I am two month old in the Crypto world. Still trying to know more about Crypto as Crypto is a big ocean. You have to understand what crypto is before investing into it. Investing in Crypto without knowing what Crypto is might result in loss of money. I myself lost $100 by investing in shit coins. Reading about Crypto is my hobby these days. I have learnt these some basic terms of Crypto in these two months. For example what is the difference between a token and a coin? What is the meaning of ICO? What liquidity means? What is the meaning of burning of a coin from its developers? E.t.c. So I am writing this article for the Crypto Newbies like me out there. This article might help those newbies to understand Crypto. Let's start with the basic question.
DIFFERENCE BETWEEN A TOKEN AND A COIN
Usually we call all Cryptos a coin but there is a difference between a coin and a token.
COIN
A cryptocurrency which is developed on its own technology and blockchain is called a coin. For example Bitcoin and Ethereum.
TOKEN
A cryptocurrency which is developed on others technology and blockchain is called a token. For example Tron, BTT, CHZ etc.
BNB was initially a token developed on Ethereum blockchain. Later on they developed their own blockchain called BSC (Binance Smart Chain), so BNB is a coin now.
WHAT IS ICO ?
An ICO might from a company, individual or some individuals. An ICO (Initial Coin Offering) is a way for a project to publically fund their work. They create a Token or Cryptocurrency that's needed for their goal and they sell a portion of it to the public to continue or begin work on the project. So people essentially purchase a token that doesn't necessarily do much yet but comes backed by a team of a certain pedigree as well as hopefully detailed technical plans. One of the key aspects of running a successful ICO came to be the white paper. Once the marketing cycle has put the project out there and the token have generated, the sell can begin.
Often the token are sold in exchange for more established crypto currency like Bitcoin and Ethereum. That way the developers are able to sell portion of their sales and fund their efforts using this blueprint. ICOs raise more than 20 billion dollars in 2018 alone. Ethereum is the best example of an ICO.
While this is a great way for small projects to find funding from like-minded and passionate people. But the problem is ICO requires nothing to begin selling other than a website and some tokens. This has led to many scams. So according to me now a days 99% of the ICOs are fake out there. They just create fleshy website and some useless tokens and newbies like me go there to buy in search of next big thing.
WHITE PAPER
A white paper is meant to be a marketing tool to generate hype but they also supposed to discuss what the project tends to do and how they will do it. Not uncommon for white paper to be dense with math theories and flowcharts.
LIQUIDITY
Liquidity is a measure of how easily an asset can be exchanged. It means how quickly you get money of an asset. Your investments can be said to have stronger liquidity when you can quickly convert it into other assets or cash.
COIN BURN
Burning of a coin means reducing the supply of that coin by destroying it. How do they do it? The developers of that coin send a huge numbers of coins to an unknown address and no one can recover tha coins again. By doing so again and again they reduce that coin's supply which automatically increases that coin's price.
Recently in March, BNB developers have completed their 15th burning session. Binance burned a total of 1,099,888 BNB, equivalent to $595,314,380 USD.
FORK
A fork is a change in any crypto's rules and protocols. Developers of any crypto currency update that currency's protocol from time to time by reducing the flaws and drawbacks of its original currency. A Fork can be a Soft Fork or a Hard Fork.
HARD FORK
A Fork which creates a permanent change to original currency's rules and protocols is called a Hard Fork. It creates a whole new blockchain, which will not accept any blocks mined using the old rules. The best example of a hard fork is our BCH. Bitcoin Cash is a hard fork of Bitcoin (BTC) and more reliable than BTC.
That's it for today. If learnt something from this article then
Thanks.
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