Basic Terms to Know Before Investing in Crypto and NFTs
As with any investment, it’s important to understand exactly what you’re investing in before you start. That’s especially true when it comes to a speculative and still evolving asset like crypto. Here are some of the terms and phrases that will help beginners understand the world of crypto investing.
Altcoin
Any coin that is not Bitcoin is referred to as an altcoin
Altcoins can range from the second-most popular coin, Ethereum, to thousands of coins with a relatively low market value
Bitcoin
On January 3, 2009, the first and most valuable cryptocurrency was released
While its value has continuously increased since then, it has experienced tremendous oscillations
Bitcoin Cash
A peer-to-peer electronic cash system forked from the original Bitcoin
Block
Data sets within a blockchain
Blocks on cryptocurrency blockchains are made up of transaction records created when users buy or sell currencies
Blockchain
A digital method of record keeping that serves as the foundation for cryptocurrencies
A blockchain is made up of sequential blocks that are added to one another to form a permanent and immutable ledger of transactions (or other data)
Coin
A digital value store that exists on a specific blockchain or cryptocurrency network
Coinbase
A well-known centralized cryptocurrency exchange
Coinbase just made history by becoming the first cryptocurrency exchange to list on the Nasdaq
Cold Wallet/Cold Storage
A safe way to keep your cryptocurrency fully offline
Many cold wallets (also known as hardware wallets) are physical devices that resemble a USB drive
Cryptocurrency
A digital and decentralized form of currency
Cryptocurrency can be used to buy and sell items, as well as to store value over time
Decentralization
The distribution of power away from a central point
Decentralized Finance (DeFi)
Financial transactions carried out without the intervention of a third party, such as a bank, government, or other financial organization
Decentralized Applications (DApps)
Developer-created applications that are put on a blockchain to carry out tasks without the use of middlemen
Decentralized finance operations are frequently carried out with the help of decentralized apps
Digital Gold
Experts frequently compare specific cryptocurrencies to real gold in terms of their ability to store and increase in value
Bitcoin is often known as “digital gold”
Ethereum
Ethereum, the second largest cryptocurrency by transaction volume, is a crypto network and software platform that developers can use to construct new applications, and it has its own currency, ether
Exchange
A cryptocurrency exchange is a digital marketplace where the cryptocurrency may be bought and sold
Fork
When the users of a blockchain modify its rules
Changes to a blockchain’s protocol frequently result in two new paths: one that follows the existing regulations and another that splits off from the prior one
Gas
A charge is paid to the Ethereum network by developers in order to use the system
Genesis Block
The first cryptocurrency block ever mined
HODL
Though the term started in 2013 as a user error on a Bitcoin forum, it now stands for “Hold On for Dear Life”
It refers to a passive investing technique in which investors buy and hold cryptocurrencies rather than trade them in the expectation that their value would rise
Halving
A feature built into Bitcoin’s code that reduces the quantity of new Bitcoin entering circulation by half once a specific number of blocks are mined (usually every four years)
Bitcoin’s price may be affected by the halving
Hash
A distinct string of numbers and letters that identifies blocks and is linked to cryptocurrency buyers and sellers
Hot Wallet
A bitcoin wallet that is software-based and connected to the Internet
Initial Coin Offering (ICO)
A method of raising funding for a new cryptocurrency project
ICOs are analogous to stock Initial Public Offerings (IPOs)
Market Capitalization
The total value of all coins mined is referred to as cryptocurrency market capitalization
Mining
The method by which new cryptocurrency coins are made available and a log of user transactions is kept
Node
A computer that is linked to the blockchain network
Non-fungible Tokens (NFTs)
Non-fungible tokens are value units used to represent ownership of one-of-a-kind digital assets such as art or collectables
NFTs are often stored on the Ethereum blockchain
Peer-to-peer
Two users interacting without the assistance of a third party or mediator
Public Key
The address of your wallet, which is identical to your bank account number
Private Key
The encryption code that allows you to access your cryptocurrency directly
Satoshi Nakomoto
Bitcoin’s pseudonymous founder
Nobody knows who Nakomoto is or whether he is more than one person
Smart Contract
An algorithmic program that automatically enacts the provisions of a contract based on its code
Stablecoin or Digital Fiat
A stablecoin’s value is linked to another non-digital currency or commodity
On the blockchain, a digital fiat represents a fiat or government-backed money
Token
A unit of value on a blockchain that usually has a value proposition other than merely a value transfer (like a coin)
Vitalik Buterin
Ethereum was invented in 2015 by a programmer
Wallet
A place to keep your cryptocurrency assets
Digital wallets are available on several exchanges
Wallets can be hot (internet, software-based) or cold (physical) (offline, usually on a device)
REFERENCE:
https://time.com/nextadvisor/investing/cryptocurrency/crypto-terms-you-should-know-before-investing/
DISCLOSURE:
None of these articles constitutes financial advice. Articles are highly summarised to make it easy for the reader and save your time, so please DYOR further before putting your hard-earned money into any product mentioned.
Please note that the tech industry evolves rapidly and this article's information is correct at the time of publishing. As Heraclitus said, “Change is the only constant”, so if anything sounds old or off please holler on the socials or comment here so everyone stays peeled.
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