Top 10 Crypto terms you should know
Cryptocurrency has been reported and talked about everyday and it is becoming an alternative for unbanked people globally.
But there is a lot of confusion among crypto enthusiasts of the words used by crypto experts in their daily arguments and commentaries.
Let me explain to you some of the words that are very commonly used in crypto space and will help you understand the foundation of cryptocurrency.
Blockchains are typically managed by a peer-to-peer network for use as a publicly distributed ledger, where nodes collectively adhere to a protocol to communicate and validate new blocks. Rather than being managed centrally (like a central bank that manages currency), it refers to the digital ledger used to store all cryptocurrency transactions. In simple terms, blockchain is a form of spreadsheet that is duplicated thousands of times and sent to a network of different computers. Any update on the spreadsheet is reflected in all the copies.
Blockchain is a fundamental aspect of the crypto world and refers to the digital ledger of all the transactions ever made in a particular cryptocurrency. It differentiates cryptocurrencies from other currencies by making the transaction public to everyone on the Blockchain.
Non-fungible tokens (NFTs)
Non-Fungible Token (NFT) is used to identify something or someone in a unique way. It enables virtual transactions between collectibles like art, music, and trading cards using smart contracts. This type of Token is perfect to be used on platforms that offer collectible items, access keys, lottery tickets, numbered seats for concerts and sports matches, etc. When someone buys an NFT, they receive a certificate secured in Blockchain technology, making them the owner of that specific digital asset. NFTs are non-replicable and can only have one official owner at a time.
It will become very popular in 2021 and everyone is talking about it. We have seen CryptoPunks, Bored Ape NFTs selling for millions of dollars.
Initial Coin Offering (ICO)
It is just like a traditional Initial Public Offering (IPO), where any company raises funds for the business, Initial Coin Offering (ICO) is a new method for raising or securing funds for your projects and startups. The major difference is that you can be based in any part of the world, whereas in IPO, it is nation centric.
ICOs are similar to stocks, but they sometimes have utility for a software service or product offered. To participate in an ICO, you will usually need to purchase a digital currency first.
ERC-20 is a technical standard used for smart contracts on the Ethereum blockchain for creating tokens. It includes a list of rules tokens must comply with. There are 3519 tokens at this moment on ERC-20, with a total market cap of $786,205,785,344, according to Ethereum data provider Etherscan.
ERC-20 tokens allow developers to build token applications that are interoperable with other products and services. Used exclusively on the Ethereum platform, it is an acronym for 'Ethereum Request for Comment', and the ERC-20 standard has been in use since 2015.
Tether, Binance Coin, Chainlink, Dai, Wrapped Bitcoin are some of the few crypto projects built using the ERC-20 framework.
A private key, also known as a secret key, is a variable in cryptography that is used with an algorithm to encrypt and decrypt data. A private key is typically a long, randomly or pseudo-randomly generated sequence of bits that cannot be easily guessed. If someone is able to access your Private Key, you could lose all your funds in a matter of seconds.
Never share your private keys with anyone. And never forget your private keys, if you lost it, you lost all your crypto that is accessible with a private key. This key is very important to verify transactions when selling or withdrawing your crypto assets.
Decentralized finance (DeFi)
Decentralized Finance is a blockchain-based form of finance that does not rely on central financial intermediaries such as brokerages, exchanges, or banks to offer traditional financial instruments, and instead utilizes smart contracts on blockchains.
DeFi is a blanket term used to describe decentralized alternatives to traditional finance systems. It is meant to give access to these traditionally exclusive systems to opening them up to the public in a democratic manner without having intermediaries such as brokerages, exchanges, or banks.
Decentralized apps (DApps)
Decentralized applications (DApps) are digital applications or programs that exist and run on a blockchain or P2P network of computers instead of a single computer, and are outside the purview and control of a single authority.
DApps are open-source applications built on a blockchain intended for real-world use. It runs on top of distributed computing systems such as Ethereum or Bitcoin. Decentralized applications are stored on and executed by a blockchain system. Ethereum is considered the mother of DApps.
Proof of Stake (PoS)
PoS are terms that are used to create blockchains through common agreement. PoS stands for Proof of Stake that is used to scale up transactions involving large blockchains without running up a huge electricity bill. It is called a consensus mechanism, the method by which a blockchain maintains its integrity.
Proof of Stake was created as an alternative to Proof of Work, which is the original consensus algorithm in Blockchain technology, used to confirm transactions and add new blocks to the chain. Bitcoin is an example of Proof of Work consensus.
Satoshi Nakamoto is the name used by the presumed pseudonymous person or group of individuals who developed Bitcoin, authored the Bitcoin white paper, and created and deployed world's first cryptocurrency Bitcoin. As part of the implementation, Nakamoto also devised the first blockchain database.
While many attempts have been made, the founder of Bitcoin remains completely anonymous to this day. In 2021 a monument was announced in honor of Nakamoto in Budapest, Hungary for his work on Bitcoin and cryptocurrencies
Nakamoto was active in the development of Bitcoin up until December 2010 making all modifications to the source code himself.
An Altcoin is an alternative digital currency to Bitcoin. The word Altcoin is a mix of two words 'alternative' and 'coin ', to form 'altcoin'. It actually refers to a group of cryptocurrencies, ultimately all the cryptocurrencies other than Bitcoin.
Since Bitcoin launched in 2011, thousands of altcoins have emerged. Some coins disrupt markets and shape industry trends, most of the popular altcoins serve some real-world function. Ethereum is currently the world’s largest altcoin.
The above crypto words will definitely help crypto enthusiasts understand the market Kleverly!
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