If you feel like a dummy when your techie friends start talking about crypto jargons like bitcoin, blockchain and ICO, fret not, you are likely in the majority of people.
That is why we have come up with a quick 101 cheat sheet for you to learn some basic crypto terms so you can hold conversations with others on crypto topics to impress your friends. If you really want to learn more though, consider visiting Learn Crypto’s cryptocurrency 101, an online knowledge base where you can self-learn about crypto basics to expert level proficiency.
As a start, here are some quick cheats to get you started.
What is Cryptocurrency?
Cryptocurrency is a new kind of internet money. You can use it to buy things online, and you can send it instantly to other users anywhere in the world, at very low cost, needing nothing more than a smartphone and an internet connection.
Cryptocurrency can be cheaper and more convenient than many existing services like Paypal or Wise (formerly Transferwise), if – for example – you regularly send money overseas. Several million people are actively using it today for that purpose.
Worthwhile as that is, it isn’t what’s drawing people’s attention As well as functioning as a new type of internet money, cryptocurrency is also a very popular form of investment, with eye-popping long-term appreciation.
What is Bitcoin?
Bitcoin is a type of cryptocurrency that was created in January 2009. It follows the ideas set out in a whitepaper by the mysterious and pseudonymous Satoshi Nakamoto. The identity of the person or persons who created the technology is still a mystery.
Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms and, unlike government-issued currencies, it is operated by a decentralised authority.
There are no physical bitcoins, only balances kept on a public ledger that everyone has transparent access to. All bitcoin transactions are verified by a massive amount of computing power. Bitcoins are not issued or backed by any banks or governments, nor are individual bitcoins valuable as a commodity. Despite it not being legal tender, Bitcoin is very popular and has triggered the launch of hundreds of other cryptocurrencies, collectively referred to as altcoins. Bitcoin is commonly abbreviated as “BTC.”
What is Ethereum?
Like Bitcoin, Ethereum is another popular type of cryptocurrency. Launched in 2015, Ethereum is an open-source, blockchain-based, decentralised software platform used for its own cryptocurrency, ether.
What is Crypto Mining?
Cryptocurrency mining is the process of using computing power to verify transactions on a blockchain network and earning cryptocurrency for providing that service.
Cryptocurrency mining is painstaking, costly, and only sporadically rewarding.
Nonetheless, mining has a magnetic appeal for many investors interested in cryptocurrency because of the fact that miners are rewarded for their work with crypto tokens. This may be because entrepreneurial types see mining as pennies from heaven, like California gold prospectors in 1849.
What is A Cryptocurrency Exchange?
A cryptocurrency exchange, or a digital currency exchange (DCE), is a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money or other digital currencies.
Exchanges may accept credit card payments, wire transfers or other forms of payment in exchange for digital currencies or cryptocurrencies. A cryptocurrency exchange can be a market maker that typically takes the bid–ask spreads as a transaction commission for is service or, as a matching platform, simply charges fees.
What is an ICO?
ICO stands for “Initial Coin Offering”. It is the cryptocurrency industry’s equivalent to an initial public offering (IPO). A company looking to raise money to create a new coin, app, or service launches an ICO as a way to raise funds. Interested investors can buy into the offering and receive a new cryptocurrency token issued by the company. This token may have some utility in using the product or service the company is offering, or it may just represent a stake in the company or project.
It’s important to note that, unlike an IPO which is regulated, investing in an ICO won’t result in you having an ownership stake of the company you’re giving money to. You’re gambling that the currently worthless currency you pay for now will increase in worth later and make you money.
We hope you found these basics useful.