If you’re a trader, you already know that there’s a complete narrative that combines words, terminology, and terms that are frequently used in currency trading. Technical and fundamental (financial) analyses such as the Bollinger Band Index, support and resistance levels, swing trading… They are just a few of many. Just like in all disciplines – each specialty has its own terms and expressions that require you to get used to it.
Cryptocurrencies are as specialty as other disciplines, and if you’ve started trading, or intend to do so in the near future, it makes sense to quickly learn about the specialized terms and expressions you find when you enter the world of cryptocurrencies.
To help you get started, we’ve prepared for beginners a guide with some basic terms that you might find at the beginning of your journey into cryptocurrencies.
Blockchain technology and associated encryption terms
Before we look at the main types of cryptocurrencies, we should explain the term “Blockchain”, which is one of the software technologies on which most cryptocurrencies are based.
Blockchain uses the peer-to-peer computer network to verify cryptocurrency transactions and ownership. Cryptography is used, i.e., “encryption”, to secure data. The encryption process consists of complex mathematical equations and is therefore called cryptocurrencies.
Nodes or “Nodes”: A set of intra-network computers that all work on specific software, and some of these specialized nodes have the function of solving the complex encryption problems used to secure transactions. They are provided with encryption information for newly mined digital currencies to identify them. Because they produce encryption units for new digital currencies, the term used to refer to these specialized units is miners” or “adeners.”
Different types of cryptocurrencies – currencies and symbols
The first thing to learn about cryptocurrencies is why some of them are called “currencies”, “codes”, and sometimes called “service codes”.
Cryptocurrency coins or “currencies”: cryptocurrencies are cryptocurrencies used to buy and sell all goods and services as an alternative to traditional currencies such as dollar, pound, euro and yen. Bitcoin was the first example of cryptocurrencies that it knew as people knew, and. Many other currencies such as Bitcoin Cash and Litecoin. Bitcoin Cash has emerged as a result of the “hard fork“, a split in the blockchain technology network. In order to make a change in the primary “protocol”, or blockchain software, at least 51% of the nodes that make up the blockchain must be agreed to implement the change. It is part of the Bitcoin network that is necessary to make some technical changes, so it is believed to make the blockchain more effective. If 51% of the nodes, which is the required majority, do not agree, yet they continue to change the protocol, this will continue to create a “hard fork” or “split” in the blockchain network, which means that they are divided into two separate currencies. Part of the network approves the changes, and the other part rejects it. Since the formation of this split, this aspect of the blockchain network that has approved the changes is a new cryptocurrency called Bitcoin Cash ABC.
Whenever the blockchain is updated for cryptocurrencies, there is a “hard fork”, i.e. “split”. When one aspect of the divide continues as a new and independent cryptocurrency, this aspect is referred to as hard fork.
Another term you’ll find constantly is ‘Altcoins’. Or”Alternative Cryptocurrencies”. Alternative digital currency: A term used to refer to any cryptocurrency other than Bitcoin was first coined when cryptocurrencies of various types began to emerge after the spread of the cryptocurrency concept through the launch of Bitcoin.
Cryptocurrency tokens or “symbols“: They are not designed to be spent in the same way as traditional currencies. Instead, it is linked to blockchain, which has a certain function. This function may be smart contracts or “smart contracts” for a blockchain network such as ethereum that is used to create decentralized applications known as “Dapps” or blockchain payments such as “Ripple” known as ripple, and codes are spent on purchasing the right to use these items. provided by blockchain networks. Smart contracts: a software term based on a set of rules; The only difference is that these contracts have been verified and applied through the peer-to-peer network used by blockchain technology. That’s why applications created from these contracts are referred to as decentralized applications or “Dapps”.
While the above is certainly not a comprehensive summary of all the terms for cryptocurrencies you find, they briefly cover many key terms. There are plenty of resources available online, if you want to get to know them in more detail.