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Crypto Confusion

Crypto Confusion

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The most common cryptocurrency questions: Answered

The cryptocurrency market has experienced rapid growth in the last few years, and even months, with more people than ever turning to digital currencies as their primary mode of investment. However, as cryptocurrencies are a relatively new addition to the trading world, and come with lots of specialised language and terminology, they are often not well understood by the general public.

To help new crypto traders get in on this burgeoning investment market, we’ve researched which questions are most commonly asked about cryptocurrencies in the United Kingdom and United States. We’ll be addressing each of these questions one at a time, lifting the fog that shrouds this industry in confusion for many people, and enabling them to make their own informed decisions in this great new way to invest.

So, covering topics from mining digital coins and how to go about purchasing your first cryptocurrency, to the safety of your investments and whether or not crypto is a taxable asset, read on to get yourself clued-up and familiar with this exciting new market.

What do they know? The public’s views on cryptocurrency

Before we discuss the most commonly asked crypto questions, we’ve surveyed hundreds of members of the British public to find out just how much they understand about cryptocurrencies. Here’s what we found.

Less than 1 in 4 people believe that cryptocurrency will ever become legal tender

Question: “Do you believe that cryptocurrency (e.g. Bitcoin) will ever be legal tender?”

When asked whether they believed that cryptocurrency would become legal tender, the vast majority of the British public were unconvinced, with 75.7% responding “no”.

Of those who believed that it would become legal tender, most assumed that this would happen within the next ten years, while the largest portion of “yes” responders (9.8%) believed that this would happen in as little as five years’ time.

Only 1 in 20 believe that cryptocurrency is a safe investment right now

Question: “Do you believe that cryptocurrency (e.g. Bitcoin) is a safe investment?”

Here we can see that despite the huge gains that many cryptocurrencies have experienced in the last 12 months, only 5.6% of respondents believed that crypto was a safe investment, compared to the 64.6% who thought it wasn’t.

Further education needed as 1 in 4 still have no idea what cryptocurrency is

Question: “To the best of your knowledge, what is cryptocurrency?”

The largest group of respondents is people who don’t know what crypto is, with 22.4% responding “No Idea”. This shows that before they can consider crypto as a viable investment opportunity, many people need to be brought up to speed with what cryptocurrencies are and how they can be useful.

That said, 21% of respondents replied with either “Digital currency”, “Online money”, or “Virtual Money”, which while perhaps being simplified explanations of what cryptocurrencies are, does show that a large section of the public is at least aware of crypto.

Bitcoin remains the cryptocurrency with the highest mainstream awareness, with only 1 in 10 not knowing what it is

Question: “What do you think Bitcoin is?”

Bitcoin is the archetypal cryptocurrency. It was the original digital coin that sparked the crypto revolution and should, therefore, have the largest level of public awareness. In fact, only 13.3% of respondents claimed not to know what Bitcoin is, which is substantially low considering that almost a quarter of those surveyed didn’t know what cryptocurrency even was. This exemplifies Bitcoin’s indisputable brand recognition and, for some, its synonymity with the crypto market as a whole.

While 20.7% identified Bitcoin as a cryptocurrency, 22.7% of respondents replied that it was either “currency”, “digital currency”, or “online currency”. This suggests that many more people have a general idea of what Bitcoin is, even if they didn’t use the correct terminology of “crypto” or “cryptocurrency”.

It’s also interesting to note that the next highest answer was “rubbish”, which was chosen by 3.9% of those surveyed. This shows that while awareness of Bitcoin and cryptocurrency is becoming more widespread, there is a traditionally-minded element that, even if they understand what crypto is, are not convinced by either its value or legitimacy.

Despite it's widespread news coverage earlier this year, 1 in 4 have no idea what Dogecoin is

Question: “What do you think Dogecoin is?”

A much larger proportion of survey respondents thought were not aware of what Dogecoin coin, with 25.7% answering “No idea”. This almost double the amount responded “No idea” for Bitcoin, showing that despite the meme-inspired crypto having made the news an awful lot in the past year or so, the brand recognition of Bitcoin proves to be the strongest.

This is highlighted by the fact that 5.1% of respondents thought that Dogecoin was Bitcoin, perhaps showing that people believe Bitcoin to be an almost umbrella term synonymous with cryptocurrency itself.

Alt coins remain a mystery to many, with almost 1 in 2 admitting they're not sure what Binance Coin is

Question: “What do you think Binance Coin is?”

Binance Coin, the cryptocurrency launched by crypto marketplace Binance, is one of the more well-known digital coins in the crypto community. However, the general public is much less aware of it than alternative coins, with 44% of people responding with “No idea” when asked what Binance coin is.

Only 13.1% of respondents correctly identified Binance coin as a cryptocurrency. Notably, large numbers of those surveyed came close to the right answer, with 4.1% thinking it was a currency (which is half-correct), and 3.40% thinking that Binance Coin is Bitcoin.

Interestingly, the next most common response was that Binance Coin is a con. This picks up on the wariness and trepidation that many people who are unfamiliar with crypto have when confronted with it. It also suggests that Binance Coin is less of a household name than competing coins, which in turn means it is less likely to be trusted by the general public.

Survey respondents believe that Cardano is a cheese or alcoholic drink

Question:“What do you think Cardano is?”

Cardano is another popular cryptocurrency in the crypto community, but how well is it known to the average Joe? A sizeable 42.9% of those surveyed admitted to not knowing what Cardano is, but judging by some of the other most popular answers that figure is considerably higher! This is further exemplified by only 2.8% of people correctly responding that Cardano is a cryptocurrency, so what did the rest think it was?

The most popular response after “No idea” is that Cardano is a type of cheese, an opinion shared by 3.6% of respondents. In all fairness, a cheeseboard of Tallegio, Manchego, Cardano and Brie sounds rather appetizing, and it seems many wouldn’t bat an eyelid if they saw this on a menu.

The next most common response was that Cardano is a drink. However, if you combine this with those who responded with “Alcohol” or “Wine”, you reach a total of 9.2%, which outstrips the “Cheese” responders and is more than triple those who knew it to be a cryptocurrency.

Survey respondents believe Ethereum is a drug

Question:“What do you think Ethereum is?”

Ethereum is one of the most popular cryptocurrencies currently on the market, yet it hasn’t been able to build up the same name recognition as Bitcoin or Dogecoin, which have benefitted from extensive media coverage and celebrity endorsements. As such, only 13.8% of people correctly identified Ethereum as a cryptocurrency, with 30.7% claiming to have no idea what it is.

Again a small but notable number of respondents incorrectly assumed Ethereum to be the same as Bitcoin, showing that the two terms’ meanings are often conflated by the public. However, possibly due to the more scientific-sounding name of Ethereum and the lack of the term “coin” in its moniker, people seem to confuse it with a much wider range of things.

This is evidenced by the third most common response being that Ethereum is a gas, which accounted for 4.2% of respondents. Other misconceptions about the nature of Ethereum are that it is a drug (2.4%) and that it is a metal (3%).

Crypto’s most frequently asked questions

In the last twelve months, there have been 9,269,000 searches for “cryptocurrency” in the UK and USA. With almost a billion searches, it’s clear that people are hungry for information on everything crypto, so we’ve taken some of the most commonly searched questions on the matter, and answered them one by one. Here are the top crypto FAQS:

Question 1. Which is the best cryptocurrency?

There are many cryptocurrencies on the market, with new coins appearing on a regular basis. This can be quite confusing for potential investors, as the differences between these coins is sometimes unclear and difficult to get your head around.

In short, there is no one cryptocurrency that is superior to the others, as they are all equally able to rise and fall in value. However, the cryptocurrencies that have been established for longer periods of time tend to have greater market confidence than newer coins, which can fall into obscurity if they are not adopted by the crypto community.

Additionally, those cryptocurrencies that have been around for a while will have more historic data available on price fluctuations and trends that you as an investor can dissect and analyse. Therefore, the best cryptocurrencies for new investors are generally those that have larger, more established communities that can be tapped into for insights and information, making them a very useful resource.

Question 2. How can I mine cryptocurrency?

Mining cryptocurrency is the process by which new digital tokens are created, which can then be used and traded on crypto exchanges. Mining for these tokens is an entirely digital process, but is very energy-intensive and can require some specialised hardware to make the process efficient.

In terms of which cryptocurrency is the best to mine, it is very hard to say. You would need to calculate the cost of power and equipment required to mine a single coin and offset that against the particular cryptocurrency’s market value. As market values change very frequently, there is no definitive answer. However, there are some that are more efficient to create, such as Ethereum and Stellar, due to different consensus mechanisms and protocols that consume less energy.

If you are looking to get into cryptocurrency mining, you will need a computer with very high processing power, an effective cooling system to keep your hardware from overheating, and a power supply that can keep up. Mining Bitcoin, for example, uses an extraordinary amount of energy and is often carried out en-masse by miners who turn entire warehouses into crypto mining operations, using economies of scale to reduce the cost of the process per digital coin. However, it is possible for low-scale miners to get in on the game if they have the funding and know-how to kick-start their operation.

Question 3. How can I buy cryptocurrency?

Purchasing your own Bitcoin, or any cryptocurrency for that matter is a fairly simple and straightforward process. To begin with, you’ll need to think about which cryptocurrencies you’re interested in purchasing and find a broker or crypto exchange that trades in that currency.

Not all cryptocurrencies are available on all exchanges, so you’ll want to think carefully before settling on one to use. You should also be aware that some exchanges do not accept fiat money, such as USD, GBP or EUR, as payment for cryptocurrencies, so these might not be the best option for new crypto traders who do not yet have cryptocurrency to spend.

If you want to simplify the process, you can also buy and sell cryptocurrency through brokers. These are different from exchanges in that they provide easy-to-use dashboards and systems, and carry out transactions on your behalf. However, they can offer lower returns or slightly delayed transactions in return for these benefits, so think about how comfortable you are with exchanges before making a decision.

Which crypto questions are people asking more?

Now, we’re turning our attention to the changes in search volume that each question experienced in the last 12 months, compared to the 12 months prior.

“Will cryptocurrency crash” experienced the biggest increase in searches over the last year, with Google users asking the question 1,961% more than in the previous 12 months. This reflects the huge peaks that crypto, and bitcoin specifically, has experienced in recent months. Speculation over if and when the value would reduce is only natural for a volatile asset at record highs. In April 2021, Bitcoin reached a high of over £46,000 per digital coin, although this has since reduced to around the £28,000 mark.

“Is cryptocurrency halal” and “can cryptocurrency be taxed” came second and third, with increases of 1,309% and 1,116% respectively. These questions show that cryptocurrency is spreading to new markets and audiences who are considering whether investing in cryptocurrency is the right move for them, on both a personal and financial level.

Questions about crypto experienced significant increases in search volume across the board. This booming interest in the crypto market suggests that cryptocurrency is turning more mainstream than ever, and will become a staple of the future investment landscape.

It’s interesting to note that at the bottom of the table, the question that received the 20th largest increase in search volume was “can cryptocurrency be banned”. This implies that people have seen the meteoric rise in the value of cryptocurrencies like Dogecoin, Ethereum and Bitcoin, and want to check that their investments will be safe before joining the crypto revolution. While it is true that cryptocurrencies have sent a shockwave through the traditional investment landscape, they are only becoming more mainstream and embedded in the financial marketplace as a result. Crypto isn’t going anywhere.

Methodology

We wanted to find out which questions around cryptocurrencies were the most common, and to provide a helpful resource from which readers could find their answers. In order to do this, we created used a survey to collect data from the general public. This survey asked general questions about crypto, as well as questions about individual cryptocurrencies.

We also compiled a list of common questions about crypto that could then be fed into Google Keyword Planner to discover how many searches each question received. We looked at data for the past twelve months, combining results from the UK and the USA in order to rank the questions from the most-asked to the least. We then grouped together questions that covered the same or very similar topics and ranked each topic by their most-googled question.

The most-searched questions were then presented in order and answered one by one to create our list of crypto FAQs and answers. The aim of this was to help familiarise newcomers to the world of crypto with some of the various workings and terminology of the sector, as well as clear up any confusion and misunderstandings about cryptocurrencies and how they function.

Sources

commpro.biz

euronews.com

Investopedia.com

uktech.news

uk.pcmag.com

en.wikipedia.org

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