18 Crypto Terms Every Newbie Investor Should Know

The world of cryptocurrency is a fast-growing world full of new terms and complex language. If you are new to the world of cryptocurrency, there are certain terms that can be difficult to understand or seem redundant – or both.

While you can always refer to an online dictionary for basic meanings and common usages, this article is intended to help you learn some new crypto vocabulary through a more fun and practical lens.

Common crypto terms you should know as a new investor

1. Blockchain

Each cryptocurrency transaction is first processed, then verified and finally recorded in a virtual ledger known as a blockchain. When someone sells or buys something using cryptocurrency, the transaction is immediately recorded in this virtual ledger. Blockchain is a digital ledger of transactions that is decentralized and distributed across multiple nodes.

Blockchain is immutable; Once information is entered into the blockchain, it cannot be changed or deleted. This makes it easier for people to trust this technology because it will not be possible for someone to change the content accidentally or on purpose.

Blockchain is also decentralized because it does not depend on any centralized authority for operation or maintenance. All stakeholders contribute to security by maintaining copies of all transactions ever made on the network!

2. Bitcoin

Bitcoin is the first and largest cryptocurrency. The digital currency was created in 2009 and uses peer-to-peer technology to operate. Bitcoin is considered decentralized, which means that it is not owned or controlled by any authority or government. Issuing bitcoins and managing transactions is the sole responsibility of everyone on the network. Bitcoin has many interesting and unique characteristics, including being decentralized, secure and transparent. All of these make Bitcoin more than just a payment system anyone has seen before.

3. Altcoins

This is used as a collective term for all other cryptocurrencies except Bitcoin. Bitcoin is the original cryptocurrency and therefore all other cryptocurrencies are referred to as “altcoins”. There are now over 1,600 different altcoins on the market, and more are being launched every day.

Some people invest in them to diversify their cryptocurrency portfolio; others buy them simply because they like the underlying technology. For example, Ethereum is an altcoin that uses smart contracts (self-executing contracts embedded in the blockchain) and has become popular for hosting ICOs (initial coin offerings).

4. Fiat

The word fiat is a Latin term that translates to “let it happen.” It is used to describe the monetary systems we use today, which are supported by governments. You are probably familiar with fiat currencies such as the US dollar, the euro and the yen.

5. Bear/Bearish

The term bearish is used to describe a market that is currently falling in value. A bear market is a period of time where the value of an asset will fall, and then there is a recovery within the same period. A bearish market occurs when there is downward momentum in the price of an asset and it continues until it rebounds.

6. Gas tax

When you send Ether to another address on the Ethereum blockchain, your transaction must be reviewed by miners. Miners are computers that run the Ethereum protocol and verify transactions by solving complex mathematical puzzles. Gas is a unit of measure for the amount of work that an Ethereum transaction requires. The more complex a transaction is (think: lots of calculations), the more gas it needs to complete.

All transactions need a certain amount of gas, but if a user does not include enough in the transaction, it can be rejected by miners and never recorded on the blockchain.

7. NFTs

Unlike traditional cryptocurrencies, non-fungible tokens (NFTs) are unique tokens that have no value beyond what society assigns to them. In other words, there is only one Mona Lisa painting – you can’t just make another one and expect people to be willing to pay for it. You can also think of NFTs as digital works of art or collectibles.

They are not backed by any central entity like a bank or government, so their value depends on how many people want them and what they are willing to pay for them. This makes them a risky investment, but if you play your cards right (and invest early), you can end up making some serious money!

8. Mining

Mining is the process by which a cryptocurrency is created. After a currency is released, it can be mined by anyone with the right equipment and technical knowledge. Mining is done by solving complex mathematical puzzles, and miners are rewarded with new coins for each puzzle they solve.

9. Bull/Bullish

A bullish market is a market that is in an uptrend, with prices rising from one period to the next. The term “bull” is used because bulls charge forward with their horns up when they are excited about something.

10. Smart contract

Smart contracts are computer programs that can be used to execute the terms of a contract. Smart contracts are executed by a decentralized network of computers, making them immutable. This means they can never be altered or changed, and they are stored on the blockchain in an immutable form.

Smart contracts have been around since the early days of Bitcoin, but have become increasingly popular – thanks to Ethereum and other blockchains that support smart contract development. The most common use case for smart contracts is to transfer value between parties by enforcing contractual obligations in code (ie if you send me $10, I’ll send you $20).

11. Crypto wallet

Crypto wallets are digital wallets that store your cryptocurrency. They can be accessed with a personal key, which is a string of numbers and letters that gives you access to your crypto wallet. There are two types of crypto wallets: software wallets (also known as hot wallets) and hardware wallets (cold storage wallets). While software wallets are connected to the internet, hardware wallets are offline – and therefore usually more secure.

12. Crypto exchange

Crypto exchanges are online marketplaces where you can buy and sell cryptocurrencies. They are similar to stock exchanges, but they trade digital assets instead of traditional stocks. You can use these exchanges to buy and sell bitcoin, Ether, litecoin and many other digital assets.

13. HODL

HODL is a misspelling of hold. The term was coined in 2013 by a bitcoin investor called GameKyuubi and means to keep your coins and not sell them. It has become popular in the crypto community as an optimistic reminder that you may be better off holding on to your coins than selling them at a loss, especially during bear markets.

14. Initial Coin Offering (ICO)

An Initial Coin Offering (ICO) is a way to raise money for a new cryptocurrency project. It is similar to an IPO, but instead of shares, the investor receives tokens of the project. ICOs can be used to raise funds for all types of cryptocurrency projects, including blockchain platforms and decentralized applications (dApps).

15. Private key

A private key is a secret number on your crypto wallet that allows you to use the cryptocurrency. It’s like a password, but it’s not meant to be shared with anyone else. Private keys are used to sign transactions on the blockchain and are only available to their owners. This makes them very important tools to ensure security for cryptocurrency users. If it gets into the wrong hands, they can steal all your cryptocurrencies and you won’t be able to do anything about it.

16. Public key

A public key is a string of numbers and letters that, combined with a private key, gives you access to your cryptocurrency. The public key is visible to everyone, while the private key is kept secret by the owner. The public key is the address you share with others so they can send you cryptocurrency.

17. Certificate of employment

Proof of work is a system that requires some form of work to be performed to validate a block. This ensures that every transaction on the network has been verified by multiple nodes, preventing double spending and enabling trustless cooperation between strangers who may not know or trust each other.

The most common consensus algorithm used by blockchain networks is Proof of Work (PoW). Bitcoin and Ethereum both use this algorithm as their primary means of securing transactions and validating blocks on their networks.

18. Bull/bear trap

Bull Trap is a scenario where the price of an asset tricks you into buying it and then goes down. And the Bear Trap is where the price of the asset tricks you into selling it and the proceeds up. This is an example of fakeouts in technical analysis terms.

Conclusion

We hope you have learned some new terms and have a better understanding of what they mean. Now that you know all about these crypto terms, you can start using them and really get into the language of this exciting world!