It is important to know what these crypto terms mean whether you want to invest in cryptocurrency or stay tech-savvy, so you can have some conversation about crypto with your relatives. These terms are newly formed terminologies purposely used for anything related to cryptocurrency. Some terms have similar meanings to the words derived from, and some have different meanings.
There are at least twenty terminologies in the world of crypto which are important for you to be familiar with. Those terms are Altcoin, Bitcoin Cash, Blockchain, Coin, Cold Wallet, Decentralized Finance (DeFi), Decentralized Applications (DApps), Digital Gold, Fork, Halving, Hash, Hot Wallet, Initial Coin Offering, Market Capitalization, Node, Peer to Peer, Public Key, Private Key, Smart Contract, and Stablecoin or Digital Fiat
Altcoin combines the word ‘alternative’ and the word ‘coin’. As the first and the most valuable coin, Bitcoin is not categorized as an Altcoin, but other coins are labeled as Altcoins. Bitcoin Cash Since the first and most valuable cryptocurrency, Bitcoin, is too unpredictable for a currency's usefulness, Bitcoin Cash makes transactions better since it is designed purposely to be a more stable version of Bitcoin.
Blockchain is a collection of blocks containing data. A block can contain information about coin buying or selling transaction records between cryptocurrency users. Since it can only contain so much, new blocks need to be formed that are then chained into a blockchain. It acts as a permanent archive of data, specifically transactions.
Blockchain Technology: The Backbones of NFT
A coin is the form of cryptocurrency itself, which has digital value on a blockchain. Some examples of the most popular coins are Bitcoin, Ethereum, Tether, Cardano, Dogecoin, XRP, Litecoin, and Solana.
Cold Wallet. A cold wallet is like a traditional leather wallet. But instead of keeping cash or cards, a cold wallet is hardware to store your cryptocurrency. Since the storing is offline, you can not lose your crypto to hackers, but you can lose it like how you lose your cash with your leather wallet.
4. Decentralized Finance (DeFi)
Decentralized Finance is an open and transparent financial service. It runs without any arbitrator involved and is subsidized by the Ethereum network. Decentralization itself means distributed power, so all users, not a central command, are involved in the Decentralized Finance activities.
5. Decentralized Applications (DApps)
Decentralized Applications are used to control the activities of the Decentralized Finance or other decentralized actions on a blockchain.
6. Digital Gold
Like real gold, the value of cryptocurrencies like Bitcoin can increase over time and be used as an investment. Digital gold is what those crypto are normally referred to. While you obviously can only store real gold physically, you can store your digital gold both connected or not connected to the internet.
A fork is a blockchain split by users to make some changes. One blockchain would be the same before the split, while the other would have some differences. Bitcoin Cash above is an example of a fork from Bitcoin.
Halving is a phenomenon in which the supply of Bitcoin is limited because a specific number of mined blocks has been reached, which normally happens once every four years. It can have a significant impact on the price of Bitcoin.
Hash is a fixed-length security string of numbers and letters which is unique and almost impossible to be cracked. It is very useful for the data security of crypto buyers and sellers on a blockchain.
10. Hot Wallet
Internet-connected cryptocurrency storage, a hot wallet is the opposite of a cold wallet. While you benefit from quicker access to your crypto with a hot wallet, you also get some online risks that you would not get by using a cold wallet. Hackers can steal your crypto as they hack your online files.
11. Initial Coin Offering
Initial Coin Offering or ICO is the crypto term of a stock market term, Initial Public Offering or IPO, which means an early proposition for those who want to invest in a new cryptocurrency project.
12. Market Capitalization
The market capitalization of cryptocurrency is the total value of all combined coins. The total number of coins and their value are multiplied to find the market capitalization of a certain cryptocurrency.
Node. Node is a computer used to do activities in a blockchain network. A node is a device to store the blocks containing data on a blockchain. All the nodes on a blockchain are connected and keep exchanging the latest information to keep updated.
13. Peer to Peer
Peer to peer is a direct interchange between two users without connecting to a broker. Since blockchains are decentralized, the connection between two users in a blockchain uses the peer-to-peer method.
14. Public Key
If you have an account number for your bank account, you also have a public key for your cryptocurrency wallet. It is named public key since you can share it publicly to receive money from others who send you some.
15. Private Key
The previous key is for the public, as you can tell from its name. In contrast, like in its name, a private key is the key that you have to keep for yourself. You use your private key to access your cryptocurrency directly, so it is similar to the password for your bank account.
16. Smart Contract
A smart contract is a program with a code that will automatically execute the terms of a contract on a blockchain when the specific condition based on the code is met. This program is very useful for busy users who cannot track their blockchain activities all the time.
17. Stablecoin or Digital Fiat
Fiat is a type of money that has value from government regulation or law. Digital Fiat or Stablecoin is a currency in the blockchain whose value is fixed with its non-digital currency.
Some of those crypto terms are easy to understand, but some are rather tricky to understand because the terms are very unfamiliar. However, as crypto becomes more popular over time, learning those terms can be enjoyable, and learning the cryptocurrency itself.