10 common and important cryptocurrency terms for newbies

10 common and important cryptocurrency terms

Today I decided to put together a list of the first 10 cryptocurrency terms that came to mind for me as a new trader tonight when I was thinking about what to write about. These are some of first terms I researched when my friend brought me into the market.

1. ICO – Initial coin offering, similar to an IPO (initial public offering) in the stock market. This is when a company raises money for their cryptocurrency venture by selling tokens in the underlying coin for Bitcoin, Etherum, or cash. This is an opportunity to get in on the 'ground floor' of a potential company for some investors. This is also where a lot of investors lose a lot of money. Invest in ICO at your own risk.
2. Fiat currency – The currency a nation uses. Ex. Dollars, Yen, Euros. Paper bills and coins.
3. Alt Coin – 'Alternative coin.' Basically, any cryptocurrency other than the original Bitcoin
4. Whale – Someone who owns a large percentage of a particular cryptocurrency. You'll know when a whale is buying and selling because of the large swings in price. Some say 5%, some say more, some say less. But you know when they're making moves.
5. Market Cap – Market Capitalization. It's the number you get when you multiply the number of coins by their current value. It gives an idea of how big the market is.
6. Blockchain – The system of electronic ledgers that are created, modified, and checked by a system of distributed computing systems. The 'blocks' of the chain are linked and secured using cryptography.
7. Mining – The process of solving the cryptographic equations necessary to create, modify, and verify blocks in the blockchain. In order for a 'block' to be added to a blockchain the cryptographic puzzle must be solved (mined) and the computer that solves the puzzle is rewarded with a coin. Anyone with a computer can mine but it requires a lot of computing power to be efficient and profitable.
8. Wallet – software, hardware This is where cryptocurrency is stored. A software wallet stores the information on your computer with a specialized program. A hardware wallet is an electronic device that is able to 'store' your coin off of the internet. Not all wallets will be able to store all sorts of coins.
9. Tokens – Pre-allocated coins from an upcoming cryptocurrency venture given to investors who put money into an ICO that are exchanged for the real coin upon going public.
10. Exchange – Where you buy and sell various cryptocurrencies. Each exchange has different types of coins. Not all exchanges will have all the coins.

Bonus!

Fork – When a cryptocurrency decides enact certain major changes in the protocols of the blockchain it's called a 'fork.' This may result in a split in the blockchain and the creation of a new coin type.

I hope this helps those of you who are new to cryptocurrency trading.

Safe trading!

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