It’s no secret that the world of cryptocurrency can be intimidating for any newbie. With so many unfamiliar terms floating around, it’s easy to feel like you need an insider to understand what’s going on. Luckily we’ve got you covered. If you’re reading this, you’ve probably heard of Bitcoin (and maybe Ethereum, too). But beyond those two, there is a whole world of other digital currencies — called altcoins, or tokens — that are now available to online investors. And while newbies might find the terminology as confusing as trying to speak Elvish, there’s no reason why you shouldn’t dive into the world of “crypto” and learn about it – be it investing or mining or just knowing how this whole phenomenon works works.
Today we explain commonly used terms and phrases related to crypto assets and blockchain technology.
ICO and airdrops
Initial Coin Offering (ICO) is a way for startups to start their crypto business by issuing crypto tokens to the public. EOS (Electro-Optical System), which has become one of the most popular blockchain protocols, started out as a project with a massive ICO (Initial Coin Offering) that raised a whopping $4 billion. ICOs are used by blockchain startups to fund the creation and launch of their product. They do this by selling their own digital tokens to investors looking to make profits in the future. Investors are typically rewarded with higher returns as the token’s value increases as more people use it.
air drop: A free giveaway of tokens by a company to promote their business or boost their token economy by distributing tokens to existing crypto users.
FUD and FOMO
The crypto market is often a place for emotions of all kinds: greed, hope, confusion, and doubt. Whether you’re an investor or a trader, it’s important to recognize these emotions and try to keep them in check. FUD means fear, uncertainty and doubt. It refers to the dissemination of false information to create doubts in the minds of investors, leading them to sell their tokens, which in turn depresses the price of the token in question. This is one of the most common ways for scammers to profit from crypto.
FOMO is the fear of missing out. This refers to the “must catch them all” mentality that drives people to invest in every promising token they hear about.
Hodl and Schilling
Both Hodl and Schilling are used as verbs in the crypto world. hodl is a misspelling of “hold” and is used to refer to holding your investment despite the dips and bumps. HODL was first used in a Bitcoin forum in 2013, where an investor said, “I AM HODLING.” Since then, it has become the rallying cry of people refusing to give up their investment and weather the storm. shilling is the paid promotion of a product or service, usually on social media. In crypto, shilling is usually made by scammers who try to inflate the price of a low-quality token by spreading fake news about its future.
DAO and NFT
A Decentralized Autonomous Organization (DAO) is an organization governed by a smart contract on the blockchain. The idea was to create a venture capital fund that would not be managed by a central person, but according to an open-source code that was transparent and relied on democratic voting. However, the first DAO turned out to be a disaster as it had a coding error that allowed someone to steal $50 million. NFTs are non-fungible tokens that are unique, such as B. Tickets to a football game or a museum. They’re used for rare items that you can’t make multiple copies of, such as: B. Unique artworks. NFTs can be used for anything that is rare.
POW and POS
A blockchain network is a ledger of all transactions ever made between network members through their computers. It is accessible to anyone using the network. To ensure everyone follows the rules and transactions are safe, the computers on the network must agree on which transactions have taken place and order them chronologically. This is called “mining”. Proof-of-Work (PoW) is the most commonly used consensus mechanism on the blockchain. The computers in the network compete against each other to solve a mathematical puzzle. The first computer to solve the puzzle and verify the transaction receives a token reward.
Proof-of-Stake (PoS): This method requires network members to lock their tokens in order to gain the right to verify transactions and receive a reward. The more tokens they block, the more they can verify. This method eliminates the need for computers to solve complex mathematical puzzles to secure the network.
Altcoin literally means another coin. You may have heard Bitcoin called the “king” of cryptocurrencies. And it’s true: it was the first digital currency, and it’s still the most popular. But it is hardly the only one – in fact it is far from it. In fact, 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 that does not rely on the same powerful computing systems as Bitcoin.
Decentralized Apps (DApps)
A decentralized application runs on a network of computers that are not controlled by a single authority. It’s a way of designing software that isn’t controlled by a single company or individual. This was made possible by the rise of blockchain technology, which allows a system to run autonomously and without a central source of control. The most prominent example is a cryptocurrency running over a blockchain-based network that is largely decentralized. There is no single source of control regulating the network and it is open source.