On the financial markets of the civilized world, cryptocurrency has grown in popularity. In 2022, Cryptocurrency is steadily gaining support. Investing in cryptocurrency in 2022 will provide greater financial stability.
Checking the increase in people’s participation and investment in Cryptocurrency will undoubtedly lead us to the conclusion that it dominates the digital world.
Similarly, it should be known that cryptocurrency is a digital currency that is rapidly replacing physical currencies in the global monetary system. It is not concerned with printing and all official duties required by the World Bank for a currency to be considered official. It only relies on volatility, as it rises and falls based on how it was injected into the digital market. In short, it is also attracted to demand and supply forces.
What is Cryptocurrency?
Cryptocurrency is a form of money that can be transferred online without the need for banks or other intermediaries. Behind the scenes, complex mathematical algorithms ensure that all transactions are recorded. Once recorded, these transactions cannot be altered, resulting in an efficient payment system.” It is, in short, a peer-to-peer network.
What concepts or terms should you be familiar with? They are listed below:
Blockchain is a digital information system that makes it difficult to hack into a protected wallet system. It properly stores information regarding past and present transactions with valid proof – receipts. Simply put, it is the technology on which cryptocurrencies are built. It is a distributed ledger that stores transaction records.
Bitcoin is the first cryptocurrency that made it possible for other cryptocurrencies to exist. Many Cryptocurrencies would not exist on the digital market if it did not exist. In 2009, Bitcoin was the first cryptocurrency to be introduced. It is a peer-to-peer decentralized online currency.
Ethereum is the second most well-known cryptocurrency, following Bitcoin. It is the first open-source blockchain platform to implement smart contracts. It entered the digital market following Bitcoin. This is the second-largest and most-desired coin.
Altcoin refers to an alternative cryptocurrency.
The term is used to refer to any Cryptocurrency other than Bitcoin, although prominent cryptocurrencies (such as Ethereum) are typically not referred to as Altcoins. They are also coins that are not prominent enough on the digital market; their market capitalization is insufficient compared to Bitcoin and Ethereum. In all honesty, they can also be invested in, but they lack sufficient visibility and feasibility in the “Crypto World”
In addition, an Altcoin is any coin that is not Bitcoin, as stated previously. It could be anything from Ethereum, the second-most-famous coin, to any of the thousands of coins with negligible market value. Some Crypto Experts assert that investors should only invest in well-known cryptocurrencies with a solid whitepaper and widespread adoption. Alternative coins include Fantom Token, Matic, XRP, and Dogecoin, among others.
A bear market is a negative market in which prices are falling and investors are selling, which further depresses prices. This market is simply unprofitable. In this situation, the profit bars have begun to decline, and investors are selling out of fear of further loss, which causes the coin’s value to fall further. In fact, this term is not exclusive to virtual currencies.
Bull market: A market in which prices are rising and new investors are entering the space to purchase. Unlike in a bull market, investors are willing to sell in a bear market. A bull market will attract more investors due to the profit potential.
Fiat money is a currency declared legal tender by a government, such as the U.S. dollar, but not backed by a commodity. The value is determined by supply and demand. These are straightforward empirical in nature; they are observable.
Hodl: This clearly originated from a 2013 post on Bitcointalk. It is an incorrect spelling of “hold.” Hodl is a term used by cryptocurrency investors to indicate that they will not sell their investment. This is used to express the investors’ feelings, as they are unwilling to sell their investments. They engage in holding, or “Hodl.”
Token is merely a tradable digital asset that provides a utility within the ecosystem of the project that issued it.
Market capitalization is the total value of a cryptocurrency. This is determined by multiplying the supply in circulation by the current market price. It is a far superior indicator of value than the trading price.
Whitepaper merely supports the financial viability of each Cryptocurrency. A document that contains all technical project information. This includes how it operates, token details such as tokenomics, team information, and frequently a roadmap for the future.
12. Wallet: This is essentially a place where you can transfer and store your currencies. Numerous types of exchanges provide digital wallets. There are both hot (online, software-based) and cold wallets (offline, usually on a device). It is a file in the blockchain that stores and receives your cryptocurrency, similar to how your email inbox stores and receives messages. A Public Key and a Private Key are required to operate it.
13. Block: it is a computer file that maintains the record, or ledger, of cryptocurrency transactions that have been completed during a given time period and are worth a specific number of coins.
Genesis Block is the first block of a blockchain that is known to contain unspendable coins. It was established on January 3, 2009 with fifty Bitcoins. It only serves as the source from which Bitcoins originate.
Peer-to-Peer is the trusted direct networking of two or more computers without a centralized third party serving as an intermediary. Peer-to-Peer (P2P) networks, which are decentralized networks, power blockchains.
Protocol: This is the software that connects the blocks and provides the rules for adding new blocks to the decentralized network.
17. Algorithm: The type or formula used to generate transaction-protecting keys. Hash, Public Key, and Private Key are the keys on which cryptocurrencies depend.
18. Encryption is a typical algorithmic process by which legible text is transformed into an illegible text called a hash or a key. This process, also known as cryptography, is where the term cryptocurrencies originated.
Hash: A string of letters and numbers that represents a particular transaction that has been verified and submitted. Typically referred to as Hash or TxID.
Hash Rate: The rate at which a computer verifies and submits a transaction, creating a new Hash. It is also the average rate at which a blockchain generates new Hashes and is measured in hashes per second.
Public Key: A string of letters and numbers that identifies the Blockchain address of your wallet. This information can be shared in order to receive cryptocurrency, similar to an email address or bank account number.
Private Key: A string of alphanumeric characters that unlocks your wallet. As with your password or PIN, this is sensitive information that must never be shared. It is confidential and should only be known by you.
Seed Phrase: This is a 12-, 18-, or 24-word phrase that only you have access to and that serves as a backup for your private keys. If you forget or lose your private key, you can recover it using a seed phrase.
Cold Wallet: This is the offline storage of your wallet’s Public and Private Keys by printing them on paper or storing them on an external hard drive that is not connected to the internet, in order to prevent hacking-related losses. When your wallet contains a large quantity of coins, cold storage is recommended.
The public and private keys of your wallet are stored on an app that is connected to the internet and is used to access your wallet. If your computer or mobile device is hacked, your keys may be stolen.
Mining: The process by which a computer or network of computers verifies transactions. When every computer on the network accepts a transaction, two things typically occur: a new block is added to the chain, and new coins are created and added to the new block.
Consensus: This is the algorithm typically used to verify and submit transactions. Proof of Work (PoW), Proof of Authority (PoA), and Proof of Stake are the most prevalent consensus algorithms (PoS).
Mempool: A collection of verified and submitted transactions that are awaiting confirmation by all Bitcoin network computers; a “waiting area” for valid blocks. A large mempool size indicates congestion; a backlog of blocks awaiting addition to the blockchain.
Proof of Work (PoW) is an algorithm that allows multiple computers in a blockchain to mine blocks in competition. Before the new block can be accepted by all other computers in the blockchain, the first computer to mine a block must demonstrate that it used a specific amount of energy to do so.
Proof of Authority (PoA) is the algorithm that authorizes a trusted computer or group of trusted computers to mine blocks. This method is faster than PoW.
Proof of Stake (PoS) is the algorithm that permits a computer to mine blocks proportionally to the number of coins it holds. For example, a computer with 2% of the available coins can mine no more than 2% of all blocks.
31. Evidence of Activity (PoA)
A transaction verification algorithm that uses both Proof of Work (PoW) and Proof of Stake (PoS). After a block has been successfully added, the system switches from PoW to PoS.
Proof of Burn (PoB) is an algorithm that enables computers to mine blocks based on the number of coins “burned” Coins are burned by sending them to an address that cannot be spent. The more coins that are burned, the more opportunities to mine.
Non-Fungible Token: This is a file type that is stored in a block and cannot be duplicated or replaced, making each NFT as unique as a fingerprint. To prove ownership of the asset or provide access to the asset, NFTs are attached to digital assets such as JPEG images and digital paintings.
Node: A computer that is already a participant in a blockchain. Therefore, a blockchain is a network of nodes.
A faucet is a reward system on a website or app that provides free cryptocurrency in exchange for registration or completion of certain tasks. Not all of these offers are fraudulent, so one must exercise caution before signing up or providing personal information. For instance, Kucoin performs this action when you initially create an account with the exchange.
Whales: Individuals or organizations that hold large quantities of a particular cryptocurrency. They are also known as wealthy individuals in the CRYPTO world. The minimum number of Bitcoins required to qualify as a Whale is one thousand. Typically, smaller holders are referred to as Dolphin or Fish.
A Nonce: These are randomly generated numbers that are only used once to verify new blocks. Typically, when a block is submitted, a nonce is appended to it to ensure that it is a new block and not an old block being resubmitted to the chain.
Smart Contracts: These are snippets of code that exist within the blockchain and whose purpose is to execute the logic programmed by the developer. When specific data is submitted to the blockchain, the code executes its intended function, such as initiating a payout.
Solidity is the programming language used to create smart contracts based on Ethereum.
Oracle: A piece of code that verifies, analyzes, and feeds the results into a smart contract for further action after receiving data from multiple sources both inside and outside the blockchain. Oracle data is used by smart contracts to perform actions.
Chain Linking: This is the process of connecting two distinct Blockchains, such as Bitcoin and Ethereum, in order to transfer crypto coins between them. For a transfer to be successful, the transaction must be simultaneously recorded and verified in both blockchains.
Block Explorer is a search engine that enables participation in blockchain transactions and provides access to blockchain data and information. Blockchain.com, blockstream.info, blockexplorer.com, blockcypher.com, btc.com, and blockchaingist.com are some examples.
Application-Specific Integrated Circuit (ASIC): This is a specialized circuit designed for a computer that mines only a particular type of cryptocurrency and serves no other purpose. A Bitcoin ASIC circuit cannot mine Ethereum, only Bitcoin.
Decentralized Finance (Defi) is a financial service that relies on blockchains and smart contracts to facilitate access to financial and banking services. In fact, because DeFis are automated, they enable access to previously exclusive services for everyone.
SATS is the smallest Bitcoin unit, equal to 0.00000001 BTC. Bitcoin’s creator, Satoshi Nakamoto, is referred to as SATS, also known as Satoshi’s.
Gwei: This is the smallest unique unit of Ether. 1 gwei corresponds to 0.000000001 ETH (10-9 ETH). Consequently, 1 ETH corresponds to 1 billion gwei.
This is the payment a miner receives for validating and submitting transactions on the Ethereum network. Every transaction requires gas, preventing hackers from blocking them.
dApps (Decentralized Applications) are programs that operate on a blockchain and are not governed by a central authority. If Twitter were a decentralized application, for instance, once a message is posted, no one, including Twitter, could delete it.
Unspent Transaction Output (UTXO) Model: A payment system in which a transaction involves two separate actions; the first action sends the required number of coins to the recipient, and the second action sends the unspent balance to a different address in the sender’s wallet. The total number of coins in the wallet is determined by adding all of the wallet’s unutilized balances.
There is no list of unspent balances, only a total balance. This model is used in Ethereum whereas Bitcoin uses the UTXO model.
52. Fork: This is a type of split that occurs when the algorithm of the blockchain is updated. If there is a clear disagreement between or among multiple computers (miners), particularly regarding algorithms, one group accepts it. While others continue to use the old system, resulting in distinct computers with the same ancestry.
Hard Fork: An update to the blockchain that is permanent. The computers that run the current blockchain are excluded from the older ones.
Soft Fork: This is the permanent change to the protocol that necessitates software updates on computers. Those who fail to update are still included in the blockchain, but they are unable to submit new blocks.
The market capitalization of a cryptocurrency is calculated by multiplying the number of coins in circulation by the price of a single coin on the market at the moment. This amount can reach the tens or hundreds of billions of dollars.
This is a website or app, such as Binance, that enables you to open an account and purchase cryptocurrencies with bitcoins, altcoins, or fiat currencies such as dollars or euros. The funds are deposited into your account using the standard methods, such as PayPal or wire transfer. Kucoin is another example of this.
ArbitrageBuying cryptocurrency on one exchange and selling it on another for a higher price.
Stablecoin is a cryptocurrency whose value is properly pegged to the value of a fiat currency, a commodity such as gold, or whose supply is controlled by an algorithm, ensuring the currency’s value remains stable. The most well-known stable coin is Tether, whose value is roughly equal to one US dollar.
Memecoin is a cryptocurrency that is based on a joke. They have no practical application and only have value because many people consider them to be comics and purchase them for that reason. Dogecoin is one example:
60. Dollar Cost Averaging (DCA):
This is the practice of purchasing a predetermined amount of a cryptocurrency on a weekly, monthly, or annual basis, regardless of price fluctuations. It eliminates emotion from the investment process, maintains consistency, and capitalizes on price declines.
Casascius Coin: These are the actuarial metal Bitcoins created by Casascius (Mike Caldwell) and embedded with a piece of paper containing the private key for a specific number of Bitcoin. A total of 27,673 Casascius coins worth 59,383.9 BTC were produced.
Coin Mixer is a piece of software that makes bitcoin transactions undetectable and untraceable.
This is accomplished by mixing one transaction with others and sending it back to the owner at a different address and for a different amount.
Initial Coin Offering (ICO) (ICO)
This is the offering of a new cryptocurrency in exchange for fiat currency, bitcoins, or alternative cryptocurrencies.
However, ICO participants always hope that the cryptocurrencies they purchase will appreciate in value.
Know your Customer (KYC) is the procedure used to verify the identity of a cryptocurrency user and link it to their wallet.
Double Spend: Attempting to send the same cryptocurrency payment to two different wallets.
67. Escrow: This is a blockchain-based third party, such as BitPay, that holds cryptocurrency securely until the seller receives payment from the buyer.
68. FOMO (Fear of Missing Out): This simply refers to selling a valuable asset to purchase a rising asset.
69. FUD (Fear, Uncertainty, and Doubt) Existence of FUD when many remain outside the digital market – Cryptocurrency.
Mooning: A cryptocurrency whose price is increasing, i.e., it is “mooning” and experiencing a bull structure.
71. Pump and Dump: This refers to the practice of purchasing a large quantity of cryptocurrency in order to profit when its price has legitimately risen due to high demand on the digital market.
72. Shill: A person who promotes an altcoin in order to profit from it.
73. Bagholder: This investor is in possession of a coin that is not worth what they paid for it.
Capitulation refers to the sale of a cryptocurrency at a substantial loss due to the loss of hope that its value will skyrocket or increase.
75. 51% Attack: This refers to a computer or group of computers that have the ability to verify more than fifty percent of all network transactions. It allows them to reverse transactions and spend coins multiple times, and it is also simple to manipulate.
Link: http://www.makeuseof.com/cryptocurrency-terms-defined/
