**To start buying and selling cryptocurrencies, investors will make transactions through cryptocurrency exchanges. In the crypto market, there are two types of exchanges, centralized exchanges (CEX) and decentralized exchanges (DEX). In this article, BHO Network will introduce in detail about centralized exchange (CEX) including: how it works, the pros & cons, and popular centralized exchanges today.**


# What is CEX?
CEX stands for Centralized Cryptocurrency Exchanges - or Centralized Exchanges. This exchange will be managed by large-scale cryptocurrency trading coordination organizations. The business model is similar to traditional asset exchanges such as stock exchanges.

In a nutshell, a centralized exchange (CEX) is a trusted third-party intermediary that provides trading, depositing and withdrawing services for cryptocurrencies and oversees the operations between buyers and sellers.

# How does a centralized exchange (CEX) work?
**Trading activities:** Centralized exchanges (CEX) will allow investors to buy and sell cryptocurrencies with fiat currency. For example, a centralized exchange in Vietnam will allow the use of VND to buy cryptocurrencies (USDT, USDC...), then buyers can choose the cryptocurrency trading pairs (BTC/USDT, ETH/USDT, etc.) that they desire. In addition, most exchanges also provide additional services including asset custody, trading limit setting, leveraged trading, borrowing - lending, etc.

**Transaction fee:** Like stock exchanges, centralized exchanges (CEX) will charge a transaction fee from users through each cryptocurrency purchase or sale. However, the transaction fee is also quite low, ranging from 0.1% to 1.5%.

**Trading Regulations:** Centralized exchanges (CEXs) are regulated by institutions, and therefore must also comply with the operating regulations of the countries where they are licensed to operate. So, the exchange must comply with the legal regulations on identity verification (KYC - Know Your Customer) and anti-money laundering (AML - Anti Money Laundering), and ensure the rights as well as safety of investors.

**Asset control:** Any crypto assets when deposited or purchased on a centralized exchange (CEX) will be managed and controlled by that exchange. In addition, there are cases where the exchange locks abnormal deposits and withdrawals, which will prevent the transaction from happening as desired by investors. Therefore, choosing a reputable and secure electronic trading platform is essential.

**Exchange Coin:** Currently, most exchanges issue their own exchange coins to serve their ecosystem. Therefore, the needs and uses of exchange coins are also different. However, in general, exchange coins will often have the following use cases and characteristics:

- Reduce transaction fees, easy to convert: When investors trade on the exchange, the transaction fee will be reduced if using exchange coins such as Binance coin (BNB), Gate token (GT), Huobi token (HT), etc. In addition, after the transaction, there will be a very small amount of cryptocurrencies that cannot be exchanged or sold for stablecoins, but can be converted to exchange coins for use, or collected for later liquidity.
 
- Account upgrade: When the trading account is upgraded to a VIP account, depending on the trading volume, investors will be rewarded with exchange coins, depending on the exchange's marketing campaigns. Some exchanges often apply this form such as Binance, Okex, Gate, etc.

- Launchpad participation: Holding a large number of exchange coins also helps investors to participate in early buying tokens of new projects listed on that exchange. Take the Binance exchange for example, the tokens opened on its Launchpad have very high returns (ROI).

- Share profits from the exchange’s revenue: Just like dividends in the stock market, investors who buy and hold exchange coins will be able to earn a portion of the profits from the exchange. Some exchanges have applied this form such as BitMax, Kucoin, etc.

- Furthermore, some exchange coins are built into a private blockchain that serves the entire ecosystem. That exchange coin will be used as transaction fees for dApps in that ecosystem, such as the BNB of the BNB chain ecosystem (formerly Binance Smart Chain).

# Pros & Cons of Centralized Exchange (CEX)
## Pros
- **User experience:** Centralized exchanges (CEX) often have a user-friendly interface, suitable for newbies to trade. In addition, the exchanges always have a 24/7 support team to help investors avoid asset loss during the process of buying and selling, depositing and withdrawing cryptocurrencies...
- **Processing speed:** Transactions on CEXs are faster than DEXs.
- **High liquidity:** It is easy to find buyers and sellers of cryptocurrencies on a centralized exchange. There is no liquidity limit like some projects at DEX products.
- **2FA and email-authentication:** a typical Centralized Exchange (CEX) also integrates private keys through advanced security protocols 2FA and email-authentication to better protect investors.

## Cons
- **Control:** All crypto assets on an exchange are 100% controlled by that exchange. The exchanges operate on the trust of investors.
- **Anti-money laundering taxes and fees:** Centralized exchanges must report to tax authorities in countries to avoid money laundering through the crypto market.
- **Potential risks of hacker attacks:** Investors still have the possibility of losing their assets when the exchange is attacked by hackers. In fact, there have been a number of centralized exchanges that have been hacked, such as Kucoin exchange with more than 200 million USD in 2020, AscendEx exchange with more than 77 million USD in December 2021, etc.

# Some popular centralized exchanges (CEX) in Vietnam

## Binance
Binance is the largest centralized exchange (CEX) in the crypto market in terms of trading volume. The exchange was founded in 2017 in Hong Kong by Changpeng Zhao (CZ).

![h1 (1).png](https://cdn.bho.network/cms/h1_1_0f509aff62.png)

At Binance, investors can easily buy and sell cryptocurrency deposit and withdrawal transactions. Some impressive numbers: 
- Buy, sell and trade more than 600 coins and tokens
- The record for 24-hour trading volume on Binance exchange is up to $ 76 billion (the highest) real-time calculated is about more than $15 billion) 
- There are 90 million trusted users registered to use Binance 
- The lowest transaction fee is less than 0.1%

In June 2021, Binance started to allow NFT trading and became the first CEX exchange to have NFT Marketplace.

## Huobi

Huobi is a centralized exchange (CEX) established in China and has representative offices in Japan and Korea. Considered as one of the top Chinese exchanges, Huobi has a trading volume that is in the top 10 in the crypto market. Besides, the exchange is also reputable and has not encountered any serious attacks.

![h2 (1).png](https://cdn.bho.network/cms/h2_1_5e0ab0a1b9.png)



- Users can trade more than 500 different coins and tokens
- 24h trading volume is over $1 billion (real-time) 
- More than 10 million people registered to use Huobi.

## FTX

FTX is founded in Antigua and Barbuda and has its headquarters in the Bahamas. One of the founders of FTX is Sam Bankman-Fried - the owner of Alameda Research fund and also a Market Maker in the crypto-investment world.

![h3 (1).png](https://cdn.bho.network/cms/h3_1_94a62983c1.png)

FTX is a cryptocurrency exchange built by traders, so their target audience is also traders. FTX focuses on providing derivatives trading products: option, leverage, highly volatile assets, etc.

Although just established in 2019, FTX is also in the top 5 largest centralized exchanges (CEX) in terms of trading volume. Currently, the trading volume of FTX in 24 hours is over 1 billion USD (real-time).

## Gate
Gate was founded in 2013 - this is the oldest exchange with headquarters in China. Previously, Gate had a domain name of Bter.com, but in 2015 Bter.com was attacked by hackers and suffered a loss of up to 7000 BTC in the exchange's cold wallet. Then in 2017, when the government became more strict with cryptocurrency exchanges, the exchange changed the domain name to Gate.io.

![h4 (1).png](https://cdn.bho.network/cms/h4_1_25fc97e66d.png)

Gate is also currently in the top 10 centralized exchanges (CEX) in terms of trading volume. 
- Allows trading over 1,400 different cryptocurrencies
- 24h trading volume is over 1 billion USD (real-time) 
- More than 10 million registered users of Gate

## MEXC
MEXC was founded in 2018 (formerly known as MXC). The exchange is headquartered in Singapore. In addition to providing cryptocurrency trading services, MEXC also provides blockchain asset circulation services to help ensure the safety and security of assets for investors, thereby, making trading and investing more convenient and smarter.

![h5.png](https://cdn.bho.network/cms/h5_6fa128aa6f.png)

On MEXC:
- 1524 cryptocurrencies of all kinds are tradable
- 24h trading volume approximately more than 1.9 billion USD
- More than 6 million registered users of MEXC

# Conclusion
Nowadays, most people who are starting the crypto market can easily trade on centralized exchanges (CEX). Centralized exchanges are also constantly competing with each other via marketing strategies to attract and retain users, such as offering coins or tokens to investors with high trading volume. However, as an investor, you should choose for yourself top reputable exchanges to make transactions to avoid losing assets due to hackers, or some unsecured exchanges that may lock liquidity at any time.

In this article, BHO Network will introduce in detail about centralized exchange (CEX) including: how it works, the pros & cons, and popular centralized exchanges today.

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WHAT IS CEX? EVERYTHING ABOUT CENTRAL EXCHANGE (CEX)

What is Hold Coin? What are the ways to hold Coin successfully? Read the following article on BHO Network to learn about Hold Coin.


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What is Hold Coin? How to optimize profit when Hold Coin

***What is Coin Mining**? Does Mining Coin make a lot of money? Read the article below of BHO Network to learn how to mine Coin most efficiently. Click to see more.*

## 1. What is Coin Mining?

Coin Mining is to use the power of the miner to solve the complex algorithms of the Token. During Coin mining, miners simultaneously confirm transactions on the blockchain system and create new blocks to add to the blockchain.

For example, miners will confirm transaction information sent/received between users in the Bitcoin blockchain system. It includes information: BTC amount, sending and receiving time, arrival address, outgoing address, ...

After the confirmation is completed, all the information is included in a block. When that block is full, a new block will be created.

![dao-coin-la-gi-3.png](https://cdn.bho.network/cms/dao_coin_la_gi_3_ec3687ce17.png)

*The coin mining process is based on complex algorithms.*

## 2. What is the purpose of Coin mining?

To understand the purpose of Coin mining, BHO Network will reiterate a bit about how blockchain works:

- A blockchain system consists of transactions being performed and recording information into each blockchain block.
- The blockchain needs a common consensus mechanism to record transaction information on the Block.
- Some blockchains use a consensus mechanism called Proof of Work. This means that participants need to perform a certain task on the network before they can record that information in the block. These tasks are usually solving an algorithm on a computer. 

Thus, it can be seen that the purpose of Coin mining is extremely important, directly participating in the operation of a blockchain. Without miners, the blockchain system would not work. 

## 3. Is Coin Mining Banned?

Depending on the country, mining may or may not be prohibited. But currently, there is no specific legality about mining Coins in Vietnam, so it can be said that it is not forbidden.

This does not mean that if users are scammed in the process of investing or mining Coins, the Vietnamese government is not responsible.

![dao-coin-la-gi-6.png](https://cdn.bho.network/cms/dao_coin_la_gi_6_7ec91cd805.png)

*In Vietnam, there is no law on mining Coin*

## 4. Where does the Coin mining money come from?

Confirming transactions on the blockchain is a core and vital issue for any blockchain. Because if the transaction is not verified correctly.

The transaction amount may be lost or mistaken. From there people will no longer trust transactions on that Chain and that Chain will become a dead-chain.

![dao-coin-la-gi-2.png](https://cdn.bho.network/cms/dao_coin_la_gi_2_e66664a489.png)

*Money can be lost if the transaction is not verified.*

To increase security, transaction verification will be left to the miners. Blockchains will reward miners after they complete the work. This helps incentivize miners to work seriously.

That reward will include fees for transactions they verify in a block. Tokens generated when that block is formed also known as block rewards. Those rewards will be paid in tokens of the blockchain they verify the transaction.

## 5. 4 notes before Coin Mining

So what are the notes before Coin Mining read along to refer to this section.

- Blockchains that use the Proof of Work consensus mechanism all need to mine Coins.
- People who use their computer power are called miners.
- Hashrate (hash rate) is a unit that represents the ability of that coin mining device to solve algorithms. The higher the hashrate, the faster the algorithm is, the more Tokens you claim.
- Some miners only optimally mine a few types of Tokens.

## 6. Types of Coin Mining

Currently, there are the following methods of Coins Mining:

### 6.1 Mining Coins for free by phone

This form is straightforward, users only need a phone connected to the Internet to earn Tokens. Tokens mined by phone are usually popular coins like BTC, ETH, LTC.

One interesting thing about this is that the applications are mostly Games with Time. It can be said that users are both entertained and have money. But because it is so easy and fun, the amount of money is not much.

![dao-coin-la-gi-16.jpg](https://cdn.bho.network/cms/dao_coin_la_gi_16_103a45be6d.jpg)

*The form of Coins Mining by phone*

### 6.2 Mining Coins by diggers

This form is popular and known by many online articles. The keywords about miners, "buffalo digging", even a few large and small FUDs in Crypto,... are all derived from mining with diggers.

This can be seen as a job that earns real money, but requires a large amount of capital, as well as will be influenced by the government more or less. Typically, China's ban on BTC mining leads to miners having to move to other countries.

![dao-coin-la-gi-15.jpg](https://cdn.bho.network/cms/dao_coin_la_gi_15_751d3e7ac3.jpg)

*Image of Coin Miners* 

### 6.3 Using Cloud Mining Services

When it comes to Cloud Mining, a lot of people will immediately think of cloud storage services today. And similarly, Cloud Mining is the act of users being able to participate in remote cryptocurrency mining without equipment or machines.

In this activity, there will be 2 parties such as:

- Mining service provider: They will provide mining machines or sell hashrate remotely to buyers. Some parties are providing this service: Minergate, Genesis Mining, Hashing 24.
- Translation users (investors): They are investments. These users spend money to rent or remotely buy miners/hashrates. And they will receive the corresponding Token according to the contract.

![dao-coin-la-gi-11.jpg](https://cdn.bho.network/cms/dao_coin_la_gi_11_081f963c4f.jpg)

*Can mine cryptocurrency remotely without equipment*

## 7. Detailed Coin Mining Instructions

If you want to mine Coins, you just need to follow these basic steps:

**Step 1: Create a storage wallet**

Miners can you can choose to create a hot wallet or a cold wallet. Hot wallets are wallets that are hosted on the Internet. Cold wallets are wallets that are stored in hardware devices. Cold wallets can store a large amount of Tokens, with high security, so they are often chosen by miners. 

**Step 2: Select Coin Mining Methods**

Depending on the type of Token and financial situation, you can choose 1 of 4 methods of Coin mining: using CPU or dedicated machine, phone or Cloud Mining service. 

![dao-coin-la-gi.png](https://cdn.bho.network/cms/dao_coin_la_gi_95f8b2f9a8.png)

*Choose a suitable form of Coin mining for your financial situation*

**Step 3: Install Coin mining software**

If you choose to use a CPU and a dedicated machine, you need to install Coin mining software. This software helps to connect with miner or mining machine. 

Through the software, you will know parameters such as hash rate, mining speed, fan speed and temperature. The software is compatible with devices with Windows, Linux, and Mac operating systems. If you choose to use Cloud Mining service, you do not need to install software.

![dao-coin-la-gi-4.jpg](https://cdn.bho.network/cms/dao_coin_la_gi_4_a891040413.jpg)

*Use compatible devices to mine Coins*

**Step 4: Find a reputable exchange**

After mining Coins, you need to find a reputable cryptocurrency exchange to sell. Choosing a reputable exchange will ensure that Token trading takes place safely. In addition, you should choose a broker with a large trading volume and high liquidity to trade faster and save more time.
 
## 8. What does the Coin Miner include?

A Coin mining rig includes at least the following basic components: CPU, VGA, Hard Drive, RAM, Mainboard, Memory Chip, Power and Internet.

**1. CPU** (Central Processing Unit) or central processing unit has the sole task of distributing to VGA graphics cards for mining. Therefore, the CPU does not need to be so terrible because it only has the above single task. However, users should pay attention that choosing CPU and Mainboard must match each other.

**2. VGA**: This is the most important component of a mining rig. It is responsible for directly participating in Coin mining. The stronger the VGA, the better the mining ability. This is the component that users need to pay attention to to upgrade the most. 

VGA must be suitable for mining a certain type of Token. There are two VGA suppliers that users may have heard of:

- NVIDA: 1070, 1060, 1050ti,...
- AMD: RX 470, RX 580, RX 570,...

![dao-coin-la-gi-9.png](https://cdn.bho.network/cms/dao_coin_la_gi_9_9591faeaf1.png)

*GDDR5X of Micron*

Besides, users should interested in optimizing Coin mining. Pay attention to what type of memory chip is integrated in VGA and how much it can be overclocked.

**3. RAM:** No need to invest huge RAM, just enough to combine with CPU, Mainboard to run some basic mining applications. 

**4. Hard drive**: Similar to RAM and CPU, users do not need to invest much. For compactness, users choose an SSD with 80G or 120G memory.

**5. Mainboard**: Users do not need to invest in a huge Mainboard. But it should be noted that it must be compatible with VGA & CPU to optimize mining. In addition, users who want to plug in multiple VGAs, choose the number of ports that can be connected.

**6. Memory chip**: Pay attention to what type of memory chip is integrated in VGA, the ability to overclock to how much.

**7. Source**: Source is also an important component in the whole mining rig. It is responsible for providing power for all other hardware to work. A good performance power supply will help the whole system run stably and have a long life.

**8. Internet**: To mine Coins, users need an Internet connection. The network connection just needs to be stable. 

![dao-coin-la-gi-7.png](https://cdn.bho.network/cms/dao_coin_la_gi_7_7c81ede286.png)

*Antminer S19 Pro*

## 9. Coin mining software

Let's learn about Coin mining software with BHO below:

### 9.1 The most effective Coin mining software

There are some software that allow users to mine Coins, effective as: CGMiner, BFGMiner, MultiMiner, Miner-Server, EasyMiner, AWESOME Miner,...

### 9.2 Memory chip checker sofware

Memory chip checker software will help users check which company's memory chip the VGA card is using from. will know how much to overclock accordingly.

For example:

- Software overclock RAM, VGA
- This software allows overclocking RAM, VAG card. This allows to optimize the hardware for users to mine Coin more efficiently.
- Ethermine: Used to check how many Tokens have been mined.

![dao-coin-la-gi-8.png](https://cdn.bho.network/cms/dao_coin_la_gi_8_58c3e777b8.png)

*ETH is used to check the number of*

- TeamViewer Tokens: This software helps to monitor and manage the machine remotely. If there are any problems, they can be handled in a timely manner.

## 10. How to calculate the profit of mining Coin?

First, users need to know where mining profits come from. As mentioned above, Coin miners will have to perform 2 tasks: confirm transactions and create new blocks on the blockchain.

- Upon completion of the transaction confirmation, the miner will receive a portion of the Token from the transaction fees paid to that miner by those who made the transaction.
- In addition, when a block is generated, that miner will also receive tokens from it. This amount of Token is the motivation for daily miners to plug in and participate in mining Coins.

To calculate the profit of Coin mining, users can visit and dedicated websites to calculate the profit for Coin miners such as: WhatToMine or CryptoCompare.

How to calculate the profit of mining Coin with CryptoCompare as follows:

**Step 1**: Select Top Lists => In the Other section, select Mining Calculator.

![dao-coin-la-gi-12.png](https://cdn.bho.network/cms/dao_coin_la_gi_12_c9ea938d97.png)

*Use crypto compare to calculate Coin mining profit*

**Step 2**: Select the Token you want to mine and the specifications of the Coin miner.

For example mine Coin ETH with an Antminer G2 machine with the following parameters: 

- Mining efficiency: 220 Mh/s +10%
- Power consumption: 1200W

Therefore, fill in the corresponding information in the blank box and get the result.

![dao-coin-la-gi-10.png](https://cdn.bho.network/cms/dao_coin_la_gi_10_1bc52244ff.png)

*Coin ETH mining profit parameters*

Coin ETH with the above parameters, I will receive a profit:

- $17.23 per day
- $120.59 per week
- $516.83 per month
- $6,288.15 per year

This number will multiply many times if the user has a larger Hashing Power. 

Some notes when calculating Coin

- Mining profit: Coin mining profit will be able to change over time because it depends on the number of Tokens mined and the value of that Token. If the Token increases in price, the profit of Coin mining also increases and vice versa.
- The number of Tokens mined also depends on the Diff (difficulty) of the block. When Token increases in price, the demand for mining Coin also increases, Diff increases and the number of Tokens mined will decrease.

## 11. Factors affecting the profitability of Coin mining

To find out what are the factors that affect the profitability of Coin mining, we need to consider many factors such as:

- **Hashrate**: In simple terms, hash is a math problem, rate is the computer's processing speed. Hashrate is your computer's algorithmic processing speed. Hash rate is calculated in units of hash/s, khash/s, mhash/s, etc. 

The faster the hash rate, the greater the chance that your computer can solve the problem and the better your options of getting the block reward.

- **Block Reward** - block reward: The reward that a miner receives when a Block is verified. The reward will depend on each blockchain. As for Bitcoin, Block Reward will gradually decrease each halving with a cycle of about 4 years.

Currently, the miner will be rewarded with 12.5 Bitcoins for each block generated. This reward will continue to decrease in 2024, so the block reward is an essential factor.

- **Mining Difficulty**: The difficulty of the algorithm, usually for most tokens the difficulty will not change. But with Bitcoin, this difficulty will increase as more miners enter the market. The increasing difficulty of the algorithm causes miners to upgrade their miners continuously.

![dao-coin-la-gi-5.png](https://cdn.bho.network/cms/dao_coin_la_gi_5_bee2154725.png)

*Factors affecting profitability when mining Coin*

- **Electricity cost**: This is a significant factor. Because your excavator will work continuously and requires a huge amount of electricity to maintain the supply as well as to cool the system.
- **Power consumption**: Each miner will have a different power consumption index. This index will be related to the efficiency of the excavator, so you need to consider and compare the types of machines when choosing carefully.
- **Pool fee**: Usually miners will join mining pools to increase the possibility of receiving block rewards. That will come with a fee, although not much, but you need to pay attention to it.
- **Price**: This is the most important factor. It may be a bit expensive to build the machine, but as long as the market grows well, there will be no problem.

## 12. Should we mine junk Coin?

First, users need to understand, "Junk Coins" refer to coins born for the purpose of FOMO, or with bad motives, scams or simply talking about unpopular or unknown coins. 

So, should we mine junk Coin? Find out the reasons why you shouldn't mine Junk Coins in the section below:

- Junk coins often do not have high liquidity, worse, after mining, there are no, or very few exchanges that accept transactions.
- Chances of getting scammed are very high.
- Mining Garbage Coins, like BTC, takes time, money and effort. 

![dao-coin-la-gi-13.jpg](https://cdn.bho.network/cms/dao_coin_la_gi_13_da6b524d9e.jpg)

*Mining Coin Garbage will face many risks*

## 13. Risks of Coin Mining

So what risks can mining Coins bring to Miners? Invite readers to refer to:

- The first problem you face when mining Coin is the maintenance cost of the excavator system. Because the excavator will run continuously, the possibility of damage is very high and leads to injury. In addition, it is very difficult for you to find a place to sell your old miners if you don't want to invest in mining anymore.
- Risk of banning Coin mining: In the future, when it is becoming more popular and energy requirements are increasing until it affects national energy security, the state's introduction of some restrictive regulations is inevitable.
- Coin Price: The end product of Coin mining is Token. The current token price on the market constantly fluctuates, making it difficult for miners to calculate their profits. 
- When the market is uptrend, all Tokens increase in price, do not say. But if the market crashes, you should plan carefully if you want to invest in a coin miner system for a long time.

![dao-coin-la-gi-14.jpg](https://cdn.bho.network/cms/dao_coin_la_gi_14_814df87cb3.jpg)

*Mining machine will be damaged during Coin*

## 14. What methods do attackers often use to take advantage of users' computers to mine Coins

With the trend of encryption, as more people approach, hackers also create it? fake websites and apps. If you are new, it is very easy to click on these links.

Hackers can obtain emails or personal information and then send emails containing malicious code. They infiltrate the CPU of the user's computer, who clicks on the attachments in the mail. From there, mining Bitcoins from infected computers, even worse, stealing assets.

So, if the user receives any suspicious emails, absolutely do not click. Please quickly delete them to the trash.

## 15. Effective Coin Mining Experience

After clearly understanding “**what is Coin mining**”, please refer to compelling Coin mining experiences.

### 15.1 Determining goals and capital

As mentioned, Coin mining has many forms, so it is necessary to determine the source of capital and goals at the beginning to avoid waste.

To make Coin mining your main job, you must invest a lot in equipment. But if you wish to join as a side business or find a job in your spare time, you just need a phone call is enough.

![dao-coin-la-gi-17.png](https://cdn.bho.network/cms/dao_coin_la_gi_17_e11e647569.png)

*Define an initial goal to avoid waste*

### 15.2 Market Research

You should take some time to learn about the market. Thus, you will know the prestige and profit of each coin, thereby making a more reasonable plan.

In addition, understanding the market will help us to know other needs and ways of playing. 

### 15.3 Controlling Emotions

Because the market fluctuates, it is difficult to say how it is right to sell Coins after mining. At these times, you need to control your emotions to devise a suitable profit-taking strategy. No matter which direction the market moves, make sure you don't regret your profit-taking.

### 15.4 Beware of Scams

In a profitable market, there are also many potential risks. The most common is getting malicious code as mentioned above. Therefore, you need to be careful about security, avoid clicking on strange links.

*The last article [BHO Network](https://bho.network) shared detailed information to help you understand “**what is Coin mining**” and an overview of Coin mining. Please follow our articles to answer questions and update useful knowledge if you have any questions.*


What is Coin Mining? Should I mine junk Coin? Read the article below of BHO Network to learn more about the Coin mining experience.


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What is Coin Mining? How does Coin Mining work?

***What is Sharding**? Sharding is considered a technology to help expand the Blockchain network. This is an issue that many investors are interested in. So what are the outstanding features, advantages and disadvantages of this technology? Please join BHO Network to learn more about this project in the article below!*

## 1. What is Sharding?

Sharding is understood as the process of Sharding the database horizontally and vertically. This technology processes and stores data on multiple platforms for rapid transmission. With Blockchain, Sharding will split the network into many pieces. Each array is a separate section with independent state, smart contracts, and account data. 

Therefore, *Sharding technology* has reduced the computational burden on each node. Since then, the transaction volume on the network has also been faster than before.

![sharding-la-gi (3).png](https://cdn.bho.network/cms/sharding_la_gi_3_89fc0db11c.png)

*Sharding technology has reduced the computational burden on each node.*

Currently, the Ethereum network owns a modest TPS of only about 15 TPS. As Ethereum grows, the number of users also increases, leading to the number of transactions making 15TPS / sec , causing network congestion and consuming a lot of costs. This forces users to spend a lot of time waiting. *Sharding technology* is considered the solution to the above problem.

## 2. What problem does Sharding solve?

Blockchain network has 3 characteristics called "impossibility triangle" when only 2 of the following problems of the platform can be solved:

- **Scalability for synchronization:** Blockchain can conduct more transactions than the verifiability of a node as usual.
- **Decentralization:** Blockchain can run without depending on any small group or centralized actors.
- **Security:** Blockchain can resist many participating nodes that want to attack the network. 

![sharding-la-gi (3).jpg](https://cdn.bho.network/cms/sharding_la_gi_3_bf8f3b214c.jpg)

*3 Impossible Features of Blockchain*

However, current solutions only meet 2 of 3 characteristics of Blockchain. Specifically:
- Before the application of Sharding and PoS, Ethereum's Bitcoin or Litecoin often depended on users running a complete node to verify transactions, so it is secure and decentralized. However, the network lacks scalability. 
- Blockchains with high TPS and small nodes from 10 to 100 can maintain mutual consensus. Participating users must trust most of these nodes. So scalability and safety are there but decentralization is lacking. 
- The Multi-Chain ecosystem includes many applications and Cross-Chain protocols that will help the protocol exchange with each other. As a result, the network is scalable and decentralized; but lacks security. Hackers must attack less than 1% of the entire ecosystem to break the Blockchain.

## 3. How does Sharding technology work?

*Vitalik Buterin created sharding technology* to overcome the above disadvantages, through the following activities:

- Segment an extensive database into smaller pieces of the same format. Thereby sharing computing resources for the Blockchain network. Currently, Ethereum has more than 8,200 nodes with a continuous operation mechanism, each node in the network handles all activities. 
- Sharding will proceed to translate the above model into a parallel processing model. All transactions are executed in parallel and at the same time on the nodes. From there, the workload is distributed, helping to increase transaction throughput. Nodes will only perform certain operations, not all functions like the old model. 
- *Sharding technology* is implemented on the network using the PoS consensus mechanism - Proof of Stake. Nodes will conduct transactions based on the amount of Token Stake.The various shards and trades on the network will be allocated to the person who took it toSharding process.
- Sharding does not allow the network to use the Proof of Work consensus mechanism. Because nodes will have difficulty conducting transaction validation with the amount of information only on a piece instead of the entire network. Sharding will help nodes only need to store data related to their shards. From there, the network can scale.
- Nodes will know whether or not this transaction data has been made through the process of Shard Sharing. This is where the information of each piece is shared among the nodes and the participants can see the transactions without having to process or store all the information.
 
![sharding-la-gi (2).jpg](https://cdn.bho.network/cms/sharding_la_gi_2_0a929197cb.jpg)

*Sharding shards a large database into smaller pieces of the same format*


## 4. Advantages and disadvantages of Sharding

*Sharding technology* helps the Blockchain network to solve the problems that are limited but the project also has some disadvantages to overcome:

**Advantages:**

- Increase Blockchain scalability.
- Reduce the burden of transaction storage and processing for nodes.
- It works better with Blockchains that use the Proof of Stake consensus mechanism.

![sharding-la-gi (5).png](https://cdn.bho.network/cms/sharding_la_gi_5_66d9559657.png)

*Sharding Increases Blockchain Scalability*

**Cons:**

- Difficulty for applications and databases if Sharding is not done correctly.
- Limitations when Blockchain applies Proof of Work consensus
- The issue of privacy and security is not clear that many investors are concerned about.

In addition to Sharding, many mechanisms and technologies are applied to Layer-2 such as State Channels or Rollups. These solutions mainly deal with off-network transactions, separate from the underlying Blockchain but still apply the main Blockchain's decentralised security model. Plasma or Sidechain is also secure different from the underlying network.

## 5. Blockchain scaling problem

There are two ways to increase the transaction throughput of the Blockchain: Width Scalability (Vertical Scalability) and Horizontal Scalability (Horizontal Scalability):

### 5.1 Expand to width

For higher throughput, Blockchain requires nodes in the network to be extremely powerful and process faster and more transactions. That means users have to spend more on hardware. This is not suitable for general users. The project is ideal for individuals and organizations with solid finance and good technical background.

Both Solana and Internet Computer platforms have approached in this direction. Ordinary users cannot validate Blockchain on normal hardware. This is not necessarily bad, as this is suitable for specific applications that require high performance and consistent state. The downside is that it makes the transaction validation process less decentralized.

![sharding-la-gi (9).jpg](https://cdn.bho.network/cms/sharding_la_gi_9_6a533153bd.jpg)

*Ordinary users cannot validate Blockchain on normal hardware*

### 5.2 Horizontal scaling 

Horizontal scaling is a way of dividing a system into shards (Shards). Each shard is responsible for performing a subset of the total work on the Blockchain. Each Validator will validate that single segment and several other segments.

This allows more users to participate in the authentication process, reducing requests for each shard. Overall, the horizontal scaling keeps transaction validation decentralized, but still expands the total throughput of the system.

![sharding-la-gi (1).png](https://cdn.bho.network/cms/sharding_la_gi_1_9372a833dc.png)

*Horizontal scaling is a way of dividing a system into segments (Shards)*

## 6. Other Scaling Solutions

In addition to applying Sharding, many other Layer-2 solutions have also been born to address the characteristics of shards. Blockchain includes Rollup and State Channels. These technologies essentially process transactions off-chain (Off-Chain), completely separate from the network's base layer but still taking advantage of the network's decentralized security model.

In addition, other solutions have a separate security mechanism from the underlying network such as Sidechain and Plasma.

## 7. Why does Ethereum need Sharding?

Sharding can make running full nodes easier. According to block miner Etherscan, full Ethereum nodes take up at least 5 Terabytes of space, about 10 times more than the capacity of an average computer. These nodes will only grow larger and harder to run over time as more users join the platform.

![sharding-la-gi (4).png](https://cdn.bho.network/cms/sharding_la_gi_4_fa8068d319.png)

*Sharding is a popular technology in computer science*

## 8. Vision Ethereum 2.0 & What is Sharding Technology?

The core problem of Ethereum is how to be able to handle more transactions per second while maintaining the decentralization and security of the network. This is a challenging problem, and Ethereum developers have been thinking about this for years.

Scaling the system horizontally is the best solution to this problem. It is using *Sharding technology* - an arbitrarily fragmented Smart Contract platform. This is the vision of Ethereum 2.0.

![sharding-la-gi (5).jpg](https://cdn.bho.network/cms/sharding_la_gi_5_2e412975bf.jpg)

*Ethereum 2.0 towards Sharding to solve data processing problems*

Ethereum 2.0 is one of the rather complex approaches to scaling for the Ethereum Network. The project requires a lot of design and implementation effort. However, if successfully implemented, Ethereum 2.0 will likely be one of the most effective. The protocol will help increase the transaction throughput of Ethereum by order of magnitude.

Sharding is one of the core technologies of Ethereum 2.0. In Ethereum 1.0, each node only stores one copy of the entire Ethereum Blockchain. Whenever the network is expanded, the nodes have to update. This consumes system bandwidth and memory.

![sharding-la-gi (4).jpg](https://cdn.bho.network/cms/sharding_la_gi_4_a71779b293.jpg)

*Network structure when not using sharding and when using sharding*

With Sharding, Ethereum will be divided into many pieces. Each shard will handle its transactions and contracts. However, the shards can still communicate back and forth with other shards. Since every authentication shard is independent, storing data from other shards is no longer necessary. 

## 9. What are the challenges and risks of Sharding?
 
Sharding is the solution to Scalability Trilemma, but the technology presents another problem for Ethereum and its developers. Due to Sharding split Ethereum into many pieces. Each shard does its own thing, DeFi protocols tend to cluster on the same shard to benefit from synergies. This results in an increase in Gas Fee on some shards.

Protocols on different fragments that want to communicate with each other will have to use another interaction protocol. Therefore, the interaction between two protocols in the same fragment will be more complicated. Some pieces (Shard) will be very busy, like the population division between urban and rural areas.

![sharding-la-gi (11).jpg](https://cdn.bho.network/cms/sharding_la_gi_11_05b82872bb.jpg)

*Sharding will divide Ethereum into many pieces, each of which does its own thing*

Besides, Sharding can also bring some potential risks to the network. The project allows Hackers to destroy a thriving ecosystem by attacking any network piece. If a hacker takes over the fragment, it will cause a Domino effect that will negatively affect the Token price, many users, and the nodes on the shard.

## 10. Classification of Sharding Technology
 
In *technology*, an increase in computing power means an increase in the number of Blockchain segments. Sharding used on Blockchain networks can be divided into 3 categories as follows:

### 10.1 Network Sharding
 
Once a block is added, protocols need to communicate with each other to validate the new block. While this can guarantee the accuracy of transactions, it also quickly leads to shortcomings related to the irreplaceable Blockchain structure.

Therefore, the first step of Sharding is to split the Blockchain network, based on minimizing communication with each other. Each shard will process transactions on the chain. Miners are randomly grouped and work will be assigned to each pool of miners for independent verification.

### 10.2 State Sharding
 
State Sharding means assigning Blockchain data to different shards. As a result, reducing the storage burden of nodes. Compared to the other two sharding mechanisms, allocating state to shards is the hardest.

### 10.3 Transaction Sharding
 
Transaction Sharding deals with which transactions should be allocated to which shards. Then the difference in the ledger model of the Blockchain will impact the Sharding transaction.

![sharding-la-gi (12).jpg](https://cdn.bho.network/cms/sharding_la_gi_12_01d45f7325.jpg)

*Transaction Sharding solves the problem of which transactions will be allocated to which shards *

## 11. What is the future of Sharding
 
The future of *Sharding technology* is quite bright. A wide range of trusted projects have worked on and are using Sharding. One of the first platforms to adopt Sharding was Zilliqa.network Zilliqa was able to reach more than 2,800 transactions per second.

The Cardano network recently released a scalable solution called the Hydra protocol. Each fragment of the Hydra protocol can handle about 1,000 TPS. As a result, the Cardano blockchain can achieve a transaction throughput of 1 million transactions per second.

![sharding-la-gi (13).jpg](https://cdn.bho.network/cms/sharding_la_gi_13_583ff7883e.jpg)

*Cardano network released scalability solution called Hydra*

Ethereum 2.0 protocol, Facebook's Libra, famous Telegram open network and many other notable projects are working hard to bring the future to today. Sharding is an essential part of the future of projects.

## 12. How Sharding Technology Helps the Blockchain
 
Mass-adopted implementation of Sharding in Blockchain is likely to become a reality. Because decentralized technology is too complicated for ordinary users. Therefore, Blockchain developers are always trying their best to bring complex technological solutions into a user-friendly form.

As a result, decentralized applications (dApps) look natural and are pretty simple to users regarding visual experience. However, one of the significant obstacles to mass adoption is the speed of transactions that take a lot of time.

When implemented in a Blockchain, *Sharding technology* distributes the network load between shards. As a result, transaction speeds can dramatically increase, providing better throughput and attracting new users.

![sharding-la-gi (1).jpg](https://cdn.bho.network/cms/sharding_la_gi_1_f2331f5cfa.jpg)

*Sharding has the potential to increase transaction speed, attract new users*

Ethereum 2.0 is expected to solve the scalability issues by implementing a sharding solution into the network. The Ethereum blockchain also plans to move to a PoS consensus protocol to make Sharding implementation possible and efficient.

Ethereum 2.0 consists of 64 equal shards and can process concurrent transactions. All 64 pieces are fastened to the main chain forming the Merkle tree. Ethereum 2.0 can execute up to 100,000 transactions per second by spreading between shards.

## 13. Sharding Technology - Solution to Scalability
 
*Sharding What is Blockchain?* Sharding is partitioning, separating large databases into smaller, faster chunks known as Shards. A Shard is just a tiny part of a larger partition.

The Ethereum network will be split into thousands of Shards. The Ethereum community is trying to eliminate the requirement that transactions be checked by all nodes throughout the system when doing Sharding. Then, Sharding will allow thousands of transactions per second without going through all the nodes. This will significantly reduce the overall size.

Since nodes have dependencies rather than independence, security is uncertain. This is the sacrifice of safety to increase the scalability of the network. When a particular node requests information not stored in its Shard, the protocol looks for information in other blocks. This is a mechanism for Shards to exchange information with each other.

![sharding-la-gi (2).png](https://cdn.bho.network/cms/sharding_la_gi_2_6142429a9f.png)

*Sharding is partitioning, separating large databases into smaller, faster chunks*

Sharding is a very viable approach to solving Blockchain scalability problem. However, this technology is not without its drawbacks. Due to the structure of the Shard, the protocol can quickly lose the security of the Blockchain. This is also one of the reasons behind Ethereum's move to Proof-Of-Stake.

*The article has provided you with helpful information about **what is Sharding**. This technology is a new application for blockchain expansion today. Follow [BHO Network](https://bho.network) for more updates on the platform's latest news in the future!*


What is Sharding? What problem does Sharding solve in Blockchain? Read the following BHO Network article to understand this knowledge.

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What is Sharding? Sharding's potential challenges and risks

***What is Solidity**? What are the outstanding features of Solidity? This is something that investors are very interested in right now. It can be understood simply that Solidity is a programming language used to build applications on the Ethereum and EVM Chain platforms. Let's find out the content below with BHO Network right away.* 

## 1. Learn what is Solidity?

*Solidity* is a programming language for creating smart contracts on Ethereum. This is considered a decentralized Smart Contract platform. Anything created in decentralized systems can be built on Ethereum. It is a decentralized exchange (DEX) or digital art market (NFT Marketplace), DeFi, Metaverse,...

*Solidity* is also considered a high-level programming language. The audience of this language is primarily programmers who want to develop applications on the Ethereum platform. The *Solidity programming* language makes it easier for developers to write programs through the combination of letters and numbers.

![solidity-la-gi1.jpg](https://cdn.bho.network/cms/solidity_la_gi1_e3003eefa2.jpg)

*Solidity is a high-level programming language.*

After being initiated in 2014 by Gavin Wood, this programming language has been developed thanks to the contributions of individuals to the Ethereum project. Led by Christian Reitwiessner, Vitalik Buterin, Alex Beregszaszi and some other members.

## 2. How Solidity works on Ethereum

*Solidity* programming language is used to create smart contracts on Ethereum. The way Solidity is not too complicated. This language allows different use cases such as: 

- Mint Fungible, Non-Fungible Token into the system.
- Create a decentralized lending market for Fungible Tokens such as Compound, Aave,...
- Create markets to exchange Non-Fungible Tokens, including: Opensea, Superate,...

![solidity-la-gi9.jpg](https://cdn.bho.network/cms/solidity_la_gi9_780932cf97.jpg)

*How Solidity works on the Ethereum platform*

After developers use Solidity to write programs, one of the essential components that help execute Solidity Code is the EVM. EVM is described as a virtual computer on a Blockchain application. This machine will help turn the Solidity Code of the developers into an application that works on Ethereum.

At a higher level, Solidity also allows programmers to write “Machine Level” codes that can be executed on the EVM. The compiler is then used to break down the lines of code that the developers have written and turn them into instructions that the system's processor can understand and execute.

## 3. Advantages and disadvantages of Solidity

Although it is one of the prevalent programming languages ​​and is used by many people to write many Blockchain applications, *Solidity* is similar to any other programming language. There are always advantages as well as certain limitations.

### 3.1 Advantages

*Solidity* smart allows the creation of contracts in a safe, transparent and reliable way. If implemented properly, this language can also effectively increase operational efficiency or reduce administrative costs and dependence on 3rd parties.

*Solidity* uses a large number of programming concepts known as Programming Perceptions. These perceptions exist in many other programming languages ​​such as variables, string manipulation, classes, functions or arithmetic operations, etc. 

This is also because C++, and Python, mainly influence Solidity, JavaScript. So if people know a language like Java or C, learning and using Solidity is very easy.

![solidity-la-gi10.jpg](https://cdn.bho.network/cms/solidity_la_gi10_0d2a341cf9.jpg)

*Solidity allows to create of smart contracts securely*

*Solidity* is one of the Blockchain programming languages ​​used today on Ethereum and EVM Chain. This programming language provides quite a bit of open source documentation on how applications work. Solidity is used in many different situations.
 
Furthermore, people can quickly build more complex platforms from other people's work. For example, if you are programming a DEX for yourself. You can completely modify Uniswap's source code and add more innovative features on top of the product itself. It can be the features Liquidity Farming, Lending,...

### 3.2 Disadvantages

In some cases, Solidity's immutability is a limitation of this programming language in some cases. For example, once the contract is made, upgrading or adding additional features is impossible.

Besides, because Ethereum operates on Blockchain technology, it is impossible to collect and update information quickly to the system except through transaction activities. This can be a big deal when it comes to factors such as volatility data or the rates of currency pairs (Forex).

![solidity-la-gi4.jpg](https://cdn.bho.network/cms/solidity_la_gi4_dad52ac1ae.jpg)

*Disadvantages of the Solidity programming language*

The biggest drawback that can be seen from Solidity is facing is nascent when compared to other older programming languages ​​like C or Java. For developers, this means very few libraries and references. This makes learning Solidity a challenging task for newbies.

## 4. Application of Solidity language

*Solidity* is applied to create intelligent contracts for Fungible Tokens and Non-fungible Tokens. Different standards are used to build the above Tokens in the Ethereum ecosystem. This allows a variety of uses to be created for Blockchain users. 

*Solidity* also allows users to use Fungible Token and Non-fungible Token in Ethereum. From creating Non-fungible Tokens to adding these Token to Yield farming Pools to collect profits, different types of Tokens are made possible by Ethereum.

![solidity-la-gi3.jpg](https://cdn.bho.network/cms/solidity_la_gi3_0b4a92e0e5.jpg)

*Solidity is used to create smart contracts Decentralized*

Decentralized autonomous organizations or DAOs for short are also possible thanks to Solidity. DAO - a new form of online organisational structure, mainly written by Solidity. These DAOs will allow people who do not know each other as members to stay together online. Here, people will vote on important decisions of the DAO.

Solidity also makes it possible for users to automate processes in the DAO. This process will include voting on critical decisions and making allocations to DAO members for their contributions to the group.

## 5. What does the Solidity programming language do?

Completely different from other Ethereum-based virtual machine languages, Solidity will include the following functionality:

- Support for multiple C3 linear updates.
- It supports objects or state variables, data types, and many other programming functions.
- Complex member variables for Contracts have arbitrary hierarchical mapping and structure.
- The application binary interface facilitates several certain tasks in a single contract.

Many Blockchain platforms like Ethereum, Tendermint, Ethereum Classic, Counterparty, ErisDB support *Solidity*.

## 6. What data types do Solidity supports

After learning about the features of Solidity, readers will also need to know more about the data types that this programming language supports, such as:

- **Integers (integers)**: Solidity can support both unsigned and signed integer domains. For example, keywords like “Uint256” can be used to allocate a size of 256 bits, and the language also supports runtime exceptions.
- **Boolean**: Boolean data type when it returns the value "0", it is False and if "1" it is True. This also depends on the precision of the condition. Output is typically generated as a Boolean value when Logical operators are used.
- **Modifiers**: Modifiers are used to determine the consistency of conditions before the smart contract code is executed.
- **String Literals**: String literals can be represented by double or single quotes.

In particular, **Solidity** also provides Enums, operators, and arrays,... forming a data structure called "Mappings". This structure is used to return values ​​associated with storage locations. Because the implementation syntax is very similar to any common programming language. This can support both single as well as multidimensional arrays.

![solidity-la-gi8.png](https://cdn.bho.network/cms/solidity_la_gi8_38b6e2f3e5.png)

*Solidity supported sata types*

## 7. Tools Solidity Developers Can Use

Tools *solidity* sevelopers san use to build intelligent contracts based on programming languages Solidity can be:

- Solgraph: Used to generate a DOT graph that shows the functional control flow of a Solidity and identifies security vulnerabilities.
- Solidity REPL: Solidity REPL is used to able to write command line code on Solidity Console.
- EVM Lab: This is a diverse set of tools with interoperability with the Ethereum virtual machine (EVM). It's the Etherchain API - a viewer that tracks a virtual machine.
- Evmdis: Evmdis stands for EVM Disassembler, which can be statically analysed on top of Bytecode to create a higher level of abstraction than raw EVM operations.

![solidity-la-gi5.jpg](https://cdn.bho.network/cms/solidity_la_gi5_b9a5802ec7.jpg)

*Tools used by Solidity programmers to build smart contracts*

## 8. Where can Solidity be used?

*Solidity* is often used a lot in the following specific cases.

### 8.1 Voting

Voting solves many problems such as data manipulation, tampering, changing voting machines and booth capture. Smart Contacts Solidity can be created and deployed to make voting transparent and streamlined.

![solidity-la-gi2.png](https://cdn.bho.network/cms/solidity_la_gi2_011b927e26.png)

*Using Solidity to vote*

### 8.2 Crowdfunding

Crowdfunding is done through smart contracts. This can solve problems like third-party commissions or data management. Solid Smart Contracts can crowdfund without requiring a centralized system to build trust. Therefore, this will reduce additional costs.

![solidity-la-gi11.png](https://cdn.bho.network/cms/solidity_la_gi11_22691c97c4.png)

*Crowdfunding through smart contracts*

### 8.3 Blind Auction

In an open auction, participants can view each other's bids, leading to disputes or fraud. Through Smart Contracts on *Solidity*, blind auctions can be designed where the user cannot see who is bidding until the auction ends.

![solidity-la-gi12.jpg](https://cdn.bho.network/cms/solidity_la_gi12_91e848d114.jpg)

*Using Smart Contracts on Solidity to do blind*

## 9. Should you learn Solidity?

In terms of income, Blockchain Developer is currently one of the most attractive industries in Vietnam and on a global scale. This happens because demand exceeds supply. Therefore, a Blockchain Developer's income will usually be relatively high, whether people choose to work at a certain company or create an application of their own.

In Blockchain Developer, *Solidity* Dev seems to as the group with the highest need. Because Solidity is a programming language used to create applications on top of Ethereum and EVM Chain. Therefore, it can be seen that *Solidity* in Blockchain is the most used language today and the income is also handsome.

![solidity-la-gi6.jpg](https://cdn.bho.network/cms/solidity_la_gi6_7dc7bd7301.jpg)

*This is a potential course to try.*

*Solidity* is a programming language that you should prioritize learning because of a few things:

- Ethereum has been growing for a few years now. Therefore, the learning materials, and the use cases have been explored quite a lot compared to Coswasm, Link, etc., which is very useful in the learning process of learners.
- The Ethereum & EVM Chain ecosystem is the most extensive and fastest growing in the crypto space. So your growth opportunities will be huge.

*This is all about the information on “**what is Solidity**” with the features of this programming language. Hopefully, the general content shared in the article of [BHO Network](https://bho.network/vi) will be somewhat helpful for readers. Everyone can also follow the page so as not to miss the next new thing.*




What is Solidity? What are the outstanding features of the Solidity programming language? Let's find out with BHO Network through the article below.


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What is Solidity? Everything you need to know about Solidity

***What is Lending**? How many forms of Lending are there in Crypto? What are the things to keep in mind when investing in Lending Token? Let's discover detailed information about the Lending exchange with BHO Network through the article below.*

## 1. What is Lending?

*Lending* means lending. For this form, users use their assets or money to lend to others at an interest rate for a certain period. 

After some time, the lender will get back the principal amount and interest as initially agreed. In this case, the borrower can be other users or exchanges.

![lending-la-gi1.jpeg](https://cdn.bho.network/cms/lending_la_gi1_0a4879c64a.jpeg)

*Lending is a form of lending with interest rates for some time*

## 2. Highlights of Lending

In this section, BHO Network continues to share the advantages and disadvantages of the *Lending Crypto* project. We invite you to read along.

### 2.1 Advantages

- Users can lend Tokens (assets) without doing too many procedures, such as opening a bank account or verifying collection.
- Users can freely lend their idle Tokens for interest while increasing their Tokens.
- Often platforms have many options for lending time to diversify the lender's options.

![lending-la-gi12.png](https://cdn.bho.network/cms/lending_la_gi12_3c6056d711.png)

*Lending has the advantage of being easily profitable*

### 2.2 Disadvantages

- The most significant risk for the lender is that the price of the Token may be reduced during the lending period. Even the lender returns the original Token, and the interest is lower than the original.

Example: User gives Lending 100 GRT on Binance Lending within 28 days with 5% interest. Thus, the amount of Tokens collected by the lender that will be received after the end of the term is 100 GRT + interest.

At the time of lending, the price of GRT is $1.
At the end time, the price of GRT is $0.5

Thus, the number of Tokens that the lender receives after the end of 28 days will be calculated according to the following formula: 100 + 100 x 5% x 28/365 = 100,383 => GRT + profit = $100,383.

But at the end of the loan, the GRT price was reduced to $0.5. Therefore, the actual amount received after giving Lending is only $50,191.

- Users can have their crypto stolen in the absence of tight security.

## 3. How Lending Token

To understand more about the Lending exchange, please read how Token Lending works. The Lending Crypto project works by connecting borrowers with a network of lenders already registered on the platform. Borrowers need to collateralize their cryptocurrency to be allowed to borrow money. 

The lender will lend to the needy the same amount and they will earn interest on it. When the borrower repays the loan with interest, he will get his Token assets back from the Token Lending platform.

![lending-la-gi5.png](https://cdn.bho.network/cms/lending_la_gi5_2a27911bab.png)

*Lenders can make a lot of money from the Token Lending platform*

For lenders, this can be an opportunity to earn some interest. Besides, borrowers will avoid the pressure to sell tokens when they feel their price may increase in the future.

Several ICOs (short for Initial Coin Offering – a form of fundraising by startups in Token and Blockchain industries) have joined the Token Lending platform and made the whole process a breeze and more democratic.

## 4. Crypto Lending Forms Crypto

Lending forms are divided into 3 states:

- P2P Lending: peer-to-peer lending
- Over-Collateralized Lending: Over-standard lending.
- Under-Collateralized Lending: Subprime lending.

In particular, Over-Collateralized Lending and Under-Collateralized are two forms of using the Lending Pool mechanism, in which:

- Lender (Lender) will transfer the supported Tokens to the liquidity pool, in return they will receive interest. capacity. 
- Borrower (Borrower) will move other Tokens into Liquidity Pool and will pay interest. The interest rate will be calculated automatically according to the available formula and depends on the supply and demand of each asset class in the Lending Pool.

### 4.1 What is Over-Collateralized Lending?

Over-Collateralized Lending is a loan with more collateral than the loaned asset. The advantage of Over-Collateralized Lending is that users can make the most of their capital. 

For example, at the FTX exchange, users can deposit their Tokens there and borrow money from the exchange to play Futures. This means that in addition to our profit from the original asset increasing in price, users also receive money from Futures. 

However, profits come with risks. If the Futures order is reversed, the loss will cause the user's assets to be liquidated. 

### 4.2 What is P2P Lending?

*P2P Lending* is a form of direct lending between borrowers and lenders without going through a 3rd party as an intermediary. By using Smart Contracts, borrowers and lenders can enter into contracts. Smart Contracts are self-executing and allow transactions.

One of the biggest advantages of P2P Lending is that lending costs and interest rates are much lower than the other two forms because it eliminates the third party. Thus, transaction information and customers are also guaranteed. secret. 

![what-is-lending.png](https://cdn.bho.network/cms/what_is_lending_bf31f7a6c3.png)

*P2P Lending *

### 4.3 Under-Collateralized Lending?

Under-Collateralized Lending is a loan with less collateral than the borrowed asset. Another name for this form Credit, ie unsecured, uses its reputation to borrow with less collateral. 

Currently it is still unclear how to apply Credit to ordinary users, but only applied to projects in the Whitelist of the Lending project to get loans.

## 5. What is Lending Token? Learn about Crypto Lending

Lending Token is a form of users willing to lend their Token to others to receive a certain interest rate. 

Currently, users can make Lending Tokens on:

- Exchanges such as: Binance, Bitfinex, Poloniex,...
- Separate Lending platforms include CeFi and DeFi.

In which:

- Lending in CeFi: these are lending platforms in a centralized financial system, with a third-party intermediary to control the two lenders. 
- Lending in DeFi: is a lending platform in decentralized finance. Ignore intermediaries and no-custodial (non-custodial)

![lending-la-gi3.jpeg](https://cdn.bho.network/cms/lending_la_gi3_b115622b61.jpeg)

*Lending DeFi and CeFi have specific differences*

## 6. Understanding Crypto Lending Process

Below are the essential steps in the Crypto Lending process. Let's find out together.

- Step 1: Borrowers will request the background of the loan they desire.
- Step 2: The platforms will evaluate the requested loan.
- Step 3: After the platform has accepted the loan, the borrower will put his collateral Token in the Lending Pool. Typically, venues will ask for a value of 50% of the lent Tokens. 
- Step 4: The lender's assets will be deposited into the platform's wallet.
- Step 5: Lenders will receive interest periodically, weekly or monthly, based on the length and number of properties they lend.
- Step 6: When the borrower repays his loan, they can now unlock the previously mortgaged property.

![lending-la-gi10.jpeg](https://cdn.bho.network/cms/lending_la_gi10_7c3c9c950d.jpeg)

*The lender will receive periodic interest*

## 7. Information to be concerned about in Lending

In the *Lending Crypto project*, whether it is CeFi or DeFi, users must also pay attention to the following essential parameters:

### 7.1 Lending Interest Rate - Interest Rate

This is the rate of receiving interest when a user makes a loan of any 1 Token. Of course, a lender wants this number to be as high as possible.

![lending-la-gi.jpeg](https://cdn.bho.network/cms/lending_la_gi_f90fa09770.jpeg)

*Interest Rates and Tokens in Platforms*

### 7.2 Lending Time 

The lending period is when the user's Token is locked and loaned to others. Lending Time is calculated from the beginning to the end of the loan, when the user has received both the capital and the interest of the loan.

Typically, platforms will provide lenders with Multiple time frames to choose from. However, during this period, the user cannot withdraw the capital he lent until the maturity period. 

### 7.3 Lending Assets

The more Lending Tokens the Platform has, the more choices users have to make Token Lending.

![lending-la-gi11.png](https://cdn.bho.network/cms/lending_la_gi11_b5f2f52b9e.png)

*User can perform Token Lending if the platform has many types of Token*

### 7.4 Lending Total Value Locked 

Value Lending Total Value Locked is understood as the total value locked inside the platform. This number represents the user's level of interest and engagement with that platform. The more assets locked inside the venue, the more impact on the price of that Token.

## 8. Find out the nature of the operation of Lending

To invest in Lending, you need to understand the nature of Lending's process on the exchange and the Lending platform.

### 8.1 How Lending works on exchanges

When Lending is on the exchange, the Tokens in the Lending process will be included in the Margin Trading mechanism by the exchange. In other words, this is an escrow service, traders can borrow some more Tokens from the exchange to leverage their trading. 

So how can traders borrow more of that Token? There are two ways to do this:

- Method 1: Use Tokens from the exchange's reserve fund. This way, the floor must have a large number of funds for traders to borrow.
- Method 2: Borrowing Tokens from others with a certain interest rate

![lending-la-gi7.jpeg](https://cdn.bho.network/cms/lending_la_gi7_1a3fd9cd72.jpeg)

*Users should understand how the Lending platform*

### 8.2 How Lending Platforms Work

When Lending on exchanges, Tokens participating in Lending will be included Margin Trading lending mechanism. 

For the Lending platform, the amount of Tokens participating in Lending will be used to lend to borrowers (borrowers). On the other hand, media will act as intermediaries and benefit from the difference between borrowing and lending rates.

## 9. Impact of Lending on Token Price

According to the Lending mechanism, the Tokens participating in Lending will be locked for a certain period of time. This will positively affect that Token.

- Total Value Lock (TVL) when locking a Token causes the circulating supply of that Token to decrease during the lending period.
- The need to buy Tokens to participate in Lending increases.

These factors will theoretically help increase the Token price. However, there are other factors that affect the cost of that Token, barely causing the price to rise. That is, the amount of tokens participating in the lock is too small compared to its total supply, making the impact of buying demand and reducing supply almost negligible.

In addition, Lending is also a game of exchange with Margin. 

- In Lending, the exchange will hold a large number of Tokens.
- The exchange can release Tokens by using that amount of Tokens to sell them down, causing the price to plummet.
- Then use the money to buy at a lower price.

![lending-la-gi13.png](https://cdn.bho.network/cms/lending_la_gi13_19d25fd135.png)

*Lending’s activity can affect the price*

## 10. Example of Lending

Example For example, Binance Lending opens ETC Lending. At that time, the Interest rate was 7% a year and within 14 days.

- October 1 (lending): ETC price is $55
- October 15 (principal + interest payment): ETC price is $40

If a user lends 100 ETC, the total amount received will be calculated according to the following formula:
100 + 100x7% x 14/365 = 100,268 => ETC = $5,514.

However, up to the time of principal and interest payments, the ETC price was at $40, so the lender only received a total of $4,010, which means a more than 27% reduction.

In this case, the lender will be "lost" because it cannot cut losses when the ETC price falls deeply. This leads to the end of the loan term, and the principal and interest are significantly reduced.

![lending-la-gi9.jpeg](https://cdn.bho.network/cms/lending_la_gi9_ef9a46bede.jpeg)

*Lending's price is subject to change until the end of the term.*

## 11. Should I invest Lending token?

With the information we have just provided, you understand “**what is Lending**” and whether you should participate in the Lending model. If you decide to hold the Token for a long time, Token Lending is a form of passive income. Token Lending allows you to earn more from Idle Tokens.

## 12. FAQ about Lending

Here are some frequently asked questions about Lending that BHO summarizes, readers can find out if they have any questions.

### 12.1 Is the Lending service reputable?

Lending service can be said to have both potential opportunities and risks that are difficult to control. The risk can occur when the Lending Tokens drop sharply in price during the term. This makes it difficult for borrowers to recover and cut losses. 

Besides, Lending is a way for Traders to earn extra income when they intend to keep their assets long-term. 

### 12.2 Where does the Lending service get money to pay the borrower?

Like a bank, Lending's exchanges will mobilize users' Tokens, and transfer them to people who need to borrow or make other profitable investments. Then, they will together with the profits paid to the Lenders.

### 12.3 Risks from the Lending model

- If the floor owner is a person who is not severe and has bad intentions, you will have a lot of trouble.
- If the value of Base coins declines for a long time, it may cause an imbalance in liquidity. This will seriously affect the financial structure and Lending model.

### 12.4 Is anyone doing Lending successful?

Not everyone who does Lending is successful. This model works when the price of Lending Crypto is continuously increasing. It only appears when there is a large enough, sustained buying force.

*[BHO Network](https://bho.network) has just shared with you the knowledge about **what is Lending**? Hope this helpful information can help users in investing in the cryptocurrency market. Follow BHO's articles to update the latest knowledge.*


What is Lending? What are the salient features of Lending? Read the following article on BHO Network to learn more about this type of loan.


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What is Lending? How does Lending work?

***Pump and Dump** are known to be highly high-risk scalping investments. If you are a newcomer to this market, it is easy to become "prey" for the "sharks". So in today's article, BHO Network will help you learn in detail about two phenomena Pump and Dump. Let's follow along!*

## 1. What are Pump and Dump?   

To understand precisely “what are **Pump and Dump**”?, you should first learn about the definitions of these two words. Specifically as follows: 

### 1.1 What is Pump?

Pump or “pump” is a term or a code that refers to the purchase of a large number of tokens by some object. This action is intended to push up the price and demand of cryptocurrencies. Tokens selected for Pump usually have a low starting price, low popularity and small capital. 

Understandably, the "shark" (Trade Coin) will proceed to buy a large number of specific Tokens with low value. They wait for the right time and make the price push to the top to "trick" amateur traders into investing. Then, they dump Tokens to the lowest level, even zero.

![Pump-and-dump (6).jpg](https://cdn.bho.network/cms/Pump_and_dump_6_88b180686b.jpg)

*Pump is an action to push up the price and purchase demand of cryptocurrencies*

### 1.2 What is a Dump?

Dump means "discharge" in Vietnamese. The term refers to the “shark” that begins to release Tokens after the price pump. Trade Token will be sold large quantities to profit from the price difference.
You need to pay attention, people with profiteering schemes will seek and take advantage of loopholes in the supply and demand changes of the cryptocurrency market. From there, individual investors believe this is just a normal price movement phenomenon. 

![Pump-and-dump (1).jpg](https://cdn.bho.network/cms/Pump_and_dump_1_287e6f104c.jpg)

*Dump is the term used to refer to the "shark" that begins to discharge Tokens after the price Pump*
 
In summary, **Pump and Dump** is the work of one or a group of investors colluding to pump the price of a Token up and attract new investors to jump in. Then, they made a continuous sale, causing the token price to drop rapidly. This allows that initial group of people to profit quite a bit from the sudden price increase.
 
People who can perform this behaviour are usually organizations and individuals (called "sharks") that own a large amount of capital. When they hold many Tokens, they can easily navigate the market however they want.
 
In other words, Pump & Dump manipulates the cryptocurrency market schemes **Pump and Dump** that can last only a few minutes but significantly impact the price and volume of a Token. 
 
## 2. Pump and Dump Example

If you are involved in cryptocurrency investing, you must have heard of the Pump and Dump event in May 2020. Specifically, a small Altcoin that almost no one knows named Tierion has done this. 

On May 12, 2020, Tierion conducted a Pump increase from $0.05 to $0.11 (more than 45%). Then, on May 22, 2020, the Token price was dumped to only $0.03. Even that price was $0.02 lower than the initial capital he spent.

![Pump-and-dump (2).jpg](https://cdn.bho.network/cms/Pump_and_dump_2_db59be7912.jpg)

*Tierio's Pump & Dump event in May 2020 has shocked the crypto market*

However, when digging deeper into this phenomenon, one does not see anything special about the Token coin or the project of Tierio. Tierion. They only saw a few good rumors on the social network Facebook.

## 3. Why Pump and Dump

Every plan is built for a reason, **Pump and Dump**. This phenomenon has become famous for some reasons: 

### 3.1 FOMO

FOMO (Fear of Missing Out) is an effect of fear, fear and regret when people miss an opportunity. This is considered an important factor promoting the development of **Pump and Dump**. 

For example, when the price of Token is pushed up, the task of the "shark" is to do everything to convince investors. They will tell them that they will miss out on their super profit if they don't invest in this Token immediately.

Until amateur investors saw more and more buyers, the price of the Token increased rapidly. They began to feel regret and the Fomo effect was created. Regret makes them fall into the nets of "sharks". 

![Pump-and-dump (3).jpg](https://cdn.bho.network/cms/Pump_and_dump_3_2ca3a5e9cc.jpg)

*FOMO is considered an essential factor in driving the development of Pump and Dump*

### 3.2 Liquidity

Most "shark" investors in the cryptocurrency market have more capital than the daily trading volume. Therefore, they need to be as liquid as possible. 

Only then will they be able to reap profits quickly. To achieve its ambition of liquidity, the “shark” needs to create a Pump & Dump.

![Pump-and-dump (7).jpg](https://cdn.bho.network/cms/Pump_and_dump_7_da1b1e9010.jpg)

*To achieve the ambition of liquidity, “sharks” need to create a Pump & Dump*

### 3.3 ICO

The “sharks” will always find a way to Pump and inflate prices through ICO activity. This process is often supported by some famous people in the crypto world. After some time, when the price has risen as planned, the group behind it will start dumping causing small investors to suffer heavy losses.

![Pump-and-dump (9).jpg](https://cdn.bho.network/cms/Pump_and_dump_9_c490e9c199.jpg)

*Pump & Dump implementers will always find ways to push the price Tokens through ICO activity*

### 3.4 Legal Framework

They are punishable by severe punishment in traditional markets. This illegal action, also occurs in the stock market, gold, but the securities market is protected by law and not with cryptocurrencies, so be careful in investing in these coins. small with new people. 

However, most countries today do not have a formal legal framework for cryptocurrencies. As a result, the Pump & Dump trick is used freely. Since then, it quickly became a lucrative bait for "sharks" without worrying about being prosecuted by law enforcement agencies.

![Pump-and-dump (12).jpg](https://cdn.bho.network/cms/Pump_and_dump_12_2b31a2b784.jpg)

*Most countries in the world currently do not have a formal legal framework for cryptocurrencies*

##  4. Understanding the Pump and Dump process of the "sharks"

Usually, the implementations **Pump and Dump** will be go through 3 steps. Specifically as follows:
 
### 4.1 Step 1: Collecting / accumulating Token

It takes all, to manipulate the Token price, the "shark" needs to own a large amount of that Token. As mentioned above, large investors often collect tokens to facilitate price control and manipulation.  

However, collecting Tokens is not easy. "Sharks" often have to perform for a long time. They must collect in small batches to avoid accidentally increasing the Token price.  

![Pump-and-dump (10).jpg](https://cdn.bho.network/cms/Pump_and_dump_10_7dd14b0933.jpg)

*“Sharks” often collect tokens with low capitalization to facilitate price control and manipulation*

If you want to know how “sharks” collect Tokens, please continue to refer to the content below.
- **Ways to collect Tokens through direct trading channels:** “Sharks” will buy Tokens through Miners, investors who have left the project or buy directly from the founding team of that Token. Because, buying directly in bulk, the coin price will be much lower than the market price.

- **Token mining method:** “Shark” performs early Token mining or buys Tokens from the first rounds. However, this way of collecting Tokens is hazardous because it is not always possible to collect potential Tokens.

### 4.2 Step 2: Hold Price and Pump

After buying a large enough amount of Tokens, the “shark” will focus on releasing news to attract the attention of ignorant investors to FOMO at a high level. expensive. They start on forums, Groups or Chatboxes on Facebook, Telegram, Discord,... Where there are a lot of investors to discuss the Token they just bought. 
 
“Shark” can use many Clone accounts to create the most natural feeling. The good news about the Token will be released by them continuously. At the same time, optimistic predictions of that Token will also be updated regularly so that people rush to buy and the price will be pumped up.

![Pump-and-dump (1).png](https://cdn.bho.network/cms/Pump_and_dump_1_4154dceeb1.png)

*After collecting a large enough amount of Tokens, the "shark" will release news to attract the attention of uninformed investors*
 
The price push process is speedy and there seems to be no adjustment. to create large FOMO. The common feature of the Pump Token is that everyone is optimistic about the future of the Token coin to the point of absurdity. This is also when many investors think about Hold To Die the most.

### 4.3 Step 3: Dump and exit

After completing the above 2 steps, there will be the final stage where the "sharks" sell and make a profit. At this time, the price of the Token will stop increasing and the transaction volume will decrease. The "sharks" had earned enough money they needed and escaped safely.

From there, panic will begin to emerge. Token price is continuously falling to the bottom quickly. Pump & Dump victims constantly look for sellers to save what is left.

![Pump-and-dump (2).png](https://cdn.bho.network/cms/Pump_and_dump_2_9e8bcae9a8.png)

*The “Shark” makes a quick Dump Token for profit*

## 5. How to determine Pump & Dump

There are quite a few ways to determine if a Token has a Pump & Dump or not. Ensure you know the following methods to avoid being trapped by "sharks".
 
- The simplest way to identify a Pump & Dump is when an anonymous token suddenly increases in price without any credible explanation or announcement.
- When you notice paid articles about a token associated with an increase in media activity around a particular crypto project. Be careful as this could be a sign of a Pump & Dump.
- If a token with a market capitalization of only a few million dollars suddenly appears on all sites like Twitter, Facebook Telegram or Reddit, you also need to be cautious.
- Always be on the lookout for promises that you can double your money quickly when investing in a specific Token. Because this may be false advertising made by people involved in Pump & Dump.
 
![Pump-and-dump (4).jpg](https://cdn.bho.network/cms/Pump_and_dump_4_32650a5385.jpg)

*An anonymous token that suddenly increases in price for no reason is a sign of Pump & Dump*

## 6. The mechanism of operation of the Pump and Dump

Pump & Dump groups will often appear on social networks. Which is mainly on Telegram's platform channel. Here, pump discharge groups can contain several thousand to tens of thousands of participants. 

Accordingly, a type of Token when Pump & Dump is selected will be notified by the Admin in the group. Members will conduct exchanges and buy and sell together a few minutes later. Fake news about this coin has even spread widely on social media, Blogs and news sites that are said to have a reputation for sponsored content.

![Pump-and-dump (5).jpg](https://cdn.bho.network/cms/Pump_and_dump_5_95a591aa04.jpg)

*Pump & Dump groups appear mainly on Telegram 7 platform channels*

## 7. Is Pump & Dump group simple to operate?

Plan groups **Pump and Dump** always have a leader or administrator and membership hierarchy. If you are a higher level member, you will be exposed to pump signals earlier than a lower level member.

Through this, you will always have the opportunity to buy at a lower value and make more profit when conducting pumping operations. However, the time advantage at higher levels usually only lasts about 3 to 8 seconds. You can upgrade by introducing new people to the group. The more new members you add, the higher your rank will be. 

**Small note:** You need to remember that there is no profit sharing without a purpose, pay attention to the signals as soon as a group of people come to you to share high profits for unknown reasons.

![Pump-and-dump (3).png](https://cdn.bho.network/cms/Pump_and_dump_3_328fef2c47.png)

*Groups of plans Pump and Dump always have a leader and membership hierarchy*

## 8. Are Pump and Dump legal?

Pump & Dump is an illegal and tightly regulated act for traditional financial markets. In the United States, market manipulation can be punishable by imprisonment according to the Securities Act of 1933. In Vietnam, the Penal Code also stipulates the crime of manipulating the stock market with frames. The maximum penalty is 7 years in prison. 
 
In the cryptocurrency market, law enforcement agencies are always trying to intervene and prevent price manipulation but to no avail. For example, the case of John McAfee happened in 2017, 2018. 
 
At that time, he promoted a new Token daily on his Twitter. However, he did not reveal to his followers that he bought this coin before posting the Tweets. 
 
![Pump-and-dump (8).jpg](https://cdn.bho.network/cms/Pump_and_dump_8_f415a81311.jpg)

*John McAfee has been promoting a new Token daily on his own Twitter*
 
Specifically, it is Tokens like Dogecoin, Reddcoin and Verge. McAfee's actions have accused the CFTC of commodity and securities fraud, wire fraud, and money laundering. This is also the first time the CFTC has taken action against those involved in the crypto Pump & Dump scheme.
 
However, so far there is no precise regulation on this behaviour. Besides, the "sharks" on Telegram or Twitter can use anonymous IDs to avoid being tracked by law enforcement. Therefore, manipulations of the cryptocurrency market are still occurring regularly without being dealt with.
 
## 9. A few tips to avoid becoming a victim of Pump & Dump
 
You need to invest in the cryptocurrency market. However, you are pretty worried that you may be led and become a victim of Pump and Dump. Understanding this, BHO has compiled some tips to help you avoid the most effective Drain Pump trap. 
 
- Always do thorough research on the Token you intend to invest. Includes information about the white paper, creative team, project application, strategic partner and other background information. This will help you have a basis for evaluating whether the Token has potential or not. From there, you can quickly detect unusual fluctuations. 
- Limit investment when there is FOMO mentality. It would help if you kept in mind that the cryptocurrency market has a lot of potential and safe tokens. Opportunities always come your way. Therefore, be careful when making investment decisions! 
- Make a plan for effective risk management and capital management. Market volatility is normal and you don't need to worry too much. Take the time to plan for the upside/down situation and the appropriate capital ratio. This can help you avoid losing profits on your investment. 
- Be careful when investing in coins with a large market cap, reputable development team, and high adoption.
- In addition, you need to pay attention, Pump & Dump often occurs with coins with poor trading volume and liquidity. Avoiding such Tokens will help you limit many of the risks of becoming a victim of dumps.
- Finally, you should not rely too much on the investment advice of investors on social networks or in heavily advertised articles. 
- If you are new to investing, you should divide the % of capital for several different coins, which, divide a significant % (60-70%) to hold strong coins such as BTC, ETH, BNN, SOL.... The rest is used for trading in minor currencies.

![Pump-and-dump (11).jpg](https://cdn.bho.network/cms/Pump_and_dump_11_4d1e6dd895.jpg)

*Thoroughly research the Token you are about to invest in so you can quickly spot unusual fluctuations*

*Above is the basic information about **Pump and Dump** and how to identify bad tokens in the cryptocurrency market. Hopefully, the article will help you protect your capital and maximize your return on investment. Don't forget to follow [BHO Network](https://bho.network) to update more knowledge about Token!*


What are Pump and Dump? Are Pumps and Dumps Important in the Crypto Market? See the following article of BHO Network right away.

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What are Pump and Dump? Signs of Pump and Dump

What is the Gas fee? How does it affect transaction fees on Ethereum's network? Please refer to the article of BHO Network to understand Gass Fee.



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What is Gas fee? What you need to know about Gas fee

***What is Sidechain**? Perhaps this is a fairly new term for investors in the derivatives market. Sidechain is one of the popular ways to scale for Ethereum. To learn more about this platform soon. Let's learn with BHO Network how it works and some of the main advantages and disadvantages of the application in the article below.*

## 1. What is Sidechain?

*Sidechain* is one of the separate Blockchains and runs in parallel and works separately from the Ethereum Mainnet.models Sidechains and the platform's Block parameters to process transactions more quickly and efficiently. In addition, the application usually provides compatibility with the Ethereum Mainnet via a two-way Bridge.

![sidechain-la-gi (11).png](https://cdn.bho.network/cms/sidechain_la_gi_11_c5ccc6ee35.png)

*Sidechain is a separate blockchain that runs in parallel and works independently of the Ethereum mainnet*

On the market today, there are some Sidechains major BNB Smart chain, Avalanche C-Chain, Polygon PoS Chain, Fantom,. ..

## 2. Structure of Sidechain

*Sidechain* works like small and independent Blockchains. This application is different from the Mainchains because it tends to be more centralized, smaller and faster. The primary function of the platform is to process and validate the data for the main chain or add some parts, for example, running smart contracts for some Blockchain is impossible. 

To be able to do this, Sidechain will communicate with the main chain in several ways as follows:
- **First:** It is the use of two-way pegs, creating Sidechains . The application has two parts and uses simple payment verification (SPV) to guarantee ownership of coins:
  - **Locking Up:** This pin will be used to move coins or tokens from the leading chains to Sidechain. To do this, the tokens will be locked in an output address to avoid the presence of free tokens on the two chains. 

After the Tokens are securely locked to prevent these Tokens from being consumed elsewhere, the equivalent amount will be minted on the Sidechain and only consumed here. The funds are then sent to a wallet or Smart Contract on the platform and coordinated by a machine or code instead of a human. To obtain the coins, some specific actions must be performed.
- **Releasing:** This latch is applied when an individual wants to get coins or Tokens from the Sidechain and unlock it in the main chain. This is a more complex process than locking. 
To successfully obtain these, the Platform Representative Tokens must be destroyed, thus freeing some of the Tokens on the main chain and avoiding duplicates.
 
![sidechain-la-gi (9).png](https://cdn.bho.network/cms/sidechain_la_gi_9_26d4171015.png)

*Sidechain works like small and independent Blockchains*

- **Second:** It is the emergence of a Federation, although this will not be present in all sub-chains: The
  - The Federation is seen as the middleman responsible for locking. and release functions between Sidechains and Mainchains. Platforms are sometimes seen as a danger to centralization. 
However, the application helps maintain the integrity of cross-chain transactions. Some are machine-based, meaning the application will be generated from code, while a representative organization of Sidechain creates others.
- Federation will ensure that the Tokens represented are correctly minted and match the Tokens locked on the main chain before allowing any transaction or the issuance of any Tokens from one chain to another. 

The link will block the transaction if there is any difference between the values. This means that *Sidechain* will not hold more value than Mainchain.

They are using a Sidechain to process transactions and verify data. The scalability of the main chain is improved and transactions are processed more quickly. Because of this, users will often have to transfer money to the Sidechain to complete tasks or run Smart Contracts faster, then the application will bring that money back to the main chain.

## 3. How does Sidechain work?

As one of the Blockchain works separately, then does the *Sidechain* work? To better understand, please also BHO Network learn in the information below.

### 3.1 Security and consensus

*Sidechain* is operated on the security assumption that “n Validators in m Validators” must work honestly. Besides, Sidechains also often combine with their incentive or punishment mechanisms to minimize fraud and Toxic behaviour on social networks. Some popular consensus mechanisms used by Sidechains are DPoS, PoS, PoA,...

- **Proof of Authority (PoA):** PoA is an acronym for Proof of Authority. This is a PoS-inspired consensus (introduced below). In it, the application will use an algorithm to enhance the value of the identity and reputation of the participants, not based on the Token values ​​that the players hold. 

  Validator Nodes in the network will be selected, what users will stake is their reputation for having the right to validate transactions and create new Blocks.

Like Delegated Proof of Stake (DPoS), PoA has a limited number of Validator Nodes, usually below 25 Validators. This makes it possible for blockchains to use PoA consensus and to be easily scalable. Some famous Blockchains that use PoA include BNB Smart Chain, Ronin,...
- **Proof of Stake (PoS):** Nodes in the Blockchain are required to Staking a predetermined amount of Native Tokens on the network. for a chance to become a Validator. Validators will be primarily responsible for validating some transactions and arranging them in new blocks. 

Instead, participants will receive rewards for the production of new blocks and the carrier's transaction fees. In some cases where Validator Nodes are found to be fraudulent, Native Tokens used in the network will be Slashed.

PoS has a relatively large number of Validator Nodes, because to run Node participants only need to Staking a minimum amount of Tokens (with ETH Beacon Chain with 32 ETH). Currently, Ethereum's Beacon Chain has more than 350,000 Nodes in operation.
- **Delegated Proof of Stake (DPoS):** DPoS is an acronym for Delegated Proof of Stake. This is the consensus algorithm used in many Blockchains today. Token holders will choose a number of professional Nodes to represent in the operation of the network. Instead, Token Holder will be shared a part of the Reward for the work of ensuring network security.

DPoS has a limited number of Validator Nodes, usually ranging from a few dozen to two hundred. It is this that helps Blockchains using DPoS to be easily scalable.

![sidechain-la-gi (1).png](https://cdn.bho.network/cms/sidechain_la_gi_1_63ec77ce44.png)

*Sidechain is operating on the security hypothesis of “n Validators in m Validators”*

### 3.2 Interoperability

As usual, Sidechains will provide the ability to interact with the Ethereum Mainnet through a 2-way Bridge. The two main designs used are MPCs and Light Client And Relays. Applications will have different construction difficulty, MPCs will be easier to build but will have less security than Bridges built on Light Client And Realay.

![sidechain-la-gi (4).png](https://cdn.bho.network/cms/sidechain_la_gi_4_1cff038c5d.png)

*Sidechains will provide interoperability with Ethereum Mainnet*

### 3.3 Execution

Execution is one of the unique features of *Sidechains*. This tool will replace creating your programming languages ​​or virtual machines. Sidechains existing programming language Solidity and Ethereum's virtual machine type, EVM.

This has helped the *Sidechains* often have a high degree of compatibility with the Ethereum Mainnet. Applications on the Ethereum Mainnet can easily move across *sidechains* more quickly. 

![sidechain-la-gi (6).png](https://cdn.bho.network/cms/sidechain_la_gi_6_473484702a.png)

*Execution is one of the unique features of Sidechains*

## 4. Sidechain Highlights and Limitations

So what makes *Sidechain* stand out? What will be the remaining limitations of Sidechain? To better understand this platform, please refer to the information below.

### 4.1 Advantages 

Sidechain has many outstanding advantages. It is these advantages that make the platform attract significant attention from investors. Specifically as follows: 
- **High scalability:** transactions on the *Sidechain* can help reduce the computational burden and congestion of the Mainchain. At the same time, this allows participants to execute trades faster and more efficiently, while maintaining the integrity of the main chain.

- **Many opportunities to test and upgrade:** With large Blockchains, owning many Nodes and cumbersome structures, it will be challenging to try or upgrading. Therefore, *Sidechains* will be an excellent solution to deploy new ideas; if there is a failure, it will not affect the Mainchain too much.

- **Diversification:** More users can access Blockchain technology by transferring assets between *Sidechain* and Mainchain. Programmers can deploy their projects on Sidechain to evaluate Mainchain's cost and transaction speed.

![sidechain-la-gi (5).jpg](https://cdn.bho.network/cms/sidechain_la_gi_5_1bbf91479b.jpg)

*Seachain has many outstanding advantages*

### 4.2 Limitations

Besides the advantages, *Sidechain* has some disadvantages as follows:
- **Poor security:** For *Sidechains* , attacks of up to 51% are possible. by purchasing enough equipment (with PoW mechanism). Or enough assets to claim large stakes (with PoS mechanism). But, the application can refuse to accept any untrusted Node, which would be contrary to the nature of Blockchain as open source.

- **Difficulty in trading:** In addition to the great benefits that Sidechain brings, there will also be cases where the fees on *Sidechain* are pretty high, making participants uncomfortable when trading. The transfer of assets between Blockchains will also cause difficulties for users when they need to use assets in an urgent time.

![sidechain-la-gi (7).png](https://cdn.bho.network/cms/sidechain_la_gi_7_0b43fd1122.png)

*Besides the advantages, Sidechain has some disadvantages*

## 5. Why use Sidechain

Why use *Sidechain*? *The benefits of **Sidechain***? What *Sidechain* was born to help Blockchain solve parts of the work that previous platforms could not do? 

For example, Bitcoin, while the Blockchain is decentralized and very secure, it is not the best Blockchain in terms of throughput. Besides, the long waiting time and the increased fee when congested network is a big minus point for users. If it is only used for small payments like buying a glass of water, the speed of Bitcoin will not be able to meet the convenience and immediate needs of users.

As introduced, Sidechain works like a separate Blockchain, so the same rules will not bind the platform. Developers can add upgrades that don't exist on the main chain and create larger blocks and make transaction execution fast.

The unique feature is that even if Sidechain has severe errors, the application still does not affect the underlying chain. This will allow the product to be used as a platform for testing and implementing features that do not require consensus from most network providers.

![sidechain-la-gi (4).jpg](https://cdn.bho.network/cms/sidechain_la_gi_4_3c1a9fb4e0.jpg)

*Sidechain can do things that ordinary Blockchains cannot do*

## 6. Some examples of Sidechain

To better understand how *Sidechain*, you can refer to the following examples. 

### 6.1 Polygon (MATIC)

Polygon is a type *sidechain* of Ethereum, the application focuses mainly on the scalability of Ethereum. Polygon will be able to do as many transactions as Ethereum. However, making similar transactions on the Ethereum network is much cheaper. The block generation time on Polygon is 2s much faster than Ethereum - 10s. 

![sidechain-la-gi (2).png](https://cdn.bho.network/cms/sidechain_la_gi_2_12472ba45d.png)

*Polygon is a type Sidechain of Ethereum*

Polygon is *Sidechain* , many developers have taken advantage of this to build new protocols and applications with very low transaction costs for users. . However, because Polygon has its own Nodes, Validators, and consensus mechanisms, Polygon's security guarantee cannot be compared with Ethereum.

### 6.2 Rootstock (RSK)

Rootstock is a sidechain of the Bitcoin Blockchain that will enable the protocol to build dApps. Initially, Bitcoin will only be used to process some transactions, while Ethereum allows the construction of Smart Contracts and some new protocols. However, this process is done by attaching the Sidechain RSK to the Blockchain. Bitcoin can fully apply RSK to smart contracts, extending Rootstock's functionality. 

![sidechain-la-gi (10).png](https://cdn.bho.network/cms/sidechain_la_gi_10_bb24efdcc9.png)

*Rootstock is a sidechain of the Bitcoin*

RSK Blockchain essentially adds an Ethereum-like layer to the Bitcoin protocol. However, the product also has a Bitcoin bridge to transfer assets between the two chains. This process is carried out under the supervision of the RSK federation (RSK Federation), which comprises 25 of the largest Blockchain exchanges on the network. From there, Bitcoin can improve the supply and scalability of the exchange. At the same time, it can help maintain security and not affect the product's Blockchain.

## 7. Several projects

During construction and development, Seachain has attracted many users and has many large projects. Some outstanding projects of Seachain that you may know are as follows.

### 7.1 Alpha Alpha

Functions are like a *Sidechain* for Bitcoin's Testnet. Alpha's primary mechanism of action is based on a centralized protocol adapter. A link point can audit the signer manage money by Testnet and transfer to the *Sidechains*.

Link points also rely on that to create Blocks through the signed Block element. By using several different secure transactions, Alpha helped uncover the possibilities of the new chain.

![sidechain-la-gi (1).jpg](https://cdn.bho.network/cms/sidechain_la_gi_1_bbb52daba5.jpg)

*Alpha is one of the featured projects of Sidechain*

### 7.2 Plasma

This is a tentative model of the execution of Smart Contracts. Plasma can scale to billions of state updates per second. This will help Blockchain represent a large number of decentralized financial applications worldwide.

![sidechain-la-gi (5).png](https://cdn.bho.network/cms/sidechain_la_gi_5_4f664756f3.png)

*Proposed Model of Execution of Smart Contracts*

### 7.3 Rootstock

Rootstock is an open source Smart Contract platform with a two-way peg for Bitcoin. RST will enable Bitcoin Miners to participate in smart contract revolutions by awarding Rewards through Mining Consolidation. The project will aim to add value and functionality to the Bitcoin network by allowing users to pay almost instantly, increasing scalability higher and smart contracts to work.

![sidechain-la-gi (3).jpg](https://cdn.bho.network/cms/sidechain_la_gi_3_7d689ac799.jpg)

*Rootstock is an open source Smart Contract platform with a two-way peg for Bitcoin*

Bitcoin lacks a complete Smart Contract. This is a significant weakness for the development of Bitcoin. RST was created to provide technical needs not available as a Blockchain with a two-way latch for Bitcoin. Because Sidechain does not have its Token, the platform cannot offer competition with Bitcoin.

### 7.4 POA

POA is an *sidechain* of Ethereum with proof of authority consensus reached by independent reviewers. The project's operational goal is to build a public network for small, safe, fast and cost-effective Contracts. The platform's consensus mechanism allows speedy block times, just under 5s.

![sidechain-la-gi (3).png](https://cdn.bho.network/cms/sidechain_la_gi_3_fe4762b65b.png)

*Building a POA into a community network*

Another unique feature of POA is built for governance that supports voting. This feature is at the consensus level by allowing validation to vote for adding or removing validators on the admin dApp. The network also supports a large assortment of proof-of-identity dApps and product combinations to prove the identity of validators.

### 7.5 Liquid

The liquid is *Blockstream's* first commercial Sidechain. This project facilitates instant transfers between exchanges without waiting for confirmation delay in the Bitcoin Blockchain. The liquid is available to participants of all Bitcoin exchanges.

![sidechain-la-gi (8).png](https://cdn.bho.network/cms/sidechain_la_gi_8_de86d11b1f.png)

*Liquid is the first commercial sidechain of Blockstream*

## 8. Some other uses of Sidechain

In addition to some of the uses that BHO Network introduced above, *Sidechain*, are a few other ways of working. Specifically as follows:
- **Using Sidechain to highlight the sound:** This effect makes a specific sound element more prominent in the Mix. This is similar to when the DJ uses the Sidechain to speak over the background music. You can also do the same method so that the Backing Track does not drown the Vocal part of the singer.

- ***Sidechain* can isolate specific frequencies:** If you have access to a Multiband Compressor (most software like Logic or Pro Tools and Ableton will be available) it's not a good idea to use *Sidechain* for the entire Audio Track but use this product on specific frequencies in that Sound Track. For example, when you play Funk Guitar and want the highs and mids to stand out more.

- **Use Sidechain Presets or Plugins for Different Audio Tracks:** You can use 2 different Sidechain Compressions for the same Mix. The type of Compression you use for the drums may differ from the type of Compression you use for the Bass.

![sidechain-la-gi (2).jpg](https://cdn.bho.network/cms/sidechain_la_gi_2_d01f6be49c.jpg)

*Sidechain has some pretty cool apps that you can use*

*Above is all the content related to *What is Sidechain?* Hopefully, [BHO Network](https://bho.network) has provided you with more helpful information through the above information. It can be seen that Sidechain is a platform with a lot of mining potential. However, you should thoroughly understand your needs and suitability to use it. If you have any questions related to the cryptocurrency market, please visit the website for answers!*



What is Sidechain? Through this article, let's learn the advantages and disadvantages of Sidechain with BHO Network.

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What is Sidechain? Learn how Sidechain works

BHO Pad is a platform to support blockchain projects in building their own community, thereby helping them to raise capital. BHO Pad is a comprehensive solution for blockchain projects in raising capital, providing high-tech human resources, and consulting on marketing strategies.\n
BHO Pad was developed based on BHO Network's own successful fundraising experience, with 03 rounds of IMO (Public Sale) sales reaching more than 1 million USD in less than 40 minutes, especially the 3rd IMO round sold out in just over 30 seconds.\n
In addition, BHO Network has an expansive network of media & social networking communities in more than 20 countries and territories and more than 10,000 media partners that include news sites, communities, and KOLs.\n
With more than 100,000 members of the BHO Network community and the monthly website traffic of over 500,000 times, BHO Pad can be the door to help blockchain projects come closer to the community, thereby accessing and interacting with potential investors more easily.\
BHO Pad is one of the core products in the BHO Network ecosystem, aiming to support and accompany Vietnamese blockchain start-ups.

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BHO Pad

A sovereign chain based on the Substrate architecture, an established blockchain platform in terms of resilience, performance, and security. BHO Chain employs the Nominated Proof-of-Stake (NPoS) system rather than the traditional Proof-of-Work (PoW) approach, resulting in a performant, green, and energy-efficient consensus mechanism. The BHO Chain is entirely open source, developers easy to build products & dapps on network.

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BHO Chain (BHC20)

BHO Wallet is a financial tool supporting individuals or organizations to hold assets, spend, and receive cryptocurrencies. Being aware of difficulties incurred when using digital wallets on the market, BHO Wallet offers solutions to optimize users' experience by developing superior features such as: personalization, security warning, simple interface. Hence, BHO Wallet promises to bring a completely different experience, while meeting users' needs and solving complications for more than 70 million investors in the market.\n
BHO Wallet is one of the key products to complete the ecosystem of BHO Network with the goal of supporting easy and safe transactions, as well as generating more financial opportunities for the BHO Network investor community, and the crypto em in general.

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BHO Wallet

BHO DEX is a decentralized exchange that enables online peer-to-peer cryptocurrency transactions.\n
BHO DEX enables projects to generate their own tokens on multiple chains, which facilitates trade and eliminates the need for multiple DEX, which results in increased risk in management.\n
With BHO DEX, end users may simply swap their tokens across several networks at a lower cost than with other DEX.\n
BHO DEX is a strategic product that leverages the high speed and cheap gas fee of BHO Network to accelerate the growth of users and dApps projects inside the BHO Network ecosystem.

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BHO DEX

BHO NFT Marketplace is a digital commercial platform connecting buyers and sellers to provide optimal services and experiences for users when trading NFT and GameFi products.\n
With the priorities of safety and ease of use, NFT Marketplace will provide a solution to help the exchange and purchase process be transparent and fast with NFT authentication tools while helping sellers to easily setup customisable stores. NFT Marketplace is the ideal platform to connect NFT and GameFi users with a community of creators, designers, and collectors of digital art publications.\n
NFT Marketplace is one of the four key products of BHO Network in its development roadmap in 2022, creating the premise for transparent and convenient trading and buying based on blockchain technology.

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BHO NFT Marketplace

Products

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BHO Network is built on BHO Chain (BHC-20) - a foundational and critical component of the BHO Network in enabling the development of a complete ecosystem based on blockchain technology.

BHO Network - Bring blockchain to life

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