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Frequently Asked Questions
A1. Blockchain is a decentralized, distributed digital ledger that records transactions across multiple computers securely and transparently. Each block contains data, a timestamp, and a cryptographic hash of the previous block, ensuring immutability. Blockchain isn’t just for finance. It’s useful anywhere that requires trust, transparency, efficiency, or fraud prevention.
A2. Stablecoins are cryptocurrencies designed to maintain a stable value by pegging them to a reserve asset like the U.S. dollar, euro, or commodities such as gold. They reduce volatility compared to other cryptocurrencies like Bitcoin or Ethereum.
A3. They provide price stability, making them useful for payments, remittances, and as a store of value. They also act as a bridge between traditional finance (fiat currency) and digital assets.
A4. Fiat-collateralized: Backed 1:1 by reserves of fiat currency (e.g., USDC, USDT). Crypto-collateralized: Backed by other cryptocurrencies, often over-collateralized to account for volatility (e.g., DAI). Algorithmic: Use smart contracts and algorithms to control supply and stabilize value (e.g., Terra USD before collapse).
A5. Through collateral reserves or algorithmic mechanisms. Fiat-backed stablecoins are audited and redeemable for the underlying fiat. Crypto-backed rely on over-collateralization and liquidation mechanisms. Algorithmic rely on supply/demand adjustments.
A6. Reserve risk: lack of transparency in collateral.
Regulatory risk: governments may impose restrictions.
Smart contract vulnerabilities for crypto/algorithmic stablecoins. De-pegging risk when collateral or mechanisms fail.
A7. They act as a medium of exchange, lending collateral, liquidity in pools, and yield farming assets. Stablecoins bring predictability in value, enabling long-term DeFi strategies without volatility risk.
A8. Regulators focus on reserve transparency, consumer protection, systemic risk, and anti-money laundering compliance. In the U.S., agencies like the SEC, CFTC, and Federal Reserve are exploring frameworks for stablecoin regulation.
A9. They bypass traditional banking intermediaries, reduce fees, and settle transactions almost instantly across borders, compared to days with SWIFT or wire transfers.
A10. They can complement fiat but are unlikely to replace it fully in the near term. Central Bank Digital Currencies (CBDCs) may also compete with or integrate with stablecoins.
A11. USDT (Tether) – Largest by market cap, fiat-backed.
USDC (USD Coin) – Backed 1:1 by U.S. dollar reserves.
DAI – Crypto-collateralized stablecoin managed by MakerDAO.
PAX Gold (PAXG) – Gold-backed stablecoin.
A12. Provide liquidity for trading and settlement.
Enable efficient cross-border transactions.
Reduce counterparty and settlement risk.
Open new revenue models in DeFi and tokenized assets.
Tokenization
Tokenization is the process of converting real-world or digital assets into digital tokens on a blockchain. These tokens represent ownership, access, or rights to that asset and can be securely transferred, tracked, and traded.
Asset-Backed Tokenization: Real-world assets like property, gold, or stocks are tokenized.
Example: A $1 million building can be split into 1 million tokens worth $1 each.
Utility Tokens: Provide access to a product or service within a blockchain ecosystem.
Example: Tokens used to pay for cloud storage or hotel booking on a blockchain platform.
Security Tokens: Represent investment contracts, like shares or bonds, and are regulated like securities. Example: Tokenized company stock that pays dividends automatically.
Liquidity: Easier to buy, sell, or trade assets that were traditionally illiquid.
Accessibility: Opens up investment to smaller investors through fractional ownership.
Efficiency: Reduces intermediaries and paperwork.
Automation: Payments, voting, or profit sharing can be automated via smart contracts.
Smart Contracts
A smart contract is a self-executing program that runs on a blockchain. It automatically enforces the terms of an agreement between parties without needing intermediaries like lawyers or banks. Think of it as a digital “if-then” rule stored on a blockchain.
Automated Execution: Once conditions are met, the contract executes itself automatically.
Once deployed on the blockchain, the code cannot be changed. This ensures trust and prevents tampering.
Cybersecurity
Cybersecurity is the practice of protecting computers, networks, programs, and data from digital attacks, unauthorized access, or damage. It ensures that information remains confidential, available, and trustworthy in a digital environment.
Confidentiality: Keeping information private and only accessible to authorized users.
Integrity: Ensuring data is accurate and has not been tampered with.
Availability: Making sure systems and data are accessible when needed.
Network Security: Protects networks from unauthorized access, malware, and attacks.
Application Security: Secures software from vulnerabilities and exploits.
Information Security: Protects data, whether stored or in transit.
Endpoint Security: Secures devices like laptops, phones, and IoT devices.
Cloud Security: Protects data and applications stored in cloud services.
Identity & Access Management (IAM): Ensures only authorized users can access systems or data.
Operational Security (OpSec): Protects processes and procedures for handling data
Digital ID
A Digital ID (Digital Identity) is an electronic representation of a person, organization, or device that can be used to verify identity online or in digital transactions. It allows secure access to services, systems, or assets without relying on physical identification.
Government-Issued IDs: ePassports, digital driver’s licenses, or national ID cards.
Corporate or Service IDs: Employee IDs, customer loyalty IDs, or access badges.
Blockchain-Based IDs: Self-sovereign identities (SSI) where the individual owns and controls their ID without relying on a central authority.
Authentication: Logging into apps, websites, or devices securely.
Financial Services: KYC (Know Your Customer) verification for banking or payments.
Healthcare: Accessing medical records securely.
Travel & Hospitality: Digital check-ins, boarding passes, and hotel registration.
Voting: Secure digital voting systems.
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