Hello Friends 👋
HODL. DApp. Ethereum.
No, these are not words from a newly-discovered alien language. They’re among the many new and key terms in the language of cryptocurrency.
Cryptocurrency isn’t just a novel investment option, and in many ways represents a different world altogether compared to traditional stocks and bonds. Between unfamiliar acronyms, emerging technologies, and keeping up with memes and tweets, just learning the basics takes time, even for seasoned traditional investors.
As with any investment, it’s important to understand exactly what you’re investing in before you start. That’s especially true when it comes to a speculative — and still evolving — asset like crypto.
There are a few prerequisites recommended before you buy into crypto, like stocking your emergency fund, paying down high-interest debts, and securing a traditional retirement plan.
But another item you should add to your checklist is at least a beginner’s understanding of what you’re getting into, including how crypto differs from other investment strategies, and the different factors that can affect a cryptocurrency’s market value.
Here are some of the terms and phrases that will help beginners better understand the world of crypto investing.
Crypto Terms You Should Know
Altcoin
An altcoin is any coin that’s not Bitcoin. Altcoins can be anything from the second-most popular coin, Ethereum, to any of the thousands of coins with very minimal market value. Experts say you should largely stick to the bigger, more mainstream cryptocurrencies as an investment.
Bitcoin
The first and most valuable cryptocurrency launched on Jan. 3, 2009. While its value has climbed steadily since then, it has seen wild fluctuations. In the past months alone, the price of Bitcoin has fluctuated from a record high of $60,000 to below $30,000.
Bitcoin Cash
A peer-to-peer electronic cash system that formed from a fork of the original Bitcoin. Where Bitcoin is widely accepted as too volatile to be useful as a currency, Bitcoin Cash is designed to be better optimized for transactions.
Block
Groups of data within a blockchain. On cryptocurrency blockchains, blocks are made up of transaction records as users buy or sell coins. Each block can hold only a certain amount of information. Once it reaches that limit, a new block is formed to continue the chain.
Blockchain
A digital form of record keeping, and the underlying technology behind cryptocurrencies. Blockchain results from sequential blocks that build upon one another, creating a permanent and unchangeable ledger of transactions (or other data).
Coin
A representative store of digital value that lives on a given blockchain or cryptocurrency network. Some blockchains have the same name for both the network and the coin, like Bitcoin. Others can have different names for each, like the Stellar blockchain, which has a native coin called Lumen.
Coinbase
A popular centralized cryptocurrency exchange. Coinbase made history recently as the first cryptocurrency exchange to go public on the Nasdaq.
Cold Wallet/Cold Storage
A secure method of storing your cryptocurrency completely offline. Many cold wallets (also called hardware wallets) are physical devices that look similar to a USB drive. This kind of wallet can help protect your crypto from hacking and theft, though it also comes with its own risks – like losing it, along with your crypto.
Cryptocurrency
A type of currency that’s digital and decentralized. Cryptocurrency can be used to buy and sell things, or as a long-term store of value.
Decentralization
The principle of distributing power away from a central point. Blockchains are traditionally decentralized because they require majority approval from all users to operate and make changes, rather than a central authority.
Decentralized Finance (DeFi)
Financial activities are conducted without the involvement of an intermediary, like a bank, government, or other financial institution.
Decentralized Applications (DApps)
Applications that are designed by developers and deployed on a blockchain to carry out actions without intermediaries. Decentralized finance activities are often completed using decentralized apps. Ethereum is the main network supporting activities in decentralized finance.
To be continued… Stay tuned… :-)
If you want to share anything or have any suggestions/questions, please leave them in the comments!
That’s it for today :-)
Hope each of you has a great start to your day. See you soon.
— Amit
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