Crypto Trading Crypto Basics 2

Question 1

What is dollar-cost averaging (DCA) in crypto investing?

Accepted Answer

Investing a fixed amount at regular intervals regardless of price to reduce the impact of volatility

Answer

DCA involves consistently investing the same amount over time, which averages out the purchase price and reduces the risk of investing everything at a peak.

Question 2

What is a cryptocurrency exchange?

Accepted Answer

A platform where users can buy, sell, and trade cryptocurrencies

Answer

Crypto exchanges are platforms (centralized like Coinbase/Binance or decentralized like Uniswap) that facilitate buying, selling, and trading of cryptocurrencies.

Question 3

What is a 'rug pull' in crypto?

Accepted Answer

A scam where developers abandon a project and run away with investors' funds

Answer

Rug pulls are fraudulent schemes where project creators drain liquidity or abandon the project after attracting investor funds, leaving tokens worthless.

Question 4

What is staking in cryptocurrency?

Accepted Answer

Locking up cryptocurrency to support network operations and earn rewards

Answer

Staking involves locking tokens in a Proof of Stake network to help validate transactions. In return, stakers earn rewards, similar to earning interest.

Question 5

What is a DEX?

Accepted Answer

A Decentralized Exchange — a peer-to-peer platform for trading crypto without intermediaries

Answer

DEXs like Uniswap allow users to trade directly from their wallets using smart contracts, without a centralized authority holding funds.

Crypto Trading Practice Test

Crypto Trading Practice Test

Crypto Trading Crypto Basics 2