Cryptocurrency is a digital asset that has taken the world by storm. From Bitcoin to Ethereum, you’ve probably seen many individuals advance financially through trading.
With such popularity in the current market, it’s important that you understand the terminology if you wish to get involved. It can be a complicated process, and you’ll want to give yourself the best chance of success.
Interested in learning more? Below we are going to discuss the top crypto terms that everyone should know.
Exchange
A crypto exchange is a digital marketplace where individuals can buy and sell cryptocurrency. A user can convert one thing into another and trade for fiat currencies like USD, EUR, or AUD.
They act as a mediator between buyers and sellers and generally charge a fee for their service. Some marketplaces such as Noones allow you to buy Bitcoin with other payment methods including gift cards.
Blockchain
Blockchain is the underlying technology that powers cryptocurrencies. In simple words, it’s a kind of decentralized ledger of transactions.
Each block in the chain contains information about every transaction that takes place on the network. It’s incredibly secure and transparent technology and is what makes crypto possible.
Wallet
A cryptocurrency wallet is a digital wallet that allows you to store, send and receive crypto. They each contain a private key which is used to access the funds and is stored on the blockchain.
There are various types of wallets out there each promising different advantages. It’s important to do your research so that you find one that is suitable for you.
Altcoin
The term altcoin is used to describe any type of coin that isn’t Bitcoin. As it was the “original cryptocurrency”, other types are alternatives. Litecoin, Ripple, and Dogecoin are some other examples you may have heard about that have gained recent popularity.
Many of these have different features when compared to Bitcoin. For instance, some are more suitable for day-to-day purchases. What you choose depends on your investment goals.
Mining
Crypto mining is the process of verifying transactions and adding them to the blockchain. In return for their work, the miner is rewarded with coins.
The mining process is challenging and complex. They must use powerful computers and hardware to solve mathematical algorithms – something that requires a lot of electricity.
Fork
Finally, a fork is a significant change to the underlying rules of cryptocurrency. It’s not unusual and usually occurs when developers disagree on how to proceed or resolve an issue.
There are two main types of forks – soft and hard. A soft fork is a backward-compatible change while a hard fork is not.
Final Words
And that’s it! These were just six of the top cryptocurrency terms that everyone should know. While there is a lot more you will need to learn, these should give you a solid foundation if you plan on getting started.
Just remember to make fact-driven decisions. As with any investment, you don’t want to put anything on the line until you are aware of all the risks.
