VWB Blog It’s been already a decade since the cryptocurrency was first introduced to us. In the beginning, we had only a few crypto coins like Bitcoin, Ethereum, etc. But now things have changed.
Today, we have numerous cryptocurrencies flooding the market and they provide excellent investment opportunities to traders and investors.
Before you think of entering the crypto investment market, you must make yourself familiar with the common terms.
Novice investors often find it difficult to understand the complex crypto terms. To clear the crypto jargon, we have explained some of the most common terms that are often used while crypto trading or investment.
Here is the brief rundown of the important crypto terms:
Altcoin
Don’t confuse Altcoin with Bitcoin because they both are different. An altcoin is the third most popular cryptocurrency after Bitcoin and Ethereum. It is one of the mainstream cryptocurrencies that is ideal for investment. You will often hear about Altcoin in crypto news. If you are planning to invest in any of the top available cryptocurrencies, Altcoin could be a good choice for you.
Bitcoin cash
Once again Bitcoin cash is not Bitcoin. It refers to a P2P electronic cash system that is developed from the original Bitcoin cryptocurrency. Bitcoin cash is widely used in places where Bitcoin is considered to be too volatile. It serves as a better alternative for optimised transactions.
Blockchain
Blockchain is a term that is widely used in the cryptocurrency sphere. It refers to the underlying technology that cryptocurrencies are based on. In simple words, it is an online form of record keeping. It is the result of sequential blocks that are placed upon one another to create a permanent ledger of transactions.
Cold wallet
Cold wallet, which is also known as cold storage is used for storing cryptocurrencies offline. This is where you store all the cryptocurrencies that you have bought online. Most cold wallets are offline devices that look like USB drives. These types of crypto wallets are used to keep your crypto coins from getting hacked. A cold wallet or hardware wallet is any day safer than an online wallet. Since it stores cryptocurrencies offline, they cannot be accessed by hackers. With cold wallets, you are less likely to lose your cryptocurrencies.
Pancakswap
No, we are not talking about pancakes here. Pancakeswap is a decentralised exchange launched in 2020. It is built on BSC (Binance Smart Chain) and allows you to trade different tokens without the aid of a centralised authority. With Pancakeswap, you get to control your tokens. It is based on an AMM (automated market maker) model which eliminates the need for an order book while trading online assets on the platform. Instead, it allows you to trade via smart contracts. You can learn more about pancakeswap online.
Crypto Mining
Newbies are often confused by this term. Some of you might think that crypto coins are found in mines. Well, that sounds hilarious. Mining refers to the process through which cryptocurrencies are created. To put it simply, it is used to create new crypto coins and put them into circulation. Crypto mining is done with the help of powerful computers. Miners solve complex mathematical equations to create new cryptocurrencies. After creating the tokens, they can put them up for trading with other crypto coins. This is done through online exchanges. However, mining is not done by investors or traders. There are crypto miners who do the hard work, while you only sell and buy the tokens. So next time you come across the term ‘mining’ in cryptocurrency, don’t get confused.
Gas
Gas refers to the fee you pay for making a cryptocurrency transaction. This fee covers the cost of paying a miner, who mined the crypto coins in the first place. The payment amount depends on how quickly you want the transaction to be completed. This term is not as common as the other terms in the list. But learning the meaning of a few extra crypto-related terms wouldn’t harm.
Whale
In the world of cryptocurrency, the whale has a completely different meaning. It refers to accounts that store large amounts of crypto coins. These accounts are so big that they can single-handedly influence the whole crypto market. Most of the mainstream cryptos have multiple whales that influence the value of those cryptocurrencies in the market. You will also come across websites that track the activity of these whale accounts. This is to maintain full transparency in the crypto market. Many of the well-known whale accounts are large funds or early investors. Tracking their activities is a smart move. That’s because it will help you to know how they will move the cryptocurrency in the market.
HODL
HODL means holding a cryptocurrency even after its market value drops. This term was first coined in 2013 when it a crypto investor made a typo. Instead of writing ‘HOLD’, he wrote ‘HODL.’ Since then it has been widely used in the crypto market. Some crypto investors have even come up with a full form “hold on for dear life.” The primary idea behind the term HODL is to hold the cryptocurrency, instead of selling it off due to increasing volatility.
These are some of the commonly used terms in the crypto market. As a beginner, you must know the meaning of these terms to sail smoothly through the competitive market. Unless you understand the meaning of these terms, things are going to be hard for you as a crypto investor.