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FAQ Category Name: General

General FAQs for crypto users

List of Questions (39)

What is zk SNARK?

zk SNARKs is the abbreviation for Zero-Knowledge Succinct Non-interactive Argument of Knowledge. It is a coded proof system that enables one user (Provider) to verify the transaction to the other user (verifier) that the statement is true while maintaining the anonymity of the provider. zk SNARK thus maintains the privacy of the users while validating the transactions according to the consensus algorithm of the network.


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What is block time?

Block time is the time required to develop a particular blockchain protocol. Generally, for the Ethereum blockchain, new blocks are added approximately after every 14 seconds. The development of blockchains is done in a linear design which is an ideal structure for validation.


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What is an accredited investor?

In the U.S., an accredited investor is an individual who has more than $200K income in the two recent consecutive years or who draws a joint income of $300k along with his spouse for those years and expects the same income in the current year. Alternatively, a person whose individual net worth or joint net worth with spouse exceeds $1 million can also fall under the definition of the accredited investor.


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What is Ether?

Ether is the local token of the Ethereum blockchain and also functions as the fuel to execute the operations on the Ethereum platform. Every operation on the Ethereum platform needs a certain amount of power to operate efficiently. Ether is designated as the unit of measurement of the energy utilized to perform the operations. This unit of measurement is called as ‘Gas ‘which compensates the miners for the transactions they perform on the Ethereum blockchain. The more the energy required more the gas is required and more complex is the coded program written for it. The value of each unit of Gas is measured in Ether and ETH is the symbol used to represent it.


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What is Ethereum Smart Contract?

Ethereum has initiated the smart contract programming for the blockchain ecosystem. A smart contract is a program written or coded to meet the specific needs of the business requirements in a wide array of industries. Ethereum based smart contracts are used widely in various industries such as in supply chain management, Ethereum based smart contracts are coded to perform asset tracking processes and to automate compliance and reporting system. In the banking and Finance sector, Ethereum based smart contracts automate the real-time implementation of regulatory control limits that can automate claim processes.


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What is POS?

POS is the abbreviation for Proof of Stake. This Proof of Stake has been invented to overcome the problem in POW. In the POW procedure, a heavy amount of power supply is required for mining. The miners thus have to sell their reward coins to pay electricity bills. The POS thus provides them an alternative to pay as per their percentage volume of coins.


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What is POW?

POW is the abbreviation of the term Proof-of-Work. It is the original consensus algorithm on a blockchain network to add new blocks to the network. The miners have to compete in calculations with each other to accomplish the transactions at minimum time. They further need to confirm transactions on a network with consensus. In turn, they get rewarded with cryptocurrencies and this process is called proof of work.


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What is liquidity?

Liquidity is the degree at which a specific asset can be purchased or sold without affecting the stability of its market price. In simple terms, it can be defined as the competency of the asset to be converted into cash without any complexity.


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What is an Atomic Swap?

An Atomic swap can be termed as a smart contract technology that facilitates the exchange of crypto assets on a decentralized platform like crypto exchanges, without third-party intervention.


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What are Smart Contracts?

Smart contracts are the set of rules that are followed for transactions to complete.


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What is the Lightning network?

A lightning network is a peer to peer cryptocurrency micro-payment platform powered by blockchain technology which enables fast and low latency transactions. It uses smart contracts and multi-signature wallets for efficient functionality.


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What is FinTech?

FinTech has been coined from the term financial technology. It is associated with technology-related innovation in financial services. It is incurring new business ideas, models, applications, and processes such as payment wallets or e-commerce from mobiles. It is altering the entire perception of financial markets and businesses and financial services.


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What is Halving?

The term Halving is originated from the word half. In the crypto industry, while the mining process is performed, miners compete with each other to solve complex mathematical computations. After resolving the calculations the winner is rewarded with Bitcoin. This Bitcoin reward is cut half or halved after a certain number of Bitcoin blocks are mined.


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What is a Gas?

Gas is the amount of computational power that is required for performing every operation on the Ethereum platform. It measures the amount of work or set of actions required to complete the transactions or contracts on the Ethereum platform. It ensures that an appropriate fee is being paid to miners on completion of each transaction.


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What is a Hard Fork?

A hard fork is the radical modification in the protocol of blockchain-based network that validates previously invalid blocks/ transactions (and vice a Versa). The miners in a blockchain set the rules that move the memory in the network. If some miners want to change those rules they need to ""fork it""to indicate that there`s been a diversion to the protocol. It requires an up-gradation of the latest protocol software on all nodes or computers within the network.


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What is Distributed Consensus?

Distributed Consensus is the virtual agreement between all the nodes or computers within the decentralized network, permitting peer to peer transactions without interference of any third authority


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What is Decentralized Application(DApp)?

Decentralized Applications (DApps) are the blockchain-based peer to peer decentralized programs that run on the distributed ledger system .Mostly Smart contracts in the Ethereum blockchain are called as DApps.


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What is a Bubble?

A bubble is an economic cycle that displays a steep escalation of asset price followed by a deep drop due to an investor’s behavioral change. This movement can be witnessed often in economies, stock markets, securities, and business eco-systems. The deep drop is not only due to investors behaviour change but also due to the fact that there is economical backup for the steep increase in asset price.


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What are ERC20 Tokens?

ERC Tokens are cryptocurrencies developed on the Ethereum platform and are solely used for this platform. ERC20 stands for Ethereum Request for Comments and 20 is a unique identification number assigned to differentiate it from other cryptocurrencies. They are created by a smart contract written in codes. It is a protocol standard that outlines certain standards and rules for issuing tokens on the Ethereum blockchain network. They are stored and sent or exchanged using the Ethereum platform.


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What is a custodian Wallet provider?

Custodian Wallet provider is the online service provider for crypto-asset account holders similar to other digital payment services. The custodian wallet provider enables the account holders to store and hold the crypto assets in their accounts.


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What is DEX?

DEX is the short form for Decentralized exchange. These exchanges have no physical location where investprs can go buy and sell tokens. These exchanges are blockchain-powered and allow peer to peer (P2P) trading and exchange of tokens and digital currencies. However, the level of decentralization differs per DEX.


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What is Distributed Ledger Technology? (DLT)

Distributed Ledger Technology (DLT) is the digital system of decentralized computers or nodes that records data consistently on each node. Unlike conventional data storage systems, the database on this network is decentralized, transparent, secure, fast and immutable. The data on ledgers is proceeded, verified and maintained by participants on the network with consensus.


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What are Security Token Offerings?

Security Token Offerings (STOs) is a type of public offering in which tokenized digital securities, known as security tokens,are offered that are compliant with the regulatory laws under the specific jurisdiction.


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What are ICOs?

ICOs are defined as Initial Coin offerings that are used as a crowd fundraising tool by the enterprises. The firms offer a token to the investors in exchange for fiat currency or other crypto assets of high immediate value.?? The startups often use this capital raising model for technical up-gradation or to cover operational costs.


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What is cryptocurrency market capitalization?

Crypto market capitalization or Market Cap is a mathematical computation technique to find out the total value of all the outstanding tokens of a crypto asset on legally compliant exchanges. The market cap of the crypto assets is equal to a total number of outstanding tokens multiplied by the current price of the token. For example: If the current price of a token is $5,000 and there are 10,000 outstanding tokens: The Market cap = 5000 *10,000 =$ 50,000,000


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Who is a miner?

An individual who performs cryptographic computations on the systems which allows exploration of new crypto assets on the distributed ledger system. The miners are rewarded with tokens and are changed with transactional fees as a commission.


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What are Intangible assets?

Intangible assets are the non-physical assets that are utilized for the long term. Intangible assets are intellectual properties such as company brand, Trademarks, Patents, goodwill, Franchises, copyrights, etc. can be categorized under hard assets.


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What are Tangible Assets?

Tangible assets are measurable assets that have a physical form and finite monetary value. Tangible assets include machinery, equipment, land, furniture items, inventory and also financial securities like cash, bonds or stocks.


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What are Crypto-assets?

Crypto-assets broadly includes all the crypto-related assets stored on distributed ledgers. The term covers all types of crypto tokens such as securities tokens, utility tokens, privacy coins, cryptocurrency


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What are Hard Assets?

hard asset can be defined as tangible or physical commodities or resources such as gold or silver, which are purchased to generate monetary expansion and benefits in the future. Hard assets are of two types long term assets and short-term assets. Any equipment or machinery falls under long term assets. Short assets include raw material or inventory. Hard assets also include Vehicles, Office furniture, buildings, etc.


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What are Hard Assets?

hard asset can be defined as tangible or physical commodities or resources such as gold or silver, which are purchased to generate monetary expansion and benefits in the future. Hard assets are of two types long term assets and short-term assets. Any equipment or machinery falls under long term assets. Short assets include raw material or inventory. Hard assets also include Vehicles, Office furniture, buildings, etc.


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What is Tokenization?

Tokenization is termed as the conversion of any real-time assets into a token that can be stored moved, and recorded on a blockchain system.? Tokenization can be applied to financial products such as bonds and equities, real-time assets like art pieces, precious metals, real estate, and copyrights of intellectual property like music, etc. Tokenization generates new sources of monetization and investments. Tokenization is very similar to creating asset backed (securities) token.


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What is an Airdrop?

Airdrop is a popular marketing strategy on social media that involves the distribution of coins or tokens to the customers as a reward. The airdrop generally appeals to the participants to perform certain tasks like liking, commenting, joining and following the groups or social accounts. While some ask to subscribe to the company newsletter, tweeting in favor of the company or entity. In the crypto industry, users may get airdrops for holding a coin, using a particular crypto exchange, linking the wallet with the crypto project. Airdrop is not legally recommended to offer securities publicly in the USA.


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What is Mining?

Mining is the process in which high-speed computations are done and added to explore new blocks. It is a process in which transactions for various forms of crypto tokens are verified and added to the blockchain digital ledger. The principle of “burning” the coins held by the miners that grant them mining rights is done by Proof of burn algorithm.


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What is a Bear Market?

A Bear Market is the market scenario in which the prices of securities plummet by more than 20 % which creates fear and negative impact on the market players and investors. It is categorized into two types: Cyclical Bear market: It lasts for a short period of several weeks to months Secular Bear market: It can last for years and decades.


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What is Cold Storage?

Cold storage or the cold wallet can be termed as the type of digital data storage that is not often connected with any network or computer or the internet. It is generally used for long period storage and ensures more security and control.


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What is a Smart Contract?

A smart contract is a self-operating coded computer protocol that executes transparent and secured peer to peer negotiations without third party interference. Smart contracts can have functions for automatic transactions, formulas for calculating asset prices and other specific features. They provide security and innovation driving advantages. Due to smart contracts, parts of crypto exchanges are automated, which in turn reduces the number of mediators thereby reducing the transactional costs for buyers and sellers.


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What is a blockchain?

Based on a peer-to-peer (P2P) topology, blockchain is a distributed ledger technology (DLT) that allows data to be stored globally on thousands of servers – while letting anyone on the network see everyone else`s entries in near real-time.Each block in the chain contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant`s ledger.


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What is Bitcoin?

Bitcoin is the first?decentralized digital currency which can be transferred through peer to peer (P2P) network. It was invented by a pseudonymous developer Satoshi Nakamoto in 2008 who introduced it as an electronic payment system.?


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