Most Frequently Asked Questions Regarding Bitcoins

In order to have a clear understanding of what bitcoin is, how it works, its benefits and disadvantages, here is a list of some commonly asked FAQs.

1)  Overview of cryptocurrencies

Generally, a cryptocurrency is virtual money. The fact that cryptocurrencies are secured via cryptography, their transactions are generally safe. Over the years, its utility has increased.

2) Uses of cryptocurrencies

In today’s time, the use of cryptocurrencies has widened. The cryptocurrencies can be considered a source to earn interest through crypto staking and ‘yield farming’. Cryptocurrencies such as Bitcoins could be considered as an alternative storehouse of wealth. It aids in making investments in novel start-ups.

3) Examples of cryptocurrencies

Some types of cryptocurrencies are- Bitcoins, Tether, Litecoin, Ethereum, XRP, etc.

4) All About Bitcoins

Bitcoins are decentralized computerized currency that a person can exchange, sell, or buy without any intermediary body such as a bank. To understand the concept from the consumer’s perspective, a Bitcoin can essentially be regarded as cash available online. Bitcoin Era can be a user friendly app that would aid the users in providing necessary information regarding Bitcoin investments

5) Who Controls Bitcoins?

All the Bitcoin Owners generally handle Bitcoins all around the world. Though the developers are working on the software, they cannot implement any changes in the protocols of Bitcoins. Here the users have the autonomy to choose the sort and the version of the software they want to. Bitcoin is regulated by a decentralized authority where the government or any sort of issuing organization has no role to play.

6) Is It A Good Idea To Invest In Bitcoins?

Yes. Recently, an increase in the investments of Bitcoins was observed. Though it is still a new scheme of earning money, it is rapidly increasing in the finance market. In 2018, the total value of Bitcoins exceeded over 100 billion US dollars, thereby hinting at its increasing popularity.

8) Market Price Fluctuation of Bitcoins

It is the demand and supply that determines the price or the value of a Bitcoin. The value of Bitcoin follows the general rule of demand and price- with the increase in demand, the value of the Bitcoin increases and vice versa. The price of a Bitcoin is usually inconsistent because the Bitcoin market is relatively small than it should be.

9) Transaction fees in Bitcoins-

Usually, Bitcoin transactions could be taken forward without any fees. However, a free transaction would lead to a few days waiting. Before a transaction, a Bitcoin wallet provides the option to review the fees before proceeding with the transaction. Transaction fees are frequently used to prevent the overloading of the network of the miners.  The number of bytes determines Bitcoin fees in a Bitcoin transaction.

10) All About Bitcoin Mining Process

Mining is often competitive; hence it becomes difficult to create new transactional blocks consecutively. This usually leads to safeguarding the impartiality of the Bitcoin network. This process does not allow any individual to replace a blockchain as per their spending, which might be a form of fraud for others.

11) Is Bitcoin safe for investment purposes?

The cryptography, protocols and the technology used by Bitcoins have an efficient security record as it is more or less one of the biggest digital projects in the wide world. A common flaw in Bitcoin transactions could be user error. The Bitcoin wallet, which is the storehouse of files and some private keys, has the chance of accidentally getting deleted or stolen. However, the users have the option of using security practices in order to keep their security against theft.

12) Does a person need to pay tax on Bitcoins?

If a person owns a Bitcoin for a longer period, a certain amount might get deducted as tax. If a person holds a Bitcoin for more than 36 months, the gains earned are classified as long-term capital gains and a certain percent is deducted as tax.

Final Words 

So, these were some most commonly asked questions that almost every financial investor has. If you are a Bitcoin trader, going through these helpful points will help you have an overall better understanding of Bitcoin and its components.