Frequently Asked Questions

Cryptocurrency is a digital or virtual form of currency that uses cryptography for security and operates independently of traditional banking systems. It's built on blockchain technology, which is a decentralized ledger that records all transactions across a network of computers.

Unlike traditional currencies issued by governments (fiat currencies), cryptocurrencies are typically decentralized and not controlled by any single authority. Bitcoin, created in 2009, was the first cryptocurrency, and thousands of others have been created since.

Blockchain is a distributed ledger technology that maintains a continuously growing list of records (blocks) that are linked and secured using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data.

This creates an immutable record of transactions that is extremely difficult to alter or hack. The blockchain is maintained by a network of computers (nodes) that validate and record transactions without the need for a central authority.

Bitcoin and Ethereum are both cryptocurrencies, but they serve different purposes:

Bitcoin: Primarily designed as a digital currency and store of value. It focuses on peer-to-peer transactions and has a limited supply of 21 million coins.

Ethereum: A platform for smart contracts and decentralized applications (DApps). While it has its own currency (Ether), its main purpose is to enable programmable blockchain applications.

Cryptocurrency can be safe when proper security measures are followed, but it also carries risks. The blockchain technology itself is very secure, but individual users can be vulnerable to:

• Scams and fraudulent schemes
• Exchange hacks and security breaches
• Loss of private keys or wallet access
• Human error in transactions

Always use reputable exchanges, secure wallets, and never share your private keys.

To buy cryptocurrency safely, follow these steps:

1. Use reputable, regulated exchanges
2. Enable two-factor authentication (2FA)
3. Start with small amounts to learn
4. Transfer funds to a secure wallet you control
5. Never share your private keys or seed phrases
6. Be wary of scams and too-good-to-be-true offers
7. Research before investing in any cryptocurrency

Hot Wallets: Connected to the internet, making them convenient for frequent transactions but more vulnerable to hacking. Examples include mobile apps, web wallets, and exchange wallets.

Cold Wallets: Offline storage solutions that are much more secure but less convenient for regular use. Examples include hardware wallets and paper wallets.

Best practice: Use hot wallets for small amounts you need for transactions, and cold wallets for long-term storage of larger amounts.

Important: This is general information only and not tax advice. Consult a qualified tax professional for your specific situation.

In most jurisdictions, cryptocurrency transactions are subject to taxation. This typically includes:

• Capital gains when you sell crypto for more than you paid
• Income tax on crypto received as payment or rewards
• Trading one cryptocurrency for another

Tax laws vary significantly by country and are constantly evolving. Always consult with a tax professional familiar with cryptocurrency regulations in your jurisdiction.

Keeping accurate records is crucial for tax compliance:

• Record the date, amount, and value of each transaction
• Keep track of purchase prices and sale prices
• Document the purpose of each transaction
• Save records from exchanges and wallets
• Consider using cryptocurrency tax software

Remember: This is general guidance only. Consult a tax professional for advice specific to your situation and jurisdiction.

Crypto vouchers are prepaid cards or codes that can be redeemed for cryptocurrency. They work similarly to gift cards but provide cryptocurrency instead of store credit.

The process typically involves: purchasing a voucher from an authorized retailer, receiving a redemption code, entering the code on the issuer's platform, and receiving cryptocurrency in your wallet.

For detailed information, read our comprehensive guide: What Are Crypto Vouchers?

Crypto vouchers can be safe when purchased from legitimate, authorized providers. However, they also carry risks:

Safety measures: Only buy from reputable retailers, verify the provider's legitimacy, keep codes secure, and redeem promptly.

Risks: Scam vouchers, higher fees than direct purchases, potential expiration dates, and limited consumer protections.

Always research the voucher provider thoroughly before making a purchase.

Crypto games, also known as blockchain games or web3 games, integrate cryptocurrency and blockchain technology into their gameplay. They often feature player-owned assets (NFTs), play-to-earn mechanics, and decentralized economies.

Players can earn cryptocurrency through gameplay, own unique in-game items as NFTs, and participate in player-driven marketplaces.

Learn more in our detailed guide: Crypto Games Overview

While some players do earn money from crypto games, it's important to have realistic expectations:

Potential earnings: Some games offer rewards in cryptocurrency or valuable NFTs that can be sold.

Significant risks: Many games fail, token values can crash, earning potential varies greatly, and initial investments may be required.

Important: Treat crypto gaming as entertainment first, with any earnings being a bonus. Never invest more than you can afford to lose.

To start crypto gaming safely:

1. Educate yourself about blockchain and cryptocurrency basics
2. Start with free-to-play games or small investments
3. Research projects thoroughly before participating
4. Use secure wallets and never share private keys
5. Be skeptical of promises of high returns
6. Only invest what you can afford to lose