A Simplified beginner’s guide to Crypto
Mon Jan 30 2023
The article covers some of the common terms used in cryptocurrency
If you’ve been following crypto news, you’re probably aware of the exponential growth of crypto assets over the years. Numerous new cryptos are cropping up every day, some with super low fees and some with outrageous returns. However, the information available to investors can be confusing and contradictory, so we’ve put together this guide on basic terms you need to know about crypto right now—from ICOs and HODLs to blockchain technology. If you are interested in entering the world of crypto, this article has insights that will help you make an informed decision.
What is Bitcoin?
Bitcoin was one of the first cryptos ever created. The concept of Bitcoin was introduced in 2008 by an unidentified programmer, or group of programmers, under the pseudonym Satoshi Nakamoto. Among the cryptos available, Bitcoin remains by far the most popular. The creation of new coins is capped at a total supply of 21 million coins. The bitcoin trading volume is now at USD 454.8 Billion.
What are Altcoins?
Altcoins are a catch-all term for any cryptos that are not Bitcoin. They could include anything from the incredibly popular Ethereum to the meme-worthy Dogecoin. Of course, if you are new to this, stick to the more renowned altcoins out there, and you should be fine.
What is a Blockchain?
The technology underlying crypto is called the blockchain. It is a decentralised system that is not controlled by a government or a financial body. It functions as a register of every crypto transaction completed on that respective peer-to-peer network, which is shared across nodes periodically. Not only does this govern how coins are mined, but it also prevents counterfeits.
What is a Block?
A block is a grouping of user transaction data on a blockchain. Blocks are periodically added to the blockchain, though the time it takes to mine a block differs between cryptos. For Bitcoin, it’s 10 minutes. For Ethereum, it's closer to 15 seconds. Once a user (typically the one with the most processing power) is allowed to mine a block, they get coins for their efforts.
What is a Wallet?
Wallets sound exactly like the word suggests. They are a way to store any crypto you earn or purchase. Specifically, they store the private and public access keys you need to claim your coins. “Hot” wallets are ones you frequently use for online trading, so they’re more likely programs or online services. “Cold” wallets are for cryptos you want to save or hold for a while. This usually means keys stored on a hard disk or even a piece of paper.
What is an Exchange?
A crypto exchange is a digital marketplace where you can buy and sell bitcoins and altcoins.
What is a Fork?
We’ve already established how cryptos are decentralised. Changing the process isn’t up to a single authority but rather a majority decision. Forks are when such changes happen, resulting in a bifurcating blockchain. One continues along the old path while the other follows the new one, often resulting in spinoff altcoins.
What does HODL mean
Acronym for “Holding on for Dear Life”. This is crypto speak for an investment strategy where you buy and then hold on to cryptos instead of trading them as soon as the rate is a little higher. It’s essentially putting that share of coins on ice, earning no immediate returns for you, and hoping the exchange rate will drastically improve down the line.
What is an ICO
An Initial Coin Offering (ICO) is how funds are raised for new crypto projects, this is similar to Initial Public Offerings (IPOs) in the stock market. Though getting in on the ground floor is the best way to earn a profit margin on a potentially successful new crypto, it’s also far too commonly used as a scam tactic, so be on your toes.
While it may seem intimidating at first, we hope that the information in this guide makes it a little less so. Even if you're new to crypto, your knowledge will only expand over time. As with any investment or venture, you should be prepared for significant fluctuations in value and rapid changes in fortune.
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