Cryptocurrency is changing the financial world as we know it. There is no denying this. But in doing this, it has bought with it a unique language, filled with terms and jargon that some beginners do not understand.
If you are just starting your crypto journey, it is crucial that you understand these terms when navigating through the vast crypto space. In todays blog, we will break down some on the more beginner crypto terms and help you get an understanding of the basics and help build your confidence on your crypto journey.
Blockchain
A blockchain is a “decentralised” digital ledger that records every transaction that is made within the crypto space. Whether you are purchasing a coin, transferring a coin between wallets or paying for a service, the blockchain sees and records it all. This being the case, it makes the blockchain the “backbone” of everything that is cryptocurrency.
Bitcoin.
Bitcoin was the first and is easily the most well known of all the cryptocurrencies. It was created by an anonymous person only known as Satoshi Nakamoto. Little more is known about the “founder” of Bitcoin other than a name. Bitcoin operates on a decentralised network without any kind of central authority.
Altcoins.
Any cryptocurrency that is currently available or in development, that isn’t Bitcoin is referred to as an Altcoin. The most popular examples of these would be Ethereum (ETH), Solana (SOL) and Steller (XLM).
Ethereum (ETH).
Ethereum is a decentralised platform, similar to Bitcoin that enables smart contracts and decentralised applications (dApps) to be created and opertated without any risk of downtime or fraud. It has its own token, ETH which is currently one of the most popular cryptocurrencies in the world.
Wallets.
A wallet is a tool made for the purpose of storing and managing a users cryptocurrency. There are many different types of crypto wallets and each comes with its own set of advantages and disadvantages. You can learn more about crypto wallets by reading our in-depth guide by clicking here.
Public and Private Keys.
A private “key” is a secret code, known only to the owner of the wallet. This code will allow the user to access their wallet and their assets and manage them as they choose. These keys must be kept safe and private at all times.
Public keys are a code that acts as a “mailing address” where people can send crypto assets to. You should never send any assets to a public key unless you are 100% sure of the owner and reciprocate of the funds.
Decentralised Finance (DeFi)
DeFi is the term given to a financial system that is built solely on blockchain technology, without the need for traditional banks or intermediaries. This can include services such as lending, borrowing and trading on decentralised exchanges or DEX’s are they are known.
Exchanges.
A cryptocurrency exchange is a platform that has been created to allow users to buy, sell and trade their digital assets. There are two types of exchanges available to people operating in the cryptocurrency space:
– Centralised Exchanges: Operated and owned by a company. Examples of these exchanges would be Binance, Coinbase and Crypto.com
– Decentralised Exchanges: These are peer-to-peer platforms that are not owned or run by any company and operate without intermediaries. Examples of these exchanges would be Uniswap and PancakeSwap.
FOMO (Fear Of Missing Out).
This term has been floating around since crypto gained ground. It refers to the anxiety investors feel when they see a cryptocurrency increasing in value rapidly and the fear that comes with missing out on potential life changing financial gains.
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Gas Fees.
As with everything in the world today, nothing is free and this applies to the crypto markets. Gas fees refer to the cost you have to pay for processing a transaction on the blockchain. These fees can vary between platform and depending on the demand at the time of the transaction.
Smart Contracts.
A smart contract is a self-executing contract with the terms of the agreement written directly within the program code. They run on blockchains such as Ethereum. They enable automated, trustless transactions.
Stablecoins.
A stablecoin is a cryptocurrency that is pegged to a stable assets. Such examples would be a crypto being pegged to the US dollar or being pegged to gold. There are currently several stablecoins, such as Tether (USDT), USD Coin (USDC) and DAI.
Crypto Whale.
This term refers to a person or group of people that hold large amounts of cryptocurrency. When this person or group of people make transactions on the blockchain is has the ability to influence the market prices significantly.
Rug Pull.
A rug pull is a term used to describe a scam, where the developers launch a crypto project, attract a large number of investors and then suddenly disappear with the funds that have been raised, leaving the investors with a bunch of worthless coins in their wallets.
Crypto Analyst‘s Final Thoughts.
Understanding the terms used in crypto is very important when it comes to making decisions and navigating the crypto space.
Whether you are trading, investing or just exploring the blockchain, knowing all of these terms will help you avoid some of the scams and hopefully maximise your crypto potential.
If you are looking to move forward with your crypto journey, consider signing up to Crypto Analyst today, but clicking here and seeing what we can offer you.
Cryptocurrency is going to be a big part of our financial future, so make sure you keep learning and enjoying your crypto journey!