Popular Cryptocurrency Terms You Need to Know
Crypto is the currency of the future. As the most significant advent in technology advances since the invention of the internet, cryptocurrency and the blockchain industry has grown in leaps and bounds ever since.
To novices, cryptocurrency lingo can be strange. Like the real world fiscal market with its jargon like bonds, assets, securities, and the like, there are special terms, newly coined, to refer to several aspects of the cryptocurrency market and the blockchain industry.
Cryptocurrency is more than just a new way of investment. It goes beyond this and permeates many aspects of our lives and the world at large, particularly in business and commerce. Thus, cryptocurrency is more than just traditional bonds and stocks.
With the new technologies and their corresponding linguistic jargon, it can be difficult to know what each term stands for. Even seasoned investors, who buy Dogecoin, Ethereum, and Bitcoin, can struggle with such terms as gas fees, HODL, hedge investment, staking, and fork.
Nevertheless, whether you are a newbie or veteran dealer, or investor in crypto, you need to know certain popular, basic terms. Here are some of them:
Altcoin
This is one of the most popular terms thrown around in everyday crypto speech. Altcoins refers to all cryptocurrency tokens that are not Bitcoin. It is a way of differentiating the pioneer cryptocurrency, Bitcoin, from all other tokens.
And the differentiation is apt! After all, Bitcoin’s market value is nearly ten times that of the most valuable altcoin, Ethereum. Today, there are hundreds of altcoins in the cryptocurrency market. In the year 2021, the best performing altcoin was Solana.
Encryption
Encryption in crypto, and by extension, the blockchain, is slightly different from traditional encryption. Cryptocurrency encryption refers to how legible, clear text is converted into a hash or illegible text. The process is computerized and done with the use of mathematical algorithms. This process is referred to as cryptography.
Public Key
In cryptocurrency, a public key refers to a sequence of numbers and letters that identifies your wallet address within the blockchain. Your public key is similar to your bank account, which you can share with others whenever you want to receive funds.
Private Key
The private key goes hand in hand with the public key. It is a sequence of letters and numbers that functions as a password to unlock your cryptocurrency wallet. It must be kept private and safe at all times.
The best two ways to store your private keys are to memorize the lengthy hash, or write it out on a piece of paper, and keep it somewhere safe.
Consensus
Cryptocurrency tokens operate on different blockchains. For instance, the ETH blockchain functions differently from the Bitcoin blockchain. At the heart of these functions is the algorithm on which the protocol is based.
These algorithms are together known as a consensus. They form the basis for the verification and submission of transactions on the blockchain. Three major kinds of consensus exist: Proof of Work, Proof of Authority, and Proof of Stake.
Gas
Not to be confused with the real-world automotive fuel, gas in cryptocurrency refers to developers’ fees for using the Ethereum network to build Defi apps. The fees are paid directly to the Ethereum network and are paid in Ether (ETH).
HODL
HODL is an acronym for Hold on For Dear Life. Originating from a typographical error, it refers to a specific investment strategy where investors purchase and hold on to a cryptocurrency, hoping that its value increases over time.
Initial Coin Offering (ICO)
Initial Coin Offerings are similar to Initial Public Offerings for real-life stocks. They are a way for new crypto projects to raise funds.
Market Cap
In the cryptocurrency market, market cap or market capitalization is the sum of all of the coins mined on that particular blockchain. Market cap is calculated by multiplying the present value of a cryptocurrency token by the total market supply.
Today, Bitcoin is the largest cryptocurrency by market cap, with a value of $1.1 trillion.
Conclusion
There are far more terms in the cryptocurrency industry than the ones detailed in this article. Some of the popular ones not listed here include cold wallet, hard wallet, mining, non-fungible tokens, node, whale, nonce, oracle and smart contracts.
Some of these terms apply to certain blockchains, while others apply to all. It is not required that you master all of them. But, if you intend to be a serious cryptocurrency investor, then you must learn as many as possible.
After all, you do not want to come up stumped as a Defi token trader when you hear about lending pools.
