How do you make a letter in a circle transparent to the background? (Inkscape)

Question

Say you have a circle, and a letter (X), on top of that circle. The circle is black, the background is white, and you want the X to be transparent. HOWEVER, you want the X (or the area where the X occupies) to be transparent to the white background, not the black.

What is this called, and how is it accomplished?

Answer 1

Assuming, you want the X to be totally transparent:

1. Use Path → Object to Path on both, the circle and the X.
2. Select the X and then the circle (order matters).
3. Use Path → Difference.