Basic Terms to Know Before Investing in Crypto and NFTs

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2 years ago
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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:

  1. 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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