One of the biggest buzzwords in the technology space at the moment has to be Cryptocurrency. So big, the entire cryptocurrency space is currently worth $1.72 Trillion as of the time of writing the article. If the cryptocurrency market was a stock market operated by a country, it will be the 18th largest stock exchange by market cap in the world.
But very few know how cryptocurrency works or what it’s used for. According to a recent survey done by Cardify, only 16.9% of investors who have bought crypto “fully understand” the value and potential of cryptocurrency, while 33.5% of buyers have either zero knowledge about the space or would call their level of understanding “emerging.”
Even fewer know about the larger ecosystem that exists beyond the cryptocurrency space which includes Blockchain, Decentralised Finance, Web3, Smart Contract and so much more.
In this article, we will break down all the terminologies and jargon around the cryptocurrency space into much simpler and more digestible bits using related anecdotes.
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Cryptocurrency Acronyms and Terminologies You Must Know in 2022
- Nakatamo Satoshi
- Blockchain Wallet
- Alt Coin
- Cryptocurrency Exchange
- Decentralised Finance
What better way to start than with the man who is presumed to be the brains behind the creation of Bitcoin, the first cryptocurrency. Many folks in the crypto space believe he’s a pseudonym that represents the original creator(s) of Bitcoin.
Whatever and wherever he is, dead or alive, the name has made history as being the pioneer of the most disruptive technology innovation at the moment.
Given the price of BTC today, Satoshi would be a billionaire.
In addition, the poor (rich) lad also exists as a token called Satoshi and currently trades on the Coinmarketcap with the price set at $0.000412.
Blockchain is a combination of computer networks that transparently stores all the information about a crypto transaction. Visualise several series of blocks which contain the information in a space connected by endless chains.
Blockchain is the technology that powers all cryptocurrency transactions, for without it there won’t be any cryptocurrencies in existence. Its mission is to ‘wrestle power’ from centralised and opaque organisations like banks, government, lawyers, Insurance companies, “omo oniles”, etc and put it in the safe and transparent hands of ordinary folks like you and me, hence decentralising the whole process of money exchange (a classic tale of Robinhood).
As you probably have noticed, decentralisation is ironically the central theme for cryptocurrency and no other token, coin or terminology represents this theme like Bitcoin.
Bitcoin is a virtual or digital token that can only be used on the internet. Unlike the physical currencies e.g the US dollar and UK Pound Sterling which are controlled by the government, Bitcoin is controlled by anyone. And like the traditional currencies which are stored in physical wallets, Bitcoin can also be stored in wallets called digital wallets (We will talk more about this).
Bitcoin is the first and most valuable cryptocurrency with the price currently at $44,230.
Ethereum is the second most popular and valuable cryptocurrency but it has a more unique usage than Bitcoin.
The former both serves as a medium of exchange and technology within the blockchain where other decentralised applications like Defi, Smart Contracts, NFT can be built on while the latter is only used as a medium of exchange.
Think of Ethereum as the Gold of cryptocurrency and Bitcoin as the dollar.
Ethereum can also be referred to as an alternative coin to Bitcoin.
The blockchain wallet acts the same way as your physical wallet which is used to store cash and cards except it is used online to store digital currencies like Bitcoin.
It is very secure and can only be accessed by a key unique only to the wallet’s online (unlike the physical wallet that can be ‘accessed’ by boys under the bridge).
An Address is a string of characters in a wallet that can send and receive cryptocurrency. It is synonymous with a real-life address or an email.
Just like a physical address where no two houses can share the same numbers, each address on the blockchain is unique and marks the location of a wallet.
Short form for alternative coins, Altcoins refer to any type of cryptocurrencies other than Bitcoin. Altcoins were created to serve a much better purpose to cryptocurrency users than Bitcoin.
Ethereum was the first-ever altcoin created. Other examples of altcoin include Solana, Bitcoin Cash (which is the 3rd most valuable cryptocurrency), XRP, Cardano, etc.
Shitcoins are altcoins that are fraudulently created and serve no intrinsic value to users. They are truly shitty by every definition of the word. Examples of shitcoins include Dogecoin, Shiba Inu, Safe Moon, Magic Internet Money, etc.
Crypto Exchanges are platforms where digital currency owners can buy or sell cryptocurrency coins like Bitcoin, Ethereum, Polygon, Litecoin Solana and the likes. They are two types of Crypto Exchanges:
Centralised Crypto Exchanges – These exchanges are operated by trusted third-party companies where individuals have little or no control over the trading of their digital assets. They are safe but kind of defeat the essence of decentralisation. Examples of centralised crypto exchanges include Binance, Luno, Huobi, Coinbase, etc.
Decentralised Crypto Exchanges – these exchanges grant users total control over their digital assets without involving any third party, think of it as the bundle of cash you keep underneath the mattress or at the dark spot of your wardrobe and use whenever you want. Examples include Uniswap, PancakeSwap, Kine Protocol, etc.
Tokens are simply altcoins that have no dedicated blockchain, unlike Bitcoin and Ethereum. They leverage existing blockchain, most commonly Ethereum. They are essentially like coaches that only move once attached to a train engine.
One great advantage about tokens is that cryptocurrencies can be created on an existing blockchain without the need to build a blockchain, just like a coach needing to move on the rail tracks without a need to build a new train engine.
Defi, short for decentralised finance, is the movement within crypto that removes the control banks and institutions have on money, financial products and financial services.
It eliminates the fees that banks and other financial companies charge for using their services. This means anyone can lend, borrow and other access financial services just by being connected to the internet without the need for intermediaries like banks.
More buzzwords pop up daily around the crypto space, but these 11 are some of the most useful and popular terminologies around the cryptocurenccy space.
Great Crypto Insight!