Demystifying some crypto terms

If you are a beginner, here are some of the terms and phrases that will help you better understand the world of crypto investing. 

Altcoin

Any coin that isn’t Bitcoin is known as an altcoin. Altcoins range from the second-most popular coin, Ethereum, to thousands of coins with an extremely low market value.

Bitcoin

On January 3, 2009, this first and most valuable cryptocurrency was released. While its value has consistently increased since then, it has experienced violent swings. Bitcoin’s price has swung from a record high of $60,000 down below $30,000 in just a few months.

Blockchain

Simply said, blockchain technology is a decentralized, distributed ledger that tracks the provenance of digital assets. The data on a blockchain can’t be changed by design, making it a real disruptor in industries like payments, cybersecurity, and healthcare.

Centralized Exchanges (CEXs)

Centralized exchanges are organizations similar to conventional stock exchanges that facilitate cryptocurrency trading on a large scale. Centralized exchanges can be used to conduct trades from fiat to cryptocurrency (or vice versa). These exchanges have lists of open buy and sell orders, consisting of volumes and prices. They match up buyers and sellers and announce current market prices based on the last price an asset sells for. for those users who do not have their crypto wallets, the exchanges store the cryptocurrencies on their behalf. Some well-known global CEXs include Binance, Coinbase, Gemini and Kraken. In India, CoinDCX, WazirX. CoinSwitch Kuber, Unocoin, etc., are the popular ones.

Cryptocurrency

Cryptocurrency is based on blockchain technology, which records and maintains information about all transactions in a public ledger that is open to the public. It is a decentralized structure that is not governed by any central authority. All transactions are recorded in a decentralized ledger that is open to the public, eliminating the need for a central authority. It is safeguarded by robust encryption, unlike digital cash.

Cryptocurrency Airdrop

It is a marketing tactic used for launching a digital currency. or a Defi protocol, with the objective of promoting them. It has been a common practice endorsed practically by every company, especially to launch a product. It involves delivering the tokens to the wallets of people who opt for this Airdrop, either for free or in exchange for a promotional service. However, one should be aware of dusting attack which is often associated with AirDrop.

Cryptocurrency Burning

It is the process in which tokens are removed from circulation, which reduces the number of coins in use. Burning means the tokens are sent to a wallet address that cannot be used for transactions other than receiving the coins. Hence the tokens can no longer be used. It is similar to publicly traded companies’ practice of buying back stock to reduce the number of shares in circulation. Cryptocurrency burning is practised to increase the value of a currency.

Crypto Wallet

If you want to trade, buy and sell cryptocurrencies or blockchain-based applications, you need a crypto wallet. They allow you to store and transfer your funds with complete security because they are cryptographically safeguarded

Decentralized crypto exchanges (DEXs)

Decentralised exchanges or DEXs is a peer-to-peer marketplaces where transactions occur directly between crypto traders. This means users can buy and sell cryptocurrencies with one another without the need for brokers. Users connect their crypto wallet to a DEX, select their crypto trading pair of choice, enter the amount, and hit the swap button. The most popular DEXs — like Uniswap and Sushiswap — utilize the Ethereum blockchain. Unlike centralized exchanges, DEXs don’t allow for exchanges between fiat and crypto — instead, they trade cryptocurrency tokens for other cryptocurrency tokens.

Ether (ETH)

The second-largest cryptocurrency by trade volume, one can buy ether from any Centralized Exchanges, Decentralized exchanges (DEXs), or wallets. Ethereum applications and contracts are powered by ether.

Ethereum

Ethereum uses blockchain technology that not only powers the cryptocurrency ether (ETH) but many other tokens and thousands of decentralized applications. The main highlight of the technology is its capability to facilitate a peer-to-peer network that securely executes and verifies application code, called smart contracts. Smart contracts allow participants to transact with each other without a trusted central authority/

Non-Fungible Tokens (NFTs)

NFTs are one-of-a-kind digital assets that represent real-world objects. NFTs can also be digital items, such as digital art, GIFs, in-game items, and tweets. NFTs are not interchangeable and differ from fungible tokens such as bitcoins. As a result, NFTs cannot be exchanged in the same manner that cryptocurrencies can. All transactions in NFTs are done online and are controlled by a digital ledger.

Satoshi

The smallest unit of the cryptocurrency bitcoin is the satoshi. It is named after Satoshi Nakamoto, the creator(s) of the Bitcoin cryptocurrency and the blockchain protocol. The satoshi to bitcoin ratio is 100 million satoshis to one bitcoin.

Satoshi Nakomoto

Satoshi Nakamoto is the anonymous name used by the creators of the Bitcoin cryptocurrency. Although the name Satoshi Nakamoto is often associated with Bitcoin, the real person who bears the name has never been identified, leading many to speculate that it is a pseudonym for a person or group of persons with a different identity.

Smart Contract

An algorithmic software that, based on its code, automatically executes the terms of a contract. The Ethereum network’s capacity to execute smart contracts is one of the network’s most valuable features. Smart contracts are written in programming languages such as Solidity and Vyper and are compiled by the Ethereum Virtual Machine into bytecode and executed on the blockchain.

Stablecoins

Stablecoins are cryptocurrencies with a fixed value that’s usually pegged to a leading fiat currency like the U.S. dollar, fiat currencies, or exchange-traded commodities such as precious metals. Stablecoins serve as a much-needed antidote to price volatility in the cryptocurrency markets. 

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Sevashree Mohapatra
A strategic Corporate Communication leader and technology enthusiast, I have more than 20 years of experience in content, corporate communication, and Strategy. Having worked in major media houses and MNCs like Hindustan Times, Ogilvy, ArcelorMittal, and Suez, I have helped brands to create value for their customers.