Introduction to Cryptocurrency Technical Terms

Cryptocurrency Technical Terms – There is a lot going on in the world right now. The COVID-19 pandemic has in many ways shifted the world’s equilibrium and balance. Governments, businesses, and society are coming to grips with the new reality.

In the midst of all this, the rise of cryptocurrencies has proved to be both a boon and a bane. Boon because it was the reason why millions of people all over the world were able to sustain themselves. Bane because it was also the reason that has attracted many cyberattacks!

Depending on whether you love it or hate it, there is no denying the fact that you can ignore cryptocurrencies. Bitcoin, Litecoin, Ethereum, and Dogecoin have become common household names. With everyone from JP Morgan to Tesla looking to benefit from them, it is but natural that you should know about them too.

In this article, we look to discuss the top 7 technical terms around cryptocurrencies that you need to be aware of. Whether you are looking to start trading in cryptocurrencies like the ethereum code, or are simply educating yourself, this article will help you out.

Blockchain Technology

If you have heard about cryptocurrencies, you have most likely heard about Blockchain technologies as well. In very simple words, Blockchain is the underlying network on which Bitcoin transactions happen, data is stored and transactions are processed.

It is a secure and immutable network that works as a decentralized ledger to store and process information. Data is stored in the form of blocks that are linked to other blocks with a system of chains.

Cryptocurrency Mining

The asset needs to be generated in the first place before it can be traded or invested in. This is done through the process of mining. Sophisticated computer systems with processing power are required to solve a series of mathematical equations.

Following this, a crypto block is mined. Crypto mining has become an expensive, tedious and complicated process in recent times. Many countries have outlawed mining simply because of their huge energy needs.

Cryptocurrency Wallets

Just like you store your physical cash and cards in your leather wallet, you need to store your crypto keys in one as well. This wallet can be both offline as well as online. It consists of an external hard drive, pen drive, or even a small piece of paper that carries your keys.

You need them to access every transaction that you make in cryptocurrencies. This is both for making payments as well as receiving them. Most experts recommend holding offline wallets.

Non-Fungible Tokens (NFTs)

NFTs are becoming increasingly popular in recent times. They refer to bestowing ownership over any digital asset like a piece of digital painting or video, or even a picture. This is an extension of the entire cryptocurrency and Blockchain ecosystem.

It allows you to hold ownership of digital assets. In recent months, artists like Banksy and Snoop Dogg have been in the news for promoting and selling their artwork and music in the form of NFTs.

Central Bank Digital Currencies (CBDCs)

Cryptocurrencies like Bitcoin and Ethereum are unregulated by national governments and central banks. While they have not been deemed completely illegal, they do not enjoy the full sanctity of financial assets.

Governments and banks recognize the benefits and have started experimenting with digital currencies that are sanctioned by governments. This is what CBDCs mean. They are at an experimental stage but are likely to become popular in the coming years.

Crypto Cyber Safety and Security

Cryptocurrencies have come under attack from cybercriminals that are looking to get their hands on them. The profitable growth nature of cryptocurrencies means criminals are looking for novice traders and investors who can be scammed.

Experts recommend following all cybersecurity protocols as far as cryptocurrencies are concerned. This means using offline wallets, avoiding public network connections, and not falling prey to email scams.

Decentralized Finance (DeFi)

DeFi refers to the process of trading and investing in decentralized currencies. It allows people to easily buy and sell cryptocurrencies without the possibility of having an intermediary or middleman to regulate the same.

Not only does it help in preventing additional commissions, but it also boosts efficiency and direct trust. In recent years, investing in De-Fi projects and platforms has become lucrative and something that investors are looking at seriously.

The Bottom Line

If you are someone that is looking to improve their understanding of cryptocurrencies, this article is going to help you. Can you add to the list of crypto terms that can help our readers? If you want to continue with the list, mention your crypto terms along with their meanings in the comments below. We will make sure to edit and update the article along with your suggestions.