Frequently Asked Questions

What is CryptoCurrency?

Learn how to use cryptocurrency

These days, cryptocurrencies are becoming a very popular method for transactions and payments, with both businessmen and companies. Such operations require reliability and stability, therefore, new types of digital currencies continue to emerge. Thanks to this article you will find out how to use cryptocurrency and their features as well as stablecoins.

The history of the cryptocurrency market

In the early 2000s, it became clear that the system of bank payments was very long and complex for business and that there was a need for faster and more convenient transactions between countries and users. The most important event happened in 2009 when Bitcoin was born. At first, it seemed like nothing more than a simple surprise, but later the currency became extremely popular and and it's price shot up. Therefore, the obvious question arose - what is cryptocurrency.

Cryptocurrency is virtual money that, unlike fiat money, has no physical expression. The digital currency must be protected from counterfeiting and duplication, and its quantity and emission are strictly limited, for example, for the largest cryptocurrency Bitcoin (BTC), the maximum amount is 21 million coins (more than 21 million BTC will never be created).

Over time, users realized that this was a great way to make instant transactions around the world and began to actively use the system. Cryptocurrency has many advantages over fiat currencies.
• Opened code. Thanks to this feature, everyone can mine virtual coins.
• Anonymity. Unlike classic electronic money, transactions with which are easily tracked, it will not work to get information about the owner of a cryptocurrency wallet. Only the wallet number and limited data on the amount on the account are available.
• Decentralization. Cryptocurrency is an independent currency. Nobody regulates its issue or controls the movement of funds in the account.
• Limitedness. As a rule, the cryptocurrency is issued in a limited volume, which excludes the risks of inflation due to the excessive activity of the issuer.
• Reliability. Hacking, forging, or performing other similar manipulations with virtual currency will not work - it is reliably protected.

What is a stablecoin and the difference from crypto?

Classic cryptocurrencies have one more important feature - large fluctuations of the rate. For example, the value of one Bitcoin coin has grown from a few cents to thousands of dollars. However, such large fluctuations in the exchange rate scares off some investors. Therefore, they need some alternative that can be more reliable and predictable. It's time to find out what is stablecoins.

A feature of classic cryptocurrencies is the absence of dependence on fiat currencies but stablecoins are a special category. They use the same technologies as Bitcoin, Ethereum, and others.

However, there is a big difference due to the need for stability - they are tied to a physical asset. There can be many options: fiat currency, gold, oil and even real estate.

The question arises, what is the point of stablecoin? The main task of such currencies is to provide a stable exchange rate, but to maintain mobility, anonymity, and provide users with the ability to carry out almost instant transactions around the world.

Extremely high volatility in the cryptocurrency market is good for traders and speculators, as it allows them to make good money. But for the real business, it poses a threat - due to sharp leaps in the course, it is difficult to plan a budget, etc. This is the main answer to the question - "What is the purpose of a stablecoin". They solve this problem and open the way for the real economy to the world of modern technology. The more business projects are involved in blockchain technologies, the greater the demand for stable assets.

The market offers different options for transactions, but what stablecoin is better to use? Today several options can be recommended to users:

TrueUSD. The TUSD currency is fully backed by assets in the reserve account. The conversion rate is the US $1.

GeminiUSD. Created by the billionaire brothers Winklevoss in 2018. Depends on the US dollar.

Tether. The idea of ​​this "stablecoin" from Tether company was born in 2012. Since being listed in 2015, Tether has become one of the most popular and successful assets in the market.

USD-Coin. This is a stablecoin created by Coinbase and Circle. It also depends on the US dollar.

PAX. This popular stablecoin was created as an alternative to Tether. PAX is traded alongside other assets available on exchanges. Specifically, you can use PAX to buy or sell Bitcoin, Ether, Binance coins, EOS, XRP, and Stellar lumens.

What is token?

Another area that is becoming popular these days is tokens. If you want to find out what is token, then you must know that this term can be used as a substitute for money. For example, subway tokens or casino chips are great options for tokens. Today, they are sold for pre-sale and ICO by the issuers themselves. Instead, they take cryptocurrency and sometimes fiat currencies.

They often do not have their blockchain, using existing platforms, for example, Ethereum or Waves. If you want to understand what is a crypto token, then a great example is the Ethereum network (ETH). The project passed ICO in 2014 with the ETH token.

Now you need to figure out what the main differences are. The main difference is in the attachment of the second to a specific ICO project. It is a means of payment in a specific ecosystem based on the underlying cryptocurrency. A cryptocurrency without a token can exist, a token without a cryptocurrency cannot.

This is because tokens are based on a specific blockchain, and cryptocurrency is an integral part of it. They are built on a ready-made platform. Moreover, a malfunction of the parent blockchain will have an unforeseen effect on the circulation in the network and will likely severely undermine the functionality and operation of the issuing project. Malfunctioning tokens will not affect the operation of the blockchain. Now you know what is the token economy.

Thus, the functions of tokens are tied to the issuer. They are not mined, unlike cryptocurrency, but are issued by the company itself at the time of the ICO or token generation event (TGE). The cost and investment attractiveness of a token are determined by the actions of the organization that issued them.

They can also be divided into several types:

• Equity-tokens - an analog of a promotion in which a network member has the opportunity to receive a share of the profit;
• Utility-tokens - give a certain value or opportunity within their platform
• Asset-backed-tokens - a token backed by a real commodity (for example, gold).

There are as many ways to use tokens as there are projects. The user can pay for educational courses, pay a doctor for a consultation, buy gated content, or publish ads. Below is a table that will help you understand the main differences between tokens and classic cryptocurrencies.


Parameter Crypto Tokens
Emission Decentralized. Depends on consensus algorithms, but is mined by miners. Centralized.

Tokens are issued by the issuing organization during the ICO or token generation event (TGE).

Blockchain Cryptocurrency plays the role of the unit of account of this blockchain. Released on someone else's blockchain.
Dependency on each other No Problems in the blockchain will also affect the tokens issued on it.
Possibility to pay for transactions Yes No

Now you know what is a basic attention token, the main features of cryptocurrencies and stablecoins. This information will help you to work with digital currencies more productively.

What is Bitcoin?

Many people understand Bitcoin as an embodiment of the crypto market in general. The first cryptocurrency, launched in 2009, is still considered as the most reliable and popular virtual asset. The Bitcoin price impacts on other digital currencies; hence, the majority of players keep an eye on Bitcoin rates foremost.

General overview of the first cryptocurrency

Crypto newcomers are interested in what is Bitcoin in general. Bitcoin was launched by the mysterious Satoshi Nakamoto (the real creator of the first digital asset is still unknown) in 2009. The principal idea of the first digital currency laid in empowering users with the opportunity to make transparent and anonymous transactions globally.

At present, Bitcoin is among the most prominent investing instruments, being competitive to gold, shares, or real estate. The all-time return on investment is 8 613%.

The Chinese ranking of cryptocurrencies places Bitcoin in 14th position, highlighting that the first cryptocurrency has a less impressive basic technology than its competitors. Meanwhile, Bitcoin is ranked #1 according to its creativity.

Despite the fact that the total number of issued digital assets exceeded 6 000, Bitcoin is still dominant. Its market capitalization is 60% of the total crypto market.

Bitcoin mining: how to earn the top-rated cryptocurrency?

There are a number of ways to add Bitcoin to your investing portfolio:

  • purchase them on special platforms;
  • receive them from other holders (as a salary, for instance);

However, the initial way of getting BTCs is mining. What is Bitcoin mining? Such a question requires a profound understanding of them. The crypto community considers the process as transactions entering into the blockchain.

The mining algorithm includes the following steps:

  • A user makes a transaction of a certain amount of BTC and determines a fee.
  • A transaction is placed in the Bitcoin mempool.
  • Miners pick up an order to include a transaction into a new block.
  • Miners get rewards for a new solved and published block.

Bitcoin is a mineable cryptocurrency that means no other ways to emit new Bitcoins exist. The maximal supply of BTC is 21 million coins.

Bitcoin halving and its impact on miners

On 11th May 2020, the third Bitcoin halving took place. The news entered the ranking of the most discussed topics, catching the attention of people not aware of digital currencies generally. Crypto beginners wish to know what is the Bitcoin halving in detail.

Halving implies slowing of new blocks generating process. Due to halving miners’ reward decreases. For instance, one solved and published block had been delivering miners 50 BTC of reward, while the last halving cut the reward to 6.25 BTC.

Why is the halving important?

The crypto experts focused on the importance of the process, since many people don’t understand what are the advantages of Bitcoin halving.

The halving process is a stumbling block referred to inflation. The experts compare Bitcoin to gold. World gold reserves are limited; hence, the more the precious metal is mined, the higher its price is. The same mechanism is fundamental for all cryptocurrencies, including Bitcoin. The limited supply keeps Bitcoin popular and skyrockets its investing potential.

Is there any interdependence between halving and BTC rates?

Crypto enthusiasts are interested in the impact of Bitcoin halving on the price of the first cryptocurrency. The following tendencies take place:

  • The first halving occurred on 28th November 2012. Bitcoin price skyrocketed from $19.65 per coin to $102.13 within 6 months.
  • The second halving took place on 9th July 2016. Bitcoin price moved to $1 028 per coin from $641.79 within 6 months.
  • The third halving happened on 11th May 2020. Bitcoin price has already changed from $8 672 to $11 773 per coin.

Are miners still ‘in the black’?

Bitcoin mining is connected with some expenses, including electricity tariffs, taxes, and equipment costs. According to the Business Times statistics, the net cost of Bitcoin mining depends on a certain country. For instance, in Venezuela the net cost of 1 mined BTC is just $1062, while in South Korea the index exceeds $30 000.

Based on the BTC price higher than $11 000 per coin, mining is profitable in 113 countries. The following countries are ranked in the top-5, according to the net cost of 1 mined Bitcoin: Myanmar ($2 812), Uzbekistan ($ 2 977), Trinidad and Tobago ($3 011), Ukraine ($3 712), and Kuwait ($4 119).

When is the next time of Bitcoin halving?

The crypto community is interested in what is Bitcoin halving countdown. Some websites contain the countdown until the next halving occurs, but investors need to understand that the halving time depends on the amount of mined blocks.

For instance, at the present time the amount of blocks required to be mined untill the next halving is 196 807. When the last block is mined, the halving will occur automatically. According to the experts’ calculations, the next BTC halving is about to happen in 2024, cutting miners’ reward to 3.125 per one block.

What if the last Bitcoin should be mined?

The total supply of Bitcoins is 21 million, and the last BTC is predicted to be mined in 2140. The experts expect a massive adoption of cryptocurrency, while opinions towards the Bitcoin price movements are sometimes unbelievable. Some experts expect $1 million per BTC.

The moment of mining the last BTC may transform Bitcoin into a powerful competitor to gold, presenting this virtual currency as the new financial standard.

What is Blockchain?

Today, cryptocurrencies have become a very popular method for transactions around the world. This is not surprising as each user can transfer money quickly, reliably, and safely using cryptocurrency coins. All that is required is to select the appropriate currency and indicate the recipient's wallet number. This convenience and popularity has made it possible thanks to the blockchain technology that all cryptocurrencies use. In this article, we will tell you more about what is blockchain and the main features of this technology.

From theory to practice - the history of blockchain technology

Interestingly, the basic principles of the technology were formed long before the appearance of the first cryptocurrency. The idea was first formulated by scientists Stuart Haber and W. Scott Stornett in 1991. They came up with a way to process digital documents so that they are not forged or incorrectly formatted.

The system used cryptographic protection of the files with a time stamp. A year later, Merkle trees were included in the development, which made it possible to combine documents into a single block. However, back then the technology was not widely used, and it was not possible to patent it.

In 2004, computer technology developer Hal Finney launched the RPoW (Reusable Proof Of Work) network. The system had its digital token, Hashcash, with a cryptographic signature that could be sent between users.

In the RPoW system, the problem of double-spending was solved by registering token holders on a trusted server, where customers could check the validity and integrity of the entered data in real-time. RPoW can be called an early prototype of a cryptocurrency. Four years later, Bitcoin appeared, which used the same principles and began to set trends for subsequent cryptocurrencies.

What is blockchain in simple words?

The term Blockchain consists of two simple words - block + chain. It is a distributed database consisting of blocks in which information about a transaction is recorded and stored. At the same time, copies exist simultaneously and independently on many computers, so it is impossible to forge or falsify data.

Each new block created contains a header and a list of transactions performed in the past. After formation, it is checked by other users of the network participants. If they agree, then the block is added to the end of the chain - after that, it cannot be changed. Moreover, it contains not only new data but also encrypted information about previous blocks. This is how the database is automatically updated on all devices connected to the network.

What is blockchain and how does it work?

If we explain the Blockchain technology in simple terms, then we can compare it with the documents of a company, where the actions of employees are recorded. Each such entry is a special block. Now imagine that the documents are stored in a safe with a secret code. Every time new information needs to be entered, you enter the code and other employees know about it. This is an analog of a private key in the system.

Now let's pay attention to an important feature that will help you understand what is blockchain technology. Imagine that this safe has a special scanner, every time a document with new data is placed in the safe, the automation turns on a scanner that checks the information. This data is immediately sent to all employees, that is, there are many copies of this document.

Therefore, not a single person, even with code, can fake information. A standard check immediately identifies the intruder. Blockchain technology works similarly. When creating each record, the block is duplicated on all computers (network members) at once. Therefore, each user has his copy, which eliminates the risk of counterfeit transactions.

What is blockchain - an example

To consolidate the understanding of the principles of blockchain operation, we will also consider a transaction in the system based on an operation to transfer a cryptocurrency, for example, Bitcoin:

  • Client number 1 wants to transfer one Bitcoin to Client number 2;
  • The blockchain forms this operation into a block along with other similar transactions. The new block contains the number and hash of the previous block;
  • The generated block is sent to all participants in the blockchain system;
  • If there are no errors, each participant writes a block of information to his database;
  • The block is added to the chain of previous blocks, thus, contains information about all previous transactions;
  • Cryptocurrency is transferred from Client 1 to Client 2.

Key features and benefits of the blockchain network

Thanks to the Blockchain system, transactions become safe and accessible. Now every user can send money anywhere in the world, and the standard problems inherent in fiat currencies (long transaction processing time, high commission, the risk of monetary fraud, etc.) are simply excluded. Moreover, blockchain technology has many important benefits.

  • System openness. The transaction history is available to any user. This does not violate the confidentiality of the participants in the process. In the blockchain, you can see the balance of each wallet and its transaction history, while personal data remains intact.
  • Safety. In large blockchain networks, the history of operations is kept on hundreds of thousands of servers, such a data storage system is transparent and secure. Two keys are required for signing - public and private. Only keys open access to digital assets in a particular user's blockchain wallet.
  • Lack of intermediaries. Canadian programmer Vitalik Buterin made a great contribution to the development of blockchain technology. He owns the idea of ​​creating a blockchain platform that has scripting functionality for creating decentralized applications. The Ethereum blockchain network created with his participation makes it possible to conclude smart contracts without using the services of intermediaries. Contracts are written in programming languages ​​in bytecode, which is read and executed by the Ethereum Decentralized Virtual Machine (EVM). Several hundred decentralized applications have been created on the Ethereum blockchain, including platforms for social networks, casinos, and financial exchanges.

Types of blockchain networks

Today there are three types of technologies, but this direction is developing, hence, new proposals may appear in the future.

  • Permissionless Blockchain is a network that does not have a governing body, where all users are equal and complete confidentiality is respected. This type includes Bitcoin, Ethereum, Monero, and most other cryptocurrencies.
  • Public Permissioned Blockchain - open to users, but their activities are controlled by the full node of the blockchain network. Most of these systems have their cryptocurrency, and a deposit or prepayment is required to use the network. Thus, the scaling increases, and the number of transactions increases. Public Permissioned Blockchain projects have a high message transfer rate and a small number of confirmations. An example of an exclusive network is the Ripple blockchain project.
  • Private Permissioned Blockchain is a closed platform for trustees, often invisible and inaccessible to the general public. In such systems, internal tokens are usually not created and the absolute immutability and data security inherent in decentralized networks is not guaranteed in it. An example of a private network is the Hijro financial platform.

Combined types of blockchain networks can also function. The purpose of developing such projects is to combine the merits of different types. So, now you know what is the purpose of the blockchain, which means you can make safe and profitable transactions. Choosing the best method and convenient cryptocurrency, will make the transaction not only reliable but also profitable.