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Highlights
- Bitcoin, the first cryptocurrency invented in 2009, had the largest market capitalisation on 13 September 2021.
- People can trade cryptocurrencies for other cryptos or fiat currency on a cryptocurrency exchange, an online location.
Cryptocurrency has become increasingly mainstream at present, with more and more people buying digital assets. While some people know what they’re doing, others are betting on the market, hoping their timing is spot on.
However, putting money into the crypto market without knowledge is a sure-fire way to lose money, unless the person gets lucky.
For a safer ride, it’s best to have some foundational knowledge before investing money into any of the thousands of cryptos available.
So, here are ten words relevant to crypto and their meanings.
Cryptocurrency
A digital currency that can be used to pay for goods and services. Transactions are verified and recorded by a decentralised system.
Decentralisation
The concept of taking away the need for a third party such as a bank. Blockchain is decentralised because rather than needing a bank's approval to make changes, it just needs the approval of the users of that blockchain.
Bitcoin
Bitcoin is the first cryptocurrency invented in 2009. By market capitalisation, Bitcoin is the world’s largest cryptocurrency as on 13 September 2021.
Altcoin
Simply put, an altcoin is any cryptocurrency that isn’t Bitcoin. It’s essentially shorthand for alternative coin. The largest altcoin currently is Ethereum’s Ether coin.
Blockchain
Blockchain is a form of technology that provides a system where transactions made in a cryptocurrency are stored in blocks across a network of computers that are linked in a peer-to-peer network.
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Cryptocurrency Exchange
This is an online location where people can trade cryptocurrencies either for other cryptos or for fiat currency. Different exchanges offer different cryptocurrencies but some of the more popular exchanges are Binance and eToro.
Crypto Mining
The process of releasing more crypto coins. This can be done by a proof-of-work consensus where computers are required to solve complex algorithms. Due to the energy consuming nature of this practice, more and more cryptos are turning towards proof-of-stake where miners are required to own some of the coin in order to mine more of it.
Crypto Wallet
This is an online location where people store their cryptocurrency. Access to crypto wallets are achieved using private keys, which are essentially passwords.
Cryptocurrency Whitepaper
A whitepaper is the mission statement of a cryptocurrency. They explain the purpose and technology that pertains to a digital currency. Whitepaper’s can be found on the website of crypto and should be read before by an investor before they decide to invest.
Whale
A whale is a crypto investor or sometimes a group of crypto investors who hold a large amount of a crypto, which if they decide to sell, will have a marked impact on that particular coin’s price.
For example, if a group of Bitcoin whales decide to sell off their holdings of Bitcoin, the price of Bitcoin will drop noticeably because the whales have just flooded the market with it – often much to the chagrin of other smaller investors.
These are just some of the words that a would-be investor should know before diving into the exciting and unpredictable world of cryptocurrency.
