Cryptocurrency is now a decade old. Bitcoin and cryptocurrencies have evolved with time. However, it still remains a mystery for many. So, if you are keen on investing or trading in Bitcoin or know more about the crypto world, then we have got this guide, wherein we highlight some of the key terms associated with cryptocurrency that will help you understand the crypto world better.
- Decentralization- One of the most common words in the perspective of Bitcoin and cryptocurrency is decentralization. The information is distributed across the network. Thus ensuring a seamless flow of transactions without interference.
- Decentralized application– These are the applications developed on Blockchain, which runs without intermediaries. Ethereum is primarily used for supporting the finding of decentralized applications.
- Digital Gold- Owing to the growing value of Bitcoin and cryptocurrency, there has been a rising trend of comparing Bitcoin with gold, and hence, it is sometimes also called digital gold.
- Blockchain- The distributed ledger technology plays an integral role in the functioning of Bitcoin and other cryptocurrencies. This platform has several advantages, which eventually emerge as the key feature of Bitcoin. These include anonymity, peer-to-peer transaction, encryption via cryptocurrency, faster transactions.
- Bitcoin– So, what are Bitcoins? These are decentralized, digital forms of cryptocurrency that run on Blockchain. On the trading platform, Bitcoin is represented as BTC. BTC represents Bitcoin on the trading platform, the same way as the stocks on the stock exchange.
- Cryptocurrency- A cryptocurrency runs on a peer-to-peer exchange platform. There is no central body governing the exchange of cryptocurrency.
- Altcoin- In the crypto world, although Bitcoin is the most popular one, other cryptocurrencies are floating in the market. These are called alternative coins or called altcoins.
- Wallet- Don’t consider it similar to the wallet we use to keep cash. Wallets are software used to store cryptocurrencies, and having a wallet is mandatory to do cryptocurrency transactions. Again, there are two wallets in these hot and cold wallets. A hot wallet is also called a digital wallet powered by the internet. It is to be noted that the bitcoin wallets can either be in the form of web applications or else they can be mobile applications. Parallelly, a cold wallet is not digitally connected. It can be hardware like a USB drive. These may not be easy to handle and carry, but it is a more secure option from a security perspective. However, it would help if you kept it safe. Also, these wallets are protected by keys, which are private keys and public keys. It is highly advised that you keep the keys safe and not inform any third party about the keys.
- ICO or Initial Coin Offering- With investors’ rising interest in cryptocurrencies, we have also seen increased ICOs. It is an event where a crypto project is launched, and the tokens are floated in the market, which investors can purchase and get their share in the crypto market.
- Halving– It is a process wherein the Bitcoin in circulation is reduced to half. This process also impacts the pricing and value of Bitcoin.
- Hash- This alphanumeric series identifies the blocks and is tied to crypto buyers and sellers.
- Non-fungible Tokens (NFTs)- These have become very popular nowadays. These are used to represent any work or art., music or collectively. NFTs are often held on Ethereum Blockchain.
- Smart Contract- These are pre-programmed contracts that operate on Blockchain. They have pre-determined terms and conditions, making it easier for the parties involved to execute the contract without any hassle. This makes transactions easier, thus benefiting the contributing parties. It finds application in all the business fields and is presently used in real estate.
- Cryptocurrency exchange platform- These platforms act as an exchange medium for cryptocurrency trading. There are several such platforms, but the cryptocurrencies on them may vary. Make sure that you choose a trusted platform like Web for trading in cryptocurrencies.
This basic information about the crypto world would make it easier for you to participate in it actively, enhance your knowledge base and ensure a better understanding of Bitcoin and cryptocurrencies.