Cryptocurrency has become one of the most popular investment options away from traditional stocks. However, when new to the industry you might struggle to understand the various aspects given the widespread industry-specific cryptocurrency terminology.
You first have to learn the terminology in cryptocurrency before you can invest in the crypto assets. Some of the most crucial terminologies to know include;
Address
For crypto transactions, an address is a destination where the user sends and receives the digital assets. You can only access the assets transferred to the address when you have its private keys.
The address in a way is similar to bank accounts. It comes in the form of a long series of letters and numbers.
Altcoin
An altcoin is any other cryptocurrency apart from Bitcoin. The name is derived from the terms “alternative” and “coins”. Every asset that comes after Bitcoin follows a different set of protocols from that of Bitcoin as they are always looking to solve some of the underlying Bitcoin issues. That is why they are the alternatives.
Bitcoin
Bitcoin is the world’s first and most valuable cryptocurrency. Launched in 2009 by Satoshi Nakamoto, the coin has kept its place as the leader of the crypto tokens. The crypto has continued to remain popular due to its exponential price increase since its inception and growing number of users.
Bull/bullish and bear/bearish
When you invest in cryptocurrency then you have to be aware of the possible market movement to determine whether to sell, buy or hold on to an asset. The bull movement is when you expect the token price to increase. It is described as a bullish preview movement.
The crypto bear run is when the token value goes down. It is described as a bearish crypto movement. These are also common terms within the global stock market.
Blockchain
It is a distributed ledger system that contains a series of blocks to record transactions. It’s the underlying technology behind cryptocurrencies. The blockchain records all transaction details on a decentralised ledger accessible by anyone on the network. The records are also immutable in such a way that you cannot erase or edit once entered.
Mining
The cryptocurrency mining terminology refers to the process of creating new units of a digital token. It is also where the log of transactions between users are kept, while also ensuring the platform’s security.
Cryptocurrency
A form of digital and decentralised currency that uses cryptography. Cryptocurrency can be used for value exchange and as a store of value.
Decentralised
The lack of a single authority that determines the supply and uses of a token. The blockchains are decentralised as they depend on all the users within a network to approve transactions instead of relying on a single authority figure.
Digital cryptographic signature
It is the proof of authority in a digital transaction. Every transaction requires the sender to include the cryptographic signature, hence very secure.
Exchange
The digital marketplace for buying, selling and holding cryptocurrencies.
Wallet
A place to store all data related to your cryptocurrency dealings. It has information on addresses, balances, public and private keys and transaction histories. Many exchanges provide digital wallets. There are various wallets such as cold (offline) and hot (online) wallets.
