10 Cryptocurrency Buzzwords That You Need To Know In 2022 [Beginner’s Guide]
When keeping up with cryptocurrency news, checking out online forums, and reading market predictions, it’s crucial to have an understanding of common buzzwords. Otherwise, you can quickly get lost in a sea of unfamiliar crypto jargon.
Plus, since cryptocurrency trading is more accessible than ever, many eager newcomers end up jumping into the volatile market without truly understanding the ins and outs of it. This can lead to frustration, confusion, and even significant losses.
To make sure you make the most of the online crypto resources and can trade with confidence, you need to know as much as possible about the cryptocurrency world. And the best place to start is by learning common crypto buzzwords!
Common Cryptocurrency Buzzwords That You Should Know
Here are ten common crypto buzzwords that you’ll probably hear or read in the crypto community:
A blockchain is a digital database that is shared among the nodes of a P2P (peer-to-peer) network. Blockchains play a vital role in the cryptocurrency industry and help to maintain a decentralised record of all crypto transactions. When you’re just getting started with cryptocurrency investments, then this is a word that you’re bound to hear a lot!
Shortened from “alternative coin”, an altcoin refers to all cryptocurrency coins other than Bitcoin (BTC). Sometimes this is extended to Ethereum (ETH) due to this coin’s popularity being comparable to that of Bitcoin. The most well-known altcoins include Tether, XRP, Dogecoin, Polkadot, and Cardano.
A broker is someone (either an individual or a firm) that takes the role of an intermediary for traders. They will offer various tools and resources that help make the trading process easier and more efficient. Traders of all experience levels can make use of crypto brokers but beginner and first-timer traders especially will find their services helpful. If you’re interested in using a broker, then we suggest heading to a reputable crypto platform such as Bitcoin Loophole that will connect you with a trusted broker that’s best suited to your trading needs.
Mining is the act of creating new units of digital coins and entering them into circulation. Miners need to solve incredibly complex math “puzzles” using advanced hardware in order to mine cryptocurrency successfully. Many miners are encouraged to mine because they are rewarded with crypto, but some simply enjoy the challenge.
The fear of missing out (FOMO) refers to when traders end up making irrational decisions based on emotion. This typically happens when some traders experience sudden and significant profits, so others rush into buying or trading certain cryptocurrencies to get the same results. This can be a common occurrence and most often affects newer traders who are eager to make a profit. It is important to understand the power of FOMO as it can lead to losses from decisions being made without conducting due diligence.
Mooning, or “to the moon”, refers to when a particular cryptocurrency rapidly raises in price (like a rocket ship going to the moon). Users in the crypto world and other trading communities will often use this phrase as a way to elevate other traders’ fear of missing out (FOMO). It’s believed that the phrase was first used in 2017 after the value of Bitcoin skyrocketed. Other variations of this phrase include “X prices are mooning” and “When is the moon?”.
A Non-fungible Token (NFT) is a unique digital asset that is based on blockchain technology. Unlike cryptocurrencies, NFTs are not identical, and exact replicas cannot be made of them. The NFT market is mostly made up of digital artwork, memes, collectables (such as trading cards), virtual fashion and even real-world assets such as real estate.
Proof of Work
POW (Proof of Work) is the older major consensus mechanism that is used by many popular cryptocurrencies such as Bitcoin. In this process, crypto miners race against each other to be the first to generate a hash that matches the currency block’s target hash. This process is like trying to solve an extremely complex puzzle. The winner is then rewarded with a set amount of cryptocurrency. POW is a powerful and highly secure way to maintain a decentralised blockchain, but is, however, much more energy-intensive compared to other alternatives such as Proof of Stake. POW also has other limitations regarding scalability, causing blockchains such as the Ethereum blockchain to seek POS.
Proof of Stake
POS (Proof of Stake) is another consensus mechanism that places forward solutions that POW is limited by. Similar to POW, with POS, crypto miners are rewarded with cryptocurrency for adding transactions to the blockchain. However, with Proof of Stake, validators “stake” their own cryptocurrency for a chance to update the blockchain. Typically, validators are expected to have a very high level of technical knowledge and need to stake a large amount of crypto. Proof of Stake has numerous advantages over Proof of Work including having faster transaction speeds and being less energy-intensive.
A crypto wallet is where you can digitally store your private keys (which give you access to your cryptocurrency). There are tons of different crypto wallets available for traders with most allowing them to manage their cryptocurrency balances, make trades through the blockchain, and even interact with decentralised apps.
We hope you now have a much better understanding of common cryptocurrency buzzwords. Of course, there is much more crypto jargon floating around, but this is still a great starting point. Now, you can confidently participate in cryptocurrency discussions, better understand news, and further become an active member of the crypto community. You’ll still have plenty left to learn about the complex and vast world of crypto, with even veteran traders learning something new every day.
But don’t be discouraged, as crypto trading has a chance to be rewarding for anyone who does plenty of research, utilises helpful tools, and makes use of the support of a licensed broker. This is not a requirement but will give you a greater chance of minimising your losses when trading cryptocurrency if you’re a beginner. Good luck!
Disclaimer: The article is published as received and views expressed in this article is not an indication of any endorsement. Cryptocurrency is a high risk asset. Readers are advised to do their due diligence and comply with all laws of their residing nation before investing. Above content is by no means an investment advice.