10 crypto related terms that you should know
10 crypto related terms that you should know  |  Photo Credit: iStock Images
Are you new to the world of crypto and blockchain, and find the whole setup intriguing? Well, don’t fret! In the new era of digitisation, cryptocurrencies have paved the way for a virtual platform of making payments, exchange and trading. The simplest way to understand the intricacies of this digital network is to first get familiar with the most basic yet important terms. Today, we bring to you 10 crypto based terms that will go a long way in getting a deeper understanding.
Decentralization – In blockchain parlance, decentralization refers to the transfer of supervision and decision making from a centralized association, which could be an individual, corporation or group of people to a more wider network.
Blockchain – Investopedia defines blockchain as a record keeping technology behind the Bitcoin network – a specific type of database. As new data comes in, it is entered into a fresh block. Once the block is filled with data it is chained onto the previous block, which makes the data chained together in chronological order.
Cryptocurrency – It is a digital payment system that is secured by cryptography and which doesn’t rely on banks to verify transactions. Many cryptocurrencies are decentralized networks based on blockchain technology. When transfers are done through cryptocurrency funds, the transactions are recorded in a public ledger, and the cryptocurrency is stored in a digital wallet.
Mining – Bitcoin mining is the process of creating new bitcoin by solving a computational puzzle. Cryptocurrencies do not exist in any physical form; there are no minted coins/ currency notes, etc. cryptocurrencies are mined through an arithmetic process codes through mining with a virtual ‘mining rig’ that uses a combination of hardware and software designed by professional coders. Interestingly, most Bitcoin mining happens in China.
Token – Tokens are units of value that blockchain-based organizations or projects develop on top of existing blockchain networks. They are a different digital asset class from cryptocurrencies. The different types of tokens are:
- Payment tokens – Payment tokens are used as an alternative means of payment and exchange. Not a legal tender and not backed by a government, their purpose is to be a decentralised tool for buying and selling goods and services without any traditional intermediaries.
- Utility tokens – Also known as user tokens or app coins, a utility token is more like a digital coupon that can be redeemed in the future for access to a product or service. Utility tokens are not used as investments and are given out during crowd sales when an Initial Coin Offerings (ICO) is executed.
- Security tokens – Security tokens are digital assets that derive their value from an external asset that can be traded. These are created as investments that are subject to federal laws that govern security. It is mandatory for the security tokens to comply with these regulations.
Non-fungible Tokens (NFTs) – Although a digital asset, NFT s are different from cryptocurrencies in the sense that while one can exchange one bitcoin or ether for another NFTs aren’t interchangeable. Their value comes from how rare they are. NFTs give a person proof of ownership which means that they can monetise the right to own it. The first fully-fledged NFT project, Etheria was launched in October, 2015.
Bitcoin – Bitcoin is a digital currency that was created in January 2009. It is the world’s largest cryptocurrency by market capitalization. Bitcoin is created, distributed, traded and stored with the use of a decentralized ledger system, known as a blockchain. It is the earliest virtual currency that led to the creation of many other cryptocurrencies. It is commonly abbreviated as BTC.
Ethereum – It is a decentralized, open-source blockchain with smart contract functionality, and ether (ETH) is the native cryptocurrency of the platform. After Bitcoin, Ether is the largest cryptocurrency by market capitalization. Ethereum was created in 2013 however, the network went live in July 2015.
Stablecoin – While the more popular Bitcoin is more popular, it is highly volatile. On the other hand, stablecoin is a new class of cryptocurrency that offers price stability and is backed by a reserve asset. Offering the best of both worlds, stablecoin give the privacy of payments of cryptocurrency and volatility-free stable valuation.
Decentralized Finance – As per the definition by Investopedia, decentralized finance (DeFi) is a system by which financial products become available on a public decentralized blockchain network. It does not rely on any central financial intermediaries such as brokerages, exchanges or banks to offer traditional financial instruments. DeFi is a system by which software written on blockchains makes it possible for buyers, sellers, lenders and borrowers to interact.
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|CryptoCurrency||USD||Change 1h||Change 24h||Change 7d|
|Bitcoin||0.06 %||1.03 %||8.00 %|
|Ethereum||0.04 %||0.29 %||7.16 %|
|Binance Coin||0.09 %||3.01 %||18.09 %|
|Tether||0.04 %||0.52 %||0.46 %|
|Cardano||0.07 %||0.99 %||2.29 %|
|XRP||0.18 %||0.49 %||4.18 %|
|Solana||0.28 %||1.32 %||8.11 %|
|Polkadot||0.05 %||2.64 %||20.19 %|
|USD Coin||0.02 %||0.54 %||0.64 %|
|Dogecoin||0.32 %||6.54 %||6.41 %|
|Terra||0.29 %||0.05 %||7.60 %|
|Shiba Inu||0.28 %||3.75 %||7.05 %|
|Wrapped Bitcoin||0.12 %||1.24 %||8.07 %|
|Uniswap||0.31 %||0.13 %||6.40 %|
|Binance USD||0.06 %||0.76 %||0.58 %|
|Litecoin||0.26 %||2.83 %||4.86 %|
|Avalanche||0.15 %||0.86 %||0.66 %|
|Chainlink||0.17 %||1.27 %||2.22 %|
|Bitcoin Cash||0.32 %||0.63 %||2.49 %|
|Algorand||0.33 %||0.87 %||1.99 %|