Uni Finance Logo

10 Common Cryptocurrency Terms That You Need to Know

November 25, 2021 | Trading| By Uni Finance

Now that everything is going digital, coins included, we need to get a good grasp of some of the most widely used cryptocurrency terminologies. When we mention cryptocurrency, we all think of Bitcoin but the crypto world is not only about this popular digital currency.

A lot of the confusion with crypto is most likely due to the use of words that many of us have never heard. But once you learn the most common blockchain lingo, it gets easier to understand how cryptocurrency works.

We have listed the 10 common Cryptocurrency terms to add to your vocabulary.

1 ) Blockchain

A blockchain is a digital ledger composed of all the transactions ever made in a particular cryptocurrency. These transactions are made up of ‘blocks’. When a block reaches its capacity, a new block is created, and so forth. Some blockchains have a limited number of blocks by design, whereas others have an infinite market cap.

2 ) Digital Currency

Digital money (or digital currency) refers to any means of payment that exists in a purely electronic form. Digital money is not physically tangible like a dollar bill or a coin. It is accounted for and transferred using online systems. In other words, you can’t see the transaction history of your counterparty and third-party payment processor.

3 ) Non-fungible tokens (NFTs)

Non-Fungible Tokens (NFTs) are blockchain-based digital assets (or artifacts) that are unique. No two NFTs are the same and these are what you can consider as a digital collectible. That is, they are not mutually interchangeable and cannot be exchanged with one another. Non-fungible tokens enable virtual transactions between collectibles like art, music, and trading cards using smart contracts.

4 ) Mining

Refers to the process of adding transactions to the large distributed public ledger of existing transactions, known as the blockchain. The term is best known for its association with bitcoin, though other technologies using the blockchain employ mining.

5 ) Fiat

Fiat currency is government-backed and not backed by any commodity like gold. An example of fiat currency is the US dollar. The value of US dollars relies solely on the institution of the United States government. If the US crumbles, so does your fiat.

6 ) Crypto Wallet

A crypto wallet is where all your cryptocurrency coins are stored. The purpose of a wallet is to protect your digital currency. Security is so tight that you lose all access to your cryptocurrency if you ever lose or forget your password. There are two main types of crypto wallets namely hot and cold. A hot wallet is connected to the internet. It makes online trades convenient but is far less secure than a cold wallet. A cold wallet is more like a safe, kept offline in a secure spot that only you can access. It's less convenient than a hot wallet when it comes time to make purchases or trades, but infinitely more secure.

7 ) Bitcoin

Bitcoin is a decentralized digital currency that you can buy, sell and exchange directly, without an intermediary like a bank.

8 ) Altcoin

The term altcoin refers to cryptocurrencies other than Bitcoin.

9 ) Gas

When you make a transaction on the blockchain, you have to pay a fee. Gas refers to the unit that measures the amount of computational effort required to execute specific operations on the Ethereum network.

10 ) Exchange

A cryptocurrency exchange is an online marketplace where users buy, sell, and trade cryptocurrency. A cryptocurrency exchange works similar to an online brokerage, as users can deposit fiat currency such as U.S. dollars and use those funds to purchase cryptocurrencies.

Sign up for a FREE account now!