Although Bitcoin was launched in 2009, you have yet to see any mention of cryptocurrency on news channels or the internet. So many questions came in from readers and listeners to national radio stations on crypto. I explain the basics of digital tokens, mining, as well as how to start trading.
Unfortunately, there are many people who have been fooled by a crypto scam. Criminals wait for the money.
This is not financial advice. You should not risk any money in the crypto world. Let’s now take a look at some common terms.
You need to be familiar with the cryptocurrency terms that people use every day.
1. Blockchain
Every cryptocurrency transaction is recorded, verified, and processed on a Blockchain. Every time someone uses cryptocurrency to buy or sell, another entry is made to this virtual ledger.
The blockchain can be thought of as a collection of boxcars that run on a train. A cryptocurrency transaction adds another boxcar to the train.
Blockchain is distributed. It is not stored on one machine, or across any network. Instead, the blockchain is accessible from all computers around the globe that have internet access.
Companies and individuals verify every transaction added to the blockchain by using their computers’ processing power in a decentralized peer network. Each transaction is individually encrypted and timestamped. They cannot be reversed. You read it right, crypto transactions can’t be reversed.
2. Fiat
I understand what you are thinking. “I thought that a Fiat was an automobile.” But not in crypto-land. Fiat money is a government-issued currency. The U.S. Dollar is the currency you will use if you are in the United States.
Cryptocurrency is virtual money.
The government and any other standard used to back traditional currencies are not backed by cryptocurrencies. Each token represents the amount of your cryptocurrency.
The current market value determines how much each token is worth. It can go up or down depending on the market value. Price fluctuations with cryptocurrency can occur much faster and more frequently, both positively and negatively.
3. Altcoin
This is an easy one. An altcoin is any digital currency that’s not bitcoin. There are many cryptocurrencies available, and new ones are added every day.
These are the five currencies that have the highest market caps at the time of writing. This is the total market value for the circulating supply. This list could have changed since crypto is so volatile.
- Bitcoin
- Ethereum
- Binance Coin
- Tether
- Solana
4. Exchange
You need an exchange to buy cryptocurrency. You can think of the exchange as a crypto intermediary. This online service allows you to convert fiat into crypto, or exchange fiat for crypto.
A crypto exchange acts as a broker if you are familiar with traditional investing. You can deposit money via bank transfer, wire transfer, debit card, or other standard deposit methods. Most transactions will incur fees.
5. Wallet
A cryptocurrency wallet, in simple terms, is an app or physical storage device that allows for you to store and retrieve digital currency. You can store multiple currencies in your wallets, so you don’t have to limit yourself to Bitcoin.
It doesn’t matter if you use an app or a physical wallet. The currency is not stored there. Instead, wallets save the location of your currency on the Blockchain.
There are two main types of wallets: hot and cold. A hot wallet connects to the internet. A cold wallet is the best way to store cryptocurrency. It must not be connected to the internet.
There are many types of physical wallets, but they all have a special USB drive that stores your cryptocurrency directly for future use. You have the best protection against hackers with physical wallets.
6. Mining
This term is often associated with Bitcoin. It is generated by mining. Complex math problems are what computers use to mine coins. Computers can “think” faster if they are more powerful.
If your computer solves the problem faster than the others, you can win one unit of the cryptocurrency you are mining.
Although there are some cryptocurrencies that have an unlimited supply, there are many others with a limited supply. Bitcoin’s limit is 21,000,000 The last coin will be mined by 2140 or earlier.
7. DeFi
Another simple one. Here’s another simple one: DeFi is an abbreviation for decentralized financing. This refers to financial transactions which occur without the involvement of a “middleman” such as the government or another financial institution.
You can still learn about traditional online banking. If you stick to a few guidelines, it’s safe.
8. NFT
These are nonfungible tokens. This is a fancy way to say, “This digital item, is one of a type and irreplaceable.” It can be applied to any kind of content, including online artwork, songs, viral videos, and text logos.
People collect vintage cars, wine, famous art, and baseball cards. Any digital item can now be made into a collectible. These items can also be used online as status symbols.
You can only buy NFTs using cryptocurrency. An auction platform, a secondary marketplace, or participation in a mint can all be used to buy NFT. You may be wondering what that means.
9. Mint
Minting describes how a file such as a JPEG, GIF, or PNG is saved to a blockchain. Once an NFT has been minted, it is possible to sell or trade it. Participating in a mint means that you are the first to purchase that work from its creator. It is possible to trade, sell, or hold it.
The creator will specify the future royalties that they will receive during the minting process. This commission is used to determine if the work will change hands in the future. It is an attractive option for artists who want to move digitally. It is possible to sell NFTs on secondary marketplaces and get a cut of the sale.
10. HODL
Here’s an example of a term that you might come across on social media. HODL is an acronym that stands for “hold on to dear life.” It was originally a typo of “hold” in a Cryptocurrency forum back then, but it has become everyday slang.