Cryptocurrency is a buzzword dominating news headlines, inspiring movie plots, and initiating an entire industry. Venture capitalists are raving about the potential of crypto to revolutionize the monetary concept. And millions of people are joining the hype by investing in digital coins.
The reality is the new crypto world is not going away. At last count, over 19,000 versions are in circulation. The faster you familiarize yourself with the appropriate glossary, the easier it will be to navigate the cryptocurrency labyrinths.
Let’s learn the fundamental crypto terms and their meaning.
If planning to engage with the growing community, it’s crucial to master the terminology that will enable you to pick up on the most recent crypto news.
So, let’s start at the beginning. Cryptocurrency represents a medium of exchange performed through a decentralized computer network. In layman’s terms, it’s digital money, but without centralized control, making it more stable.
Blockchain is the foundational technology behind the concept of cryptocurrency. Blockchain is a digital public ledger that stores information on a global peer-to-peer network. And in the context of crypto, it’s used to record transactions.
In a nutshell, the technology facilitates data distribution but doesn’t allow copying, meaning there can be only one owner at any given time. As a global decentralized network, nobody can single-handedly control the system. Contrary to fiat money issued by a central bank, this feature drives the appeal of cryptocurrencies.
The meaning of the word mining had to be expanded in most dictionaries once crypto landed on the scene. Crypto miners do not wear hardhats and use a pickaxe but rely on powerful computers to run an algorithm that constantly works on solving complicated mathematical equations.
When a math puzzle gets cracked, the system produces a new block on the blockchain, effectively adding a new coin to the ecosystem. Miners get rewarded for their contribution either in crypto payment or fiat currency. But it is crucial to know that the computers that do the tasks are expensive and have a thirst for electricity, which can be an additional financial burden.
No matter the form, money is stored in a wallet. With cryptocurrency, there are two methods. It can be a physical device, referred to as a cold wallet – most often, a USB flash drive.
The other option is an online wallet, i.e., a hot wallet. In both instances, the system is protected with encryption, granting access only to a user with a verified private key, which is an advanced password.
Technically speaking, a token is another word for cryptocurrency, denoting a single unit of a specific digital currency. However, as the industry evolves, tokens increasingly take different meanings, such as describing certain digital assets.
Decentralized finance (DeFi) is an umbrella term for the segment of the crypto ecosystem that enables users to trade cryptocurrency, earn interest, borrow funds, and speculate on price movements. It’s a form of Wall Street for people into crypto.
In the crypto community, FUD is an acronym for “Fear, Uncertainty, Doubt,” i.e., it’s not desirable to hear associated with a specific digital coin you have a vested interest in. The term frequently shows on forums when discussing crypto and has been used as propaganda to undermine the value of some coins.
This is not a label you want to receive, as, in the crypto world, the derogatory term degenerate is shortened to “degen .”It’s mainly used for somebody who invests in new coins, not based on detailed analysis, but as a quick-rich scheme.
As financial security, Non-Fungible Tokens (NFT) represent digital content stored on a blockchain. NFTs transform digital art, games, music, and film into unique assets that are verifiable. They are used as speculative investments and do not necessarily grant copyrights to the owner of the NFT.
Bitcoin occasionally gets used as a synonym for crypto, and the reason is simple: It’s the flagship brand in the industry. Bitcoin sparked the digital coin revolution in 2009 when Satoshi Nakamoto created it.
Although the real identity of Satoshi Nakamoto is still a mystery, Bitcoin remains the most valuable digital coin, actively traded on exchanges, and functions as a benchmark for all other cryptos that enter the market.
In market capitalization, Ethereum holds second place only to Bitcoin. Following the king of crypto, Ethereum is the most sought-after crypto that continues to innovate the field.
The crypto vocabulary is constantly evolving. With every advancement in technology, new phrases emerge. Mastering the basic lingo offered in our guide will provide a solid footing for newcomers to the crypto scene.
We are at the doorstep of a new financial revolution, so learning how to communicate is essential.