Cryptocurrency has been around for a while now, but there are many people who still do not understand much about it, how it works and the pros and cons of it all.
For regular followers and viewers of our website, Facebook and LinkedIn posts, you will know that here at We Are Web, we like to convert digital jargon into plain english and keep things simple, so no matter what level of knowledge and understanding of anything digital you may have, you can stay up to date with hot topics that are circulating the internet.
We have put together a short informative guide that helps you to understand the main idea behind Cryptocurrency and some of the popular words associated with the digital or virtual currency.
Let's get to it!
Cryptocurrency is a digital or virtual currency that uses cryptography to maintain security and regulate the creation of new coins.
Cryptocurrencies are not governed by a government or financial institution, which makes them decentralised.
The first cryptocurrency and most well-known cryptocurrency, Bitcoin, was created in 2009.
What Is Cryptocurrency?
Cryptocurrency is a form of decentralised digital currency that generates money online through encryption. They are secured by encryption techniques, and serve as a currency and virtual accounting mechanism.
Crypto wallets are necessary for the use of cryptocurrencies.
Such digital or virtual currency is controlled by a central entity, meaning instead of being governed by a central authority such as a central bank, cryptocurrencies are governed by an independent form, based on blockchain technology.
Blockchain and distributed ledger technologies are used in the operation of cryptocurrencies.
Cryptocurrencies might be divided into several categories, including DeFi, Litecoin, utility tokens, and yield farming tokens such as Aava.
They differ from many other cryptocurrencies in that they utilise cutting-edge technology and have their own set of advantages. Because of this, they are quite popular.
Cryptocurrencies use a public distributed ledger to keep track of all transactions made by users. Unlike other money, cryptocurrency is generated by solving complicated maths problems using computers.
Cryptocurrencies such as Bitcoin may be seen as a safe and lucrative investment for investors, with some people thinking that bitcoin will soon be a replacement for gold.
Understanding Cryptocurrency Wording
Like digital marketing, web design and development, Cryptocurrency also has its own language.
Let's take a look at some of the popular words you may come across when looking to invest, understand and start trading with Cryptocurrency:
As previously mentioned, Bitcoin is the most popular cryptocurrency and was first released in 2009.
It is a decentralised digital currency that does not have a central authority. Instead, transactions are verified by miners, who use special software to solve mathematical problems and are rewarded with bitcoins for their efforts.
Bitcoin mining is the process of verifying and adding transactions to the Bitcoin blockchain.
Miners are rewarded with bitcoins for verifying and adding transactions to the blockchain.
A blockchain network is a decentralised network of computers that use blockchain technology to verify and record transactions.
Crypto exchanges are digital platforms where you can buy, sell and trade cryptocurrencies.
They allow you to buy or sell your cryptocurrency for other digital currencies or fiat currency (i.e. regular currency such as dollars or euros).
Cryptocurrency transaction fees are used to incentivise miners to verify and add transactions to the blockchain.
The fees are paid by the sender of the transaction and are collected by the miner who verifies and adds the transaction to the blockchain.
A smart contract is a computer protocol that enables two or more parties to agree on and execute a contract without the need for a third party.
In simple terms; the Ethereum network uses smart contracts to execute agreements between parties.
Crypto Wallet & Digital Wallets
A cryptocurrency wallet is a digital wallet that is used to store, send and receive digital currency and is necessary for the use of cryptocurrencies.
A digital wallet is a software program that stores your public and private keys and interacts with various blockchains, to allow you to send and receive digital assets.
The cryptocurrency market is the global marketplace where cryptocurrencies are traded.
It is made up of exchanges, brokers, and traders who buy and sell cryptocurrencies.
Cryptocurrencies are digital assets that can be used to purchase goods and services, and their value is determined by supply and demand.
Cryptocurrency investors are people who invest in cryptocurrencies with the hope of making a profit.
They are attracted to the potential profits that can be made by trading and investing in cryptocurrencies.
Initial Coin Offerings
Initial coin offerings (ICOs) are a way for startups to raise money by issuing their own cryptocurrencies.
Investors buy these tokens in the hope that they will be worth more in the future.
Fiat currency is a government-backed currency that is used to purchase goods and services.
It is regulated by governments and is considered to be the most stable form of currency.
Simply put, this is the money that we physically use everyday such as Euros and Pounds.
Ethereum is a decentralised platform that runs smart contracts: applications that run exactly as programmed without any possibility of fraud or third party interference.
The Ethereum network is powered by Ether, a cryptocurrency that is used to pay for transactions on the network.
Cryptocurrency Transactions & Bitcoin Transactions
As you can see, the crypto world is huge.
The most renowned cryptocurrencies are Bitcoin and other digital currencies, which have a long history and are still the most popular cryptocurrency today.
Crypto Currency History
When Bitcoin was originally introduced, it was intended to be a daily trading currency that allowed investors to buy anything from coffee to computers, as well as major goods like housing and vehicles.
Although this hasn't really happened as of yet, institutions are beginning to accept cryptocurrency including Microsoft.
Cryptocurrency is a virtual currency that is not regulated by everyday bank(s) or financial institutions.
If you are looking to buy cryptocurrency safely and securely, you will need to use a crypto wallet.
Cryptocurrencies can be used to purchase goods and services, and some investors hope to make a profit by trading and investing in them.