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The world of crypto: terms & jargon

by kevinhall
crypto

Cryptocurrency is more than just a novel form of investment. It is a new alternative to traditional investment options like stocks and bonds. Because the market keeps evolving, keeping track of the new technologies, memes, tweets, and all that enters the crypto world can be difficult, thus taking away your attention from the basics. Even experienced traders may find themselves at a disadvantage on this front. Read more about buy and sell cryptocurrency

However, just like any investment, you should take the time to study, research and understand the market and the investment before spending your hard-earned money on it. This becomes all the more important when we talk about an asset like crypto which is changing every day and is also quite volatile.

Airdrop

Airdrop helps in sending tokens to different wallet addresses. It is both a distributing method and a marketing tool. It is used by many crypto start-ups as a marketing tactic that promotes engagement and performance of a particular token/asset as well as the underlying firm or exchange platform.

Address (Wallet Address)

A wallet address also informally called address is unique for every investor. It is an exclusive identifier that enables transactions on a blockchain network. Up until now, wallet addresses are indicated by alphanumeric characters that may also be represented with a scannable QR code.

Altcoin

You know that Bitcoin dominates the cryptocurrency market to such an extent that it has become synonymous with crypto. Thus, any Alternative Coin or AltCoin is simply any digital token or coin that is just not Bitcoin. Initially, this term was used to refer to the second most popular crypto Ethereum as it was the only alternative. Today, there are multiple altcoins in the market but all do not have a significant market value.

ATH (All-Time-High)

Quite simply, ATH is an abbreviation for “All-Time-High”. It indicates the highest price of trading for equity, stock, cryptocurrency, and other financial instruments.

Blockchain

An immutable ledger, blockchain is the backbone of the technology that keeps cryptocurrencies up and running. It is a digital platform for maintaining records that work by adding data blocks in a sequence. As new data is added, the entire blockchain gets updated making this a permanent and non-editable ledger of transactions as well as data.

Cold Wallet/Cold Storage

A secure method of storing your cryptocurrency is offline. Cold wallets, also called hardware wallets, are physical devices that you can keep offline. This kind of wallet can help protect your crypto from hacking and theft online.

Decentralization

Decentralization refers to giving away power to all entities rather than concentrating it at a central point. Since a majority of users are required to approve any change on a blockchain, they’re built in a decentralized manner which also happens to be its key feature.

Decentralized finance (DeFi)

Traditional finance systems are generally centralized in the sense that there’s a regulatory body that runs the operations. Any alternate decentralized financial system is referred to as DeFi. It includes many financial products such as banking, money management, payment processing, insurance, etc.

Digital Gold

Generally, Bitcoin is considered to be ‘digital gold’ as it was created to mimic the valuable nature of gold. Often, there are some market experts who would equate cryptocurrencies to solid gold in order to weigh their value and also assess how they’re stored.

Digital Currency

Digital currency doesn’t always mean cryptocurrency, it might as well be linked to a fiat currency. Interestingly, nations like the U.S and China have their digital currencies backed by their fiat currencies.

Distributed Ledger

Data is distributed to various parts of the blockchain that is verified by the nodes in the network. These ledgers can be: permissioned, permission-less, centralized, or decentralized.

Exchange

The platform or the digital marketplace where cryptocurrencies can be bought and sold.

Fiat

Fiat currencies are legal tenders that are backed by the state and not by any commodity such as gold.

Fork

Any changes in the rules made by the blockchain’s users. Protocol changes of the blockchain can lead to two options: one with old rules and another with a new blockchain that separates from the last one. For instance, Bitcoin cash was a fork of Bitcoin.

Gas

The fee that fuels the Ethereum network. Developers have to incur the fee to be able to use the network that is usually paid in Ether, the network’s native cryptocurrency. Remember lower fees are for slower transactions while higher fees are for faster transactions.

Genesis Block

The first cryptocurrency block that was mined.

HODL

A typo that became a lingo. HODL stands for “Hold On for Dear Life”. It represents the typical buy and hold strategy of cryptocurrency trading where people take long positions on crypto hoping for an increase in value.

Hash 

This refers to the output data that is the outcome of hash functions, in the case of blockchains, often a deterministic hash function. This function makes sure that the same input data will give the same output data.

Halving

Bitcoin supplies are limited. When Satoshi Nakamoto created Bitcoin, he developed a system that would limit the supply of these coins to 21 million. On an average, every four years, bitcoin undergoes halving which indicates a decline of 50% in the reward rate for block mining.

Hot Wallet

This is a digital crypto wallet that is always linked to the internet. Accessing your funds and your crypto assets is easier on hot wallets for an investor and for a hacker. These are more prone to hacking and cyberthreats as compared to cold or offline wallets.

Hidden Cap

A team receives a certain amount of money from its investors in its initial coin offering (ICO). A hidden cap refers to this amount whose limit is often unknown to encourage small investors to make investments. This prevents large investors gauge the total cap and amend their investment size accordingly.

Initial Coin Offering (ICO)

Just as IPOs work for the stock market, ICOs are opened in the cryptocurrency market to raise funds.

Interoperability

The ability to access information across various blockchains is known as blockchain interoperability or cross-chain interoperability

Market Capitalization

Cryptocurrency market capitalization indicates the final value of the total number of coins mined. To calculate this, multiply the current number of coins by the current value of the coins.

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