Crypto from zero

Crypto has a reputation for jargon, and some of it is earned. But the core ideas are few: a shared record that nobody owns, a way for strangers to agree on that record, keys that prove who owns what, and markets where the resulting assets are traded. Once these four ideas are clear, most headlines become readable.

Blockchains and shared ledgers

A distributed ledger is a record of who owns what, kept in many copies on many computers instead of one. Imagine a village notebook that tracks debts between neighbors. In a normal bank, one clerk holds the notebook and everyone trusts the clerk. In a distributed ledger, every household holds an identical copy, and a new line is added only when most households agree it is valid.

A blockchain is the most common kind of distributed ledger. Transactions are grouped into blocks, and each block carries a fingerprint (a hash) of the one before it. Change an old entry and its fingerprint changes, which breaks every block after it. The original Bitcoin paper describes this chaining of blocks as the way to make history expensive to rewrite. ^[1]

Not every network in this guide uses blocks. Hedera calls its structure a hashgraph and IOTA describes a DAG of blocks, as the consensus chapter explains. The shared idea is the same: many independent computers, called nodes, keep the same record and follow the same rules.

Coins and tokens

A coin, in the common usage, is the native token of its own blockchain. XRP lives on the XRP Ledger, XLM on Stellar, ADA on Cardano, and so on. The coin pays network fees and often rewards the people who secure the network.

A token is an asset issued on top of an existing blockchain, usually by a smart contract, which is a program that lives on the chain and runs exactly as written. A stablecoin is a typical token: it is designed to track a currency such as the US dollar and is issued by a company that holds reserves. Think of the difference between a country's own banknotes (the coin) and a gift voucher printed by a shop that only works inside that country's payment system (the token).

The line is blurry in practice. Some projects have a coin on their own chain and also issue tokens, and the word "token" is often used for everything. What matters is who controls the rules of the asset: the network, or the issuer of a token.

Consensus: how strangers agree

If a thousand computers keep the same ledger, who decides which transaction comes next, and how do you stop someone from spending the same money twice? The answer is a consensus mechanism. Several families exist, and the eight projects on this site use five different ones.

Proof-of-work

In proof-of-work, computers compete to solve a puzzle that takes real electricity, and the winner adds the next block. Bitcoin works this way. Rewriting history would require redoing that work faster than everyone else. ^[1][2] None of the eight coins here use it.

Proof-of-stake

In proof-of-stake, the right to add blocks depends on coins that a participant locks up as a deposit, instead of on electricity. Dishonest behavior can cost the deposit, a penalty known as slashing on many networks. ^[3] Think of a security deposit on an apartment rather than a race. A participant who runs the software is a validator.

Pure proof-of-stake and delegated variants

Pure proof-of-stake is the term Algorand uses: every account that holds ALGO and takes part is eligible, and a random draw weighted by stake picks who proposes and votes in each round. ^[7] In delegated proof-of-stake, holders choose representatives, or a limited group of operators is elected by stake. XDC's XDPoS limits block production to 108 masternodes, the candidates with the most stake-weighted votes. ^[11][20] Masternodes must stake 10,000,000 XDC and complete KYC. ^[11] IOTA also combines delegated staking with its own consensus protocol, which orders transactions in a DAG. ^[10]

Federated Byzantine agreement

Federated Byzantine agreement replaces mining and staking with trust choices. Each validator names the others it trusts and how many of them must agree. Stellar's SCP works like this, with the Stellar documentation putting ledger updates at every 5-7 seconds. ^[6][22] The XRP Ledger uses a close relative: each server keeps a Unique Node List of validators it trusts not to collude, and the XRP Ledger documentation describes near real-time settlement of three to six seconds. ^[4][5][23] Both designs prefer to pause rather than to split into two histories.

Hashgraph and DAG

Hashgraph is Hedera's approach. Nodes gossip about what they have heard, and each node can calculate how everyone would have voted, so no vote messages are sent. Hedera's documentation describes it as asynchronous Byzantine fault tolerant. ^[8] A DAG (directed acyclic graph) is a structure where many items link to earlier ones without forming loops, so work can happen in parallel instead of in a single line of blocks. IOTA's Starfish protocol uses an uncertified DAG in which validators propose blocks in parallel. ^[10]

Which coin uses what

Speed numbers deserve caution too. Finality is the moment a transaction can no longer be reversed, and throughput is how many transactions per second a network handles. Vendors often quote best-case lab figures, while real usage is lower. Check what a number measures before comparing.

Wallets and keys

A wallet does not hold coins the way a leather wallet holds cash. The coins stay on the ledger; the wallet holds the keys that prove you may move them. This distinction explains most of crypto security.

• A public key (and the address derived from it) is like your bank account number. You can share it so people can send you funds.
• A private key is like the PIN and signature combined. Anyone who has it can move the funds, and nobody can undo that.
• A seed phrase is a list of words, usually 12 or 24, that regenerates your private keys. It is a master backup. Lose it with no other backup and the funds are gone; show it to anyone and the funds can be stolen.

A passphrase is an optional extra word that changes which wallet the seed phrase opens, which adds protection but also adds one more thing to lose.

Hot, cold, hardware and software wallets

A hot wallet is connected to the internet (a phone app or browser extension) and is convenient for small amounts. A cold wallet keeps keys offline. A hardware wallet is a small dedicated device that signs transactions without exposing the key to your computer; a software wallet is an app. The trade-off is convenience against exposure, like carrying cash in your pocket versus keeping it in a safe.

Custodial and non-custodial

With a custodial setup, such as an account on an exchange, a company holds the keys and you hold a claim against the company. With a non-custodial wallet, you hold the keys. The phrase "not your keys, not your coins" summarizes the first risk: if the company fails or freezes accounts, your access depends on them. The second risk is the mirror image: if you lose your keys, nobody can reset them for you.

Some networks add their own details. XRP and XLM transfers to exchanges often need a memo or destination tag, and a missing tag can delay a deposit. Each coin guide covers these points, and the buy and store guide walks through setup.

Exchanges: CEX and DEX

An exchange is a marketplace where you swap one asset for another. A centralized exchange (CEX) is a company. It usually requires KYC (identity verification), takes deposits, and holds them in custody. A decentralized exchange (DEX) is a set of smart contracts: you trade from your own wallet, with no account, against pools of funds supplied by others. That depends on liquidity, meaning how easily you can trade without moving the price.

Costs also differ. A market order buys at the best available price now; a limit order waits for a price you set. The spread is the gap between the best buy and sell prices, and slippage is the difference between the price you expected and the price you got, which grows in thin markets. Whether an exchange publishes proof of reserves is one input to judging it, but not a guarantee.

Spot versus derivatives

A spot trade is a plain purchase: you pay and receive the actual asset. Derivatives are contracts whose value depends on an asset's price without you owning the asset, such as futures and perpetual swaps. Many allow leverage, which means trading with borrowed exposure. Leverage multiplies gains and losses: a position with 10x leverage is liquidated by a price move of roughly 10 percent against you, and you can lose the entire deposit.

This site covers spot only. The reasons are practical: spot is what long-term holders of these projects use, derivatives risk wiping out a deposit quickly, and rules for derivatives differ widely by country. Nothing here is a judgment on derivatives users; they are simply a different subject requiring different guides.

Market cap versus price

A common beginner mistake is to treat a low price per coin as "cheap." Price alone says nothing about size. The market cap is the price multiplied by the circulating supply (coins available in the market).

Here is a hypothetical worked example. The numbers are invented for illustration and do not describe any real coin.

Coin B looks ten times cheaper per unit, yet it is five times larger in total. For Coin B to reach a price of 2.00 USD with this supply, its market cap would have to be 100,000,000,000 USD, fifty times what Coin A needs to reach the same price. A price per coin is a unit label, like the price per gram versus per kilogram.

Supply terms matter here. Total supply counts everything that exists, including locked coins, while max supply is the maximum that can ever exist, if the project has one. A related measure, the fully diluted value, multiplies price by the max or total supply; it shows what the market cap would be if all coins were circulating. Market cap is also an imperfect measure: it assumes every coin could be sold at the last traded price, which is not true for large amounts.

Supply, inflation and burning

Supply design is a project's monetary policy. The questions to ask are: is there a cap, how are new coins created, and who received the coins at the start?

• Inflation means new coins are created over time, which dilutes existing holders unless demand grows too. IOTA has no fixed maximum supply and mints 767,000 new IOTA each epoch, and its documentation puts an epoch at roughly 24 hours. ^[18][21]
• A fixed cap means no new coins beyond a limit. Cardano's genesis parameters set a maximum supply of 45 billion ADA. ^[24] Algorand lists a capped supply of 10 billion ALGO. ^[15] Hedera's mirror node reported a total supply of 50 billion HBAR at the time of writing. ^[16]
• A burn destroys coins permanently. Stellar's validators switched off its roughly 1 percent annual inflation in October 2019, and in November 2019 the Stellar Development Foundation burned more than 55 billion lumens, leaving about 50 billion. ^[13][14]

Distribution matters as much as the cap. When a large share sits with founders or a foundation, release schedules such as escrow and vesting affect how much supply can reach the market. Ripple, for example, places XRP in escrow and releases it on a schedule. ^[19] Each coin guide has a tokenomics chapter, and the evaluation guide shows how the rubric scores it.

Volatility and drawdowns

Volatility is how much a price moves, up or down. Crypto assets are generally far more volatile than major currencies or large stock indexes. A drawdown is the fall from a peak to a later low, expressed as a percentage.

The arithmetic is unforgiving. A 50 percent fall needs a 100 percent gain to get back to the start: from 100 down to 50, you must double. An 80 percent fall needs a 400 percent gain. Long drawdowns are therefore not a rare accident; they are part of the history of most assets in this category.

This is a description, not a forecast. Nobody can reliably predict when a fall or a rise comes, and this site makes no predictions. Practical consequences follow from the arithmetic alone: only use money you can afford to leave untouched, and be honest about how you would react to seeing a balance cut in half. A strategy such as dollar-cost averaging (buying fixed amounts at regular intervals) spreads out timing, but it does not remove the risk of loss. The tax side is separate: in many countries, selling at a profit is a taxable event, covered in the tax guide.

Common beginner mistakes

1. Sharing the seed phrase. No support agent, exchange or wallet company ever needs it. Anyone who asks is attempting theft, often via phishing (fake sites and messages that imitate the real thing).
2. Keeping the seed phrase only as a photo or cloud note. Store it offline, on paper or metal, in more than one place.
3. Sending to the wrong network or without a required tag. The same ticker can exist on several chains, and choosing the wrong network can lose funds. Send a small test transaction first and compare the address on a block explorer.
4. Judging by price per coin. See market cap versus price.
5. Using leverage as a beginner. See spot versus derivatives.
6. Skipping 2FA on exchange accounts, or using SMS as the only second factor.
7. Chasing promises of guaranteed returns. Genuine projects do not guarantee profit. Treat "double your coins" offers as scams.
8. Ignoring taxes and record-keeping. Keep a log of every purchase, sale and transfer from day one.
9. Trusting announcements. A partnership press release is not evidence of use. The evaluation guide explains the difference.
10. Leaving everything on an exchange for years without understanding the custody risk, or the opposite: self-custodying without a tested backup.

Where to go next

If one idea from this page sticks, let it be this: your security depends on your keys, and your judgment depends on evidence, not price. From here, the evaluation guide explains how this site scores projects, the buy and store guide covers setup, and the comparison page puts all eight side by side. This page is educational and is not investment advice.