Are you just starting with crypto? This industry has a lot of complicated terms and topics, right? The crypto lexicon can be tricky to crack for beginners. That’s why here’s a guide to help in demystifying crypto jargon.
This feature will tell you Blockchainain, the difference between Ether and Ethereum, and mining and miners. Your days of confusion are over.
We aim to cover the Following Points
- Basic crypto jargon and definition
- How the crypto terms are interconnected
- Examples of crypto jargon
- Using crypto terms in the trading world
15 Common Crypto Jargon or Terminology That You Should Know About
What is a crypto blockchain?
It is a decentralized ledger or database of transactions carried out on a peer-to-peer network. Does that still sound difficult? A blockchain is a database that stores information on different devices connected to the same network. Blockchains have become popular due to their high level of security and interdependence of data.
What is Decentralized finance?
Decentralized finance or DeFi means a ledger or database that has no centralized authority. Anyone connected through DeFi can make changes to the chain and forward the data to other users.
What does the financial jargon POR stand for?
PoR or Proof of Reserves verifies that a crypto exchange institution holds enough crypto funds to back up all customers. Think of it as a document to ensure that the exchange has enough assets to hold the cryptocurrency of all existing customers. The goal of PoR in crypto is to improve transparency between the customer and the exchange.
What is the difference between Ether and Ethereum?
What are ether and Ethereum and are they interchangeable? This is a common question for crypto newbies. Ether is a cryptocurrency that can be used to perform online exchanges. Ethereum is a cryptocurrency exchange platform. The two cannot be used interchangeably.
What is mining in crypto?
Simply, it is the process of verifying transactions on a Blockchain. Any new cryptographic number can be entered into a blockchain to create new crypto coins. Both software and hardware are used together to mine crypto. It is legal as the use of Bitcoin is legal everywhere.
What is Bitcoin?
Even if you aren’t a part of the trading world, you must have heard of Bitcoin. Bitcoin is the most widely used cryptocurrency in the world. It is supported on most trading platforms and has a high market value. Bitcoin or BTC uses peer-to-peer exchange and can be used for instant trades.
What is a Digital Wallet in crypto?
It means software or hardware to store your crypto assets. Digital wallets are secure and easily accessible from devices or a hard wallet. Softwares like Coinbase, Trust Wallet, and Electrum are examples of digital wallets. They will protect your digital currency and make it available at any time. Hardware such as Kaspersky, ledger, and Allegro are cold wallets. These devices have separate codes and combination locks. Interestingly, hardware wallets are usually more secure than software digital wallets.
What do you mean by Fiat Currency?
Generally, Fiat currencies are commodity assets controlled by the government. In crypto, Fiat currency means legal tenders or exchanges under government control. The market value of fiat currency is tied to the value of government-issued currency. One such example is USDT. The value of USDT fluctuates with the government-issued value of US dollars.
What is an NFT or Non-fungible Token?
The recent boom of NFT in the crypto market had everyone researching these tokens. However, the idea of NFT has existed for quite a while. NFT or Non-fungible Tokens are bits of code in the crypBloBlockchain. These tokens are highly secure and can be traded for higher prices.
NFT represents digital ownership of any commodity. The most common use of NFT has been to buy several digital images or assets. Once an NFT is purchased, a new number is added to tBloBlockchain. This number cannot be altered or deleted without affecting the other elements.
What are cold wallets and hot wallets?
Hot wallets and old wallets are concepts related to digital wallets. Digital wallets can hold digital assets or crypto and make them available for trade anytime. Digital wallets that use software are called hot wallets. This software can be used at any time on any device. Hot wallets usually use a two-factor wallet.
Cold wallets are physical storage wallets for crypto or digital assets. These devices have a unique lock and vault that can only be accessed by the owner. Cold wallets are more secure when it comes to digital wallets.
What is a meme coin?
Meme coins are cryptocurrency or digital currency based on the popularity of internet memes. People share various images and memes on social media. Such memes have been adapted as forms of digital currency. These coins are called meme coins. Some popular meme coins are Dogecoin, Shiba Inu, Dogelon Mars, etc. The market value of meme coins has recently been on a steady decline.
What is dApp?
It is short for decentralized application. It is not controlled by any central authority or organization. It runs on a blockchain. So, users can easily add new data to the application and view it as they please.
What is DAO?
It stands for decentralized autonomous organization. It is a group of people who run their own crypto projects that are not related to any company or organization. Bitcoin is an example of the very first DAO project.
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Wrap-Up The Content
Now you know the basic terminology of crypto. There are many steps to demystifying crypto jargon, but you’re ready to start your exploration of the trading world.
Frequently Asked Question
What are the main drivers for cryptocurrency adoption?
The main factors in cryptocurrency adoption are clear laws and regulations, security and stability, usefulness, and accessibility.
How do I protect myself from cryptocurrency market volatility?
The best way to stay on top of the crypto game is to follow dollar cost averaging or DCA method. By activating this, you can automatically buy more crypto when the price drops and less when the price rises. This will lower your volatility in the crypto market.
