Before you invest your money in cryptocurrencies, you need study about it and understand it. Arming yourself with a few basic crypto phrases is one of the simplest ways to begin your study of Crypto 101, especially with a still-evolving asset like crypto.
And also, we recommend building up your emergency fund, paying down high-interest bills, and obtaining a standard retirement plan. And, as we've previously stated, you should only invest what you're ready to lose in cryptocurrency, with experts recommending that you allocate no more than 5% of your portfolio to these digital assets.
But you should also have a basic understanding of what you're getting into, including how cryptocurrency differs from conventional investing techniques and the various factors that can affect a cryptocurrency's market value.
Before you go any further and invest your money in the realm of cryptocurrency, you need to familiarize yourself with the following crypto terminologies and definitions:
ALTCOIN
The phrases "alternative" and "cryptocurrency" are combined. Any cryptocurrency that isn't Bitcoin falls into this category. Thousands of altcoins have developed since Bitcoin's introduction in 2011, with Ethereum being the largest and most popular.
ALL TIME HIGH (ATH)
All-time high is shortened as ATH. It refers to a cryptocurrency that has achieved the highest market capitalization price in its history.
DIGITAL CURRENCY
Any payment method that is available in an electronic format. Virtual currencies, central bank digital currencies, and cryptocurrencies are examples of this. Digital currency can also be thought of as an electronic form of fiat money.
BULLISH
A term used to describe an asset that has a strong upward trend.
BEARISH
A term used to describe an asset that has a strong downward trend.
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WALLET ADDRESS
A wallet address is similar to the specific mailing address of your coins, much like your address is similar to where you live. The blockchain can't confirm or verify the existence of your cryptocurrency unless it has a place to "live" or be stored. You won't be able to keep any cryptocurrencies if you don't have a wallet address. Coinbase and Coins.ph are some examples.
STABLECOIN
A cryptocurrency whose value is linked to the worth of other fiat currencies or commodities. The stablecoin US Dollar Coin (USDC), for example, is tied to the value of the US Dollar.
BLOCKCHAIN
A network of computers that come to an agreement on a linked ledger. Blockchain technology is used by cryptocurrencies like Bitcoin and Ethereum to digitally record all transactions that take place within their networks.
CRYPTOCURRENCY
The words cryptography and currency are combined in this term. Cryptography refers to the technique of delivering encrypted messages between many parties, whereas currency refers to a monetary system that can be used to exchange goods and services. As a result, Bitcoin is a new type of digital currency that uses encryption to secure blockchain transactions.
MARKET CAPITALIZATION
This is the total worth of all the coins that have been mined in cryptocurrency terms. To find a cryptocurrency's market cap, simply multiply the current number of coins by their current value.
DIP
This is the point in time when the price of a cryptocurrency drops.
DAPPS
Dapps, short for decentralized applications, are programs that run on a decentralized blockchain network like Ethereum using smart contracts.
DEFI
Decentralized Finance of DEFI. This allows users to lend/borrow, earn interest, and trade cryptocurrencies without requiring a bank or central exchange through the use of secure distributed ledgers.
ERC-20
ERC-20 is an Ethereum smart contract standard for creating fungible tokens. These are interchangeable tokens that are identical to one another. Previously, to handle a new token, wallets and exchanges had to create custom code. The ERC-20 standard is used by hundreds of coins now.
ERC-721
ERC-721 is a smart contract standard for building non-fungible tokens (NFT’s). These are unique tokens that can’t be exchanged with one another.
HALVING
A Bitcoin feature in which the reward for mining Bitcoin transactions is halved after a certain number of blocks have been mined.
FORK
A branching or forking of a blockchain network's protocol into two separate routes. One blockchain adheres to the old protocol, while the other adheres to the new protocol. For example, Bitcoin Cash is a fork of the Bitcoin protocol.
FUNGIBLE
Fungible assets are those that can easily be exchange with other assets of the same type, for example, 1 bitcoin for 1 bitcoin or $1 for $1.
HODL
HODL stands for Hold On for Dear Life and was coined as a result of a typo on a Bitcoin forum in 2013. This abbreviation alludes to the habit of retaining cryptocurrency for the long term rather than selling it quickly.
NON-FUNGIBLE TOKEN (NFT)
A digital asset that is unique and non-transferable, such as a picture, audio, or video file, and whose ownership is tracked on the blockchain.
Related: How to earn Crypto with Splinterlands?
LEDGER
A record that tracks the movement of money coming in and out.
MINING
The process of confirming transactions on the blockchain to put additional cryptocurrencies to circulation.
Related: How to mine Cryptocurrency?
NON-FUNGIBLE
Because each asset is fundamentally different from the others, non-fungible assets cannot be exchanged. You can't readily replace the Mona Lisa with another work of art, for example, because each work of art is valued differently.
SMART CONTRACT
A self-executing programmable contract that has its conditions of agreement written directly into its lines of code and is kept on a blockchain.
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Disclaimer: The value of cryptocurrencies is extremely volatile and can fluctuate dramatically at any time. Purchasing, selling, and/or holding cryptocurrencies entails significant risk and is not appropriate for everyone. Carefully assess your financial condition and risk appetite before making any cryptocurrency transaction.