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How to Buy Cryptocurrency

· 3 min read

There are several ways to buy cryptocurrency.
In this post, I’ll explain the main methods, and later demonstrate each of them in practice.

1. Buying Through Exchangers​

This is the simplest and fastest way to purchase crypto.

How it works​

  1. Choose a suitable exchanger.
  2. Select the exchange direction (e.g., bank card → Bitcoin).
  3. Enter your Bitcoin address in the request.
  4. Complete the exchange by transferring funds to the specified card.
  5. After payment, Bitcoin is sent to your wallet address.

You can buy not only Bitcoin, but also Ethereum, stablecoins, and other altcoins.

Risks​

  • Some exchangers are unreliable.
  • To protect yourself, use exchanger aggregator services that:
    • Show exchanger reputations
    • Display reviews and user ratings
    • Track reserves and operating history

2. Centralized Exchanges via P2P Trading​

Another popular option is P2P (peer-to-peer) trading on centralized exchanges.

How it works​

  1. Create an account and complete KYC/verification.
  2. Go to the P2P section.
  3. Choose the exchange direction (e.g., your national currency → Bitcoin via bank card).
  4. Select a seller and open a deal.
  5. Transfer money to the seller’s account.
  6. Once payment is confirmed, the seller releases the crypto to your exchange balance.

Safety​

  • The exchange acts as a guarantor.
  • If disputes arise, you can contact support.

3. Buying Directly with a Bank Card​

This option is the most convenient, but also comes with higher fees.

  • Available on many centralized exchanges and platforms.
  • Allows you to buy crypto literally in one click.

Pros​

  • Fast and simple.
  • Confidence that you’ll receive your assets.

Cons​

  • High commissions (often more expensive than exchangers or P2P).
  • May not be available in restricted countries.

4. Buying with Cash (Offline Exchangers)​

For maximum anonymity, you can buy crypto with cash.

How it works​

  1. Find an exchanger offering “cash → crypto.”
  2. Open a deal online.
  3. Go to the exchanger’s physical office in your city (e.g., Dubai, Istanbul, etc.).
  4. Hand over your cash (USD, EUR, or local currency).
  5. Receive cryptocurrency directly to your wallet.

This method is common in major cities and is the most private way to buy crypto.

Key Reminder​

Regardless of which method you choose:

  • You need your own crypto wallet to transfer assets and keep them fully under your control.
  • We’ll cover wallets — how they work, which to choose, and how to secure them — in the next lesson.

Disclaimer: These materials are created for educational purposes only and do not constitute financial advice.

Crypto Strategies Beyond Trading

· 6 min read

In this post, I will talk about the ways to earn with cryptocurrency that require medium or large capital.
These strategies go far beyond just trading or staking, which many beginners think of first. Each of them has its own features, requirements, risks, and potential profitability.

1. Portfolio Investing​

The first method for medium and large capital is portfolio investing.
The goal of portfolio investing is to buy strong, fundamental assets for the long term — starting from three to five years or more.

The profitability of such a portfolio depends on:

  • The chosen assets
  • The current market phase (bull or bear)
  • The skill of proper portfolio rebalancing

Why Medium or Large Capital Matters​

Imagine you only have $1,000, and you use it to buy some strong, fundamental assets.
Even if your portfolio grows five or ten times in three years, you’ve made around $9,000 profit. Spread across 36 months, this isn’t significant.

Now imagine you have $200,000 in capital.
A fivefold portfolio growth over three years would bring you $1,000,000+ profit — a life-changing amount.

That’s why it’s better not to start portfolio investing with small sums.
Instead, use other methods (like testnets, ambassador programs, or airdrops) to grow your capital first — then allocate into long-term assets.

Two Approaches​

  1. Lump-Sum Investing – invest a large amount into BTC, ETH, or other strong assets at once and hold long term.
  2. Gradual Accumulation (DCA) – consistently buy assets (e.g., BTC, ETH) every month for a set amount. This is one of the best methods to build a portfolio from scratch, as it smooths out volatility.

Portfolio investing works best when combined with DeFi (see below).

2. Decentralized Finance (DeFi)​

DeFi currently offers the widest range of tools and opportunities for those with medium or large capital.

Earning in DeFi means allocating assets across multiple instruments and building strategies to generate passive income while also growing your portfolio.

Examples of DeFi Tools:​

  • Lending and borrowing platforms (e.g., AAVE, Compound)
  • Liquidity provision on DEXs (e.g., Uniswap, Curve, Balancer)
  • Yield farming and liquidity mining strategies
  • Stablecoin lending for consistent returns

Why Combine DeFi with Portfolio Investing​

If you only hold an investment portfolio, it will grow in value during bull markets.
But if you put these same assets to work in DeFi, you can generate additional yield even in sideways markets.

Profitability depends on:

  • The chosen protocols
  • Your risk profile
  • Market conditions

3. Mining​

Mining can be considered a long-term earning method.

  • After Ethereum switched to Proof-of-Stake (PoS), it is no longer mineable with GPUs.
  • The only realistic coin worth mining today is Bitcoin.

Why Mining Requires Large Capital​

  • Mining requires specialized hardware (ASICs) that costs thousands of dollars.
  • Hardware takes years to pay off.
  • If BTC price drops, you may mine at a loss.

Example:
Many miners rushed to buy ASICs and GPUs on credit during bull markets.
When the market turned downward, they had to shut down and sell equipment at a loss.

Mining should always be viewed as a long-term strategy — not for quick profits, but for accumulating BTC over years.

4. Staking​

Staking is a method of earning suitable mainly for those with very large capital.

Many beginners misunderstand staking.

  • Not staking: locking coins on Binance or another centralized platform for 3–8% yields.
  • Real staking: delegating coins to validator nodes in blockchains like Ethereum, Solana, or Cosmos.

How It Works​

  • Your coins are locked on validator nodes.
  • They help verify transactions and secure the network.
  • In return, you receive staking rewards.

Returns​

  • Network staking yields: 3%–15% annually, depending on the blockchain.
  • Protocol staking yields: vary, sometimes higher (DEX revenue sharing, governance tokens).

Staking is one of the lowest-risk strategies in crypto.
Your balance of strong assets (ETH, SOL, ATOM) grows steadily.
The main risk: the chosen asset itself may lose long-term value.

5. NFTs​

NFTs are a very risky earning environment, mainly driven by speculation.

The Speculation Illusion​

Stories about someone buying an NFT for $100 and later selling it for $100,000 gave many newcomers the illusion that it’s easy money.
In reality, NFT trading is extremely risky, and most collections lose value quickly.

Methods of NFT Earning​

  1. NFT Flipping – buy below market price and instantly resell at a profit.

    • Requires speed, skill, and luck.
    • High competition.
    • Extremely risky.

  2. Launching Your Own Collection – create and promote an NFT project.

    • Requires community management and strong marketing.
    • Possible to succeed, but very difficult.

  3. GameFi & Metaverse NFTs – tokenized in-game assets or play-to-earn systems.

    • 99% are financial pyramids disguised as games.
    • Most never release a working product.

Risks are extremely high. Most NFT and GameFi projects are created only to raise money from naive investors.

Unless you deeply understand this space, it’s better to avoid speculative NFT flipping.

6. Arbitrage​

Arbitrage means exploiting price differences for the same asset across exchanges (CEX vs CEX, CEX vs DEX, or DEX vs DEX).

The Reality​

  • Arbitrage is real and does work.
  • But markets are dominated by bots scanning and executing trades instantly.
  • Profitable strategies are never shared publicly. Once public, they lose relevance within days.

Risks​

  • Scams: YouTube and Telegram are full of fake “arbitrage bots” that simply steal deposits.
  • Paid Courses: Selling “secret strategies” is often more profitable than arbitrage itself.

Arbitrage works, but requires your own custom-built strategies and bots.
It’s not a beginner-friendly method.

7. Trading​

Finally, we come to trading — perhaps the most famous, yet most dangerous way to earn in crypto.

Why Trading is Risky​

  • Most newcomers lose money quickly.
  • Trading requires years of experience, emotional discipline, and personal strategies.
  • Buying “signals” or $50 courses online is guaranteed to end in losses.

The world’s best traders show 15%–70% annual returns — not per month.
Anyone promising 300% per month is a scammer.

Advice for Beginners​

  • Don’t treat trading as a shortcut to wealth.
  • If you truly want to trade, learn independently, practice with small amounts, and slowly develop your own system.
  • Be prepared for years of losses before consistent gains.

Summary of Strategies​

  • Portfolio Investing + DeFi: best combination for medium/large capital.
  • Mining & Staking: long-term, relatively stable, but capital-intensive.
  • NFTs & GameFi: highly speculative, avoid unless you understand the risks.
  • Arbitrage: real but requires private, self-built strategies.
  • Trading: risky, not recommended for beginners.

Closing Note​

This was the last post in the first module: Basics of Cryptocurrency.
In the next module, we’ll explain:

  • How to buy cryptocurrency
  • Different ways to withdraw to wallets
  • Which wallets to use
  • And which are the safest wallets for your funds

Disclaimer: These materials are created for educational purposes only and do not constitute financial advice.

Ways to Earn in Crypto Without Investments

· 2 min read

It’s time to talk about ways to make money with cryptocurrency.
Here, each method has its own detailed module.

In reality, there are many ways to earn, far beyond just trading or staking.
Each method comes with different requirements in terms of:

  • Starting capital
  • Time commitment
  • Knowledge

If you’re a beginner with very little capital:

  • Avoid trading, staking, or complex financial instruments.
  • Focus on methods requiring no or minimal investment.

For those with medium or large capital, many more opportunities are available — covered in later lessons.

1. Testnets​

  • Perfect for beginners with no capital but plenty of free time.
  • Developers launch testnet programs to trial their products.
  • Users perform transactions, interact with protocols, report bugs.
  • After testing, developers reward participants with tokens.

Potential Earnings:

  • Some testnets yield only a few dollars.
  • Others (e.g., DDX) rewarded participants with thousands of dollars worth of tokens.
  • Rewards vary widely depending on project success.

2. Ambassador Programs​

  • Instead of testing, you promote the project.
  • Activities:
    • Social media content
    • YouTube shorts / TikTok clips
    • Helping in Discord / Telegram
    • Answering community questions

Rewards:

  • Tokens or NFTs → can later be sold.
  • Unlike testnets, only the most active ambassadors get meaningful rewards.

3. Running Test Nodes​

  • New blockchains need validator nodes in early stages.
  • Developers reward users who launch them.
  • Requires minimal investment (e.g., $30–50/month for a cloud server).

Potential depends heavily on project adoption and long-term success.

4. Airdrops​

  • Free distributions of tokens or NFTs.
  • Given for:
    • Participating in tests
    • Being active in a community
    • Holding specific assets

Example:
Some NFT holders recently received airdrops worth hundreds of thousands of dollars.

Key Takeaways​

  • These methods are ideal for beginners with small or no capital.
  • They allow you to:
    • Learn the crypto ecosystem hands-on
    • Build initial capital
    • Position yourself for larger opportunities later

As your capital grows, you can move on to more advanced earning strategies — covered in the next lesson.

Disclaimer: These materials are created for educational purposes only and do not constitute financial advice.

What You Must Know Before Investing

· 2 min read

What Are the Risks in Cryptocurrency?​

Before investing in cryptocurrency, you must clearly understand the risks involved.
Crypto offers independence and freedom, but it also puts full responsibility on the user.

1. Storage Risk​

Unlike traditional banking, crypto wallets put you in full control of your funds.
But with this control comes risk:

  • Lose your wallet password or private keys → you lose access permanently.
  • Enter your mnemonic phrase into a phishing site → your funds are gone.
  • Get scammed → there is no hotline or support team to reverse the transaction.

That’s why we dedicate an entire module to security:

  • Safe storage methods
  • Recommended wallets
  • Protection tools

2. Buying the Wrong Cryptocurrencies​

The risk isn’t just price drops — it’s total devaluation.

  • Many tokens are worthless projects promoted by influencers or YouTubers.
  • About 98% of media “reviews” are paid promotions designed to pump hype.
  • Many promoted projects are outright scams.

Rule: Never buy based solely on YouTube, Telegram, or social media posts.

  • Always verify from multiple sources.
  • Do your own research (DYOR) before investing.

3. Stablecoin Risks​

Even stablecoins are not risk-free.

  • Each uses mechanisms to stay pegged at $1.
  • But de-pegging (losing that peg) can and does happen.
  • Always factor in this possibility when holding stablecoins.

4. Smart Contract Hacks​

Smart contracts power DeFi, but they also carry technical risk:

  • Developers can make mistakes → leaving vulnerabilities.
  • Hackers exploit these vulnerabilities → funds can be stolen.
  • This applies to every smart contract.

How to reduce risk:

  • Use time-tested protocols.
  • Check for audits by reputable firms.

Important: An audit is not a guarantee.

  • Even scam projects can pay for audits.
  • Treat audits as one criterion, not proof of safety.

5. The Biggest Risk: Speculation​

Speculation is the fastest way to lose money.

  • Leveraged trading
  • Buying tokens or NFTs just to “flip” later
  • High-yield schemes

These methods are the most dangerous and wipe out most newcomers.

Summary​

Crypto risks fall into several categories:

  1. Storage risk → losing access to your funds
  2. Useless tokens → near-total devaluation
  3. Stablecoin de-pegging → losing the $1 peg
  4. Smart contract hacks → vulnerabilities exploited
  5. Speculation → the fastest way to lose everything

Every category of crypto comes with its own risks, which will be covered in future lessons.

Disclaimer: These materials are created for educational purposes only and do not constitute financial advice.

How to Survive Bull and Bear Phases

· 3 min read

Crypto Market Cycles: Bull vs. Bear​

The cryptocurrency market, like any other financial market, moves in cycles.
Globally, it can be divided into two phases:

  1. Bull Market (Growth Phase)
  2. Bear Market (Decline Phase)

These cycles repeat every few years (sometimes decades), and understanding them is crucial for building a successful investment strategy.

Bull Markets​

During a bull market:

  • Prices rise across the board — Bitcoin, Ethereum, and nearly all other assets.
  • Media coverage turns euphoric: “Crypto is the future!”
  • New projects appear daily.
  • Speculators flood the market, chasing quick profits.
  • Headlines announce fresh millionaires.

Key insight:
If you enter at the beginning of a bull run, it’s almost impossible not to make money.
But most newcomers arrive at the very end, when:

  • Prices are overheated
  • Valuations peak
  • A collapse is imminent

Example:

  • The last bull phase began in early 2020 and ended in late 2021, with Bitcoin peaking at $69,000.
  • Most newcomers joined during the hype peak — right before the downturn.

Bear Markets​

During a bear market:

  • Bitcoin, Ethereum, and altcoins decline sharply.
  • Many projects collapse (or exit scam).
  • Media turns negative: “Crypto is a bubble!”
  • Panic spreads.
  • The downturn can last years.

Historical examples:

  • After Bitcoin hit $19,000 in 2017, a three-year bear market followed.
  • After 2021’s $69,000 peak, a bear cycle began and extended through 2022–2023.

How to Navigate Cycles​

  • Don’t buy during euphoria.
    Entering when media screams about crypto usually means buying the top.
  • Accumulate in bear markets.
    That’s the time to buy strong, fundamental assets at discount prices.
  • Sell in bull markets.
    Take profits when hype is everywhere and valuations explode.

Example:

  • 2018–2019 was a dead market — the perfect time to accumulate BTC, ETH, and altcoins.
  • Those who bought then were able to profit massively in the 2020–2021 bull run.

Bear Markets as Opportunity​

Ironically, when media screams “Crypto is a scam” and everyone panic-sells — that’s often the best time to buy.

But be smart:

  • Don’t go all-in at once.
  • Use portfolio investing to diversify risk.
  • Focus on strong assets like Bitcoin and Ethereum.

Long-Term Perspective​

For me, Bitcoin is the anchor asset.

  • I don’t care about its price in 1–2 years.
  • I buy with a 5–15 year horizon.
  • Bitcoin’s role as a future global asset matters more than short-term price swings.

Summary​

  • The market always has two phases: growth (bull) and decline (bear).
  • Accumulate in bear markets.
  • Take profits in bull markets.
  • Beware of euphoria: when everyone screams “crypto is the future”, it’s usually the first sign a crash is near.

Disclaimer: These materials are created for educational purposes only and do not constitute financial advice.

What You Need to Know About Approaches to Making Money in Crypto

· 2 min read

There are only two global approaches to making money in cryptocurrency:

  1. Speculative (trading)
  2. Investment (long-term holding)

I’m talking about approaches, not individual methods of earning.
Specific methods (staking, liquidity provision, yield farming, etc.) will be covered later.

1. The Speculative Approach​

Most beginners choose this path — and it’s usually a huge mistake.

Why? Because almost all crypto media (YouTube, Telegram, social networks) is filled with:

  • Leverage trading ads
  • “Which coins to buy to get rich quick”
  • Courses from “successful traders”

Newcomers naturally try trading because it’s the first thing they see.
Their goal: earn as much as possible, as quickly as possible.

The result?

  • They lose their deposit.
  • Lose interest in crypto.
  • Leave the market altogether.

Why Speculation Fails​

  • 95%+ of traders lose money within a year.
  • Trading is extremely risky.
  • Only a handful succeed — those with years of experience and strategies they never share.

For beginners:

  • Avoid leverage trading.
  • Avoid “high-yield tricks.”
  • Speculation almost always ends in losses.

2. The Investment Approach​

This means buying strong fundamental assets (like Bitcoin or Ethereum) for the long term.

Why It Works​

  • Outperforms nearly all speculators chasing quick profits.
  • Builds wealth gradually instead of chasing hype.
  • Much harder to lose money compared to trading (though portfolio value will fluctuate with cycles).

Reality Check:

  • Your portfolio may drop in value for months or years.
  • You won’t become a millionaire overnight.
  • But long-term, simple accumulation wins.

The Key Takeaway​

  • No easy, fast profits in crypto (just like in any other field).
  • Those chasing quick wins always lose.
  • Long-term investors with strong assets steadily grow wealth.

My Experience​

I’ve followed the market since 2016.
Every cycle, I see the same pattern:

  • People arrive during bull runs.
  • Try to get rich fast.
  • Lose everything.
  • Leave with nothing.

Meanwhile, patient investors accumulate and survive.

Final Advice​

  • Speculation = high risk, high chance of losing it all.
  • Investment = long-term wealth with patience and discipline.

Build a well-structured portfolio of strong assets.
Invest in yourself first — skills, knowledge, analysis.
Blindly following others always leads to losses.
Create your own strategy.

As Warren Buffett said:

“Don’t buy an asset for 10 minutes if you’re not ready to hold it for 10 years.”

Disclaimer: These materials are created for educational purposes only and do not constitute financial advice.

Stablecoins Explained: How They Work and Why They Matter in Crypto

· 2 min read

What are Stablecoins?​

As explained in the previous lesson, stablecoins are tokens pegged to the value of government currencies (most often the US dollar).
They can also be pegged to real-world assets like gold or silver.

The most popular stablecoins are:

  • USDT
  • USDC
  • BUSD

How Do They Stay at $1?​

Let’s take USDT (Tether) as an example:

  • Issued by Tether Limited
  • Backed by reserves of dollars and cash equivalents
  • For every 1 USDT issued → 1 USD is held in reserve

Peg mechanism:

  • If USDT drops to $0.98, traders can buy it at a discount, redeem it for $1, and profit.
  • This arbitrage quickly pushes the price back to $1.

The same logic applies to USDC (issued by Circle) and BUSD (issued by Binance).

Centralized Stablecoins​

All three — USDT, USDC, BUSD — are centralized stablecoins.
This means:

  • They are issued by companies.
  • Companies comply with regulations.
  • They include a freeze function in their contracts.

Yes, centralized issuers can freeze tokens directly in your wallet.

Why?

  • To comply with regulators.
  • Usually applied in cases of stolen funds or hacks.
  • Ordinary users are almost never affected.

Decentralized Stablecoins​

To avoid the risk of freezing, decentralized stablecoins exist.

Example: DAI (issued by Oasis/MakerDAO).

  • Pegged to the US dollar.
  • Backed by crypto collateral.
  • To mint 1 DAI → lock $1.50 worth of ETH.
  • Overcollateralization keeps DAI stable around $1.

Other examples: Frax, LUSD.
Their mechanisms are more complex (covered in PRO modules).

Where Are Stablecoins Used?​

Stablecoins are used everywhere in crypto:

  • Buying BTC, ETH, and other crypto on exchanges
  • In DeFi for lending, borrowing, yield farming
  • Across centralized and decentralized instruments

Which Stablecoin to Use?​

  • Short-term / everyday use: USDT or USDC are fine (buying, trading, DeFi yield).
  • Long-term holding: Avoid large balances in centralized stablecoins → risk of freeze (low, but real).
  • Consider decentralized options like DAI for higher safety.

Disclaimer: These materials are created for educational purposes only and do not constitute financial advice.

Why Do We Need Cryptocurrency?

· 3 min read

As you’ve already learned, cryptocurrency is a massive industry, and everyone can use it in their own way and for their own needs.
The main advantage of cryptocurrency is full and independent control over your own funds.

When you use cryptocurrency correctly, only you have access to your money.

  • Neither banks nor regulators can take away your funds.
  • Transactions cannot be frozen.
  • Accounts cannot be blocked.

You are the sole owner of your funds, independent of government influence.

Banks vs. Cryptocurrency​

Ask yourself: where is it safer to store money?

  • In a bank, where transactions can be blocked, accounts frozen, or funds withdrawn without consent?
  • Or in cryptocurrency, where only you hold the keys and access?

History shows that neither banks nor governments can be fully trusted.

Financial Inclusion​

Cryptocurrency opens countless opportunities, especially in developing countries:

  • More than 2 billion people don’t have a bank account.
  • With crypto, all they need is a wallet app on a phone.
  • No ID verification. No bank permission.

Download a wallet → Create it → Send your first transaction.

Decentralized Finance (DeFi)​

DeFi expands these opportunities further:

  • Borrowing and lending
  • Trading on decentralized exchanges
  • Buying insurance

…all without intermediaries and without central authorities.

Cross-Border Payments​

  • Sending money anywhere in the world takes ~10 minutes.
  • Fees are just a few cents (or at worst a few dollars).
  • Commonly done with Bitcoin or stablecoins.

Recipients can easily swap crypto for local currency through exchangers.

Today, crypto payments are widely used by:

  • Developers and freelancers (fast, reliable, low-fee payments).
  • People in sanctioned countries (often the only way to interact with the global economy).

The Myth of Easy Money​

Many newcomers see crypto only as a way to make money.
But there is no such thing as easy money in crypto.

  • Quick, effortless profits do not exist.
  • Most newcomers lose money chasing hype or “magic money buttons.”

I’ve been watching the market since 2016, and the pattern is always the same:
Following media, YouTube, or Telegram “signals” without analysis leads to losses.

The Right Approach​

Yes, there are many ways to earn in crypto, but each requires:

  • Time
  • Knowledge
  • Strategy
  • A minimum budget for entry

It’s crucial to:

  • Choose a personal strategy
  • Study methods gradually
  • Avoid blind trust in influencers or media hype

Following others without doing your own research is the fastest way to lose money.

What’s Next​

In the next post, I’ll explain the two main approaches to earning with cryptocurrency — and which one might be right for you.

Disclaimer: These materials are created for educational purposes only and do not constitute financial advice.

What Are Smart Contracts?

· 2 min read

As mentioned in the previous lesson, smart contracts are sets of functions and conditions executed in a specific order.
They are written by developers and are used to create decentralized applications (dApps) on platforms like Ethereum or BNB Chain.

Example 1: Token Swap on a DEX​

Suppose I go to Uniswap and want to swap ETH for another token:

  1. I send a transaction to the smart contract.
  2. The smart contract reads the details and selects the best exchange rate.
  3. It takes my ETH and sends the requested token back to my wallet.

But what if the ETH price drops during the swap?

  • If the price moves within the allowed range, the swap goes through.
  • If the price deviates too much, the trade is canceled and my ETH is returned.

This shows the power of smart contracts: they enforce predefined rules automatically.

Example 2: Buying an NFT​

Imagine I want to buy an NFT on a decentralized marketplace:

  1. I send a transaction to purchase the NFT.
  2. The smart contract receives my funds.
  3. It transfers the NFT to my wallet.
  4. It sends payment to the seller.

The deal is completed automatically — no third party needed.

Why Smart Contracts Matter​

Transactions happen without relying on intermediaries.
This is the core advantage of smart contracts and cryptocurrency.

Key Benefits​

  1. Transparent – anyone can review the contract code.
  2. Autonomous – no central governing authority required.
  3. Immutable – once deployed on blockchain, the code cannot be altered.

Risks to Consider​

Smart contracts are only as safe as the code inside them.

  • Anyone can deploy a contract.
  • Malicious actors can create harmful functions.
  • Users must be cautious and verify contracts before use.

I’ll cover the risks and security aspects in more detail in a future lesson.

Disclaimer: These materials are created for educational purposes only and do not constitute financial advice.

Cryptocurrency Explained: Blockchain, Smart Contracts, and Mining

· 3 min read

Cryptocurrency is not just Bitcoin or Ethereum. It’s a vast global sphere that can be divided into three main components: blockchain, smart contracts, and mining. The entire cryptocurrency ecosystem is built on these three elements.

1. Blockchain – the core element​

The core element of the cryptocurrency ecosystem is the blockchain.
Imagine a large global distributed database that runs on thousands of computers around the world. As soon as any information is added to this database, it is automatically copied to every computer in the network, creating global synchronization.

This approach ensures the immutability and security of the information stored in the blockchain. Any transaction recorded in the blockchain stays there forever and cannot be altered.
If someone wanted to change it, they would have to alter the data on every single computer in the network.

The main advantage of blockchain: immutability and data security.

2. Smart contracts​

A smart contract is a set of conditions and actions executed in a specific order.
For example:

  • If condition A is met → action X is executed
  • If condition B is not met → action Y is triggered

Smart contracts are stored in the blockchain, which makes them immutable as well.

They are used almost everywhere:

  • Issuing NFTs
  • Creating new tokens
  • Exchanging tokens

They are the backbone of most processes in the crypto space.

3. Mining​

Mining provides security and decentralization for the blockchain.
Its main purpose is not the creation of new coins.

The real purpose of mining is securing the network.

For maintaining that security, miners receive rewards in the form of newly minted coins — for example, Bitcoin or Ethereum.

Foundation of the crypto space​

These three elements form the foundation of everything that exists in the crypto space today:

  • Decentralized finance (DeFi)
  • Marketplaces
  • Exchanges

All of it is built on blockchain and smart contracts, while security is ensured through mining.

Key difference from the traditional financial system​

The main difference between cryptocurrency and traditional finance is full, independent control over your own funds.

  • With crypto: you own your assets directly, without relying on third parties.
  • With banks: your money can be frozen or your account blocked.

This is especially relevant now, in the era of regulations and restrictions based on nationality.
But safe storage of cryptocurrency is a skill that needs to be learned.

Beyond speculation​

Cryptocurrency is not just about price speculation or trading “monkey pictures.”
It is already a massive global financial ecosystem that offers:

  • Access to traditional financial instruments
  • Independence from regulators or central authorities
  • Decentralized forms of the same financial tools available in the traditional system

What’s next?​

In the next lesson, I’ll explain how blockchain works using a simple and clear example.
Understanding how blockchain functions is critically important to fully grasp how cryptocurrency as a whole operates.

Disclaimer: These materials are created for educational purposes only and do not constitute financial advice.