Beginner questions about cryptocurrencies

Cryptocurrencies are not exactly new; it’s been more than thirteen years since the first one appeared on the scene, and there have been literally thousands of others launched since then. However, even though they have been a common focus of media attention, particularly in the last few years as prices have risen and fallen sharply, there is a great deal of uncertainty around crypto where the average consumer is concerned. In this light, it might make a lot of sense to break down some of the questions people have about crypto – so here are some of the most important beginner’s questions about these digital assets.

Why do crypto prices increase and decrease?

This is a question worth asking: we can see with fiat currencies that their prices rise and fall based on actions taken in their national economies, but crypto coins don’t have a central bank or government to affect things like that. The truth is that supply and demand control the price of a crypto coin. If more people want it and demand outstrips supply, the price goes up. If demand falls, so does the price.

How do you buy crypto?

The short answer is, for beginners at least, “from a broker”. There are plenty of crypto brokerages online, including Coinbase and crypto.com. The slightly longer answer is that you should get a crypto wallet so you can store your Bitcoin (or other crypto), and you can then use an online transfer service to buy it with your own dollars. Once the coins are bought, you should transfer them to the wallet, as you can use this to make payments to betting sites like Cloudbet. Brokerages don’t like it when you use your account balance to transfer from there to betting sites, and may close your account.

Do you have to pay taxes on crypto?

You don’t have to pay any tax on crypto that you own, or transactions between wallets. If you win crypto in an online casino or other betting site, you won’t be taxed on that, either. If, however, you sell crypto or mine it, then you may well have to consult a crypto tax calculator to get an idea of how much you may need to pay. You are best advised to consult an accountant on this, as they can inform you how the gains need to be declared for tax purposes.

How is crypto produced?

The answer here is that it depends on the cryptocurrency. In the case of Bitcoin, the most commonly held and traded crypto, coins are “mined” using blockchain transactions, and the people who mine them are paid in Bitcoin. This is also the case for most cryptocurrencies as it stands, but Ethereum, the second-biggest coin, there is a move underway to change its mining to a “proof of stake” basis, which involves much less energy being used and will make ETH a far more efficient coin once the move is complete. That’s set to happen in the middle of September 2022.

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