Learning about cryptocurrencies may come with some challenges. Therefore, we will examine some of the basic terms associated with Cryptographic currencies.
- Blockchain
Definition: It is also known as the collection of records within a set time frame referred to as the frost and protected y a chain of connected blocks. Such inclusions are Advertisements created and are permanent within the particular database. Key Point: When it comes to the promotional aspects of virtual currencies, blockchain development tops the list. - Cryptocurrency
Definition: “Cryptocurrency is a currency that is digital and uses cryptography for its transactions across the internet. There is no authority that governs this form of money and most of the time it is based on a blockchain.” Money that does not depend on the banks – based money. Money that is not tied to a nation and is predominantly worldwide.
Examples: BTC, ETH, LTC. - Bitcoin (BTC)
Definition: The first virtual currency in the form of an electronic coin and the most prominent among other currencies. It was founded in 2009 by Satoshi Nakamoto, a pseudonymous person or group of people. Key Point: Most people tend to classify Bitcoin as “digital gold” as it is a good asset for storage of value but the supply of it is quite rare. - Altcoins
Definition: All other coins except bitcoin. “Altcoin” is a blend of alternative and coin. Examples: Ethereum Ripple (XRP) Cardano (ADA) Polkadot (DOT).
- Token
Definition: A token is a digital asset that is developed and used within a particular blockchain or decentralized network for certain functionalities. Tokens can be of use in different spheres and might include utility tokens, value tokens, or project participants’ tokens.
Types: Utility tokens (available for certain services provided by the platform), security tokens (meaning ownership/profit investment), governance tokens (involved in making decisions in distributed organization management). - Wallet
Definition: A wallet is a software or hardware tool that holds private/public keys required to send/receive cryptos. A wallet will not hold any physical coins but rather maintain some cryptographic data.
Types: Hot wallets (preferred due to portability but at the risk of external attacks), cold wallets (these are offline hence more reliable). - Private Key
Definition: A private key is an encrypted alphanumeric mnemonic device that permits entry to any cryptocurrency wallet and access to the contents in that case including any assets held.
Key Point: since a private key is an integral core of a wallet, it is important to take all the advanced evasive measures possible for the protection of clients. Once lost, it can be impossible to access both the wallet and funds inside. - Public Key
Definition: A public key is an alphanumeric key linked with a cryptocurrency wallet that people use to send money and which can be made available to people.
Key Point: The public key has the function primarily of being an address used for sending cryptocurrency. - Decentralization
Definition: It is the procedure of transference of control or governance of systems from a single entity to a larger extent to multiple organizations or entities. applying this to cryptocurrencies means no bank or a government is in charge of the system.
- Mining
- Concept: This can be referred to as an activities through which technologies work to finalize…
This would also refer to the creation of new coins of the crypto currency. Miners partake in this process using core and fast computers with high processing power to tackle blocks of complex mathematical equations.
Categories: Among others: Proof of Work, Proof of Stake.
- Proof of Work (PoW)
- Concept: It is a consensus mechanism that cryptocurrencies such as Bitcoin employ. Thus, members of the network, known as miners, must fracture their CPU power to the maximum and solve the given mathematical puzzle to determine who gets to add information into the chain.
- Proof of Stake (PoS)
- Concept. The pilot one is considered more energy-intensive as compared to the latter.
In essence, the PoS system allows for the incorporation of the wealth of the participant into the process.
- Smart Contract
Definition: This is a type of a contract whose conditions are encoded into the programmable logic. Whenever a certain event occurs, the contract operates under preset conditions and executes necessary tasks.
Operational area: Smart contract can be deployed on various platforms but the popular one is the Ethereum blockchain.
- DeFi (Decentralized Finance)
- Legal orientation: This is a proposition to build ecosystems, as well as services like lending and borrowing, trading, etc, which operate vertically and seamlessly simply installing smart contracts onto the block-chain.
Core Idea: DeFi seeks to build the traditional finance systems but in a disperse manner.
- Exchange
- Concept: An exchange is where market participants can carry out the activities of buying, selling and exchanging cryptocurrency. There are centralized (CEX) and decentralised (DEX) exchanges.
Illustrations: CEX: Binance, Coinbase; DEX: Uniswap, Pancakeswap.
- Gass Fees
Definition: Gas fees refer to the transaction costs that are incurred when there is an action (like sending crypto or executing smart contracts) carried out on the Ethereum network. The fees are paid out to miners or validators as a form of remuneration for their services.
Key Point: Gas Prices Increases when effects of network congestion are felt. - Fork
Definition: A fork is a modification of a blockchain that could lead to a bifurcation, hence resulting in a new coin being created. There are two types of forks soft forks (which do not result in a new blockchain) and hard forks (which produce a new blockchain).
Examples: The Bitcoin Cash (BCH) cryptocurrency was created via a fork of the Bitcoin (BTC) network. - HODL
Definition: A HODL is simply an acronym in the digital asset industry which stood for Hold on for Dear Life, which means holding rather active trading within a crypto currency when market is very volatile.this is because some investors felt proud to have contributed to the growth of such markets.
Origin: Originated from a massively miswritten posting on a Bitcoin message board back in 2013.
19 Whale
Definition: An individual or organization that buys and requests a tremendous quantity of digital assets. Large volumes of such cryptocurrency contain minimal liquidity and can cause price fluctuations.
- FOMO – ‘Fear of Missing Out’ – is a specific condition that mainly pertains to the cryptocurrency market in relation to an investor who buys towards the top and not the bottom because he or she ‘believes’ the prices will keep going up.
- Pump and Dump
Definition: A strategy where the price of a cryptocurrency is artificially increased (pumped) through the use of exaggerated claims, and later sold by the perpetrators, causing heavy losses to other investors since the price ‘dumps’ on its own. - Stablecoin
Definition: Digital currency that has fixed value currency ties like United states dollar among others in order to control adjustment of its market price.
- NFT – Non-Fungible Token.
Definition: A Non-Fungible Token is a digital and unique numerical representation of a certain asset. Items considered under this category may include their collectibles, music, and works of art. Most NFTs are based on Ethereum because of its remarkable Blockchain Technology.
Key Point: In contrast to traditional cryptocurrency which can be exchanged for an equal asset, NFTs are entirely unique and cannot be exchanged for anything of equivalent value.
- Airdrop
Definition: With respect to cryptocurrencies, an airdrop means distribution of free tokens or coins to the holders of that particular cryptocurrency. It is more often than not a marketing technique or a means of rewarding the first supporters of a given project.
- ICO – Initial Coin Offering.
Definition: A form of crowdfunding and a social network development strategy where new digital currency cryptographic tokens or coins are sold to investors for the purpose of financing new projects and startups which are often under development.
Conclusion
Knowledge of cryptocurrency lingo is necessary to maneuver the crypto market which assists the users who are traders, investors and participants of a blockchain project in one way or another. As this is a growing forever field, it would be beneficial for any person who is involved or wanting to get involved with cryptocurrencies to keep abreast with all the important words and notions.
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