Thursday, 11 January 2018

FAQ for Beginners in Cryptocurrency

I've been receiving a number of questions offline from new entrants and hereby I hope that this post will be able to answer any query should you happen to have just as you entered this game of cryptocurrency. Also, from a recent comment from Budget Babe on my earlier post (here), I can't help to agree much that the situation is real here and it seemed that I'm not the only one having heard such questions

FAQ
1.  Why I can't guarantee the price of bitcoin?
This is very simple. No one can guarantee anything in investment. Every investment comes with a risk and cryptocurrency here today, belong to a higher risk investment vehicle. The rise/fall in price is due to the buying/selling of coins. When there is more buyer buying in, this will drive the price up, likewise when more sellers are selling, this will drive the price down. This is the basic of supply and demand and economics, which if you do not understand, you might wish to take a look and read more about this.

Apart from this basic factor, investor's mentality, news is equally important. As of today, cryptocurrency is still an asset that bears strong speculative flavor and I dare to say that MOST people that are involved today are clueless about this.

2. Why I cannot guarantee how fast they'll receive the transaction in their wallet?
Do understand that when you withdraw your coin from the exchange, they are sent into the mining pool whereby the miners will facilitate the transactions with their computer power.

When a withdrawal transaction is posted, it is in the mempool, and not mined yet. In a distributed system, it can take a few moment for the changes to propagate so that your transaction shows up everywhere. Do look up onto your particular blockchain explorer with your hash code or txid to view the status of your  transactions.

During certain exciting period, like token offerings, blockchain explorers will be behind due to the high level of activity. Hence, withdrawal may not show up in a blockchain explorer for hours.

So long you've confirmed and double check that the receiver is correct, you will be able to receive your transaction. But patience is needed.

Hereby, I will write down some blockchain explorer for common coins like BTC and ETH:

ETH:
1. https://etherscan.io/

2. https://etherchain.org/
3. https://live.ether.camp/

BTC:
1. https://blockchain.info/
2. https://blockexplorer.com/
3. https://live.blockcypher.com/btc/

For other coins' blockchain explorer, simply key in ' XXXcoin blockchain explorer' on Google and you'll be able to find them.

3. Why we can't reverse the transaction?
When your transaction is posted, it will be in the pool and there is no reversal. This is because the blockchain network are designed to be irreversible and there is no control over this issue. I don't think you will be asking me the question on why could your Honda Fit not fly won't you? It is designed to not do so and likewise for the Bitcoin network.

If you failed to double-check your transaction and had sent an incorrect amount or to the wrong recipient, there is no reversal for it. Hence, it is extremely important to make sure that the transaction details are correct before you click send.


4. Can I pay more to "jump queue" for "processing" if it gets delayed because network gets clogged up?

Unfortunately, no. You're not able to do so. As mentioned earlier, when you post your transaction, it is posted to the mempool and it will take time for the miners to do the work and during exciting period, this duration for 'processing' will take longer. What you can do here is, to either be patient to wait or choose a less exciting time.

To check on the current queue you may wish to visit the various blockchain explorers or key in 'Unconfirmed transaction for XXXcoin' on Google and select on your search result.

For now, allow me to use the all famous Bitcoin's unconfirmed transaction now for your reference
(link here)


Based on transactions/second of 4.31. They will be able to process 258.6 transaction/min and 15,516 transaction/hour.

With the current unconfirmed transaction at 171,593 it will roughly take you 11.05 hours of waiting time for your transaction to be facilitated. For now, if you post your transaction in, you'll be the number 171,594th in queue.

Another way to send dollars over is to find a coin with a less congested network to send your coin over. In this case, the time you take to receive your coins will be lesser. But yes, you're right. You'll be holding onto another coin.

ETH's network is too congested previously due to the crytokitties earlier. Hence, what you can do is to avoid this timings. 

5. Why there's a fee charged by the exchanges for buy/sell trades, a withdrawal fee, and also margin spread if they buy OTC?
This is definite. Don't forget that these exchanges are running a business too. If you've bought any investment asset before, I'm sure you'll be aware of these fees. For example, commission, SGX handling fees for Stocks.


What you can do now here is, either reduce on your transactions, or ensure that your transactions' return are great enough to not be affected by the fees imposed. Alternatively, you may wish to look for another more suitable market which may cater to your needs.


This spread is something that is very common in assets that deals with currency, ie. Forex. Hence to avoid this, a better instrument you might wish to take a look at might be the stock market.


6. Is my money gone? Shit
It would be if your transaction is sent to an incorrect account. Else, if everything is correct (amount, receiver), you will need to be patient to wait for that. Read point 2 for a clearer image of blockchain transactions.

7. Due to the long waiting time, I've lost money as Xcoin had fallen by X%!!
For this, please be aware that you can use other coins that are less congested/have a faster transactions. Or best, hold the coins and wait for it's recovery. If what you're holding is some shitcoins and that they are only at this price for a moment, before it crash back, my suggestion is that, you keep this shitcoin in the exchange and prepare to sell at any point of time when it hits your TP.

Yes, you're exposed to the risk IF the exchange is hacked.

8. Can you help me to buy X coin and send it to my wallet? I pass you cash ok? I'm not able to make an account as Binance have stopped accepting users and Gemini is taking a very long time. I'm not accepted yet!
I'm sorry. Due to the trouble and concern as well as I do not wish to get involved in your crypto affair, I'm afraid that I'm not able to help you. Do be reminded that, without a fiat-crypto account, YOU WILL NOT BE ABLE TO CASH OUT WITHOUT THAT ACCOUNT.

9. I've got my friend to get this coin for me and I want to cash out now. But I do not have a fiat-crypto exchange. Help!
If you're someone that is holding onto some coins because you've got your friend to buy them for you and they're sitting in your wallet or crypto-crypto exchange. This moment now, you want to cash out, but you're still not confirmed as a user yet by the fiat-crypto exchange.

What you can do is - Find the same friend of yours or whoever that has a fiat-crypto exchange. Send your coins over to sell and wait for the amount to be depositted into his/her bank. Do be aware of charges that will be imposed by the bank/exchanges and not think that your friend here is trying to siphon your money!



Nonetheless, should anyone continue have any questions for cryptocurrency. Please feel free to drop by my comment section or email. I will try my best to answer each and every of them.

Read:
1. Cryptocurrency for Dummies (Part 1, 2, 3 and 4)
2. Should I invest in Cryptocurrency?
3. Did I just upgraded to a crypto-fund manager? LOL
4. Buying Alt Coins - Crypto-Crypto Exchange (Binance)

5 comments:

  1. Actually,there's this FYB-SG locally whereby u can trade n deposit BTC.They only deal with BTC,but u can withdraw or deposit SGD into ur Bank A/C.The fees are cheap,unlike the banks charges for overseas transfer to n fro.I hv Gemini A/C n when I transfered USD500 back to my OCBC A/C it showed only USD468.Now I always try to sell my altcoins into BTC n transfer it to FYB-SG.The fees much cheaper n the rates of the BTC which is in SGD is about 2 thousands higher than the rate at Gemini after the conversion.

    ReplyDelete
    Replies
    1. Hi Steven,

      Indeed, FYB-SG is a local fiat-crypto exchange which I have forgotten! Haha. I remembered looking at it earlier when I was creating my first account. And the fees charged is only 0.6% to my knowledge, which makes it much cheaper than Gemini due to the foreign currency handling fees imposed for TT transactions.

      Thanks for the recommendation! :)

      Delete
  2. Replies
    1. Hi Foolish Chameleon,

      FYB-SG is a local fiat-crypto exchange that deals only with BTC. And you'll be able to buy/sell BTC using SGD. Just relooked into it recently, fees are relatively cheap at 0.6%

      Delete
  3. looking for alternative to Gemini.. which recently seems to be not as good as before

    ReplyDelete