Here are the 10 terms you should know.
Blockchain
Like traditional accounting, every cryptocurrency transaction is processed, verified and recorded on a ledger known as a blockchain. Each transaction recorded on the blockchain is timestamped, individually encrypted and cannot be reversed or changed. Blockchains are decentralised, meaning that they exist on computers all over the world that are accessible because of the internet.
Altcoin
An abbreviation of alternative coin, altcoin is any digital currency excluding Bitcoin. Simply put, altcoin includes all coins stretching from Ethereum to meme-based Shiba.
Fiat
In the crypto world, fiat money is essentially government-issued currency. Think the Australian dollar, U.S dollar, Japanese Yen, and so forth.
Cryptocurrencies, on the other hand, are virtual money. Cryptocurrencies are not backed by governments and other traditional standards used with fiat. Tokens represent how much one owns. The value of each token fluctuates on the daily, and investors are encouraged to check current prices.
Exchange
An exchange is an online service that allows investors to purchase cryptocurrencies with fiat, and to sell cryptocurrencies for fiat.
Like any other traditional bokerages, investors will be expected to pay fees for each trade. Currently, there are a handful of platforms that provide these services with differing fees.
Wallet
A cryptocurrency wallet is a mobile application or physical storage device that allows investors to store and retrieve digital currencies. Wallets are able to store multiple digital currencies. Unlike physical wallets, a cryptocurrency wallet only stores the location of one’s currency on the blockchain.
DeFi (Decentralized Finance)
DeFi refers to finance transactions that happen without a ‘middleman’. Examples of financial middlemen include the government, traditional banks or other financial institutions.
Mining
Most cryptocurrencies have a limit to how much it produces. Mining is the competitive process that verifies and adds new transactions to the blockchain using the proof-of-work (PoW) system. For instance, the supply of Bitcoin is capped at 21million. Miners compete to gain as much Bitcoin before the supply runs out.
NFT
NFTs (Non-Fungible Tokens) denote an asset that is unique and irreplaceable. It extends to all forms of digital assets such as drawings, music, AI, and more. The current excitement, however, surrounds digital art. Most NFTs are part of the ethereum network, but more and more blockchains can implement their own versions of NFTs.
Mint
Minting is the process of publishing NFTs. Essentially, it is the digital certificate one will hold built on a blockchain that guarantees ownership of a unique digital asset.
HODL
Also another abbreviation, HODL denotes “hold on for dear life”. In the context of cryptocurrencies, HODL means to buy and hold the assets. The term originated in 2013 within a Bitcointalk forum.
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