Learn about the most common terms in the cryptocurrency world!

Cryptocurrencies have risen in value like Bitcoin (BTC-USD) And Ethereum (ETH-USD), and is expected to reach its highest levels ever.

The latest bull run has caused a surge in interest in cryptocurrencies, from both traditional and institutional investors.

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However, one of the obstacles that makes investors hesitate is the unfamiliar acronyms and technical terms associated with the crypto field.

While many investors follow the wisdom of the famous rich Warren Buffet, that you should “Invest in what you know…and nothing more”.

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Therefore, to understand the world of cryptocurrency, investors must learn not only the crypto-equivalent of the traditional terms associated with stocks and bonds, but also a host of new concepts, such as smart contracts And Non-fungible tokens (NFTs) And Decentralized Exchange Platforms (DEXs).

Blockchain Technology

Every investor should have a basic understanding of what blockchain And why it is a revolutionary technology, it is the primary engine that powers all cryptocurrencies. It is a digital form of record keeping that is tamper-proof, encrypted and decentralized.

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This digital data log is distributed in its entirety/over a network of computers or devices Contract nodes This technology is revolutionary, because the data in question is not stored centrally, and therefore cannot be controlled by any single authority.

It's a system "untrustworthy", where individuals do not have to trust an entity that keeps their data in a centrally controlled location.

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The system also has the potential to render custodial banks inoperable, as transactions recorded on . are automated blockchain By specific algorithms, it is almost impossible to change them, once the network has been verified.

smart contracts

Algorithmic programs can be stored on blockchain, which can implement agreements between participants almost instantaneously, without the need for an intermediary to validate the contract.

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and enjoy this “Smart Contracts” With the power to disrupt the world of finance, and change the legal system.

As it is one of the main value propositions of the network ethereum, which was the first network blockchain It allows the implementation of smart contracts.

The difference between DEX and CEX

Cryptocurrencies can be purchased in different ways.

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Initially it can be purchased by bank transfer to Central Exchange (CEX) Such as Coinbase (COIN). Once the funds are added to the exchange, users can buy from the list of mainstream cryptocurrencies.

And one of the alternatives to buy and hold cryptocurrency in CEX, is to use Decentralized Exchange (DEX)Which hosts a large number of digital currencies and tokens.

Decentralized exchanges do not store your purchases in a central location, but rather send them from cryptocurrency to a connected digital wallet, such as a wallet Metamask.

“Hot” and “cold” wallets

Portfolio “hot” It is an online storage of cryptocurrencies, where this can be done on a wallet like Coinbase, or via a browser wallet, such as MetaMask.

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Wallets can also be used MetaMask To interact with decentralized exchanges.

Cold storage wallets are considered the safest way to store cryptocurrencies, after several online hacks, where investors lost large percentages of their investment portfolios.

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Whereas cold storage means moving your encrypted belongings to a physical device that looks like a drive USB It is a penetration resistant method.

DeFi and DApps

DeFi Or decentralized finance, is the name given to any activity in finance, conducted without the intervention of an intermediary, such as a bank.

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There are most applications DeFi Currently online ethereum, While Dapps . Decentralized Applications These are programs that operate in a decentralized manner blockchain, and one example is Aid:Tech linking donors to recipients.

What is the NFT؟

Non-fungible Numeric Tokens (NFTs) It is a unique digital asset that can be traded on exchanges like open sea OpenSea In the past six months, many NFTs individual in excess of $1 million)740 thousand pounds sterling) each.

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An example is NFT For the digital artist MIKE Basim Beeple sell for 69.4 million dollars in Christie's in March 2021.

Other miscellaneous terms that cryptocurrency investors may encounter are words like HODL, which means “Holding your investment for the long term”, and the GAZ fee, which refers to the price paid for Cryptocurrency miners transactions, to be recorded on the Public Distributed Register.