20 Crypto Terms You Should Know
What's a fiat currency? What's the difference between a private key and a public key? And what's an Ethereum network, anyway? When you first enter the crypto scene, it can be a lot to process. There are thousands of different coins, tokens, and products to choose from, and bizarre technical terms are thrown around left and right.
Where are you even supposed to start?
The good news is that you are not alone, and there are plenty of ways to learn about crypto digital assets without stress or confusion. We’ve put together the perfect starting point for any crypto newcomer or aspiring miner with a list of twenty crypto terms you should know.
The Basics
These are the crypto basics everyone should know, whether or not you plan to invest.
1. Cryptocurrency
A cryptocurrency is a decentralized digital currency, meaning it isn’t controlled by a central authority.
2. Blockchain
Blockchain is the technology that forms the foundation of cryptocurrency. It is a digital form of record-keeping that is unchangeable due to its decentralized structure.
As you’ll learn, blockchain can be used in more than just cryptocurrency, with applications in areas like healthcare, supply chains, security, and voting.
3. Bitcoin
This original crypto made available in 2009 still represents nearly half the crypto market cap today.
The price of Bitcoin has fluctuated massively throughout the decade, but impressive all-time highs sparked the interest of investors on an individual and institutional level.
From government adoption to renewable energy Bitcoin mining, this famous “digital gold” is still at the top and making worldwide headlines every day.
4. Altcoin
If a cryptocurrency is not Bitcoin, it’s considered an altcoin.
Some altcoins like Ethereum and Cardano are considered mainstream, while others remain relatively unknown.
5. Satoshi Nakamoto
The mysterious Bitcoin creator goes by this name, but very little is known about their identity. It could be a group of people, a nickname, or a mysterious red herring.
6. Tokens and Coins
While coins are a unit of value on blockchain platforms, tokens have other functions. Bitcoin and Ethereum, for instance, are coins – essentially securities like stocks or commodities.
Tokens are designed for utility. Digital token economies are increasingly common. Whether through gaming, ownership of digital items, or another type of value transfer, tokens are highly variable and typically held on the Ethereum blockchain.
7. Crypto Wallet
Just like you store cash in a leather wallet or money clip, you store cryptocurrency in a digital wallet. Some wallets are connected to the internet (software-based hot wallet) while others are kept offline (physical cold storage) and are considered more secure.
If you’re serious about crypto, consider purchasing at least one piece of physical hardware to serve as cold storage for your assets.
All About Mining
You’ve surely heard about crypto mining by now, but what exactly does it entail? Here’s the basic mining vocabulary you should know—HODL (that's Hold On for Dear Life).
8. Crypto Mining
Crypto mining is the process in which new cryptocurrency coins are made. It’s also how the decentralized blockchain ledger is constructed and maintained.
Some crypto mining operations are small DIY setups, while others are high-profile operations with huge production rates. Energy requirements for Bitcoin mining are demanding, so renewable energy is a priority for future investors.
9. Hashing
Mining is accomplished as computers solve cryptographic hash functions to secure new “blocks” of information on the blockchain. This process is known as hashing, and it is the main metric of production for mining operations.
Hash power and hashrate are other terms that describe how much input is necessary to maintain a network or how much cryptocurrency a system is currently able to mine.
10. Mining Rig
Any equipment used to mine cryptocurrency can be considered a mining rig. From an $800 gaming computer to a multi-million dollar operation, rigs come in all shapes and sizes.
11. ASIC Unit
Application-specific integrated units (ASICs) are a popular mining rig, predominantly powered by a graphics unit and minimal additional features. This equipment is optimally designed to mine cryptocurrency, with few other uses.
12. Eco-Friendly Mining
Wind, solar, hydroelectric, and other innovative renewable energy sources are now used to mine Bitcoin and other cryptocurrencies. Pay attention to eco-friendly mining practices if you want to maximize crypto profits while reducing carbon output.
Crypto Markets
Before you dive into the crypto marketplace and make your first investments, be sure you know the following terms.
13. Exchange
You can easily buy and sell currency on a digital marketplace known as an exchange. Coinbase is a popular exchange in the United States, while Binance and Kraken are widely used for transactions overseas. There's also Decentralized EXchange (DEX), which are peer-to-peer exchanges that don't use a middleman like Coinbase, Binance, or Kraken.
14. Market Cap
Market cap is the total value of all coins mined for a particular cryptocurrency. The market cap for Bitcoin, for instance, is nearing $1 trillion, while second-tier altcoins may have market caps in the $5 billion range or lower.
15. Technical Analysis
Technical analysis is a form of statistical analysis used to evaluate trends in the market and make informed predictions about the direction of a particular asset.
There are proven methods for technical analysis that can help improve your chances in the marketplace. YouTube has plenty of helpful tutorials, although they can be difficult to follow at first.
16. ICO
The Initial Coin Offering event attracts funding and builds interest in a cryptocurrency in its early stages. Companies use ICOs to put themselves on the crypto map and establish strong messaging and support.
Blockchain Bonuses
As mentioned above, blockchain technology goes beyond cryptocurrency. Here are some next-gen terms to know as blockchain becomes more prevalent.
17. Fork
When an alternative version of a blockchain or program is created, it’s known as a fork. Many cryptocurrency projects have emerged from fork events which send technology in a new direction. There are soft forks that are compatible with old nodes and hard forks that make old blocks incompatible with the new chain.
Forks may be good for the reputation and price of a cryptocurrency, but not always.
18. DApp
Decentralized applications are the software equivalent of cryptocurrency. The apps are maintained by a decentralized network rather than a single server.
Successful DApps include Augur (market predictions) and Basic Attention Token (digital advertising). Many games and digital art applications are also growing in popularity.
19. DeFi
Decentralized finance refers to building alternatives to financial systems with traditional centralized structures. Most DeFi apps are built on the Ethereum blockchain, using smart contracts to reduce reliance on third-party authorization.
Proceed with caution in DeFi territory since the industry is still new and working through growing pains.
20. NFTs
Non-fungible tokens are digital units with no copies, replicas, or alternatives of equal value.
This includes audio, video, photos, GIFs, and even memes – anything digital with a unique identity can be captured and secured in an NFT.
The NFT marketplace is exploding with over $2 billion in sales in the first quarter of 2021.
Jump into Crypto with Confidence
Should you pump and dump? What's a POS, POW, or API? And what's the deal with "proof of stake"? Language is key to understanding a culture, a country, and a new industry like cryptocurrency.
We hope these 20 terms will help you navigate the marketplace with confidence but don't be discouraged if you still have a little FUD.
This is only a brief overview of what crypto has to offer – keep reading, learning, taking chances and discovering more every day. Soon, you'll be reaching your ATH.
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