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Though anyone who has been trading cryptocurrency since the very beginning of digital coins might disagree, crypto investing is brand new. The most contact most people have with crypto consists of the regular news headlines exploring crypto’s rise and its implications for the future. However, even these articles can be difficult to parse for anyone unfamiliar with crypto, as the world of cryptocurrency is filled with layers upon layers of jargon.
If you are eager to become the next great cryptocurrency investor, you need to start by speaking the language. To understand the details of cryptocurrency trading, you might need to enroll in cryptocurrency courses, but in the meantime, here are a few essential terms you need to master:
Coin is the colloquial term for cryptocurrency. Crypto terms related to coin include:
Bitcoin. Easily the most famous cryptocurrency, Bitcoin was also the first and is currently the largest and most valuable digital coin. Following Bitcoin’s example, many other cryptocurrencies also include the term “coin” to signify what they are and entice investors.
Meme coin. Many cryptocurrencies are branded based on popular memes, or internet jokes. One of the most popular meme coins is Dogecoin, made famous from an Elon Musk tweet.
Stablecoin. Cryptocurrencies can be pegged to existing currencies, commodities or financial instruments, which serves to maintain the coins at fixed market values. This makes them safer investment options for those uncomfortable with the volatility of most crypto assets.
Token. An individual, specific cryptocurrency can also be referred to as a token.
Blockchain is the technology on which cryptocurrencies are created and tracked. Often referred to as an indelible digital ledger, blockchain does create records that are saved on every user’s device within a network, and as a result, they are exceedingly difficult to alter — fraudulently or otherwise.
Some crypto investors do not buy cryptocurrency to acquire it but rather mine to create new coins. Mining is exceedingly energy-intensive, requiring immense computing power; in fact, Bitcoin mining alone uses more energy than entire countries, and as a result, crypto mining does contribute significantly to the energy and climate crises.
A cryptocurrency exchange is a website or app that allows users to buy and sell crypto assets. Most exchanges only permit the trade of certain crypto assets, and all require fines and fees to use.
Cold Wallets and Hot Wallets
Once you begin acquiring cryptocurrency, you will need a place to store your coin. You have two options:
Cold wallets are physical storage devices, like flash drives, on which you can keep cryptocurrency offline. While cold wallets are more difficult to trade from, they are undeniably more secure.
Hot wallets are online cryptocurrency storage, usually provided by a crypto exchange. Hot wallets are prime targets for hackers, who can access large caches of valuable coins simply by cracking passwords to hot wallet accounts.
A decentralized autonomous organization, or a DAO, is a group of people who are creating a cryptocurrency project. DAOs always have shared goals and values — but those goals and values might not line up completely with the branding used to entice investors.
A popular phrase amongst crypto fans, fiat currency refers to traditional currencies, which are backed by the credit of a nation state. There are certainly disadvantages to fiat currency, which is why cryptocurrencies are rising in popularity.
When a private company first offers sales of its stock to the public, it produces an initial public offering, or IPO. Similarly, when a cryptocurrency first becomes available for sale, it presents an initial coin offering, or ICO. Investors interested in taking advantage of especially low coin prices might pay attention to ICOs — though these are often the riskiest crypto investments to make.
The total market value of a cryptocurrency is its market capitalization, or market cap for short. As mentioned above, Bitcoin is the most valuable cryptocurrency with a market cap of about $379 billion (as of this writing). In total, all cryptocurrencies available have a combined market cap of about $1 trillion.
NFT stands for non-fungible token, which is a crypto asset that uses the same underlying technology as cryptocurrency. Typically, cryptocurrency investors also become interested in NFT collection.
There is money to be made through cryptocurrency investment — if you understand the system and navigate trades correctly. The sooner you start learning about cryptocurrency, the sooner you can leverage this technology to your financial gain.
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.