Cryptocurrency and the Blockchain for Beginners
The blockchain and Cryptocurrencies have sparked global attention over the past few years, garnering coverage on popular outlets such as The New York Times, The Wall Street Journal, Forbes, Sports Illustrated, and Last Week Tonight with John Oliver. The highly speculative digital assets were designed to be used as a medium of exchange between two parties on an immutable public ledger following the great recession of 2008 which rocked the global financial markets. Fast forward ten years to present time and the blockchain as well as cryptocurrencies have the top business, governments and national banks interested in the power behind the technology. As a result, a large majority of the cryptocurrencies available have risen dramatically over the past couple years. In 2017 alone, the value of the premier cryptocurrency, Bitcoin, rose from its low of $960 to its peak of around $20,000, which amounts to an extraordinary 2000% increase.
With the rise of popularity of both the blockchain and cryptocurrency, there have been a number of new and unique terminologies that have appeared in the crypto communities, confusing many everyday individuals who are new to the technology and usage. With this blog post, we plan to touch upon many of the popular terms for our readers so you are able to fully understand the messages on cryptocurrency/blockchain based message boards, discord/slack servers and social media platforms.
To begin, we will list a number of the general key terms used around the community as well as an easy to decipher definition to maximize readability for the beginner.
• Blockchain: A secure public ledger that is unable to be hacked or changed by any individual which shows pseudo-anonymous transactions between two parties. There is no need for any central server or trusted authority to confirm transactions.
• Block: A continuous growing list of records which are then linked together on the blockchain.
• Decentralization: The process where authority or decision-making is taken away from one single centralized source and are instead distributed between a group of agents.
• Address: The location to which users will either send or receive their cryptocurrency. Each coin will have its own unique address.
• Altcoin: Any digital asset/cryptocurrency which does not refer to Bitcoin.
• Wallet: The location where your cryptocurrencies will be held. Many coins have their own specific wallet which can store your assets.
• Smartcontract: Trustless, Self-executed agreement between two separate parties which are noted on the blockchain. Each party will set the terms of the agreement, which will then automatically go into effect.
• Fork: When a user group of one particular blockchain decides to split the coin in a different direction to have the coin function as they see fit. One example here is when the Bitcoin blockchain was forked to then become Bitcoin Cash.
• Mining: Using your computing power and electricity to add transactions onto the blockchain you are mining. As a result, miners will generate a small amount of that cryptocurrency for the work completed.
The terms above can be used in general conversation when discussing both digital assets as well as the blockchain and how it operates.
In addition to the general terms, we have cultivated a list of terms for our readers looking to get involved with investing and trading. As a disclaimer, proper due diligence should always take place when looking into different investment options. As a word of advice, investors and traders should only invest the amount they are willing to lose. Once again, we have provided definitions for each term that allow for maximum readability.
• Exchange: An online marketplace where digital assets can be purchased, sold, and stored within the company’s servers.
• Fiat Currency: Physical money such as dollars and euros.
• Bullish: A positive sentiment for the global market or for a specific coin/token.
• Bearish: A negative sentiment for the global market or for a specific coin/token.
• ATH: All-time high. When a coin (or portfolio) hits its highest recorded point
• Marketcap: The total supply of a cryptocurrency multiplied by its price. This can be used to observe and predict potential growth possibilities.
• ICO: Initial Coin Offering. A token sale offered by a company that is releasing a new cryptocurrency. This can be compared to an IPO in traditional financial markets.
• FOMO: Fear of Missing Out. This term is often used when the sentiment on a coin/token is extremely high at a particular moment and investors don’t want to miss out on the opportunity to increase their portfolio gains.
• FUD: Fear Uncertainty Doubt. This is a disinformation strategy used by a competing product or investors who wish to persuade others to invest elsewhere.
• Moon: When an investment made undergoes tremendous gains.
• Pump & Dump: A scheme where a group attempts to artificially raise the price of a coin and then sell that same coin when other investors buy the coin at the heightened price. It is advised to stay away from groups of this nature.
At this moment in time, we are still in the infancy of cryptocurrencies and blockchain technology. Each day, there seems to be a new ICO ready to launch to increase the efficiency of our society while the technology behind the blockchain continues to grow and evolve to something that can be of use to individuals around the world.
The above general and investing terms mentioned in this post are only a small taste of what the cryptocurrency/blockchain community has to offer. Knowledge is key at this stage in the game. It is advised to continue to stay up to date with the latest news to become a well-rounded trader and investor. As mentioned before, the top business, governments and national banks are becoming interested in digital currencies and the blockchain. It doesn’t look as if this technology will be disappearing anytime soon.
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