What You Should Know About Cryptocurrency

Cryptocurrency is a form of digital money that exists entirely online. It’s designed to be secure, transparent, and decentralized, meaning no single person, government, or organization controls it. Instead, transactions are verified by a global network of users.

The technology behind most cryptocurrencies is called blockchain — a secure, shared digital ledger that records every transaction. Once added to the blockchain, transactions cannot be changed, helping to ensure transparency and trust.

Key Features of Cryptocurrency

✅ 100% Digital — No physical coins or paper money. All transactions happen electronically.
✅ Secured by Cryptography — Complex coding protects your transactions and accounts.
✅ Decentralized Network — No central authority; power is distributed across users worldwide.
✅ Blockchain Technology — Provides a permanent, transparent record of all transactions.

How to Access Cryptocurrency with Element

You can explore the world of digital assets safely within your trusted Element experience.

Simply use your Element Checking Account to access the Self-Directed Investment Portal, available in Element Online Banking or the Element Mobile App. Inside the Portal, you can buy, sell, and hold popular cryptocurrencies — all in one secure place.

Ready to Get Started?

What You Need to Know About the Crypto Portal

Buy Cryptocurrency Easily

Once you accept the Terms and Conditions in the Self-Directed Investment Portal, you can choose from popular cryptocurrencies like Bitcoin, Dogecoin, and more.

– Minimum purchase amount is $6.00.
– Select the Element account to fund your purchase, enter the amount, and invest — it’s that simple.

Track Your Crypto Portfolio

After your first purchase, your investments will appear in your Portfolio Dashboard within the Portal.

Here you can:
– See your current holdings
– Monitor gains or losses
– View historical price charts — daily, weekly, or monthly

Understanding Costs and Fees

Buy and sell transactions come with a fee based on the size of your trade:

– Minimum fee: $0.99 per transaction
– Maximum single trade: $5,000
– No daily, weekly, or monthly trade limits

All fees are clearly shown at the time of your transaction.

Transactions: Safe, Simple, Secure

Element is committed to making your crypto experience easy and secure.

To protect your funds and meet regulatory standards:
⚠️ You cannot send or receive cryptocurrency to or from external wallets outside of Element.

This closed system helps reduce fraud and enhances the safety of your digital assets.

Understanding Crypto Value & Volatility

Cryptocurrency is not backed by any central authority. Its value is determined by the market, meaning:

– Prices can change rapidly, sometimes significantly
– Crypto investing carries higher risks than traditional investments
– Regular monitoring is important

Invest only what you’re comfortable with, and stay informed.

Tax Considerations

Cryptocurrency is considered a taxable asset, similar to stocks or other investments.

– You may owe taxes on profits when you sell
– Access your quarterly account activity and download e-statements anytime via the Investment Portal

We recommend consulting a tax professional for personalized advice.

FAQ

How to Buy and Sell Cryptocurrency

How do I buy/sell/hold crypto?

Simply enroll in a crypto account and accept the terms and conditions. Once your account is set up you can select your coin type, how much you want to purchase or sell, designate which account you want debited/credited, and confirm.

How do I buy digital assets?

• Enroll and accept the Terms & Conditions
• Click on the “Invest” button (Note: This button will say “Trade” after your first transaction)
• Select the asset name to view all supported assets
• Select your desired asset
• Enter in how much cryptocurrency you want to purchase (you may enter this in USD or in the cryptocurrency value)
• Designate which Direct Deposit Account you would like to make the purchase from (e.g., checking)
• Click “Preview transaction”
• You will be taken to a confirmation screen that displays the transaction fee and the net amount of digital assets you will be receiving
• Click “Confirm purchase”
• Congrats! Your order is complete; your account will be debited and your digital asset account will be credited with the corresponding amount of the purchase in near real-time

How do I sell digital assets?

• Click on the “Invest” button (Note: This button will say “Trade” after your first transaction)
• Click on the “Sell” tab
• Select the asset name to view all supported assets
  • Note: you may only sell assets that you are currently holding
• Select your desired asset
• Enter in how much cryptocurrency you want to sell (you may enter this in USD or in the cryptocurrency value)
• Designate which Direct Deposit Account you would like the proceeds of the sale to be sent to (e.g., checking)
• Click “Preview transaction”
• You will be taken to a confirmation screen that displays the transaction fee and the net amount of USD you will be receiving
• Click “Confirm sale”
• Congrats! Your order is complete; your account will be credited and your digital asset account will be debited with the corresponding amount of the purchase in near real-time.

Can I buy/sell my crypto at any time?

You can place a Buy or Sell order at any time, though there may be occasions when scheduled maintenance occurs. During these maintenance windows, crypto Buy and Sell orders will be temporarily unavailable. A message will appear at the top of the order screen notifying you of the time and date of these maintenance windows.

After creating my account, do I need to set anything else up?

When you created your account, we completed what’s called the KYC (Know Your Customer) process of verifying your identity and personal information. If you’ve done this and agreed to our terms and conditions, you are all set! You don’t have to do things like upload your ID, take a picture of yourself, or do other things that other platforms make you do. We already know who you are and trust you!

How do I access my funds?

Your cryptocurrency balance can be viewed on your mobile banking dashboard by clicking the “Crypto Trading” button on the left panel.

How do I view my balance?

Your cryptocurrency balance can be viewed on your mobile banking dashboard by clicking the “Crypto Trading” button on the left panel.

What are the fees for buying cryptocurrency with Element FCU?

We keep it simple and competitive:

• Minimum Transaction Fee: $0.99
• For purchases up to $1,000: 2.99%
• For purchases between $1,000.01 and $5,000: 1.75%

No hidden charges, no complicated structures—just transparent, easy-to-understand pricing for your crypto purchases.

I accidentally placed a trade, am I able to get a refund?

No. Because trades are near instantaneous and are irreversible, trades cannot be refunded. For more information please review the Terms and Conditions.

What support is available?

Element is equipped with additional tools to help answer your questions and has resources available to get additional support when answers are not immediately available. That being said, we will not be able to offer financial advice or reverse or modify any transaction already completed.

Can I place an order for digital assets over the phone?

No. You can only place orders for digital assets through your online banking or mobile banking app but you can call and have someone walk you through how to make a trade/place an order.”,

Can I transfer crypto in and out of my account?

No. The two most important goals for us as a financial institution in offering cryptocurrency is to make it as easy and safe to buy, sell and hold cryptocurrency as possible. In order to meet both of those goals (ease and safety), for a variety of both security and regulatory reasons, you are not able to send cryptocurrency outside of Element.

Can I use my crypto to make purchases?

Currently, we only provide the ability to buy, sell, and hold cryptocurrency through Element with no ability to pay or transfer out.

How do I learn more about cryptocurrency?

Element is equipped and ready to provide you with all necessary information needed to easily begin to buy/sell/hold with Element. This educational guide, including “Crypto 101” and other sections, is meant to help you make informed investing decisions when it comes to cryptocurrency.

How do I find more information about coins?

You can find more information on coins by clicking the coin on the Crypto Home Page or clicking the Learn portal and scrolling down to the Explore Top Coins section.

What if I have more questions?

Element is equipped with additional tools to help answer your questions and has resources available to get additional support when answers are not immediately available. That being said, we will not be able to offer financial advice or reverse or modify any transaction already completed.

Where can I see prices for the cryptocurrencies available?

Current market prices for the available cryptocurrencies are shown on both the main Crypto Home screen and your Portfolio screen. Prices are updated every five seconds.

Banking Crypto

Are my digital asset holdings at Element taxable?

Your crypto holdings are taxable when you sell them – just like any other investment asset.

Can I deposit digital assets into my digital asset accounts with Element?

We currently do not support digital asset deposits. This feature may be available at a future date. Currently, through our platform, you are only able to buy, sell and hold digital assets.

Can I send digital assets to or from a wallet outside of Element?

No. The two most important goals for us as a financial institution in offering cryptocurrency is to make it as easy and safe to buy, sell and hold cryptocurrency as possible. In order to meet both of those goals (ease and safety), for a variety of both security and regulatory reasons, you are not able to send cryptocurrency to a wallet outside of Element or receive cryptocurrency from a wallet outside of Element.

Can I use my digital assets to make purchases?

Currently, we only provide the ability to buy, sell and hold digital assets through Element with no ability to pay or transfer out.

How do I know my digital assets are secure?

We use a combination of systems to make sure the crypto that you store with Element is secure.

We independently monitor your crypto balance with our qualified custodian daily to ensure there is agreement on the balance between all parties, and immediately work to resolve any discrepancies if any do appear.

Crypto being held with our qualified custodians is not used for any other purposes and is there for you when you want to sell it.

What are the fees associated with each trade?

There is a $0.99 minimum fee per trade, with a fee range of 1% – 2.99% per trade depending on the size of the transaction. You will be shown the amount of the trading fee before you confirm the trade.

What happens to my digital assets if I close my Element account?

Prior to closing your account, you can either liquidate your cryptocurrency holdings or elect to keep your digital assets directly with the Qualified Custodian.

What happens to my digital assets if I die?

Your cryptocurrency holdings are like any other assets that you hold with Element and they are treated exactly the same as any other assets if you were to die. Your beneficiary or other designated person with a power of attorney would have access to all of your Element assets and would liquidate them on whatever basis they felt was warranted.

What happens to my digital assets if Element shuts down the digital asset offering?

In the extremely unlikely event that Element were to fail, you would still be able to retrieve your cryptocurrency directly from the qualified custodian that stores your holdings. In this event, you would be provided instructions on how to retrieve your holdings.

Which coins are available to purchase?

The coins available to purchase are visible to you in the online banking and mobile banking app. Element decides which coins to offer and there will be communication when there are changes to the coins that are offered.

Why was the exchange rate that my order was fulfilled at different from the exchange rate I saw before buying/selling?

Cryptocurrency markets are open 24/7 /365, and prices change by the second. Depending on how long you took to confirm the trade, the price may have changed slightly based on the latest market prices.

Can I lose my cryptocurrency?

Losing cryptocurrency held via Element is very very unlikely- it is held securely with the Qualified Custodian on your behalf by Element.

Can my cryptocurrency lose value?

Yes, like any investment product your cryptocurrency may lose (or gain) in value over time. Cryptocurrencies are volatile and unpredictable, meaning their prices can go up and down quickly and without warning. Many factors can affect the value of a cryptocurrency, such as supply and demand, regulation, hacking, competition, innovation, and market sentiment. You should only invest in cryptocurrencies if you are aware of the risks and willing to accept the potential losses.

Can the Bitcoin or cryptocurrencies in my account be used for illegal purposes?

As long as the cryptocurrency remains in your Element account, it cannot be used by anyone other than you. Bitcoin and other cryptocurrencies can be used for illegal purposes, just like any other form of currency or asset. However, it is important to note that the vast majority of cryptocurrency transactions are legitimate and legal. As a cryptocurrency user, it is important to use caution and due diligence when transacting with others outside of Element and to report any suspicious activity to the appropriate authorities.

Do I need a wallet for my cryptocurrency investments with Element?

No, you do not need your own wallet for your cryptocurrency investments with Element. Your cryptocurrency is held by Element on your behalf with a qualified custodian – in a similar manner to the cash in your checking accounts.

How do I know my crypto is secure?

We use a combination of systems to make sure your crypto that you store with Element is secure.

We independently monitor your crypto balance with our qualified custodian daily to ensure there is agreement on the balance between all parties, and immediately work to resolve any discrepancies if any do appear.

Crypto being held with our qualified custodians is not used for any other purposes, and is there for you when you want to sell it.

How do I know the value of my cryptocurrency?

The value of your cryptocurrency can be determined by checking your balances within your web portal or mobile app. The value of cryptocurrency can be highly volatile, so it is important to monitor it regularly.

How long does it take to process a Bitcoin or cryptocurrency transaction?

Your cryptocurrency buy-or-sell-transaction should take only a few moments to process. The transaction details and corresponding cryptocurrency or dollars will be shown in your account quickly, usually within less than a minute.

Where is my cryptocurrency stored?

Cryptocurrency purchased through our digital asset service offering is held with a regulated and qualified custodian. Please see “Is my Crypto Insured?” for more information.

Is my crypto insured?

Digital Assets are not insured by the National Credit Union Share Insurance Fund (NCUSIF), the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC).

Why should I buy, sell and hold crypto through Element?

Accessing cryptocurrency through Element is the easiest, safest, and quickest way to invest in digital assets like Bitcoin, Ethereum, and others. There are a number of advantages to this innovative offering:

• It’s Easy – Because you are already an account holder, there are no additional forms to fill out or funds that are required to be transferred away from your primary accounts. As a result, you are able to begin buying and selling cryptocurrencies almost immediately.
• Your Personal Information is Safe and Secure – Your identity and bank information have always been safe with us. When you leverage our digital asset services, that same level of security holds true. By buying or selling digital assets through Element, your personal information will be securely shared with lnvestiFi, our selected qualified custodian and liquidity provider only to the extent necessary to conduct transactions.
• It’s Quick – Buying or selling cryptocurrency through Element means you have near immediate access to your crypto when you buy it, and your funds when you sell. You have instant access to digital asset trading with funds from your checking accounts.
• No Surprises or Hidden Fees – When you trade digital assets throughElement, fees are clearly shown before you place your trade.

Will I earn interest on my crypto holdings like a savings account?

Your cryptocurrencies will not earn interest like a regular savings account.

Why is the list of coins I can buy limited?

Element constrains the number of coins available for investment. Coins are evaluated on a number of factors, including a form of risk assessment to ensure they are appropriate for inclusion. From time to time this list will be evaluated and additional coins may be offered.

Can anyone buy/sell/hold cryptocurrency through Element?

Only account holders over the age of 18 and in good standing with Element can buy/sell/hold cryptocurrency. Commercial accounts may not be used.

Am I able to place a limit order or stop/loss?

Currently, only market orders are available for trading. Other order types may be made available in the future.

Crypto 101

Why do people invest in cryptocurrency?

People invest in digital assets like cryptocurrency for several reasons. First, while not all the potential applications of this technology have reached mainstream adoption and new technologies are still being developed, many believe in the long-term potential and value of these assets and want to be an early adopter of the future of finance.

Second, although cryptocurrencies can be volatile, many see it as a long-term hedge against inflation.

Third, while other asset classes might require you buy an entire piece such as with stocks, crypto can be purchased and sold fractionally – so investors can buy as much or as little as they choose and have full control over the asset.

Finally, speaking again to the long-term value, many investors believe there is a large upside to buying cryptocurrency. Coins like Bitcoin have a history of outperforming many popular stocks on a variety of occasions.

Is cryptocurrency a good investment?

Cryptocurrency may be a good investment for some people, but it is also highly risky and volatile. The value of cryptocurrency can rise and fall rapidly, and there is no guarantee that you will make a profit. It is important to do your own research and consider your personal financial situation before investing in cryptocurrency.

What are the advantages and disadvantages of cryptocurrencies?

Some of the advantages of cryptocurrencies are:

• They offer fast, cheap, and global transactions without intermediaries or censorship.
• They provide transparency, accountability, and immutability through the blockchain.
• They enable financial inclusion and empowerment for people who lack access to traditional banking services.
• They offer privacy and anonymity for users who value their personal data and freedom.
• They foster innovation and experimentation in the fields of technology, economics, and social change.

Some of the disadvantages of cryptocurrencies are:

• They are volatile, unpredictable and susceptible to market fluctuations and speculation.
• They are vulnerable to hacking, theft, fraud and human error.
• They face legal uncertainty and regulatory challenges in different jurisdictions.
• They require technical knowledge and skills to use safely and effectively.
• They consume significant amounts of energy and resources for mining and network maintenance.

What is a cryptocurrency exchange?

A cryptocurrency exchange is a platform that allows users to buy, sell and trade cryptocurrency with other users. It operates similar to a traditional stock exchange, but with cryptocurrency instead of stocks. However, stock exchanges are heavily regulated, while cryptocurrency exchanges do not have any central regulatory authority.

What is a decentralized exchange?

A decentralized exchange is a type of cryptocurrency exchange that operates on a decentralized network, meaning that it does not rely on a central authority to process transactions. This makes it more secure and less vulnerable to hacking or other security breaches. However, cryptocurrency exchanges do not have any central regulatory authority.

What is a digital asset?

A digital asset is anything that is stored digitally, is uniquely identifiable and can be used to store

value. Cryptocurrency is one form of digital asset, but there are others as well.

What is a smart contract?

A smart contract is a self-executing contract that is written in code and stored on a blockchain. It is designed to automatically execute the terms of the contract when certain conditions are met without the need for a third party to enforce the contract. Smart contracts use blockchain technology, which allows for secure and transparent execution of the contract without the need for intermediaries like lawyers or banks. Instead, the terms of the contract are encoded into a program and stored on a decentralized blockchain network. Smart contracts have many potential applications from finance and insurance to real estate and supply chain management. They have the potential to revolutionize the way we do business, enabling faster, more secure and more transparent transactions.

What is a stablecoin?

A stablecoin is a type of cryptocurrency that is designed to maintain a stable value relative to a specific asset, such as the U.S. dollar, gold, or another cryptocurrency. This stability is achieved through a variety of mechanisms, such as using a reserve of the underlying asset to back the stablecoin, or through algorithms that adjust the supply of the stablecoin in response to market conditions. These are not available via Element and your account for trading at this time.

What is a wallet?

A cryptocurrency wallet is a digital wallet that is used to store, send, and receive cryptocurrency. It consists of a public key and a private key, which are used to sign and verify transactions. A cold wallet is a type of cryptocurrency wallet that is not connected to the internet. This makes it less vulnerable to hacking or other security breaches, but it also means that it is less convenient to use than a hot wallet. A hot wallet is a type of cryptocurrency wallet that is connected to the internet. It is more vulnerable to hacking or other security breaches, but it is also more convenient to use than a cold wallet.

What is Bitcoin?

Bitcoin is the first and most well-known cryptocurrency. It was created in 2009 by an anonymous person or group using the pseudonym Satoshi Nakamoto. Bitcoin is unique in that it has a limited supply of 21 million units, which are released gradually through a process called mining. Bitcoin also has a high level of security due to its use of cryptography and decentralized network.

What is cryptocurrency?

Cryptocurrency, or “crypto,” is any kind of decentralized digital currency. Cryptocurrencies are based on cryptography, or advanced mathematical algorithms that are very difficult to crack. Cryptography is probably used a lot in your everyday life already – your phone and computer use it to keep your passwords secret and your data private.<br>Unlike traditional currencies, like the U.S. Dollar, crypto is not issued or controlled by a central government or bank. Instead, crypto is managed by massive, free-to-join networks of computers. These computers maintain a shared ledger of all transactions on the network called a “blockchain.” The computers earn rewards in exchange for confirming that new transactions are valid. A majority of computers in the network need to agree when a new coin is produced or a new transaction is completed. Thus, the more computers that join the network, the more secure it is.

Most cryptocurrencies are finite in quantity, which is why some people view them as a hedge against inflation.

Cryptocurrency transactions are irreversible and permanent, recorded on a public blockchain.

Because cryptocurrency is transacted on a public ledger (or the blockchain) and the network of computers to create new crypto is free to join, anyone can easily participate in cryptocurrency. As long as someone has access to the internet they can get involved with crypto, regardless of location, government, or credit score. This makes the ecosystem more fair, equitable, transparent, and global.

Many advocates see the most popular cryptocurrencies like Bitcoin and Ethereum as the future and an alternative to traditional fiat currency like the U.S. Dollar

How does cryptocurrency work?

Cryptocurrency works through a decentralized network of computers that verify and record transactions using cryptography. When a transaction is initiated, it is broadcast to the network and verified by a group of computers known as miners. These miners use complex algorithms to solve mathematical problems and the first miner to solve the problem is rewarded with newly minted cryptocurrency. Once the transaction is verified, it is added to a public ledger called a blockchain, which is maintained by the network and cannot be altered or deleted.

What is the difference between Bitcoin and other cryptocurrencies?

Bitcoin was the first cryptocurrency to be created and is still the largest and most widely known cryptocurrency. It operates on a decentralized, peer-to-peer network and uses a blockchain to maintain a secure and transparent ledger of transactions. Cryptocurrency is a general term for digital or virtual currencies that use cryptography for security and are not controlled by any central authority. There are many other cryptocurrencies that have different features, such as anonymity, smart contracts, or low fees, but they are usually less established, less liquid, and more volatile than Bitcoin.

Two main differences between Bitcoin and other cryptocurrencies:

• Purpose: While Bitcoin was created as a decentralized digital currency, other cryptocurrencies have been developed for different purposes, such as smart contract platforms (e.g. Ethereum), privacy-focused transactions (e.g. Manero), or faster transaction times (e.g. Litecoin).
• Technology: Different cryptocurrencies use different underlying technologies to achieve their goals. For example, Ethereum uses a different consensus mechanism than Bitcoin and has its own programming language to allow for the creation of decentralized applications (dapps).

What is bitcoin halving?

Every four years, or roughly every 210,000 blocks in the Bitcoin blockchain, the Bitcoin halving occurs. This event is programmed into Bitcoin’s code to regulate how new bitcoins are created and limit their total supply.

• Bitcoin miners use computers to solve complex math problems, which adds transactions to the blockchain – Bitcoin’s public ledger. In return, they receive newly created bitcoins.
• The halving process cuts this reward in half. For instance, if miners were getting 6.25 bitcoins per block, after the halving, they receive only 3.125 bitcoins.
• As a result, fewer new bitcoins enter circulation, slowing down the growth rate of the total supply. Bitcoin has a fixed maximum of 21 million coins, and halvings help extend the time it takes to reach this limit.

Why does it matter?

• Scarcity: As the supply of new bitcoins slows down, Bitcoin’s value could go up if demand remains steady or rises (similar to how rare items often fetch higher prices).
• Price impact: Past halvings have been tied to price increases over time (for example, after halvings in 2012, 2016, and 2020), but this isn’t a sure thing.
• Miners: They’ll earn less, so some may quit mining if it’s no longer profitable, which could impact the network’s security.

The last halving occurred in April 2024, and the next one is expected around 2028. This halving is like a built-in clock that makes Bitcoin’s supply grow more slowly over time, aiming to keep it scarce and valuable.

Who created Bitcoin?

The creator of Bitcoin is still unknown, but the pseudonym Satoshi Nakamoto is widely credited with inventing it. Satoshi Nakamoto’s true identity has never been revealed, and many people believe it may be a group of individuals rather than a single person.

What is the difference between Bitcoin and Ethereum?

Bitcoin and Ethereum are two of the most popular cryptocurrencies in the world. They both use blockchain technology to record and validate transactions, but they have different purposes and features. Bitcoin was created as a digital currency that can be used as a store of value and a medium of exchange, while Ethereum was designed as a platform for smart contracts and decentralized applications.

Purpose: Bitcoin was designed primarily as a digital currency and a store of value, while Ethereum was created as a platform for decentralized applications (dApps) and smart contracts.

Blockchain: Bitcoin and Ethereum both use blockchain technology, but they have different consensus algorithms. Bitcoin uses a proof-of-work (PoW) algorithm, while Ethereum is in the process of transitioning to a proof-of-stake (PoS) algorithm. This means that the way transactions are validated and added to the blockchain differs between the two.

Transaction speed: Ethereum has a faster block time than Bitcoin, which means that transactions can be processed more quickly. However, Bitcoin is currently more widely adopted and has more transactional capacity than Ethereum.

Supply: Bitcoin has a fixed maximum supply of 21 million coins, while Ethereum currently has no maximum supply limit. However, Ethereum has a plan to limit its supply through a series of upgrades known as Ethereum 2.0.

Programming language: Ethereum is unique in that it allows developers to write and execute smart contracts using its own programming language, Solidity. Bitcoin does not have a native programming language for smart contracts.

Community: While both Bitcoin and Ethereum have large and active communities, they differ in their respective focuses. The Bitcoin community tends to be more focused on financial and economic issues, while the Ethereum community is more focused on building decentralized applications and exploring the potential of blockchain technology.

Why are there so many coins?

Anyone equipped with the proper skills can create a cryptocurrency. There is no central authority that regulates or approves new cryptocurrencies. New coins are also designed for different purposes and with new features – to be more private, faster, scalable, or energy efficient. Still others are used for specific applications, such as decentralized finance (DeFi), gaming, or non-fungible tokens (NFTs). Element constrains the number of coins available for investment to the most secure cryptocurrencies. Not all cryptocurrencies are created equal or have a legitimate purpose. Some of them are scams, copies, or derivatives of existing coins that aim to exploit the hype or the lack of regulation in the crypto space.

Why does cryptocurrency have value?

Cryptocurrency is unique in that unlike other assets like stocks or commodities, there is no underlying asset driving its value. Instead, its value is derived from the fact that a community of people trust and agree upon its value together.

Like how the U.S. Dollar has value because everyone agrees it has value and treats it as such, many crypto investors and visionaries see popular cryptocurrencies taking a similar position and becoming widely accepted to have value. People having faith in its value gives it inherent value, which will only grow with continued adoption.

The various real-world applications of blockchain and cryptocurrency technology further drive its value. For instance, the Ethereum network powers smart contracts, NFTs, and a variety of other decentralized applications.

Cryptocurrency is also said to have value because of how it could act as a hedge against inflation. As only 21 million Bitcoin can ever be produced, for instance, it has defined scarcity and value.

Are Bitcoin and other cryptocurrencies legal?

In the United States, Bitcoin and other cryptocurrencies are generally considered legal, but they are subject to regulation by various government agencies. For example, the Internal Revenue Service (IRS) considers Bitcoin and other cryptocurrencies to be property for tax purposes, which means that transactions involving cryptocurrencies are subject to capital gains taxes.

Can cryptocurrencies be hacked?

Cryptocurrencies themselves cannot be “hacked” in the traditional sense, as they are decentralized digital assets that exist on a secure, distributed ledger called a blockchain. However, the wallets and exchanges used to store and trade cryptocurrencies can be vulnerable to hacking and other cyber attacks.

How can I protect myself from Bitcoin scams?

Bitcoin scams are unfortunately common in the cryptocurrency world, but there are several steps you can take to protect yourself. When your cryptocurrency is held with Element, it is very secure. However, like with any scams involving money, there are additional ways to keep yourself safe:

• Hold your cryptocurrency with Element: Buying, selling, and holding your digital assets with Element will provide you with the greatest protection.
• Beware of phishing scams: Phishing scams are designed to trick you into giving away your private information by posing as a legitimate website or email. Always double-check the URL of any website or email address to make sure it is legitimate
• Don’t fall for get-rich-quick schemes: If someone promises you huge returns on your Bitcoin investment in a short amount of time, it is likely a scam. Always be skeptical of any investment opportunity that sounds too good to be true.
• Research before investing: Before investing in any cryptocurrency, do your own research and make sure you fully understand the risks involved. Don’t invest more than you can afford to lose.

By following these tips, you can help protect yourself from Bitcoin scams and make more informed decisions about your investments.

What is a blockchain?

A blockchain is a public ledger of transactions that is maintained and verified by a decentralized, peer-to-peer network of computers. The computers work together to confirm that new transactions are valid through different types of “consensus mechanisms” (ways of coming to agreement that a transaction is valid) that vary based on the particular blockchain. Each computer in a blockchain network maintains its own copy of the shared record, making it essentially impossible for a single computer to alter any past transactions or for malicious actors to overwhelm the network. Truly decentralized blockchains do not rely on centralized authorities or intermediaries to transact globally, securely, verifiably and quickly, making technology like cryptocurrency possible.

Once a new coin is generated, it can be exchanged in the online community just like cash. The blockchain is validated by the community to record every transaction ever made with the currency. By sharing that information openly, people can agree on what amount of currency was sent or received without the need for a middleman.

Data on the blockchain is stored in one long public ledger. The details of each transaction are added to the newest block. When the block reaches a designated amount of data, it is complete. It is then given a unique code, called a hash. This is part of what makes cryptocurrency and blockchain so secure. As every transaction relies on an algorithm that relies on past transactions, the system just gets even more secure and difficult to break as time goes on.

How does blockchain encryption work?

Cryptocurrency and blockchain work as a result of cryptography, which involves encryption. Encryption is the process of converting plaintext to ciphertext and back to safeguard data and systems, making it impossible for unauthorized parties to access encrypted data. The purpose of blockchain encryption is to prevent sensitive data like coin balances and transactions from falling into the wrong hands and being abused, falsified, or stolen. Blockchain encryption security is based on an algorithm that must be solved in order to verify a piece of data prior to its addition to a blockchain. This guarantees that security measures are implemented prior to being stored. Encryption relies on this algorithm, in addition to passwords and keys needed to decode information, to render original data unreadable. The procedure turns the original information and data into plaintext, an alternate text that enables encryption and security. When an authorized person wants to access or read blockchain data, they may decrypt it using a key. This key then converts the encrypted text to plaintext just for them.

What is the role of cryptography in the Bitcoin and crypto networks?

Cryptography is the science of secure communication and data protection. Cryptography plays a critical role in the Bitcoin and crypto networks by ensuring the security and authenticity of transactions and maintaining the integrity of the blockchain. Transactions are secured using public-key cryptography, which uses two mathematically related keys: a public key and a private key. The public key is shared freely and used to encrypt transactions, while the private key is kept secret and used to decrypt them.

What makes the blockchain so transformative?

Many believers in blockchain and cryptocurrency technology think it may revolutionize many aspects of global commerce. It can make payments, foreign trade, and transfers of value more efficient than traditional systems. Blockchain technology also has the potential for making things like the home buying process more quick and seamless. By eliminating the need for middlemen and unnecessary intermediary organizations, many processes can be done in less time for less money.

“Proof-of-Work and Proof-of-Stake Protocols”

“Proof of Work (PoW) and Proof of Stake (PoS) are ways a blockchain validates transactions and maintains the integrity of the blockchain. Both are important consensus mechanisms used in blockchain technology to validate transactions and maintain the integrity of the blockchain.

In Proof of Work (PoW), miners use computational resources to solve complex mathematical problems to validate transactions. The first miner to solve the problem and validate the transactions is rewarded with a block reward, which typically consists of newly minted cryptocurrency and transaction fees. This block reward creates new blocks in the blockchain and is an incentive for miners to participate in the process.

The difficulty of these problems ensures that the network cannot be easily manipulated, as any attacker attempting to change the blockchain history would need to have significant computational resources to do so. Bitcoin is a popular example of a blockchain that uses (PoW).

In Proof of Stake (PoS), validators are selected to validate transactions and create new blocks based on the amount of cryptocurrency they hold as a stake in the network. The idea behind PoS is that validators are incentivized to act in the best interest of the network, as they stand to lose their stake if they behave maliciously. This creates a self-regulating system that is designed to discourage malicious behavior and maintain the security and integrity of the blockchain. PoS is used in several popular cryptocurrencies, such as Ethereum, Cardano, and Polkadot as a way to achieve consensus in a decentralized network.

Both PoW and PoS are important because they provide different approaches to achieving consensus in a decentralized network. PoW has been the most widely used consensus mechanism in blockchain technology, but it has been criticized for its high energy consumption and resource-intensive nature. PoS is seen as a more energy-efficient alternative that still provides a high level of security through economic incentives.