Understanding cryptocurrencies and blockchain is like learning a new language. Clearly you cannot expect to be fluent from 'the get go', but having a basic grasp of some key points is an absolute must.

Your Crypto Coach has produced several very useful Crypto Compass Guides, that will help you learn the basics about this exciting world. There are some fundamental questions that you should be able to answer before investing any money so one of the guides provides you with the answers to 20 basic cryptocurrency questions.

This easy to follow guide should help you on your way in crypto.

Here are a couple of the key questions with answers.....

1. What is cryptocurrency and blockchain?

Any form of currency that only exists digitally, that usually has no central issuing or regulating authority but instead uses a decentralised system to record transactions and manage the issuance of new units.
It relies on cryptography to prevent counterfeiting and fraudulent transactions.

So basically cryptocurrencies are digital coins/tokens that aren’t controlled by a central authority, but through a network of equally privileged participants that follow
an agreed set of rules via cryptography (very complicated mathematics).

A blockchain is a growing list of records, called blocks, that are linked together using cryptography. In other words very complex equations. Each block contains a unique cryptographic hash of the previous block, a timestamp, and transaction data. You can imagine that a blocks 'hash' is like a fingerprint, it's totally unique to that block.

The timestamp proves that the transaction data existed when the block was published in order to get into its hash. As blocks each contain information about the block previous to it, they form a chain, with each additional block reinforcing the ones before it.

Therefore, blockchains are resistant to modification of their data because once recorded, the data in any given block cannot be altered retroactively without altering all subsequent blocks. This would be an impossible task.

Different blockchains do different things, and this alone is why virtually every industry in the world is looking into blockchain technology. It's the future. Imagine how the internet was 30 years ago, that’s blockchain technology now.

2. How do you set up a crypto exchange account?

Whilst not every cryptocurrency exchange set up is exactly the same, there is a general registration process that tends to be rather similar for each crypto exchange platform. As an example Coinbase is a fantastic exchange for beginners who are looking to start buying cryptocurrency.

Our Trusted Affiliates page for Crypto Compass Members has several trusted exchanges listed where our members receive discounts and commissions.

The sign-up process usually goes something like this…..

First, you will need to provide a small bit of personal information, which could be nothing more than a name and an email address. The exchange will then send you an email to confirm that you are in control of the associated address.

You will then need to add a payment method that can be used as a mechanism for deposits and withdrawals.

For some users, the above three steps will be enough to get the job done. However, depending on the exchange, and the level of your engagement, you may need to go through a more extensive “Know your Client” (KYC) process, which is really just identity verification.

If you’re interested in making larger trades, then you’ll need to verify more information about yourself. Different trading tiers are available to users based on the amount of information the exchange has collected about the customer. Additional verification could come in the form of an address, phone number, government-issued identification, and even a selfie of you holding that form of ID.

In addition to digital currency exchanges offering different tiers of trading to their customers, the laws regarding user verification can also vary between countries. This is why instant sign-up is possible on some exchanges while others may take some time to get you verified for buying and selling.

For the crypto trading platforms that have more stringent requirements for knowing about their customers, the following information may be required:

Full, legal name
Date of birth
Email addresses
Phone number
Address
A copy of a utility bill sent to that address
Driver’s licence, passport, or other government-issued ID
A selfie of you holding that government ID

Given the growing popularity and adoption of cryptocurrencies, exchanges sometimes struggle to cope with new enquiries, so please bear this in mind. The sign up process may take more than a few days.

For answers to the other 18 questions you can request the FREE Guide - Your 20 Top Cryptocurrency Questions Answered RIGHT HERE