Getting started in the cryptocurrency market can be challenging at first. A lot of hard-to-understand words, complex slang, and a lot of information comes quickly and changes just as quickly. Aside from all that, we still have a volatile market and a few hundred projects to consider.
Although it seems impossible, it could be simpler than it looks. For this, CryptoFacil has broken down some of the terms you need to know.
Cryptocurrency Market Dictionary
Blockchains are infinite databases, used as a secure and transparent source for storing public data. This data is identified by numbers or addresses and can represent anything from cryptocurrency to confidential documents.
The system is decentralized, that is, it does not require a central server.
A smart contract is a computer program based on the blockchain. In this way, transparency and trust are increased, because the transaction is immutable (it cannot be questioned or altered) and there is no need for an intermediary to complete it.
Decentralized applications (dApps) are just like any other website or application you use, except that they are built and run on a decentralized network, such as the Ethereum blockchain.
Realized platforms are contracts in smart contracts. This way it works because the network does not require or operate a third party.
A DAO (Decentralized Autonomous Organization) is a type of organization that runs on the blockchain using smart contracts.
All DAO governance token holders can vote and participate in important decisions.
If the proposal reaches a predetermined consensus level (such as a certain number of votes), it is accepted and executed according to the rules of the smart contract.
Governance tokens are the tokens that act as a democratic collective decision-making system in the DAO.
Governance tokens allow their holders to make important decisions that affect the future of the project.
A utility token is a cryptocurrency that provides access to a decentralized application or service.
It is important to note that these are not securities, although they are sometimes speculative as such. Instead, tokens are used in the internal economy of a particular project. For example, the $APE token associated with the BAYC NFT project.
NFTs are digital tokens located on the blockchain, each NFT has its own identity and metadata.
In this way, NFTs are unique and non-fungible in the sense that they are “non-fungible”. The data contained in the NFT may be associated with digital files such as photographs, poems, albums, videos, and avatars.
Gas fees are the payment that individuals make to complete a transaction on the blockchain.
This fee is put in place to compensate blockchain miners for the computing power they must use to verify blockchain transactions and is usually paid in the blockchain’s native cryptocurrency. Thus, the price varies depending on network congestion.
In addition, the more people using the network, the higher the price of gas.
Airdrop is the process of distributing NFT or coins directly to a user’s wallet, and it’s usually free. Also, there are different types of airdrops.
For example, individuals can get an airdrop when they share a post on social media or enter a sweepstakes. As such, airdrops are a great way for blockchain projects to attract new users or compensate existing users for their support.
Hot Wallet is a digital wallet stored on the Internet. It is connected to the blockchain, allowing you to store, send, and receive tokens.
It can be accessed from any device, anywhere in the world, as long as you have an internet connection and your private keys. Therefore, because they are online, they are less secure and vulnerable to hackers. MetaMask is an example of a hot wallet.
Cold wallets are a more secure type of digital wallet and are offline. Examples of cold wallets are hardware wallets. Hardware wallets are physical devices, many of which are similar to USB drives.
Major brands include Ledger and Trezor. In this way, a paper wallet is just a piece of paper with your public and private keys printed on it. Of course, the paper is easy to lose or tear. As such, hardware wallets are seen as the most secure way to store tokens.
Ultimately, cryptocurrency hoarding is the process of locking in a cryptocurrency for proof of stake in a wallet or exchange for a set period of time in exchange for interest rewards.
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