The crypto market is about 11 years old and exclusively deals with digital assets. It operates 24 hours a day, seven days a week.
So, what is a Cryptocurrency？
Cryptocurrencies are digital assets that use cryptography, an encryption technique for security. Cryptocurrencies are primarily virtual currencies designed to buy and sell goods or services. They lack the intrinsic value as they are not redeemable for another commodity, like gold for example. Unlike traditional currencies, they are not issued by a central authority, which raises doubts about their legality and credibility among some investors. On the other hand, this defining feature of cryptocurrencies makes them theoretically immune to government interference or manipulation.
Cryptocurrencies are perceived as secure online payment gateways that are denominated in terms of virtual tokens. The termCryptorefers to the multiple encryption algorithms and cryptographic techniques that safeguard these virtual currencies. We can say that the increasing popularity of cryptocurrencies is derived from their groundbreaking technological innovation.
Cryptocurrency Terms Every Trader Should Know
The cryptocurrency market has been a leading investment destination in the past couple of years. However, cryptocurrencies remain controversial even after a long way with regards to both technological advancement and increasing popularity. Some praise cryptocurrencies stating that they are the future money or the next internet. While others still perceive cryptocurrencies as fraud. We can see that for every person claiming that cryptocurrencies are investment bubbles, theres another person insisting that they represent the next generation of finance.
Cryptocurrencies enjoy significant advantages such as transparency, 24/7 accessibility, decentralization, security, and their great potential for appreciation. On the other hand, disadvantages of the market may include extreme market fluctuations and high uncertainty which makes it hard to predict future prices.
But if youre looking to invest in the crypto market, hereare the most important terms you should know first.
Blockchain
Blockchainis a system used to store or record information in a way that makes it difficult or impossible to be hacked, cheated, or changed. It is essentially a digital ledger of transactions that is distributed across the entire network of computer systems on the blockchain. Each block in the chain contains a number of transactions, and every time a new transaction takes place on the blockchain, a record of that transaction is added to every participants ledger.
Bitcoin
Bitcoin (BTC) is the first blockchain-basedcryptocurrency, created in 2009 by Satoshi Nakomoto. Since then, bitcoin has been attracting millions of investors and became the largest cryptocurrency by market cap. The virtual currency operates on a peer-to-peer network, blockchain, allowing users to make digital financial transactions without the need for a financial institution. BTC was first released online in 2009, and it has been growing in popularity ever since.
Altcoin
Altcoin refers to any cryptocurrency other than Bitcoin. The term comes from “alternative” and “coin” and is used to describe any group of cryptocurrencies, bitcoin is excluded.
Stablecoin
A stablecoin is a cryptocurrency whose price is pegged to other assets such as fiat money or commodities like gold. A new form of cryptocurrency that aims to keep prices stable, compared to the usual fluctuations seen in the prices of other common cryptocurrencies like Bitcoin and Ethereum. A stablecoin is usually referred to as a digital fiat currency.Tether (USDT)and USD Coin (USDC) are popular examples of stablecoin.
Token
A token is a unit of value that is built on a blockchain. It is a virtual currency token and represents a tradable asset for investment purposes.
Coin
The coin is a cryptocurrency that lives independently on a blockchain or networks like Bitcoin and Ethereum.
Hot Wallet
An online software-based wallet for cryptocurrencies. Despite being more convenient for usage, this type of crypto wallet is more vulnerable to cyber-attacks and hacking than offline wallets.
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