What Is Cryptocurrency? - We have the answers you need!

Business Insights

The value of Bitcoin was predicted to skyrocket following the Bitcoin halving, causing a surge in interest from people who want to invest in cryptocurrency. However, many new investors tend to rely on Google for answers to their questions. 

Experts from cryptocurrency tax software company CoinLedger have provided answers to the most asked questions about cryptocurrency on Google.  

Here are the top eight Googled crypto questions, along with expert responses to each.   

1. ‘What is crypto?’ - 28,000 monthly global searches. 

Cryptocurrencies are digital currencies made up of intricate code whilst secured and stored on the "blockchain" - effectively a public access transaction timeline. Differing from traditional currencies, crypto operates independently of any authorities, governments or banks. Despite this, it’s remarkably like regular money, but it only exists online; as a result, the crypto market is vast and can sometimes be difficult to navigate. 

2. ‘What is crypto mining?’ - 11,000 monthly global searches. 

Cryptocurrency mining is a technical process that involves verifying and adding transactions to a blockchain ledger. This is achieved by using computer power to solve complex math problems that help validate and secure transactions on a blockchain.

Anyone can "mine" crypto, but specialized hardware is required, as well as constant power supply and network access. With no guaranteed returns for mining, the power needed can be costly, as large amounts of electricity are required throughout the process. 

3. ‘Why is crypto crashing?’ - 7,800 monthly global searches. 

Certain cryptocurrencies might be crashing because of various factors that can influence their price. These include market sentiment, regulatory changes, technological developments, macroeconomic trends, real world politics and economics and more. However, with crypto being free from a governing body it can sometimes be unaffected by real world politics unless they directly concern crypto, so it comes down to how the investors react. 

4. ‘What is staking crypto?’ - 5,300 monthly global searches. 

Staking in the world of cryptocurrency refers to actively participating in the validation of transactions on a proof of stake (PoS) blockchain network, similar to mining. In a proof of stake system, validators are selected to create blocks based on the amount of cryptocurrency they hold and are willing to 'stake' as collateral. The more a user stakes, the higher the likelihood of being chosen to validate transactions and earn rewards. However, some exchanges, such as Coinbase, do offer guaranteed rewards such as 5% on certain coins.  

5. ‘Which crypto should you buy today for the long term?’- 5,000 monthly global searches. 

Deciding which cryptocurrency to buy for the long term requires careful consideration of various factors, such as your risk tolerance and investment goals. It is crucial to conduct thorough research on any cryptocurrency you are interested in before investing. This includes examining the technology and team behind the project, the community surrounding it, and current market trends. By considering these factors, you can make a more informed decision about which cryptocurrency to invest in. 

6. ‘What is cryptocurrency trading?’ - 4,500 monthly global searches.

Cryptocurrency trading refers to the buying, selling, and exchanging of cryptocurrencies on various digital platforms called a cryptocurrency exchange. It involves speculating on the price changes of cryptocurrencies with the aim of making a profit in the long run. 

7. ‘How to trade crypto?’ - 4,400 monthly global searches.

Trading cryptocurrency involves several steps and it’s essential to understand the process and associated risks before getting started. Before even starting crypto trading, it's important to educate yourself about cryptocurrency markets, trading strategies, and risk management.

Pick a reputable cryptocurrency exchange. When picking your cryptocurrency exchange, consider factors such as security, fees, the cryptocurrency, the exchange supports, and the user interface and how easy it is to use.

When creating an account, make sure to use two-factor authentication. This added security measure should make the account less susceptible to scams.

Once funds have been deposited into the cryptocurrency exchange, it is time to start trading. Choose a trade strategy based on goals, risk tolerance and marketing analysis. Common trading strategies include day trading, swing trading, and long-term investing. Once you have placed trades through the cryptocurrency exchange, monitor their progress, keep an eye on market movements, and be ready to adjust your strategy accordingly. 

8. ‘How is crypto altering the face of the cosmetics trade?’ - 4,400 monthly global searches.

Cryptocurrency is gradually making its mark in various industries, including cosmetics. This is partly because cryptocurrency is attempting to engage women, as fewer women have invested in cryptocurrency compared to men.

The use of cryptocurrency is affecting the cosmetics trade by allowing certain products to be purchased with cryptocurrency. Additionally, blockchains can be utilized to increase the transparency of the supply chains of cosmetics companies. By recording every step of the production and distribution process on a blockchain, consumers can verify the authenticity of products, ensuring that they are ethically sourced. This can be especially useful for cosmetic brands that emphasize the use of natural or cruelty-free products.

A spokesperson for CoinLedger commented: 

“As the interest in investing in cryptocurrencies grows, people tend to search and Google many things. However, it is crucial for newcomers to crypto to conduct thorough research, be aware of the risks involved, and most importantly, invest only what they can afford to lose.  

“The crypto market is highly volatile, and while some people are making huge profits, others are suffering significant losses as well.  

“What makes crypto fascinating is how it is revolutionizing modern-day shopping and changing people's attitudes towards investing. We are still in the early stages of crypto, and as more countries and banks start accepting cryptocurrencies, the public's acceptance is likely to grow as well.”