common cryptocurrency question

Common Crypto Questions [2020]

Common Crypto Questions [2020]

It’s been 10 years since the inception of Bitcoin, the first cryptocurrency. But there are a lot of questions still answered. Today we will discuss some of the most common crypto questions.  

How does cryptocurrency work?

Cryptocurrencies are tokens powered by decentralized technologies like Blockchains or DAGs. Usually, blockchains have three parts. 

  • P2P networking protocol — For communication throughout the network
  • Consensus Algorithm — Determining the state of network
  • Application Layer — Creating tokenomics and other features

Bitcoin was the first cryptocurrency, created by Satoshi Nakamoto. We have written two guides explaining Bitcoin, check them out.

Short Read: What is Bitcoin and How Bitcoin Works?

Long Read: A Candid Explanation of Bitcoin

Different Cryptocurrencies have different internal mechanics. But if you understand how Bitcoin works, you will able to learn how cryptocurrency works in general.

How many cryptocurrencies are there?

This is the most common crypto question. There are more than 7000 cryptocurrencies are there, but many of them are dead or worthless. Ethereum and other smart contract platforms made it easy to build tokens, which created the ICO boom of 2017. 

We at CoinCodeCap has data for 3162 cryptocurrency project in which we found 1240 cryptocurrencies are dead coins now.

How many cryptocurrency exchanges are there?

There are more than 300 crypto exchanges right now. 

What crypto to buy? Where to invest?

Do your own research (DYOR). Please don’t invest in anything which you don’t know about because it will be you who will lose your money. Don’t let anyone tell you in which cryptocurrency to invest in. 

But, I think this quote from Aaron Swartz can help.

“The scary thing is that the more open our markets get, the faster people can move their money around and the more trading is based on this kind of speculation instead of serious analysis. And that’s scary because — recall — the whole point of the stock market is to decide the crucial question of what we, as a society, should build for the future. As Keynes says, “When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”

So learn and invest in things that fit your world view. Let your investment be the force of the change you want to see in the world.

Are Cryptocurrencies Securities?

Under USA law, If an investment contract passes the Howey test, then it’s a security. There are security tokens, which are securities. But when we talk about cryptocurrencies, it depends on the tokenomics of that cryptocurrency. 

Read: A simple explanation of Security Token

SEC chairman Jay Clayton has clarified that at least Bitcoin is not a security, but most ICOs are. In an interview with CNBC in June, he stated: “Cryptocurrencies are replacements for sovereign currencies… [they] replace the yen, the dollar, the euro with Bitcoin. That type of currency is not a security.”

Security Exchange Commission (SEC) still needs to come with more precise guidelines to classify different currencies. So are cryptocurrencies are securities? The answer is it depends, sometimes they are. 

Places to buy cryptocurrency?

It depends on which country you live in. We have written a guide on how to buy Ethereum, and you can use a similar method to purchase other cryptocurrencies. 

Is Crypto Dead?

No, it’s just a beginning. Before the crypto, only governments can print money, now anyone can. 

“Just as the technology of printing altered and reduced the power of medieval guilds and the social power structure, so too will cryptologic methods fundamentally alter the nature of corporations and of government interference in economic transactions.” — Tim May (The Crypto Anarchist Manifesto) 1992

Crypto anarchy argues State and Money should be separated like we separated State and religion while writing democratic declarations all over the world. Any cryptocurrency following some other path just not worth it.

It will take hundreds of years, but Bitcoin was the beginning of the end of money controlled by the state.

Let us know if you have any questions about crypto technology or cryptocurrencies in the comment section. We will do our best to answer them.

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