How Does Cryptocurrency Work?


Cryptocurrency is a digital asset designed to work as a payment mechanism in much the same way as regular money. Cryptocurrency is based on the technology of blockchain – a distributed public ledger, in which all transaction records are stored. The combination of encryption and blockchain makes it immutable and decentralized. If you ever wondered about how does cryptocurrency work, this article presents you with explanations of the basic principles behind the technology and clarifies how and why it differs from other types of money.


The Cryptocurrency Basics


Even people that are far removed from the world of cryptocurrencies must’ve occasionally encountered mentions of such things as bitcoin, crypto wallet, coin, crypto exchange, mining, etc. In this little write-up, we will give you a brief overview of the main concepts and terms of the trade.

To use cryptocurrency, you don’t need to be an expert in the advanced mechanics and algorithms behind them – after all, when you go to your bank and use your debit card, you don’t have to have a deep knowledge of the global financial system. However, it is very useful to understand such concepts as digital currency, blockchain, and cryptography.

The comparison we just made between cryptocurrencies and banks is not as far-fetched as you might think: in both scenarios, these are intricate systems in which assets circulate, transactions and balances are recorded to enable people and businesses to send or receive payments electronically, online. There is, however, a significant difference between regular, fiat money and cryptocurrencies, and it is that central banks and governments issue regular money, while cryptocurrencies may be released by private parties, without centralized backing.

All cryptocurrencies are based on highly sophisticated mathematics and computer programming techniques, and thanks to that, they are difficult to hack or forge. The protocols used in cryptocurrencies also disguise the personal information of their users, and as the result, the transactions and money movements are not linked to users’ identities and are hard to trace.

Users can send and receive cryptocurrencies directly, peer-to-peer, and all transactions are logged in a digital public ledger (a system known as “blockchain” – a chain of blocks distributed on users’ computers all over the globe). All records are cryptographically-encrypted (hence, the “crypto” in “cryptocurrency”). The system is decentralized: no banks or central governments are involved, and users and computer algorithms control all operations. In addition to being sent and received by users directly, cryptocurrencies can also be traded on cryptocurrency exchanges, which operate similarly to stock exchanges.

History of Cryptocurrencies


Cryptocurrencies are a relatively new invention. Although many attempts to create digital currencies have been made since the early 1980s, it was not until 2009 that the first true, encrypted cryptocurrency Bitcoin has been developed by a certain Satoshi Nakamoto – a name many believe to be assumed. Today, Bitcoin (denoted by the symbol BTC) remains the dominant cryptocurrency on the global cryptocurrency market, although there are hundreds of smaller cryptocurrencies out there, with new ones being released all the time. All cryptocurrencies, other than Bitcoin, are called “altcoins.” Some of the common altcoins are:
· Ethereum (ETH);
· Ripple (XRP);
· Litecoin (LTC);
· Tether (USDT); and
· Bitcoin Cash (BCH).

Public Ledgers


As we mentioned above, all transactions involving cryptocurrency are recorded in a public ledger, much like the system banks use to track banking operations. Unlike banks, however, in a blockchain ledger, transactions are mostly open, which ensures their transparency. Knowing that every transaction is visible guarantees that users play by the rules and that balances are carefully tracked to avoid spending more than is actually available.

The ledger looks like a list of database entries that cannot be modified unless specific conditions are met. The blockchain ledger belongs to no one: various bits and pieces are spread between users’ computers globally, making it decentralized. Anyone can log in and check the status of the system at any given time. This makes the system immutable.

Blockchain Transaction Verification: How It Works


Let’s look a bit closer at what we’ve briefly touched upon above. Here’s how it actually works.

1. A blockchain is a type of log or database in which information about transactions is entered;
2. Every transaction generates a hash;
3. A hash looks like a string of letters and numbers;
4. Transactions appear on the ledger in chronological order, and this has crucial importance;
5. The hash does not depend only on the transaction itself but also on the hash of the previous transaction;
6. Every microscopic change that occurs in a transaction creates an entirely new hash;
7. The so-called nodes (computers on which bits and pieces of the ledger are hosted) inspect the hash to verify that a transaction has not been changed;
8. If a majority of the nodes agree (reach “consensus”) that the transaction is genuine, it gets approved and written into a block;
9. Each block contains a reference to the previous block, so together they form the blockchain;
10. As the blockchain is spread over many nodes, each of which has a complete copy of the record, it would be virtually impossible to falsify the records;
11. The state of the blockchain is automatically updated, and the update (block) time depends on the specific currency’s network;
12. And as the nodes are spread out all over the world, it is essentially impossible for a single party to hijack or tamper with the entire network.

Mining


The term “mining” refers to the process of verifying transactions and adding them to the decentralized blockchain. The word “miner” has two meanings in the cryptocurrency industry:
a) A node (a computer) on any given blockchain that “manufactures” blocks by solving complex mathematical problems known as “proof of work”; and
b) A person who owns the node with whose computing capacity the calculations are performed. The equipment owners usually receive a reward in cryptocurrency as their miners produce a block about which the nodes reach the consensus. The reward per block currently stands at 6.25 BTC – or just half of what it was in late 2017.
c) In addition to the proof of work, there’s an alternative method for validating the transactions and achieving consensus called “proof of stake”. The validators support the ecosystem by locking up a certain portion of their assets as a stake in the blockchain. Once this is done, the participants wager on which blocks may be added to the chain next. When the block they betted on does get added, the validators receive a block reward proportionate to their stake.

Primary Defining Characteristics of Cryptocurrency


We have touched on several important qualities and functions of cryptocurrency. Let’s look again at how cryptocurrency differs from regular, fiat money. It is:
1. virtual, with no physical representation in the 3D world;
2. decentralized, i.e., in most cases, not backed by any government, and is truly global;
3. encrypted, which makes it immune to hacking or tampering;
4. virtually anonymous if that is what the users wish;
5. open-source;
6. requires the use of computer power to solve proof of work challenge or acquire proof of stake and generate coins;
7. can be used peer-to-peer, without the involvement of any intermediary banks; and
8. Depending on the blockchain, transactions take seconds or minutes, unlike some bank transfers.

Conclusion


We hope that our explanations have made things a bit clearer for you. But if you’re still feeling uncertain, don’t be anxious: these concepts are not intuitively clear to most beginners. Just keep reading about it – or better yet, try your hand in a little crypto trading. Our support center contains many useful guides that will help you get started. Trading is engaging, exciting, and can even be lucrative. Moreover, cryptocurrencies are not going anywhere – we believe that they have an essential role to play in our shared global future. Numerous experts think that cryptocurrencies will provide safe financial heaven for many in the rapidly shifting world economy. So we encourage you to learn more and join in the mass adoption trend that we are witnessing.

Join the Insolar Airdrop on HitBTC

An Insolar Airdrop will take place on HitBTC between 11:00 (UTC) August 6th to 11:00 (UTC) August 20th, 2020.

During this time all users who participate will each receive 2 XNS tokens for carrying out a few easy tasks.

How to take part?

– Fill out and submit this form

– Join the HitBTC and Insolar Telegram Groups and follow this Telegram Channel

– Follow Insolar and HitBTC on Twitter

ARPA Trading Contest on HitBTC



Get ready for the ARPA trading contest that will take place on our platform between 00:00 (UTC) on July 20th to 00:00 (UTC) August 3rd, 2020.

How to participate?
Trade ARPA on HitBTC during the contest period.
Sit back and wait until the end of the contest to see if you won. Users will be ranked on their buy and sell trade volumes during the contest period.

Prizes and Positions
1st pos: 100,000
2nd pos: 80,000
3rd pos: 60,000
4th pos: 40,000
5th pos: 32,500
6th to 10th pos: 30,000 each

Good Luck and Happy Trading!

Apply now: https://hitbtc.com/trading-contest/60

Please note that we have a zero-tolerance policy towards wash trading and other unfair trading strategies. Those suspected of wash trading will be excluded from the list of winners.

SENSO Airdrop Round 3

Get ready for the 3rd SENSO Airdrop taking place on our platform where this time you can win up to 200 SENSO tokens for showcasing your best trading skills.

The Airdrop will run from 00:00 (UTC) July 14th to 00:00 (UTC) July 21st, 2020.

How to take part?

– Trade SENSO on HitBTC during the Airdrop period.
– Rank in the top 100 traders at the end.
– Win 200 SENSO tokens.

Rules

The top-100 traders of SENSO with the highest trading volumes will receive 200 SENSO tokens after the Airdrop period has ended.

HitBTC Introduces Margin Trading on the Main Platform

We are pleased to announce that we’ve added a margin trading tool, previously a core feature of Demo HitBTC, to the main platform, giving our users the opportunity to leverage the funds they already have. By operating with a certain amount of money borrowed from the exchange, users will be able to amplify their trading positions and multiply their potential gains. But first, to open a trade, they have to put forward collateral equivalent to a particular percentage of the full value of the position. This collateral constitutes the margin.

This tool can be used for all the order types currently available with normal trading. The only thing different is the amount of potential profit, which increases due to the ratio of borrowed funds to the margin that is leveraged. Currently, to get a taste of crypto margin trading, HitBTC is offering a leverage rate of up to 10 for seven markets (BTC/USDT, ETH/USDT, BCH/USDT, XRP/USDT, ETH/BTC, BCH/BTC, XRP/BTC), meaning that users have the chance to raise their capital gains tenfold.

Update: New pairs added to our new margin trading feature! Enjoy up to 10x leverage on EOS/USDT, TRX/USDT, LTC/USDT, ETC/USDT, ADA/USDT, EOS/BTC, TRX/BTC, LTC/BTC, ETC/BTC, ADA/BTC and up to 5x leverage on BSV/USDT, ZEC/USDT, DASH/USDT, XLM/USDT, BSV/BTC, ZEC/BTC, DASH/BTC, XLM/BTC.

How does margin trading work?

Let’s consider a hypothetical example. Let’s say you have 400 ETH  on your account balance, or enough ETH to purchase 10 BTC. After a while, you see the price of the latter increases by 100 units, so you decide to sell 10 BTC for 1400 ETH. Consequently, your profit here is 1000 units.

And now suppose that you would like to use the maximum x10 leverage and borrow 3600 ETH from the margin lender, depositing the same 400 units as collateral. Then you spend your 4000 ETH to buy 100 BTC. In this scenario, if the price of the latter increases by the same 100 units, you will be able to sell your 100 BTC for 14,000 ETH and gain a profit of 13,600 units – or ten times more than you would have made with only your initial investment.

This also works when market prices drop. In this scenario, you take your 400 ETH and sell them for 94,000 USDT. If the price of the former falls by 200 units, you then will have an opportunity to buy these 400 ETH for 14,000 USDT, leaving you with 80,000 more USDT as a profit.

But if we add 3600 ETH borrowed from a broker and sell 4000 ETH for 940,000 USDT, the same price drop will result in the ability to get your 4000 ETH back for 140,000 USDT, plus a profit of 800,000 USDT, which is ten times more than you would have had without using margin.

Margin call level and margin liquidation level

The margin call level applies to the ratio of your account balance to the used margin, calculated in percent, at which your open positions are close to be liquidated by a broker. When this happens, users will receive a call notification in the form of a pop-up appearing in the browser and suggesting that they either close some of their positions or add some more funds to their margin. But it is also crucial to constantly monitor the margin level yourself in order to be able to increase the amount of collateral and reduce liquidation risks in time. At margin call level no automatic liquidation occurs.

Margin liquidation level is the level that initiates the automated liquidation process, meaning that it is no longer possible to prevent the liquidation once it has started. In our case this occurs when the market price is equal to the liquidation price established by the exchange.

PNL (profit and loss)

PNL is the capital gains you have accumulated, measured in USD, between your deposit and your final payouts. PNL is credited to your balance as soon as you close your position and can be subsequently transferred to your trading account along with collateral funds.

The partial closing of an open trade will realize your PNL in proportion to the value of the relevant position, which users are enabled to both increase and decrease within the valid buying power range.

Margin fees

All fees charged by a broker for the use of borrowed funds are in addition to the regular trading fees that vary based on the total volume of the trade. Our margin fees are fixed, so they do not depend on the period of time during which your position is open, and offset independently once every eight hours from your margin account.

Margin trading advantages

This tool  allows traders to expand their market activity by increasing their position sizes. You can try Bitcoin margin trading if your account balance is not sufficient to trade, but you consider the market conditions to be favourable. Moreover, with margin trading you have the opportunity to boost your gains in a much shorter period of time.

However, doing this successfully requires a more advanced level of knowledge and trade experience, owing to the high volatility of the crypto market. If you are a novice in margin trading, we highly recommend that you practice this strategy on our demo platform first before trading with real funds. You can find more information on how to get started on Demo HitBTC here.

But one more rule, which is always appropriate in crypto, is that you should do your own research and trade in accordance with the current market situation.

Get started

To start margin trading, head over to the relevant  tab and press “Margin” to add collateral funds to a margin account. Please keep in mind that at this stage your verification level and 2-factor authentication status will be checked. Then choose your trading instrument in the pop-up, enter the amount of your collateral into “Amount” and press “Transfer.” 

It is noteworthy that the sum transferred to the balance cannot exceed the amount of funds stored on the trading account and will be used for operating the particular trading instrument you have chosen. 

Now you are ready to trade on margin with an enhanced buying power. Later, you can examine the history of all your requests, trades, positions and fee charges via the terminal or Reports tab.

Good luck!

HitBTC iOS App Now Available

We’ve got some great news for HitBTC users with iOS devices. Our new iOS application is up and available in the App Store, This means that HitBTC is now available for both iOS and Android mobile devices.

HitBTC for iOS brings the industry’s most diverse digital asset market, with over 800 trading pairs, to your fingertips. The main features of the exchange come built-in to the app, so users will feel right at home on the mobile platform. With 2FA and pin code protected access, in addition to the finest encryption in the industry, mobile users will be able to enjoy the exchange’s services with the peace of mind of knowing that their funds and data are absolutely secure.

On HitBTC for iOS you’ll find everything that you need to elevate your trading, even when you’re on the move. The expansive orderbook and best in class liquidity will see that you are able to get what you want when you want it, and the price will always be fair. In addition, a variety of order types are available in the app, so you’ll be able to maneuver your way around the market as you please and explore different trading strategies without having to login to the desktop version of the exchange.

Our mobile platform comes with the latest in market tracking technology, making researching and analyzing that much easier. In addition, the mobile app has a full range of account management options which will let you access deposits, withdrawals, transfers and operation histories. The controls and features offered on HitBTC mobile will see that you are informed and capable of moving decisively in the market, regardless of where you are.

With this release HitBTC is now available for both Android and iOS devices. On-the-go, mobile functionality is key to modern trading. It is not enough for an app to merely provide access to an exchange; it has to give users a complete experience. We have been hard at work to see that you are provided with just that in our new iOS release. If you have any questions regarding HitBTC for iOS or for Android, please reach out to our support team who will be happy to assist you.

IOS: https://apps.apple.com/us/app/hitbtc-cryptocurrency-exchange/id1472411000?ls=1

Android: https://play.google.com/store/apps/details?id=com.hittechsexpertlimited.hitbtc

Happy trading,
The HitBTC Team

SENSO Holders Airdrop Round 2

We are pleased to announce that there will be a 2nd round of a SENSO Holders Airdrop on our platform between 00:00 (UTC) June 23rd to 00:00 (UTC) June 30th, 2020.

During this time all users who buy 160 SENSO tokens or more on HitBTC will earn 40 more tokens for free from a prize pool of 50,000.

How to take part?

  • Buy at least 160 SENSO tokens on HitBTC during the airdrop period
  • Hold your SENSO tokens until the airdrop ends
  • Get 40 extra SENSO tokens

Rules

  • This airdrop is subject to availability and only has 1250 places.
  • External deposits of SENSO to HitBTC do not count.
  • All rewarded SENSO tokens will be distributed between June 30th – July 2nd, 2020.

Join the Insolar Airdrop on HitBTC

We are pleased to announce that we will host an Insolar Airdrop on our platform between 11:00 (UTC) June 9th to 11:00 June 23rd, 2020.

During this time the first 1000 participants who join will receive 3 XNS tokens from a prize fund of 3000 XNS.

How to take part?

– Fill out and submit this form

– Join the HitBTC and Insolar Telegram Groups and follow this Telegram Channel

– Follow Insolar and HitBTC on Twitter

– Visit xns.insolar.io, create an Insolar wallet address and make at least 1 transaction

SENSO Holders Airdrop

We are pleased to announce that we will host a SENSO Holders Airdrop on our platform between 00:00 (UTC) June 2nd to 00:00 (UTC) June 9th, 2020.

During this time all users who buy 100 SENSO tokens or more on HitBTC will earn 25 more tokens for free from a prize pool of 50,000.

How to take part?

  • Buy at least 100 SENSO tokens on HitBTC during the airdrop period.
  • Hold your SENSO tokens until the airdrop ends.
  • Win 25 extra SENSO tokens.

Rules

  • Buy at least 100 SENSO in total on HitBTC and hold it till the end of the activity to receive 25 SENSO.
  • This airdrop is subject to availability and only has 2000 places.
  • First 2000 participants will receive the reward.
  • External deposits of SENSO to HitBTC do not count towards.
  • All rewarded SENSO tokens will be distributed between June 9th – June 12th, 2020.

HitBTC partners up with TradingView

We are pleased to announce that we have partnered up with TradingView, a global social network for traders.

TradingView is a financial visualization platform that provides market data, charting tools, analytics, trading instruments and gives users the possibility to trade on other platforms through API integration. Users can also follow each other and connect with millions of traders to discuss and share their trading ideas with the community. The platform supports a wide range of assets including currencies, stocks, indices, futures, cryptocurrencies, bonds and CFDs.

This new and exciting partnership will allow TradingView users to manage their orders on HitBTC via the web-trading interface on TradingView. For example, one can place buy or sell orders via the TradingView platform without having to log in to HitBTC, all that is required is for users to submit their private API keys to their TradingView account.

At HitBTC, we are always doing our best to improve our service, provide new opportunities to our users, and partner with exciting projects. Our new partnership with TradingView does just that, and we are very happy to offer this additional service to our community of traders.

Stay up to date with future announcements from our team.