Digital currency terminology-WWNEED.COM
Digital currencies are not just a new investment option, they represent a completely different world compared to traditional stocks and bonds. Learning the basics of this field and crypto terminology can take a long time even for seasoned traditional investors.
There are some prerequisites that we recommend before you buy your first cryptocurrency such as stocking your emergency fund, paying down high-interest debt, and securing a traditional retirement plan. But remember that you should not allocate more than 5% of your portfolio to these digital assets, and understand the ins and outs of the investment field and the differences between it and other investment strategies, and the different factors that can affect the market value of digital currencies.
Here are some terms and phrases that will help you as a beginner to better understand the world of cryptocurrency investing.
Altcoin
First in the list of cryptocurrency terms, altcoin. It refers to any altcoin to Bitcoin, from Ethereum which is the second most popular coin to any of the thousands of cryptocurrencies available in the market. Experts say you should largely stick to the largest and most popular cryptocurrencies for investing.
Bitcoin / Bitcoin
The first and most valuable cryptocurrency was launched on January 3, 2009. While its value has risen steadily since then, it has not been spared the extreme volatility that characterizes the market in general. The price of bitcoin has fluctuated in the past months from $60,000 to under $30,000.
Bitcoin Cash
Peer-to-peer electronic cash system. Bitcoin Cash was designed to improve the management and conduct of transactions between the parties after the popularity of the volatile nature of the Bitcoin currency.
Block / Block
The datasets within the blockchain, consisting of records of transactions made by users whether through buying or selling. Each block can only hold a certain amount of information, and then a new one is formed to continue the chain.
Blockchain
Blockchain enables digital record keeping, and is the underlying technology behind cryptocurrencies. Blockchain is the result of chained blocks that depend on each other to create a public, permanent ledger of transactions.
Coin / Coin
An analog store of digital value that lives on the blockchain network. Some blockchains bear the same name for both the network and the currency like Bitcoin, but the name of the Lumen coin differs, for example, to the name of the digital store called Stellar.
Coinbase / Coinbase
A popular centralized trading platform for cryptocurrencies. Coinbase recently made history as the first cryptocurrency exchange to go public on NASDAQ.
Cold Wallet
A secure way to store your cryptocurrency offline, it’s a bit like a USB device. This wallet can help you protect your money from hacking, but it is still subject to other risks such as losing it completely.
Digital currency / Cryptocurrency
A type of digital and decentralized currency. Digital currency can be used to buy and sell things, or as a long-term store of value.
Decentralization
The principle of distributing energy away from the central point. The blockchain is automatically decentralized because it requires majority approval of all users before any changes can be made.
Decentralized Finance
Financial activities that take place without the involvement of an intermediary, such as a bank, government, or other financial institution.
Decentralized applications
Applications designed by developers and published on the blockchain to perform actions without intermediaries. Ethereum is the main network that supports activities in decentralized finance.
Digital Gold
Experts compare some cryptocurrencies to real gold based on their increasing value. Bitcoin is commonly referred to as digital gold.
Ethereum / Ethereum
Ethereum is a crypto network and software platform that developers can use to create new applications, and it has an associated currency called ether which ranks second in terms of trade volume after bitcoin.
Exchange / Exchange
A cryptocurrency exchange is a digital marketplace where you can buy and sell digital currencies.
Fork
These refer to changes that blockchain users make to the rules, such as changes to Bitcoin transactions and protocols that result in Bitcoin Cash.
gas
A fee that developers have to pay the Ethereum network in order to use the system. Gas is paid for in ether, which is the original digital currency of Ethereum.
Genesis Block
The first block of cryptocurrency mined.
HODL
The term stands for “Hold On for Dear Life.” The term originated from a user typo on a Bitcoin forum in 2013, and has come to refer to a passive investment strategy whereby buyers hold onto their digital currencies rather than invest in them.
Halving
A feature written into the Bitcoin protocol where a certain number of blocks are mined, and the amount of new Bitcoin entering circulation is halved. This halving could have an impact on the price of Bitcoin.
Hash / Hash
A unique string of numbers and letters that identifies blocks and is associated with sellers and buyers of cryptocurrencies.
Hot Wallet
Unlike a cold wallet, a hot wallet only runs on software connected to the Internet. While these wallets are more suitable for quick access to your funds, they are also more vulnerable to hacking attacks. The files you store in your hot wallet can be hacked more easily than those kept in your home safe.
Initial Coin Offering
A way to raise money for a new cryptocurrency project. Initial coin offerings are similar to initial public offerings of stocks.
Market value / Market Capitalization
The market cap of cryptocurrencies refers to the total value of all coins that have been mined. You can calculate the market value of cryptocurrencies by multiplying the current number of coins by the current value of the coins.
Mining
The process that leads to the introduction of new digital currencies.
Node / Node
A computer connected to the blockchain network.
Non-fungible Tokens
Non-fungible tokens are units used to represent ownership of unique digital items such as art or collectibles. NFTs are often maintained on the Ethereum blockchain.
Peer-to-peer
Two users interact directly without a third party or intermediary.
The public key
A public key is like your bank account number, you can share it with people and organizations so that you can transact, send and receive money.
Secret key / Private Key
Like your bank account password, this secret key allows you direct access to your digital currency.
Satoshi Nakomoto
Bitcoin creator alias. No one knows Nakomoto’s true identity, or if he was more than one person.
Smart Contract
An algorithm that automatically enacts contract terms based on its protocol. One of the key value propositions of the Ethereum network is its ability to execute smart contracts.
Stablecoin / Stablecoin
A stablecoin pegs its value to some other non-digital currency or commodity. A digital fiat is an official or government-backed currency on a blockchain such as Tether that is pegged to the US dollar.
Token
A unit of value on the blockchain that carries the same characteristics as a coin.
Vitalik Buterin
The programmer who invented Ethereum in 2015.
Wallet
Finally in cryptocurrency terms, the coin purse. It is a place to store your digital coins. Many exchanges offer digital wallets which may be cold or hot.
Cryptocurrency trading terminology
Support and resistance
To help visualize support and resistance lines, think of supply and demand. Supply refers to the quantity of a product available in the market, while demand refers to the quantity demanded of a product. The demand for a digital asset at a price is greater than the supply in the support area, which pushes the price up.
A line of resistance can be identified when the market agrees that the price of a digital asset is too high, causing it to drop due to supply exceeding demand. Remember that the price does not rise at the resistance point, which indicates that it is a good time to sell.
Risk Management
The purpose of support and resistance lines is to help you mitigate a loss. If the support and resistance lines are retested, they are likely to turn into other lines. Support often turns into a new resistance line when broken, and vice versa. Investors will not want to lose their money if the market enters the support area and then the price drops, so they will sell back at the break-even price making it difficult to cross the resistance line.
Moving averages
Moving averages help traders to estimate the overall trend of cryptocurrencies, and break down the token’s momentum. The simple moving average is often represented by a line showing the average closing prices of the token. Note the closing prices of the last 30 days for example, add them up and then divide by 30 to determine the average. Many moving averages are defined with periods of 50, 100 and 200 days depending on the time horizon of your investment.
Cryptocurrency trading involves significant risks, so you are required to do a lot of research and to have complete confidence in the decisions you make. Try to avoid giving in to the fear of losing and missing out as much as possible, and overcome your emotional thinking with your rationality.
Explanation of common cryptocurrency trading terms on Twitter
- HODL: Hold Coins
- Moon: Rapid price increase
- Rekt: Losing a deal
- Pump: A rapid increase in price due to artificial manipulation
- Whale: An individual or entity that owns a very large amount of cryptocurrency, and who has a significant impact on prices.
- Fomo: Fear of losing
- Knifedrop: very fast price drop
- Long: Expect the price to go up
- Short: Expect the price to fall
- Low sat: A coin with a value of less than 100 satoshi
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