Blockchain basics
Blockchain is the technology behind every cryptocurrency. Let us explain it simply.
What is blockchain in simple words
A blockchain is a chain of data blocks. Each block stores transactions and the hash of the previous block. If you change an old block, its hash changes and the whole chain breaks — that is why the data is almost impossible to forge.
Three key ideas
- Decentralization — a copy of the ledger is kept by thousands of participants worldwide.
- Transparency — all transactions are visible to anyone.
- Immutability — recorded data cannot be erased or rewritten.
How new blocks appear
Network participants (miners or validators) verify transactions and group them into blocks. The agreement mechanism is called consensus: Proof of Work (Bitcoin) and Proof of Stake (Ethereum).
💡 Imagine a shared notebook where you cannot tear out pages and every entry is signed by all participants.
How to buy cryptocurrency
A step-by-step guide from choosing an exchange to safely storing your coins.
Step 1. Choose an exchange
Start with large, reputable platforms. Pay attention to reputation, trading volume and payment methods.
Step 2. Sign up and verify
Create an account with a strong password and enable two-factor authentication (2FA).
Steps 3–5. Deposit, buy, withdraw
- Top up your account by card or transfer.
- Buy a coin with a market or limit order.
- Move coins to your own wallet for storage.
⚠️ Never invest borrowed money and never send funds to strangers promising guaranteed returns.
Crypto security
In crypto you are your own bank — so you are responsible for your funds.
Seed phrase — the master key
When creating a wallet you receive a seed phrase of 12–24 words. It is the only way to restore access. Write it on paper and never share it.
Digital hygiene rules
- Enable two-factor authentication (2FA).
- Use unique, long passwords.
- Check the site address — scammers create copies.
- Do not click suspicious links.
Phishing and scams
Phishing is when an attacker pretends to be an exchange or wallet to steal your password or seed phrase. Scams are projects promising huge returns.
💡 For large amounts, use a hardware wallet that keeps keys offline.
Types of wallets
Which wallet to choose depends on the amount and your goals.
Hot wallets
Apps or browser extensions connected to the internet. Convenient for daily operations and small amounts.
Cold wallets
They keep keys offline. The most reliable option is a hardware wallet. Great for long-term storage of large amounts.
Custodial and non-custodial
- Custodial — a third party (e.g. an exchange) keeps the keys.
- Non-custodial — only you hold the keys: not your keys, not your coins.
💡 Combine: a hot wallet for daily spending and a cold wallet for savings.
Crypto glossary
A short dictionary of words you will see in news and chats.
Key terms
- HODL — hold coins without selling during dips.
- FUD — fear, uncertainty and doubt.
- FOMO — fear of missing out.
- ATH / ATL — all-time high / low.
- DYOR — do your own research.
- TVL — total value locked in DeFi.
- Gas — transaction fee.
- Seed phrase — words to restore a wallet.
- Staking — locking coins to earn rewards.
- Smart contract — a program that automatically executes a deal.
- DEX — decentralized exchange.
- NFT — non-fungible token.
What is DeFi
Decentralized finance — financial services without banks and middlemen.
The idea of DeFi
In traditional finance a bank holds money and charges fees. In DeFi these functions are performed by smart contracts — programs that run automatically and transparently.
Main areas
- Lending — lending your coins at interest.
- Borrowing — taking a loan against crypto collateral.
- DEX and AMM — exchanges that trade via liquidity pools.
- Yield farming — providing liquidity for rewards.
- Staking — locking coins for income.
Risks
DeFi is a young and volatile space. Smart-contract hacks and sharp price swings are possible.
⚠️ High returns always come with high risk. Do not trust promises of risk-free interest.