Are you interested in entering the world of cryptocurrency? Of course, you must first understand how it works, and the important crypto terms that are often used. Otherwise, you’ll find it increasingly unfamiliar and difficult to integrate into this world.
Well, this time arrayofthings.us details the most commonly used terms in cryptocurrency. Starting with the cryptocurrency itself and into slang terms like courier. Check it out!
9 Important Crypto Terms Beginners Should Know
Simply put, cryptocurrencies can be called cryptocurrencies because they don’t actually exist in the real world, but exist digitally, have value and can be used as a trading tool just like fiat currencies. Investing in cryptocurrency is secured by cryptocurrency, making it less likely to be counterfeited or duplicated.
Before Satoshi Nakamoto introduced Bitcoin in 2009, there have been pioneers in the cryptocurrency space since 1998. At that time, Wei University conceptualized an anonymous electronic money distribution system called B-money. After the birth of Bitcoin, many other currencies began to emerge, and eventually this cryptocurrency trend became increasingly popular.
Cryptocurrencies can be used for direct person-to-person transactions. Transactions need not be affected by exchange rates as these currencies are applied at the same rate in every country. In addition to exchange rates, cryptocurrencies built on blockchain technology do not include third parties such as banks when making transactions. Therefore, only other users will affect the value of the transaction.
In addition to being used as a trading tool, cryptocurrencies are often used as an investment method. This is because their value fluctuates, and we expect cryptocurrency prices to rise in the future.
As you know, there are various currencies in the real world such as rupees, US dollars, Singapore dollars, dinars, and pesos. Cryptocurrencies also create this diversity of currencies. As of today, more than 10,000 cryptocurrencies are traded on digital trading sites, one of which is altcoins. Therefore, bitcoin is not the only cryptocurrency.
Altcoin is a term used to describe all cryptocurrencies except Bitcoin. As Business Insider points out, altcoins are alternative cryptocurrencies to Bitcoin. You can also see the label, altcoin comes from the words alt and coin. This means alternative currency. In this context, it is an alternative to Bitcoin.
Bitcoin was the first cryptocurrency developed in the world. As a result, cryptocurrencies other than bitcoin are called altcoins, also known as altcoins.
Altcoins are the first generation of development using the same blockchain used in Bitcoin and development began in 2011. The altcoin, which first appeared, was called Namecoin in April 2011, and was developed by adapting Bitcoin’s code.
Namecoin’s existence gained historical momentum and paved the way. Its appearance showed that there was plenty of room for different types of currencies in the cryptocurrency market. And because it was derived from Bitcoin, the price often followed Bitcoin’s price fluctuations. However, as the cryptocurrency investment ecosystem matures, altcoin volatility becomes more independent.
Many people learn about blockchain through cryptocurrencies, and they start researching blockchain out of curiosity about the technology used to build cryptocurrencies. Therefore, not only IT circles, but also social classes other than the tech world, have started to find out what blockchain is.
However, the use of blockchain is not limited to cryptocurrencies. In 2018, McKinsey created a timeline that included opportunities for blockchain technology in various non-financial fields, ranging from healthcare, agriculture, real estate, to media.
Blockchain itself is a technology used as a digital storage system or data bank connected by cryptography. Therefore, the financial sector, such as cryptocurrencies, is well suited to use this technology, as blockchain will be a kind of digital ledger that can be accessed by everyone. Blockchain technology increases transparency of transactions and reduces data abuse such as bribery and corruption.
Literally, the word blockchain consists of two syllables: block and chain. Block means group and string is string. This label simply reflects how the technology works with blockchain to use computer resources to create blocks that are interconnected like a chain.
Satoshi is synonymous with a person’s name, but when the context is a cryptographic term, Satoshi is the name for the smallest unit of Bitcoin. The term Satoshi, the smallest unit, was coined by Bitcoin creator Satoshi Nakamoto.
One bitcoin is equal to 100 million satoshis, so the ratio of one satoshi to a bitcoin is one millionth (1:100,000,000) or 0.00000001 BTC.
This unit of Satoshi is very important. This is because making Bitcoin smaller makes it easier to read transactions. If used, everything was first called Satoshi before the blockchain was introduced.
Also, the source code uses Satoshi units when determining the number of bitcoins. Secondly, when calculating the cost of a byte that needs to display a very small percentage of bitcoins, the unit used is also a satoshi.
Bagholder is a general term for investors who own stocks that have fallen in price and are unlikely to recover in the near future. For example, if you buy a stock for $10 and it drops to $2, other traders may refer to it as a bagholder.
However, don’t abuse this term. If someone buys a stock or cryptocurrency with strong fundamentals and the stock price drops significantly due to certain circumstances, it is not appropriate to call that person a porter. This is because stocks with strong fundamentals, especially those that meet the criteria of a good stock, can recover and reach new highs in the future.
The term FUD is widely used in the crypto investment world. FUD stands for Fear, Uncertainty and Doubt, and is a strategy by investors to spread fear and doubt about an investment product to other investors so that the product can be launched and bought at a low price.
Well, this practice is often seen in cryptocurrency trading and the rest of the world. Experienced traders can usually sniff out and ignore FUD signals. Hold the asset until the price stabilizes again. Therefore, as a trader, you should always keep yourself updated with news and references from various reliable sources to avoid FUD.
HODL is a common term in the crypto community and is used to describe staying invested and not holding back in the face of falling prices. HODL itself stands for Hold On for Dear Life. When used in the community, the term HODL seems to imply that it holds crypto assets firmly and is not tempted no matter how high the price goes.
In fact, the origin of the term HODL is very unique. In other words, it’s due to a spelling mistake by a Bitcoin forum user with an account named “Game Kyuubi”. During the legendary bitcoin price crash in December 2013, he misspelled the word “HOLD” with the letter D in front of the letter L in “HODL”.
At the time, he criticized other traders who chose to sell their coins when the price dropped. His principle is that coins will not be sold even if the price drops. He said angrily, “If you sell now, that trader will receive your coins!” Then he continued with “I am holding” but wrote “I am paving!”.
FOMO is the abbreviation of “FOMO FOMO”. FOMO generally refers to a situation where anxiety or discomfort arises when others share positive or unique experiences. During FOMO, you tend to panic and don’t want to miss out on experiencing the same thing.
In the investment world, FOMO refers to the fear that traders or investors feel when they miss out on an investment or trading opportunity that brings potential profits. This phenomenon is very common in the world of trading and investing, including cryptocurrencies.
When you see a volatile market moving up and down sharply, FOMO is very dangerous because you have to trade immediately because you don’t want to miss this opportunity.
In fact, every moment that happens in the market is unique and can happen at any time. FOMO transactions and investments are not recommended because they make decisions based on emotions rather than the results of careful analysis.
9. Bearish and Ascending
Bearish is a crypto term used to describe a situation where the market continues to show a downtrend in price over a period of time. Ascending trend is the opposite, a term that describes a situation where a market’s price trend continues to rise or increase over a period of time.
The term is taken from the behavior of two animals that commonly name them: bears and bulls. Bears or bears fight off enemies by charging them downwards and is used to indicate a downtrend in prices. On the other hand, bulls or bulls raise their heads and charge, which makes it a good indicator of rising prices.