100,000 Questions and Answers about Cryptocurrencies 2

21. What is a public key and private key in cryptocurrency?

A public key is an address that others can use to send you cryptocurrency. The private key is a secret code that allows you to access and manage the cryptocurrency associated with your public key. The private key must be kept secure to protect your funds.

22. What is a hardware wallet?

A hardware wallet is a physical device designed to securely store your cryptocurrency private keys offline, providing a high level of security against hacks and malware.

23. What is a seed phrase?

A seed phrase, also known as a recovery phrase, is a series of words generated by your cryptocurrency wallet that can be used to recover your wallet and its funds if you lose access to it. It must be stored securely.

24. What is a decentralized exchange (DEX)?

A decentralized exchange is a platform that allows users to trade cryptocurrencies directly with one another without the need for an intermediary. Trades are executed through smart contracts on a blockchain.

25. What is staking in cryptocurrency?

Staking involves holding and locking up a certain amount of cryptocurrency in a wallet to support the operations of a blockchain network. In return, participants earn rewards, often in the form of additional cryptocurrency.

26. What is a cryptocurrency fork?

A fork occurs when a blockchain diverges into two separate paths due to changes or upgrades in the protocol. Forks can be hard (resulting in two distinct blockchains) or soft (resulting in a single upgraded blockchain).

27. What is a gas fee in Ethereum?

Gas fees are payments made by users to compensate for the computing energy required to process and validate transactions on the Ethereum blockchain. The amount of gas needed depends on the complexity of the transaction.

28. What are altcoins?

Altcoins are any cryptocurrencies other than Bitcoin. Examples include Ethereum, Litecoin, Ripple (XRP), and Cardano.

29. What is a 51% attack?

A 51% attack occurs when a single entity or group controls more than 50% of a blockchain's mining hash rate or computing power, allowing them to manipulate transactions and potentially double-spend coins.

30. What is a crypto wallet address?

A wallet address is a string of alphanumeric characters that represents the location on a blockchain where cryptocurrency can be sent or received. Each address is associated with a unique public key.

31. What is a meme coin?

A meme coin is a type of cryptocurrency inspired by memes or internet jokes. Dogecoin is a popular example of a meme coin.

32. What is HODL?

HODL is a term derived from a misspelled word "hold" and is used to describe the strategy of holding onto cryptocurrency for the long term, regardless of market volatility.

33. What is liquidity in cryptocurrency markets?

Liquidity refers to how easily an asset can be bought or sold in the market without affecting its price. High liquidity means the asset can be quickly traded with minimal price impact.

34. What is a smart contract audit?

A smart contract audit is a thorough review and analysis of a smart contract's code by security experts to identify and fix vulnerabilities, ensuring the contract behaves as intended.

35. What are ICOs, STOs, and IEOs?

• ICO (Initial Coin Offering): A method of fundraising where new cryptocurrencies are sold to investors.

• STO (Security Token Offering): A fundraising method where tokens represent ownership or shares in a company, and comply with regulatory requirements.

• IEO (Initial Exchange Offering): A token sale conducted through a cryptocurrency exchange.

36. What is a decentralized autonomous organization (DAO)?

A DAO is an organization represented by rules encoded as smart contracts on a blockchain, controlled by its members through a decentralized voting process without central authority.

37. What is yield farming?

Yield farming is the practice of staking or lending cryptocurrencies in decentralized finance (DeFi) platforms to earn interest or rewards in the form of additional cryptocurrency.

38. What is a rug pull in DeFi?

A rug pull is a type of scam where developers create a new DeFi project, attract significant investment, and then suddenly withdraw all the funds, leaving investors with worthless tokens.

39. What is the Lightning Network?

The Lightning Network is a second-layer solution for Bitcoin that enables faster and cheaper transactions by creating off-chain payment channels between users.

40. What is a multi-signature wallet?

A multi-signature wallet requires multiple private keys to authorize a transaction, adding an extra layer of security by ensuring no single entity has full control over the wallet.