It’s no mystery that the world of cryptocurrency can be intimidating for anyone new to it. With so many unfamiliar terms, you feel like you need an insider to understand what’s going on. Thanks, you’ve got it covered. If you’re reading this, chances are you’ve heard of Bitcoin (and maybe Ethereum). But beyond these two there is a whole world of other digital currencies – called altcoins or tokens – that are now available to online investors. And while newbies can find the terminology confusing like trying to speak in Elvish, there’s no reason why you shouldn’t dive in and learn about the world of “crypto” – whether it’s investing or mining or just understanding how this phenomenon works. to work
Today, we will explain commonly used terms and phrases related to the topic of crypto assets and blockchain technology.
ICOs and airdrops
An Initial Coin Offering (ICO) is a way for startups to bootstrap their crypto business by issuing crypto tokens to the public. EOS (Electro-Optical System), which has become one of the most popular blockchain protocols, began life as a project with an ICO (Initial Coin Offering), which raised $4 billion. ICOs are used by blockchain startups to fund the creation and launch of their products. They do this by selling their own digital tokens to investors who want to make a profit in the future. Investors are usually rewarded with higher returns if the token’s value increases as more people use it.
Airdrop: A free token giveaway by companies to promote their business or bootstrap the token economy by distributing tokens to existing crypto users.
FUD and FOMO
The crypto market is often a site for various emotions: greed, hope, confusion, and doubt. Whether you are an investor or a trader, it is important to recognize these emotions and try to keep them in check. FUD stands for Fear, uncertainty and doubt. This refers to spreading false information to create doubt in the minds of investors, causing them to sell tokens which in turn lowers the price of the token. This is one of the most common ways for scammers to profit from crypto.
FOMO is the Fear of missing out. This shows the “gotta catch it all” mentality that drives people to invest in every promising token they hear about.
Hodl and shilling
Hodl and shilling are used as verbs in the crypto world. hodl is a misspelling of “held” and is used to refer to keeping your investment even in the event of a bankruptcy. HODL first used in a Bitcoin forum in 2013 where one investor said: “I AM HODLING.” Since then, it has been a battle of those who refuse to give up on investment and ride the storm. Shilling is a paid promotion of a product or service, usually on social media. In crypto, shilling is usually done by scammers who try to raise the price of low-quality tokens by spreading fake news about the future.
DAOs and NFTs
A Decentralized Autonomous Organization (DAO) is an organization implemented through smart contracts on the blockchain. The idea is to create a venture capital fund that will not be run by middlemen but with code that will be open source, transparent, and dependent on a democratic vote. However, the first DAO was a disaster due to a coding error that allowed people to steal $50 million. NFTs are unique non-fungible tokens, like tickets to a football game or a museum. This is used for rare items that cannot be duplicated, such as one-of-a-kind works of art. NFTs can be used for anything that is rare.
POW and POS
A blockchain network is a ledger of all transactions that have taken place between network members via computers. It is accessible to anyone using the network. To ensure that everyone follows the rules and transactions are secure, computers on the network must agree on the transactions that have been made and order them chronologically. This is called “mining”. Proof-of-work (PoW) is the most commonly used consensus mechanism in blockchains. Computers on a network compete to solve mathematical puzzles. The first computer to solve the puzzle and verify the transaction receives a reward in the form of a token.
Proof-of-Stake (PoS): In this method, network members must lock their tokens in order to gain the right to verify transactions and receive rewards. The more tokens are locked, the more verifiable they are. This method eliminates the need for computers to solve complex mathematical puzzles to secure networks.
Altcoin literally means another coin. You may have heard people refer to Bitcoin as the “king” of cryptocurrencies. And it’s true: It was the first digital currency, and it’s still the most popular. But it’s hardly the only one – in fact, far from it. The fact is that since Bitcoin was first released in 2009, more than 3,500 other coins and tokens have been created. Many of these “altcoins” are based on an alternative blockchain technology, one that is not based on the same powerful computer system that Bitcoin uses.
Decentralized Applications (DApps)
Decentralized applications run on a network of computers that are not controlled by a single authority. It is a way to design software that is not controlled by one company or person. It has become possible thanks to the rise of blockchain technology, which enables the system to run autonomously, without a central control source. The most prominent example is cryptocurrency, which operates through a largely decentralized blockchain-based network. There is no single source of control that governs the network, and it is open source.