7 Quick Questions about Cryptocurrency

June 17, 2022

Many people coming into the cryptocurrency world are puzzled with several questions about what is in there?

Though there are many questions people ask regarding crypto trading, we just want to look at seven (7) quick questions we believe a new investor should be familiarized with. They are as discussed below.

1. How does Bitcoin work?

When it comes to how bitcoin works,   the most important element of its operation is its blockchain. Blockchain is a series of linked blocks that store records of all the transactions being conducted in the bitcoin network. Another key element to look at when we are talking about the  Bitcoin working system is its cryptographic keys and wallets.  These  are  essential
elements for accessing any form of cryptocurrency.

2. How does blockchain make Bitcoin trustless

Bitcoin's blockchain is a form ledger that links a series of blocks together. These blocks contain several transaction records, thereby ensuring the safety and integrity of the transactions. Blockchain is usually public, that is to say, anyone can view transactions going on in it. Bitcoin's blockchain makes it possible for everyone to have a good idea of occurrences which in turn makes it difficult for fraud to occur in the system. 

3. How does hashing ensure the validity of a block?

A hash is what helps the Bitcoin network to instantly ascertain the validity of a block; it does this by checking for the previous block's hash in a new block. The hash operates under a certain target which makes it difficult and strenuous for spammers to attack the network.

4. How are keys and wallets used in Bitcoin?

There are basically two types of keys used in Bitcoin. A public key is used in identifying an address on the blockchain and it can be likened to an existing username.

While a private key is used in accessing a bitcoin account and this is likened to your password which you are expected to keep secret.

A wallet on the other hand, is a set of keys and it can be in the form of QR codes. There are two types of wallets: one is called a hot wallet which is connected to the internet, and the other is called a cold wallet which is not necessarily connected to any network.

5. Is Burning Cryptocurrency Good or Bad?

Cryptocurrency burning is the act of taking tokens out of circulation. This kind of practice can either positive or negative effect on the cryptocurrency depending on a number of factors which include the investor and user sentiments; as well as the demand and supply dynamics. 

6. How Do You Burn Cryptocurrency Tokens?

Tokens can be burned when you send them to a wallet address that can only receive tokens but is not enabled to send them back to another wallet. This is definitely a deliberate attempt to them from circulation; and it is invariably referred to as the burning of cryptocurrency.

7. Why Do Companies Burn Cryptocurrency?

Usually, tokens are burned by the developers. They reduce the number of tokens available for sales, with the intent of increasing the price.

Conclusively, these are some of the things you need to know in cryptocurrency trading. It is a really complex sphere, you don't really need to be afraid, however. All you need is the right information and a reliable exchange platform that can guarantee your success in the business. Hence, bitfada is positioned to fill these gaps for you.

Do you have any questions, connect with us at: [email protected]; or go straight to register on
our platform: