Just a few years ago, not a lot of people heard of nor believed in the potential of cryptocurrency. However, due to the pandemic and the reliance on technology, there’s been a drastic increase in the number of individuals that have begun exploring cryptocurrency.
Cryptocurrency has taken over the digital world today, to say the least, and now is the best time to educate ourselves on the ongoing trend, whether or not it’s here for the long haul. According to Jason Wise of Earthweb, as of February 1, 2022, there are over 300 million people using cryptocurrency around the world, and over 18,000 organizations are now accepting cryptocurrency as a form of payment. Every day, more and more users are starting to get involved. What makes cryptocurrency an attractive investment is having complete control over your assets without the interference of any central authority.
For those just starting to learn about cryptocurrency, it could get extremely intimidating with all the numbers and terminology involved, which is why we made a list of a few terms, along with their definitions, to help you get started. Here are a few terms you should know to further understand cryptocurrency!
An altcoin is an alternative digital currency to ‘Bitcoin’. The term altcoin refers to all the cryptocurrencies other than Bitcoin.
The first and currently highest valued cryptocurrency launched in 2009. Bitcoin operates free of any central authority of banks or governments. While its value has increased consistently since 2009, there have also been extreme fluctuations.
A block refers to groups of data within a blockchain. These blocks are made of transaction records as users buy and sell coins. Once the amount of information stored reaches the cap, a new block is created to continue the chain.
Blockchain is the main key behind cryptocurrency, which is a digital way of keeping records. As mentioned, a blockchain is created when several blocks are filled with information. This creates a permanent book of transactions and other necessary data.
A cryptocurrency that is unassociated with any other blockchain or platform. The main feature that makes a coin unique is that of a currency. ‘Coin’ could also be used to describe any cryptocurrency asset that is not a token.
This is the dispersion of power away from a central point. Decentralization is usually done to blockchains it would need approval from the majority of users to operate and make any changes rather than just a few in authority.
The second most popular cryptocurrency traded after Bitcoin, Ethereum is a crypto network and software platform that developers use to create new applications, and has an associated currency called ‘ether’.
Originally a typo in a Bitcoin forum, HODL refers to a passive strategy where, instead of trading cryptocurrency, people buy and hold these coins with the hope that they increase in value over time.
A distinct combination of letters and numbers that identifies ‘blocks’, and are tied to buyers and sellers of the cryptocurrency.
Initial Coin Offering (ICO)
Similar to the Initial Public Offerings (IPOs) of stocks, this is a way that funds are raised for a new cryptocurrency initiative.
The total value of all the coins that have been mined. Multiplying the current number of coins by the current value of the coins will give you the market cap of a certain cryptocurrency.
The process in which new cryptocurrency coins are made available and the log of transactions between users is maintained.
Non-fungible Tokens (NFTs)
A one-of-one digital asset that belongs to you and you alone. NFTs have been rapidly increasing in popularity with most, but not all, being artworks and music.
A public key is a wallet’s address that is similar to a bank account number. This is used to share with people or institutions when there’s a need to send money or use cryptocurrency as payment, once authorized.
Just like a password, a private key is an encrypted code that gives you direct access to your cryptocurrency. And just like your password, keep it to yourself or you just might regret it.
Just like any other investment, there are risks to investing in cryptocurrency, and you should always know where you’re putting your hard-earned money. Cryptocurrency is a great sign for innovation, but as of right now, it’s difficult to gauge how far this can go. Keep doing your own research before deciding if this type of asset is for you!
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