“Education is the manifestation of perfection already existing within man” -Swami Vivekananda. Hello! Fellow Crypto Enthusiasts. Before I start. I would like to Thanks to my GURU for crafting me in a digital way from a completely non-technical person to a core technical expert. Today I am going to discuss very basic and common terms of cryptocurrency. Cryptocurrency & BlockChain Technology has changed my entire life which I have not to experience before anytime. So I wish to share my knowledge with the very beginners who wish to know common terms of cryptocurrency.
With due diligence and homework. Today Priya is going to give a very basic lesson. The lesson is very important when it comes to digital currency. One best area’s to become an expert that could prove helpful is merely learning the common terms of cryptocurrency. Certain lingo is highly unique to the digital currency. And making it unlikely that traders would have picked it up when studying other asset classes like stocks, bonds, and commodities.
Providing a strong foundation for those who interested to explore cryptocurrencies. This article will make you understand the common terms of cryptocurrency. Moreover the phrases of cryptocurrency.
Topic: Most common terms of cryptocurrency one must know.
A cryptocurrency is merely a currency that relies on cryptography. Bitcoin, for example. Leverages cryptography in order to verify transactions. To know more about it click here- Understanding Cryptocurrency: Dawn of a new economy.
Cryptography is basically the process of encoding and decoding information. So the observers are unable to understand which information is sent.
In digital currency, the address is basically a destination where a user sends and receives digital currency. In a way, it is similar to a bank account. These addresses usually include a long series of letters and numbers.
An altcoin is a digital currency other than bitcoin. There are more than 1,000 altcoins listed on CoinMarketCap at the time of this writing. Another way of describing the term “altcoin” is referring to it as an alternative protocol asset. This means it follows a protocol (set of rules) that’s different than that of bitcoin.
In crypto, arbitrage refers to taking advantage of the price difference between two different exchanges. If bitcoin is selling for £8,950 on one exchange and £9,000 on another, a trader can buy the digital currency on the first exchange and sell it on the second for a modest profit.
“ATH” is an abbreviation of “all-time high.” This term can be quite helpful to know for tracking the digital currency markets. These assets are so volatile, so keeping their ATH in mind can prove valuable. A digital currency could potentially hit several local highs before rising to a new all-time high.
“Bears” believe that an asset. For example a digital currency. It will decline in value. In other, way if a trader thinks a cryptocurrency will depreciate, their sentiment surrounding the digital asset is “bearish.” In many situations, traders will make use of this expectation by taking a short position on an asset. Meaning that they will make a wager that will pay off should the asset in question fall in value.
Many digital currencies make use of blocks, which contain transactions that have been confirmed and then combined together.
The blockchain is a distributed ledger system. It consists of a series of blocks. These blocks contain verified transactions. The blockchain was designed to be not only decentralized but also immutable. Meaning that entries could not be erased once placed on this distributed ledger. The idea of the blockchain was first introduced when the bitcoin white paper was released in late 2008.
If a trader believes that an asset will rise in value. He or she is a “bull”. When an investor has this optimistic expectation of an asset’s future bull. This frame of mind is described as “bullish”.
The network for a digital currency reaches consensus when the network’s nodes agree that a transaction took place. This agreement is crucial if the varying network participants (nodes) are to have the same information. In other words, the consensus is crucial to distributed ledger systems.
A distributed denial of service (DDoS) attack takes place when multiple parties work together to overwhelm a system by inundating it with either request for information or malicious data. Basically, the nefarious parties involved in such an attack want to prevent a resource, such as a server, from being able to provide some specific service, such as serving a web page.
Some digital currency exchanges have suffered DDoS attacks from nefarious parties looking to cripple these marketplaces and hopefully take advantage of this vulnerability to steal cryptocurrency. While efforting to steal digital assets may not work. An exchange’s users could become unhappy. Simply because of not able to make trades through the marketplace.
A distributed ledger is a system of recording information that is simply distributed. Or spread across many different devices. The blockchain, for example, is a distributed ledger that was originally created to keep track of all bitcoin transactions.
Escrow refers to a third-party holding financial resources on behalf of other parties. A third-party would hold funds in escrow when the other entities involved in a transaction may not trust each other.
Fiat currencies are currencies that have value. Because they are minted by a central bank. Fiat means “by decree”. These currencies have value because some central authority has decreed that they have a monetary value. Examples of fiat currencies include the British pound, euro, and Japanese yen.
Exchanges are basically just marketplaces where traders can make digital currency transactions. If a person wants to buy bitcoin, going to exchange is the fastest way to accomplish this objective.
The term “FOMO” stands for the phrase “fear of missing out.” This occurs when investors start buying up a particular asset based on their expectations that it will rise in value. Market participants can easily flock to an asset should that asset experience sharp gains.
Getting caught up in FOMO can be dangerous. More specifically, buying up an asset because it has recently enjoyed some notable upside can cause one to fall victim to market manipulation.
A fork is a change in a digital currency’s rules or protocol. Developers update a cryptocurrency’s protocol from time to time. A fork can be either a hard fork or a soft fork. A hard fork is a change to a digital currency’s protocol that makes blocks created using the old protocol incompatible with the new chain.
Fear, uncertainty, and doubt can be summed up using the term “FUD”. The idea behind is the market participants may spread misleading or inaccurate information. In order to cause an asset’s price to decline. A trader may want an asset’s price to fall so they can either short it successfully or buy in at a lower price and increase their chance of generating again.
A hard fork is a type of fork that creates a permanent change to a digital currency’s protocol, or rules. When one of these forks takes place, it results in a whole new blockchain, which will not accept any blocks mined using the old rules.
The old chain can survive, however, leading to a scenario where both the old and the new blockchains can continue.
Cryptocurrency investors developed the term “HODL,” which stands for “hold on for dear life.” The acronym originally came from a misspelling of the word “hold.” Digital currencies can be highly volatile, so when they start experiencing significant price fluctuations, some market participants state that they should simply “HODL.”
Initial Coin Offering
An initial coin offering (ICO) represents the first time that an organization offers digital tokens to the public in an effort to raise money. Companies frequently hold these offerings so they can finance projects.
These digital token sales have often been likened to initial public offerings (IPOs), where companies sell more traditional assets such as stocks and bonds in order to raise money.
KYC stands for “know your customer.” Many jurisdictions have KYC regulations, which have come to affect startups holding ICOs. These regulations require companies holding these digital token sales to verify the identity of their investors.
Going long, also known as taking a long position, means making a wager that an asset will rise in value. If a trader purchases a digital currency like bitcoin, for example, they are making a bet that the cryptocurrency will appreciate it.
While simply buying digital currency is one example of taking a long position, there are other methods available. For instance, traders can leverage options and futures.
Market cap is short for market capitalization, which is a term for total market value. The market cap of bitcoin, for example, is the number of BTC outstanding multiplied by the digital currency’s price. The term can also be used to refer to a group of digital currencies.
Mining is the process for creating new units of digital currency. For example, the bitcoin network releases new bitcoins every time a block is mined. In this instance, mining involves confirming transactions and combining them into blocks.
This verification requires hardware and electricity, and miners are rewarded with digital tokens for contributing these needed resources.
The mining incentive is a reward that miners get for confirming transactions and mining them into blocks. Verifying the transactions of the bitcoin network, for example, requires specialized hardware and substantial electricity, so miners are compensated with a mining incentive.
Initially, bitcoin’s mining incentive was 50 BTC, but at the time of the report, the reward had dropped to 12.5 BTC.
When a digital currency moons, that means it rises sharply in value. For example, a crypto trader could talk about how an altcoin is going “to the moon!”
Newcomers are frequently described as “noobs” by industry insiders. If you are this person, you may want to sit back and observe before “jumping in with both feet.” Digital currencies are highly volatile, so those who are newer to these assets should keep their risky nature in mind.
POW is an acronym for “proof of work,” which is a system of proving that a digital currency’s transactions have been verified. Many digital currencies, including bitcoin, use POW. Under such a system, miners must do “work” that is difficult for them to contribute, but easy for the broader network to verify. Miners are usually rewarded for verifying transactions by receiving units of digital currency.
POS stands for “proof of stake,” which is another method of confirming transactions. The digital currencies that use this approach to verification frequently provide all their digital tokens upfront, and miners are selected based on how many units they have (their stake). In these cases, users who confirm transactions, sometimes referred to as “forgers,” receive transaction fees for their contributions.
A private key is a piece of information—presented as a string of numbers and letters—that an investor can use to access their digital currency.
A public key is an address where an investor can receive digital currencies. This public key, like the private key, is a combination of numbers and letters.
Pump and Dump
A “pump and dump” is a type of investment scheme where a market participant—or several—work together to inflate the price of an asset so they can sell it when its value is artificially high. This practice may be particularly pervasive when it comes to digital currencies, as traders can easily get together using Telegram groups with the goal of causing specific cryptocurrencies to rise sharply in value.
The term “rekt” is crypto trader slang for “wrecked.” Basically, it means that a trader lost substantial amounts of money.
ROI is short for “return on investment.” Basically, if an investor puts their money into a digital currency. They are doing so with the hope that they will receive a compelling return.
Satoshi Nakamoto is the pseudonym for the creator of bitcoin. But more than one individual has claimed to be Nakamoto. However, none of these claimants have managed to convince the broader cryptocurrency community. They are, in fact, the creator of bitcoin.
Shorting an asset, also known as taking a short position. This means making a bet that the asset will fall in value. There are several methods that traders can use to short digital currencies, including futures, options and margin trading. Investors considering this method should keep in mind it involves a lot of risks. Especially with cryptocurrencies because of their volatile nature.
A digital token is a unit of digital currency, such as a bitcoin. It is worth noting that some of these tokens are used for specific ecosystems. And those are frequently referred to as utility tokens. Other digital tokens are essentially securities.
The term “whale” is used to describe a trader who makes sizable bets. This term is a good one to know because market participants with the ability to execute very large transactions can potentially manipulate the market—or “make waves in the ocean.”
The developers who create digital currencies usually provide white papers for these innovative assets. These documents generally offer comprehensive information on the digital token in question. Moreover, its underlying technology. For example, the bitcoin white paper provided information on a “peer-to-peer electronic cash system.” Investors who are considering taking part in ICOs. They can benefit greatly from reviewing any available white papers on the subject.
By performing the necessary research and learning this information would-be traders can enhance their probabilities. If they are able to meet the investment targets. For Venture Capitalists/Investors who are thinking to get involved in Cryptocurrency. These common terms of cryptocurrency are going utmost beneficial for all beginners.
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