The crypto industry is in the middle of a boom, and more people are joining the fray. Before you enter this venture, it is important that you have, at the very least, a basic understanding of what crypto is and how it works.
One of the first things you should become familiar with is the language.
Crypto is an evolving field with its own vernacular, composed of jargon, terms, and slang that are unfamiliar and often alien-sounding to individuals not involved in the industry.
Learning these terms will significantly help you not only in interacting with other members of the community, but also in navigating crypto’s complex landscape as a whole.
To start, here are a couple of terms to keep in mind when using crypto.
When it comes to crypto, people usually talk about Bitcoin, but there are thousands of other coins as well. All these other coins are called altcoins (or “alternative coins”).
Many investors see altcoins as lucrative ventures, believing that their value may increase exponentially over time.
Some of the most popular altcoins in the market include Ethereum, Litecoin, Tether, and Monero (which you can store in a handy XMR wallet).
Not all cryptocurrencies function as a currency alone. Some give developers the tools and space to deploy applications on their blockchain networks called “decentralized applications” or “dApps,” for short.
These programs stand out because they do not need intermediaries in order for them to function. Some examples of dApps include mobile games and social media sites.
The term “DeFi” is short for decentralized finance. It is a movement within crypto that describes or encourages the implementation of financial applications and services without the traditional middleman, like the government or banking institutions.
In this manner, people can transact with one another directly without a third party getting involved with their finances.
A fork, to put it simply, is a chain split. When developers decide to change the direction of a cryptocurrency or blockchain-based network, the project splits off into two paths (the “fork”). There are two kinds of forks: a soft fork and a hard fork.
In a soft fork, the project simply changes its course, and only one blockchain continues to operate. On the other hand, a hard fork happens when one project splits off into two brand chains.
One party follows the original course for the blockchain while the other party goes off to pursue its own plans for the network.
A hash rate is a unit of measurement that refers to the total combined processing power in crypto mining, the manner in which a blockchain network uses to validate transactions. It is measured in the number of hashes done per second.
The concept behind it is simple. The more nodes (computers and miners) that join the network, the higher the blockchain’s processing power is. This translates to a higher hash rate and, ideally, increased transactional speeds.
HODL is a slang term used in crypto, short for “Hold On for Dear Life.” It essentially means to keep your coins even during massive price dips. It stems from the belief that coin values will rise again in time, so you should not sell them for now.
According to popular belief, the term began when a user mistyped the word “hold” while encouraging others to not sell their coins.
Market capitalization in crypto simply refers to the value of all the coins currently mined in a cryptocurrency.
It is one of the many ways to determine its relative size, especially for ranking purposes. You can compute a cryptocurrency’s market cap by multiplying the number of mined coins with its current market value.
A smart contract is an algorithmic program designed to execute the terms of a contract independently.
Based on its code, it can validate, enforce, or facilitate a contract on the blockchain without any third-party oversight, making it a key component in DeFi. As such, it is a popular function used in many blockchains, particularly in building dApps.
A token is a unit of value on a blockchain that functions other than currency. While coins work similarly to conventional money, tokens are more comparable to tradable assets like crypto holdings and other valuable digital files.
To illustrate, a coin is to a dollar as a token is to a car title. Both represent something that may be of value but in different ways.
A whale in the crypto industry refers to individuals and institutions that hold an uncommonly large amount of crypto.
As such, they have a tremendous influence on the market and have the ability to manipulate prices when they buy or sell.
Whales are commonly made up of investors who bought coins when the crypto industry was still in its very early stages.
Bear in mind that these are only some of the terms used in crypto trading. To increase your knowledge, read more about crypto, engage with the community, and keep up to date on news in the industry.
By doing so, you can stay on top of any developments and execute plans that will help you achieve your financial goals.
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