You should know these terms before making a crypto investment.
The cryptocurrency industry is undergoing many changes. It’s easy to feel left out when you read amazing tweets from everyone involved in crypto.
There are people who love cryptocurrencies and hate them.
However, I think a few people have misjudged the entire crypto industry. They do not understand the terms involved in the world of cryptocurrencies and they misjudge the entire industry. They think it is too complex to understand.
Cryptocurrencies are easy to understand. It just takes a bit of effort on your part. Here I have explained the eleven terms to simplify cryptocurrency for you.
Altcoins are a short form of alternative coins.
This term is used to represent all cryptocurrencies other than Bitcoin. After the success of Bitcoin, many peer-to-peer digital currencies have been launched.
Thousands of altcoins have been built on the basic structure of bitcoin.
Blockchain is a digital ledger of transactions.
Blockchain helps you store information that no one can change. Transactions on the blockchain are duplicated and distributed over a computer network.
The transactions available in the blocks are linked to each other.
3. Consensus Mechanism
Methods for reaching agreements in a decentralized network.
In a centralized system, a database containing all tweets, a central authority can delete any tweet. In the decentralized world, there is no central authority.
A consensus mechanism is used to reach a mutual agreement.
4. Decentralized Apps — dApps
dApps are programs that run on a computer network.
A centralized system, like Facebook, runs on a computer system owned by a single organization. The dApps run on a particular blockchain that is available to the public.
Anyone can create a dApp and implement it on a blockchain.
5. Non-fungible Token (NFT)
A non-fungible token is a type of asset in the digital world.
Anyone can buy NFT like any land, but there is nothing tangible you can touch. Any artwork can be tokenized to create a digital certificate of ownership.
Who owns NFT is stored on a shared ledger called a blockchain.
6. Bitcoin Mining
In this process, a bitcoin miner solves a complex mathematical puzzle to create a new bitcoin.
Miners help make the entire payment network more reliable. Miners help verify various transactions. This process helps keep track of transactions.
Anyone can participate in mining.
7. Decentralized Finance
It is a system through which all financial products become available on a blockchain network.
These include payment processing and money management. With this system, all financial products become open to everyone.
There will be no need for the bank or any intermediary.
8. Satoshi Nakamoto
It is the presumed name of the inventor of bitcoin.
Satoshi Nakamoto was the author of the bitcoin white paper that introduced bitcoin to the world. Satoshi was active in Bitcoin development until December 2010.
No one knows who the real Satoshi Nakamoto is.
9. Smart Contract
A smart contract is a decentralized application.
It contains a self-executing contract between a buyer and a seller. The contract is written using lines of code. All transactions made through a smart contract are traceable and irreversible.
Nick Szabo presented smart contracts.
Solidity is an object-oriented programming language. It helps in writing smart contracts on the Ethereum blockchain. This language was introduced in 2014.
11. Gas (Ethereum)
On the Ethereum blockchain, gas refers to the necessary fees that must be paid to successfully complete a transaction.
The price of gas is set by the miners based on the demand and supply of the network’s computing power.
It is denoted in small fractions of ether known as gwei.
Neat little backgrounder from Sanjay Priyadarshi