Getting started in the cryptocurrency market can be challenging at first. Lots of hard-to-understand words, complicated slang, lots of information coming in fast and changing just as fast. Apart from all that, we still have a volatile market and a few hundred projects to study. Even though it seems to be something impossible, it can be simpler than it seems. For this, CriptoFacil separated some terms that you need to know.
cryptocurrency market dictionary
Blockchain
Blockchains are infinite databases, used as a secure and transparent source of public data storage. This data is identified by numbers or addresses and can represent anything from cryptocurrencies to confidential documents. The system is decentralized, that is, it does not require a central server.
Smart Contracts
A smart contract is a computer program based on a blockchain. In this way, increasing transparency and trust, since the transaction is immutable (cannot be interrogated or changed) and no intermediary is needed to complete it.
decentralized applications
Decentralized apps (dApps) are like any other website or app you use, except they are built and run on a decentralized network, like the Ethereum blockchain. Realized platforms are contracts in smart contracts. That way it works because a network doesn’t require a third party or to function.
DAO
DAO (Decentralized Autonomous Organization) is a type of organization that operates on blockchain using smart contracts. All holders of governance tokens in the DAO can vote and participate in important decisions. If a proposal reaches a predetermined level of consensus (such as a certain number of votes), it is accepted and executed as per the rules of the smart contract.
governance token
Governance tokens are tokens that act as a democratic collective decision-making system in the DAO. Governance tokens allow their holders to make important decisions that affect the future of the project.
utility token
A utility token is a cryptocurrency that provides access to a decentralized application or service. It is important to note that these are not financial securities, although they are sometimes speculated as such. Rather, tokens are used in the internal economy of a specific project. For example, the $APE token associated with the BAYC NFT project.
NFT
NFTs are digital tokens that are on the blockchain, each NFT has its own identity and metadata. In this way, NFTs are unique and non-interchangeable in the sense that they are “non-fungible”. The data contained in the NFT may be associated with digital files such as photographs, poems, albums, videos and avatars.
gas fee
A gas fee is the payment that individuals make to complete a transaction on a blockchain. These fees are put in place to compensate blockchain miners for the computing power they must use to verify blockchain transactions and are usually paid in the blockchain’s native cryptocurrency. Thus, the price varies according to network congestion. In addition, consequently, the more people use the network, the higher the price of gas.
airdrop
Airdrop is the process of distributing NFT or coins directly to the user’s wallet, it is usually free. Also, there are different types of airdrops. For example, individuals can receive an airdrop when they share a post on social media or enter a sweepstakes. As such, airdrops are a great way for blockchain projects to attract new users or compensate existing users for their support.
hot wallet
Hot wallet is a digital wallet stored online. It is connected to the blockchain, allowing you to store, send and receive tokens. It’s accessible from any device, anywhere in the world, as long as you have an internet connection and your private keys. therefore, because they are connected to the internet, they are less secure and vulnerable to hackers. MetaMask is an example of a hot wallet.
cold wallet
Cold wallets are a more secure type of digital wallet and are offline. Examples of cold wallets are hardware wallets. Hardware wallets are physical devices, many of which look like USB drives. Major brands include Ledger and Trezor. In this way, a paper wallet is simply a piece of paper with your public and private keys printed on it. Of course, it’s easy to lose or shred paper. As such, hardware wallets are seen as the safest way to store tokens.
staking
Ultimately, cryptocurrency staking is the process of locking up a proof-of-stake cryptocurrency on a wallet or exchange for a set period of time in exchange for interest rewards. Read also: Fraud: creator of the NFT collection Mutant Ape Planet is arrested in the United States Read also: Risk FTX: analysis house reduces risk rating and target price of Coinbase shares weeks: what to expect?