Despite all odds, blockchain technology has shown applications in different industries, and the technology has brought with it an entire blockchain glossary of terms that we need to be familiar with. Bitcoin has become well-known, and financial institutions worldwide now invest in cryptocurrencies and encourage their customers to do so. Meanwhile, celebrities such as Eminem, Jimmy Fallon, and Stephen Curry have also endorsed NFTs.
Despite all of the attention, blockchain technology remains a mystery. It’s only completely understood by brilliant technologists, many of whom were early users of cryptocurrencies like bitcoin and Ether. In other words, the industry is confusing for the average person.
This article will look at some terms and phrases that you should know before you invest and or before you launch your own crypto project.
A Bitcoin address is comparable to a postal or email address. It’s the only piece of information you’ll need to get someone to pay you in Bitcoin. However, one crucial distinction is that each address should only be used for one transaction.
When a corporation distributes bitcoin or an NFT directly into your wallet, this is known as an airdrop. Instead of an IPO, blockchain services will issue a token and distribute it to people who have utilized the service before. This is done with various goals. It could be for pure marketing purposes, as airdrops promote awareness of a token that others can then invest in. Alternatively, it could be to offer governance tokens for a decentralized autonomous organization (DAO).
To “ape” into something means to invest rashly in the hopes of making a quick profit. Everyone is aware that scams abound, so cautious investors conduct due diligence to ensure that a cryptocurrency or NFT project is safe before they invest their hard-earned money into it. To “ape” into a project means to invest money into it, after seeing its value rise, in the hopes of a positive outcome.
According to experts, you should focus your investments on the more prominent, more visible cryptocurrencies. Any coin that isn’t Bitcoin is known as an altcoin. The altcoins include Ethereum, the second most popular coin, and thousands of coins with lower market value.
Your bags are investments that you have held for a long time, often investments that have underperformed.
This is the largest cryptocurrency exchange in the world, where anyone can buy and sell cryptocurrencies.
A bit is a standard unit for designating a bitcoin sub-unit; 1,000,000 bits equals one bitcoin (BTC). This unit is typically more convenient for pricing advice, commodities, and services.
When discussing the notion of Bitcoin, or the entire network itself, capitalization is used. “Today, I was learning about the Bitcoin protocol,” for example. The term bitcoin is used to denote bitcoins as a unit of account without capitalization. “I sent ten bitcoins today,” for example. Bitcoin is sometimes abbreviated as BTC or XBT.
A distributed database is a blockchain. Blockchains provide public records of unchangeable data because a block can’t be changed after it’s mined and added to the chain. In other words, it’s a decentralized ledger that stores data in digital blocks.
There are a variety of blockchains available, each with its own level of decentralization, efficiency, and security. Many of them have their own cryptocurrency, such as Ether, based on the Ethereum blockchain.
A block in the blockchain is a record that includes and confirms multiple pending transactions. The process of mining adds a new block containing transactions to the blockchain roughly every 10 minutes on average.
When cryptocurrency is sent to a wallet that can only receive it and not transmit it, we say that it has been “burned.” Burn mechanics are frequently used to create a deflationary effect: as the number of tokens in circulation decreases, the ones held by investors become more valuable.
12) Buy The Dip
This is when you acquire more of an asset after its value has dropped. For example, if the bitcoin price falls by $10,000, a bitcoin holder might “buy the dip.”
Green and red bars, commonly referred to as “candlesticks,” appear on cryptocurrency graphs showing price movement. Green bars indicate price increases, while red bars indicate price decreases.
14) Cold Wallet/Cold Storage
A secure method of storing your cryptocurrency offline. Many cold wallets (also known as hardware wallets) are physical devices that look similar to USB drives. This type of wallet can help protect your cryptocurrency from hacking and theft, but it also comes with its own set of security parameter risks. This includes the possibility of you losing the wallet and your cryptocurrency along with it.
The term “confirmation” refers to the fact that a network has executed a transaction that is now unlikely to be reversed. When a transaction is then included in a block, it receives a confirmation for each following block. The probability of a reversed transaction falls significantly with each confirmation. A single confirmation is sufficient for low-value transactions, but for more significant amounts, such as USD 1000, it is prudent to wait for six or more confirmations.
Data, tokens, or assets can be sent from one blockchain to another. On the other hand, Multichain services are designed to work across multiple blockchains.
Cryptography is an area of mathematics that allows us to produce mathematical proofs with high-security levels. Cryptography is already used in online commerce and banking. It is also utilized in the case of Bitcoin to prevent someone from spending coins from another user’s wallet or corrupting the blockchain. As a result, it can also be used to encrypt a wallet, making it impossible to access without a password.
A cryptocurrency is a native token on the blockchain. With each new block that is mined, a new cryptocurrency is usually created. Each new block of Ethereum mined, for example, rewards the miner with two ether tokens as compensation. Tokens are a sort of cryptocurrency. Their origin is what distinguishes tokens from cryptocurrencies: Other tokens are created utilizing blockchain-based platforms and apps, while cryptocurrencies are incorporated into a blockchain protocol.
In simple terms, a decentralized autonomous organization (DAO) is a self-contained, decentralized organization. A DAO makes decisions by consensus. All governance token holders get votes in organization decisions, and the solution with the most votes becomes the DAO’s course of action. Consider a decentralized investment bank where, instead of the fund managers making all the decisions, the holders of its governance tokens vote on how funds from its treasury are invested.
Developer-created applications that are put on a blockchain to carry out tasks without the use of a middleman. Decentralized apps are frequently used to complete decentralized finance tasks. Ethereum is the most critical network for decentralized finance.
21) Decentralized exchanges
Decentralized exchanges are used to buy and sell bitcoins on the marketplace. Unlike traditional exchanges, these operate on a peer-to-peer network, bypassing any centralized authority. Uniswap and Sushiswap are two examples of decentralized exchanges.
DeFi stands for “decentralized finance,” It refers to any financial tool that uses blockchain technology to bypass middleman institutions, such as a smart contract or a decentralized autonomous organization (DAO).
23) Diamond hands
People with diamond hands hang on to financial assets over long periods or through price fluctuations.
24) Double spend
Double spending occurs when a malevolent person tries to send bitcoins to two different receivers simultaneously. The purpose of bitcoin mining and the blockchain is to reach a network-wide consensus on which of the two transactions will confirm and be regarded as authentic.
The native cryptocurrency of the Ethereum blockchain. Ether is currently second only to Bitcoin in terms of market capitalization, although it is a considerably more widely used cryptocurrency. Most altcoins are based on Ethereum and are therefore connected to it. Since most NFTs are also built on Ethereum, Ether is the more commonly traded token in NFT trading.
Ethereum is the blockchain that is in direct competition with Bitcoin, the world’s most well-known blockchain. It’s designed to take the blockchain technology that was pioneered by Bitcoin’s developers and apply it to more advanced financial tools such as smart contracts.
27) Flash loan
Flash loans are a type of DeFi loan that doesn’t require collateral. You can borrow money to buy an asset with a flash loan, but only if the asset can be purchased and the interest paid back in the same block. To better understand how a flash loan works, think of it this way: you want to buy a $1 million house with a loan, but the loan will only be authorized if you have another buyer willing to pay enough to repay the loan plus interest.
Smart contract technology is used to make these loans.
When users alter a blockchain’s rules, changes to a blockchain’s protocol frequently result in two paths: one that adheres to current regulations and another that departs from them. (For example, a Bitcoin fork produced Bitcoin Cash)
Fear, uncertainty, and doubt are abbreviated as FUD. This can be legitimate and is often seen when people express worries about the security or authenticity of a token or NFT project, or tactical, such as when a coordinated effort urges others to sell, depressing the asset’s price.
The cost of using the Ethereum network is called gas. Prices typically range from $50 to $500 per transaction; however, they can rise dramatically during periods of high network traffic. Every transaction requires the payment of a gas fee, which varies according to how busy the blockchain is.
31) Hash rate
The Bitcoin network must perform costly mathematical computations for security reasons. The hash rate is defined simply as the unit of measurement for the processing power of the Bitcoin network. When the network attains a hash rate of 10 trillion calculations per second, it could perform 10 trillion calculations per second.
Though the name originated from a user error on a Bitcoin forum in 2013, it’s now used to mean “Hold On for Dear Life.” It’s a passive investing approach in which consumers buy and hold cryptocurrencies, rather than trading them, in the hopes of seeing the currency value rise.
A feature built into the Bitcoin code reduces the amount of new Bitcoin entering circulation after a finite number of blocks have been mined (usually every four years). Halving may also have an impact on the price of Bitcoin.
34) Hot wallet
A hot wallet is a software-based and Internet-connected digital wallet. While digital wallets allow you to access your cryptocurrency more quickly, they are more vulnerable to hacking and cybersecurity threats than offline wallets, just as files stored in the cloud are more easily hacked than those kept in a home safe.
35) Layer 1 & 2
If you’re interested in cryptocurrency, you’ve probably heard of Layer 1 and Layer 2 solutions. The blockchain architecture is Layer 1, while the architecture constructed on the blockchain is Layer 2.
Take the issue of Ethereum’s high gas costs, for example. Making the Ethereum blockchain more efficient by implementing proof-of-stake protocols would be a layer 1 solution. An example of a layer 2 solution is Immutable X, an exchange built on top of Ethereum that employs smart contract technology to allow for gas-free, carbon-neutral trade.
36) Liquid market
NFT markets are not liquid, whereas cryptocurrency markets are. The characteristics of a liquid market include the existence of many buyers and sellers, allowing buy and sell orders to be fulfilled almost instantly. Most legitimate types of cryptocurrencies can be bought or sold at any time, but NFT traders must publish an item for sale and wait for a buyer to purchase it manually.
The mainnet will host a blockchain protocol that is available to the whole public. This distinguishes it from a testnet, which is more akin to a blockchain protocol’s beta launch.
38) Market capitalization
The total value of all mined coins is cryptocurrency market capitalization. A cryptocurrency’s market cap is calculated by multiplying the current number of coins by their current value.
39) Meme coin
Many cryptocurrencies are designed to be useful or fulfill a specific function. However, meme coins are connected to a passing fad or meme that has recently gone viral. The most well-known meme coin is Dogecoin, but there is a slew of examples. Meme coins are entirely speculative assets with no potential for usage.
Bitcoin mining is making computer hardware perform a mathematical calculation for the Bitcoin network to confirm transactions and boost security. Bitcoin miners can receive transaction fees for the transactions they authorize and freshly minted bitcoins as compensation for their efforts. Mining is a specialized and competitive market where the rewards are distributed based on the amount of calculation performed. Bitcoin mining is not for everyone, and it is not an easy way to generate money.
On blockchains, minting refers to the process of verifying data and storing it as a block on the chain.
During a public sale, buying an NFT from its developer is known as “minting.” The “mint price” is the price at which its founders sell it; for example, the mint price of the Bored Ape Yacht Club was 0.08 ether. Traders who want exposure to a collection must buy NFTs from a secondary market like OpenSea after all of the NFTs in the collection have been minted.
A multichain program or service can be used on different blockchains. Cross-chain apps and services, on the other hand, are designed to transmit data or assets from one blockchain to another.
Non-fungible tokens are value units used to represent ownership of unique digital objects such as works of art or collectibles. The majority of NFTs are stored on the Ethereum blockchain.
NFTs are currently linked with art, although they can certify ownership of any digital asset. As they get more popular, more brands are using NFTs to increase engagement with their customers and promote their other products and services. In fact, NFTs are even finding applications in the non-profit sector.
Something that exists on a blockchain is on-chain, while something that lives off the blockchain is referred to as off-chain. On-chain money is a cryptocurrency, while off-chain money is fiat cash.
This is the world’s largest NFT marketplace, specializing in Ethereum-based NFTs. OpenSea is followed closely by Solanart (the marketplace for Solana NFTs).
46) Play To Earn (P2E)
P2E games, or play-to-earn games, are blockchain-based and reward players for accomplishments with an in-game cryptocurrency. These virtual currencies can be traded for bitcoin or Ether in-game. Axie Infinity is the most well-known example. In this game, players can win Smooth Love Potion ($SLP).
Peer-to-peer refers to systems that function like a well-organized collective by allowing individuals to communicate directly with one another. In the case of Bitcoin itself, the network is set up so that each user broadcasts other users’ transactions. Most importantly, no third-party bank is required.
48) Proof of Work
Blocks are added to a blockchain using proof of work as a consensus process. POW needs miners to solve complex cryptographic puzzles that take lots of energy from powerful mining rigs to validate new blockchain transactions.
POW is a decentralized consensus process that is safe and efficient, yet it is notoriously inefficient. It’s how the blockchains of bitcoin and Ethereum work. However, Ethereum will soon switch to the more efficient proof of stake method.
49) Proof of Stake
Proof of stake is an improved consensus technique that allows blocks to be mined considerably more efficiently than proof of work, which requires a lot of energy. Holders of a cryptocurrency can use POS to validate new blocks on the blockchain.
They do so by putting their bitcoin on the line. Users stake their cryptocurrency in a network, and if a randomized process chooses their stake, they are allowed to validate a new block. They are then rewarded with more cryptocurrency. The more cryptocurrency a user has, the more likely they will be chosen to validate a new block.
Proof of stake is set up to reward those who invest their cryptocurrency over a lengthy period. In contrast, proof of work rewards those who have invested the greatest computer power to solve a cryptographic challenge.
50) Private key
A private key can be defined as a piece of data that verifies your right to spend bitcoins from a certain wallet through a cryptographic signature. Since private keys allow you to spend bitcoins for their corresponding Bitcoin wallets, they must never be shared with anyone. If you use a software wallet, your private key(s) are stored on your computer; if you use a web wallet, they are stored on remote servers.
51) Pump and dump
Pump and dump strategies involve creating fake excitement about a product to get people to buy it and boost its price. Pump and dump operators then sell their assets at a high price, causing the market price to plummet.
These can be found in traditional markets, but they are more widespread in cryptocurrency trading. This is due to the low liquidity of micro-cap coins, which makes price manipulation easier.
Sharding spreads network strain across a blockchain, allowing more transactions to be handled per second. This may seem unnecessary, but it is actually critical. Next year, Ethereum will embrace sharding, making it cheaper and less harmful to the environment.
A cryptographic signature is a mathematical process for establishing ownership. In the case of Bitcoin, a Bitcoin wallet and its private key(s) are linked by mathematical genius. When your Bitcoin software signs a transaction with the correct private key, the entire network can see that the signature matches the bitcoins being spent. The rest of the world, on the other hand, will be unable to guess your private key and steal your hard-won bitcoins.
54) Smart contract
An algorithmic program that automatically enacts the provisions of a contract based on its code. The capacity to execute smart contracts is one of the Ethereum network’s core value propositions.
Stablecoins are cryptocurrencies that are often pegged to the US dollar. The objective of a stablecoin is to allow cryptocurrency traders to keep their tokens in a crypto ecosystem without being subjected to the volatility of bitcoin and ether price movements. Tether and USDC are two examples of stablecoins.
Staking allows you to earn rewards from your crypto by committing some of your crypto assets to support a specific blockchain network and confirm transactions. With some cryptocurrencies, it is possible to stake a lump quantity of tokens in exchange for a percentage of that lump sum at regular intervals for as long as it’s staked. For example, Token X may provide a 10% monthly return on any stake of more than 5,000 tokens. In that example, you would put down 5,000 tokens in exchange for 500 Token X each month. This is an example of a passive income strategy: In the preceding scenario, recouping the original 5,000 tokens could take ten months, after which each monthly payment of 500 Token X would be pure profit (assuming the value of Token X remains steady).
Staking is not available in bitcoin or Ethereum; however, it will be when the latter embraces proof of stake.
Tokens are blockchain assets that come in a variety of shapes and sizes. Tokens include cryptocurrencies such as bitcoin. Governance tokens, which offer the bearer voting rights in a DAO or service, and utility tokens, which grant access to a service based on the number of tokens owned, are two more forms.
58) Utility Token
A utility token is a token that seeks to perform a function or deliver a service that the holder requires. These can include access to a program, a service, or a game. For example, Filecoin provides access to blockchain-based digital storage, while link connects smart contracts for off-chain data.
A Bitcoin wallet is roughly equal to a physical wallet on the Bitcoin network. Like a genuine wallet, each Bitcoin wallet can show you the entire balance of all bitcoins it holds and allow you to send a specific amount to a particular person. This is unlike credit cards, where the merchant charges you without your pre-approval. Your private key(s) are stored in the wallet, allowing you to spend the bitcoins assigned to it in the blockchain.
As blockchain aficionados will tell you, Web3 is the next iteration of the internet. From the founding of the internet until roughly 2005, Web1 was a read-only internet. Web2 allows anyone to create material and upload it to the internet. On the other hand, Web3 will be a blockchain-enabled internet. To understand how Web3 will work, imagine owning your social media postings in NFTs, utilizing Ether as a worldwide currency, and using your wallet as a form of identification instead of an email and password combination.
The rapidly growing blockchain market has created a level playing field that makes it possible for blockchain projects to gain traction. With this in mind, a decent marketing campaign with clear communication can help differentiate your project from the slew of blockchain projects on the market. Pressfarm’s PR services can help you get featured in the press, a very important aspect if you are trying to build a credible and successful ICO.
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