Welcome to the exciting world of cryptocurrency, where digital currencies like Bitcoin and Ethereum are changing the way we think about money. If you’re new to this space, there are a few key terms you should get familiar with.
Think of Bitcoin as the star player in this game, supported by the technology called blockchain, which ensures everything is secure and transparent. Imagine keeping your digital money safe in a special vault—this is where cold storage comes in. And when we say decentralized, we mean there’s no big boss controlling everything; it’s a community effort. Lastly, mining might sound like digging for treasure, but in the crypto world, it’s the process of creating new coins! In this article, we’ll quickly break down 5 must-know terms of Cryptocurrency to help you make sense of the fascinating world of digital currency.
Bitcoin – Bitcoin (with a capital B) refers to the overall concept of the Bitcoin P2P protocol & Bitcoin payment network. Bitcoin is the first open-source & decentralized cryptocurrency invented by Satoshi Nakamoto. The Bitcoin whitepaper was published in 2008, and Bitcoin was released in 2009.
Blockchain – The key technology behind most cryptocurrencies, blockchain serves as a cryptographically-secure distributed ledger of records on a network. A blockchain in cryptocurrency is comprised of tamper-proof blocks that record all cryptocurrency transactions for a set period of time. Blocks get appended to a blockchain in specified intervals through a process called mining. In the case of Bitcoin, a new block is mined and appended to the Bitcoin blockchain roughly every 10 minutes. This means that every ~10 minutes, the blockchain grows by 1 block. Blockchain technology as a whole facilitates decentralized P2P transactions without the need for a centralized intermediary.
Cold Storage – Cold storage refers to cryptocurrency wallets that are not accessible to the internet. Some examples of cold storage include hardware wallets (also referred to as hard wallets) and paper wallets. Cold storage is a safer approach to storing your cryptocurrency, as your keys are kept offline from potential breaches or hackers.
Decentralized – Decentralized means not controlled or governed by any single entity or institution. Blockchain is an example of something that is decentralized; all full nodes in the network own a copy of the blockchain – not a single entity (which would make it centralized.) In a decentralized system, if one node goes down, the rest of the network continues to operate without hiccups.
Mining – Mining is the process of expending computing power to process and verify cryptocurrency transactions. The mining process effectively adds blocks (which contain the latest transactions) to the blockchain. Miners are incentivized with mining rewards and transaction fees.
And there you have it – 5 of the must-know terms of Cryptocurrency. Whether you’re intrigued by Bitcoin’s potential, fascinated by the magic of blockchain, or just want to keep your digital assets safe, understanding these basic terms is key. Learning more (200+ more to be exact!) terms is easy! Just download Crypto Pie on your mobile device today to expand your knowledge on Cryptocurrency, Bitcoin and Blockchain!
