain technology, and it is highly secure and encrypted as a result. It is both digital money and a payment network. It was created by Satoshi Nakamoto, but that is likely a pseudonym. No one knows “his or her” true identity. Many people focus strictly on moon and Lambo now!
What is the bitcoin blockchain?
The bitcoin blockchain is a payment network. It is essentially a decentralized ledger of account. Some refer to it as the “vertebrae” of bitcoin. A “blockchain” sounds just like what it is: a chain of blocks. Each block contains batches of transactions.
Miners, or sophisticated computer hardware, work around the clock to validate these transactions within the blocks. These miners attempt to solve complex mathematical puzzles that help validate block transactions, and also allow for the creation of new bitcoin. Once each block gets full and validated by the miner, a new block is created with transactions, and each block is tied to each other via sophisticated encryption.
What is a bitcoin wallet?
A bitcoin wallet is a digital app, hardware device, or piece of paper that stores and protects private keys that access bitcoin via the blockchain. Wallets allow users to send and receive bitcoin, and some wallets hold a variety of cryptocurrencies. They are often called “multi-asset wallets.” An example of such a wallet is Exodus, which allows users to store many different cryptocurrencies. Today, there are hundreds, if not thousands of wallet providers. However, not all of them are created equal and some have been exploited or hacked. Make sure to conduct thorough research into each wallet provider you choose.
How do you trade bitcoin?
Bitcoin can be traded in a variety of ways. The most common way is to use a trading platform such as Crytptospace’s unique solution. The trading process generally happens by a user submitting a trade amount via an automated system and waiting for a buyer to purchase at their sell point. The trade itself is rather simple, the user sends the bitcoin from his wallet to an exchange, and then she can post her amount. However, each platform generally has a different wallet system to handle trades, but in practice most of the trading happens in a similar way.
When is a good time to Buy BItcoin?
Anytime! In all seriousness, traders tend to recommend people purchase bitcoin when it is on the downswing or during what is called a “bear market.” The old saying “buy low and sell high” tends to also apply to bitcoin and cryptocurrency trading. However, it also depends on your goals. If your goal is to invest in the future of the technology, you can probably purchase the cryptocurrency any time and be happy, although there is no guarantee that you will make money. Cryptocurrency in general is still a rather volatile asset class. That is why during a bear market you will oftentimes here people in the community cry, “when MOON!”
What is the best cryptocurrency to buy?
This is not an easy question to answer, and the answer can be rather subjective. It depends on who you ask. If we go on value and historicity alone, bitcoin would be the automatic shoe-in for best cryptocurrency. However, some people like coins that solve different problems or represent different kinds of value. For instance, some people who like cryptocurrencies that are treated as money will pick bitcoin cash. Some who like the idea of crypto-as-utility will choose a specific kind ERC-20 token. Every individual will likely have a different answer. At Cryptospace, we recommend sticking with the top cryptocurrencies by market capitalization. You will run less risk of getting involved with a scam or buying a cryptocurrency that could lose considerable market share in the short term.
What are alt coins?
“Alt coins” is a term that refers to cryptocurrencies and digital assets that are not bitcoin. These are cryptocurrencies that can be legitimate or illegitimate, used as a utility or a security, be a scam or valuable asset. Sometimes, members of the crypto ecosystem refer to these coins as “shit coins,” although not every alt coin is a scam.
What are Private Keys?
Private keys refer to special cryptography that provides users with accessibility to their cryptocurrency via a wallet or wallet provider. Cryptography also encrypts wallets so they are secure and not easily hacked. A private key is an alphanumeric password that is exactly 256 characters long. The password is picked randomly when a person downloads or installs a wallet device. Private keys can generally be restored if a user has saved their “seed phrase,” which allows them access to their private keys on any wallet that accepts that seed phrase designation.
What is KYC?
KYC refers to “know your customer,” which is a process businesses use to verify the identity of their customers or clients. It’s a process that banks and other financial institutions have implemented in order to prevent money laundering, fraud, corruption, bribery, and other criminal activities. KYC policies have been strictly enforced by governments to stop the spread and financing of global terrorism.
What are the best wallets to use when doing Bitcoin transactions?
This is a common question, but another one that falls into the realm of subjectivity. Different wallets have different features, functionality, and strengths. Some wallets are also questionable in terms of their legitimacy and efficacy. At Cryptospace, we primarily recommend using Exodus wallet, Mycelium, CoPay, and blockchain.com. Nonetheless, always remember to do your own research on what wallet provider you choose.
Do they have Bitcoin debit cards?
Yes! There are bitcoin debit cards available. New ones arise each year, although sometimes accessibility to these cards can be limited due to geographical location. Two popular cards in the United States are the Bit Pay card and the Coinbase card. Both cards are reliable, but be aware that using these cards means working with the legacy system and the cryptocurrency system simultaneously.
What makes Cryptospace better than Coinbase as far as buying my crypto?
Coinbase is a custodial exchange. They hold their customers funds on their platform and manage the private keys. Cryptospace is a non-custodial exchange. We allow users to execute trades while holding their own funds through our unique trading solution. It is also part of cryptospace’s mission to maintain a white glove approach with our customers by being there for them if they require assistance. Strong customer service is at the heart of everything we do.
What is Cryptospace?
We are a human centric cryptocurrency exchange that offers concierge treatment for our clients. We have a trade desk that allows for users to manage their own private keys while also being able to trade cryptocurrency. We are based in San Pedro, California, and are fully compliant with all laws and regulations that govern the buying and selling of digital assets.
What do I do with my private keys?
Your private keys, which are represented by your “seed phrase,” should be protected at all costs. You should write down your seed phrase on a sheet of paper and not let anyone see it. If anyone gains access to your seed phrase, they can steal your money by simply inputting your seed phrase into a compatible wallet. It is not advisable to take digital photos or screenshots of your seed phrases or private keys, because a savvy hacker could access them through nefarious means.
Do I have to bring people into Bitcoin?
There is no obligation to bring anyone into bitcoin. Bringing someone into bitcoin is akin to bringing them into the automobile or into electricity. Bitcoin is just a tool or technology that spreads naturally due to the value it offers society. With that said, there is nothing wrong with introducing new people to bitcoin. If someone you know is fascinated with money and attracted to technology, they will love bitcoin and be happy you showed it to them. The bitcoin revolution is fully underway, and more and more people are being brought into bitcoin by virtue of its ubiquity and utility.
What are Exchanges and are they safe?
Cryptocurrency exchanges are businesses that specialize in allowing cryptocurrency holders to exchange their coins for other coins, or even for dollars. These exchanges mostly operate on a large scale, and have systems in place to let users trade via automated systems.
The answer to whether they are safe is a more complicated question. As with cryptocurrency, not all exchanges are created equal. Some exchanges were created to con users or money launder cryptocurrency. Other exchanges like Cryptospace, Kraken, Poloniex, and Bittrex have highly reputable operations, and some of them are insured to protect their customers.
Whether an exchange is safe also depends on how it conducts business. Most exchanges, like Kraken, Poloniex, and Bittrex act as custodial wallets, meaning they hold their customer’s cryptocurrency for them. However, Cryptospace is a non-custodial exchange and our customers get to hold their own keys. We want to maximize security for our customers and ensure they also maintain sole responsibility of their wallets and private keys.
Is it safe to leave your cryptocurrency in exchanges?
Not completely. Most cryptocurrency exchanges are called “custodial exchanges.” What this means is that they hold onto their customer’s cryptocurrency within their own cold storage wallets. The problem is these wallets are usually all housed within a centralized server. This fact means exchanges are often targets of hackers, because they are honey pots. There are countless stories about various exchanges being hacked, the most famous of course being Mt. Gox.
With that said, exchanges are constantly revamping and retooling their security practices and policies, which is making them safer as time goes on. Nonetheless, most of these exchanges still store your cryptocurrency on their servers via their private keys; and so long as they continue this practice, they will not be completely safe. It is advised to use services and wallets that allow you to hold your private keys.
Is it too late to buy BItcoin?
No. It’s never too late to buy bitcoin, but that mindset also depends on the buyer. A person who wants to strike it rich is likely too late to buy bitcoin (although some people still suspect bitcoin may skyrocket). It is possible, but buying bitcoin should not only be about investing for striking rich, but also investing in the future of the economy, money, technology, and the financial system. In this way, it’s never too late to buy bitcoin. Buying bitcoin is an act of financial independence, and even now most people do see modest gains after purchasing bitcoin. And although it has been pronounced dead many times over, the value trend for bitcoin has still tended to move upward.
How do you sweep a paper wallet?
Sweep and Import are ways of transferring a private key onto a software wallet. Import keeps the Bitcoins on the original private key, while Sweep sends the Bitcoins to a whole new private key connected to the software wallet. As a rule of thumb, sweeping is more recommended than importing.
When should you sweep a private key?
You should sweep a private key if someone else had access to the private key (e.g. if someone gave you a paper wallet or the private key was published online). This will prevent a potential hacker from ever being able to spend the bitcoins associated with it. As a rule of thumb, if you’re in doubt of whether to import or sweep a private key, you should probably sweep it. Sweeping solves many of the issues that can arise from doing an import.
What is a paper wallet?
A paper wallet requires using a printer that generates and transfers a new Crypto Address and private key to paper. It works by having a new single private key and bitcoin address, usually generated by a website. When complete, you want to treat it like cash.
As soon as it’s set up the process is complete, the system will delete any trace of your data from the database. Furthermore, bitcoin paper wallets imply that bitcoin is not on the blockchain until the address is activated and coins are added. You have to enter the information online and connect your wallet to the live blockchain or(Sweep Private KEY) to the online wallet. At this stage, it is called cold storage. Paper wallets are the safest long-term storage solution for bitcoins. It is not always safe to store cryptocurrency online or in a custodial exchange because they are often hacked.
How do I check the blockchain for transactions?
Blockchain transactions can easily be viewed on a number of different block explorers. Each bitcoin transaction has a TX ID associated with it, which for most purposes acts as a bill of receipt. Different cryptocurrencies usually have their own block explorers associated with them. For example, a popular block explorer for Ethereum is etherscan.io/. For Bitcoin, blockchain.com is just one of many popular options. If you want to go MOON, you have to know how to view your transaction IDs on block explorers.
What is the best site to use for trading?
Cryptospace is the best site for trading! No really, we want you to be able to trade while also holding onto your own funds. We allow users to trade while also maintaining financial autonomy.
How can I find out more info on cryptocurrencies?`
There are a lot of amazing educational resources available online. We recommend using bitcoin.com, which is specifically designed as an educational portal, although they primarily focus on bitcoin cash. For a more general approach, coindesk.com is also a great educational resource. Other’s include Bitcoin Magazine, CoinTelegraph, and Hacker Noon (even though they are not strictly crypto). You can also reach out to us for more information.
How can Bitcoin Be hacked or stolen?
The bitcoin protocol or blockchain can not be easily hacked. In other words, the payment network itself is extremely resilient and can withstand powerful hacking attacks. Of course, people hear that “bitcoin” gets hacked all the time. Let’s be clear. The bitcoin platform itself is not the target of hackers. Instead, hackers target wallets and servers. It’s through these conduits that they obtain private keys that allow them to steal crypto from those wallets and servers. It is a best practice to always keep a low amount of funds on day-to-day use wallets, and to keep a savings amount of funds in cold storage on a hardware or paper wallet that does not constantly touch the internet.
Still have questions? Sign up for our Newsletter to learn more about cryptocurrency and be the first to hear about our upcoming events!