If you’re interested in trading digital currencies like Bitcoin, Ethereum, and Ripple but are confused about the terminology and jargon involved, worry no more. This post breaks down the cryptocurrency jargon, so you won’t be flummoxed by hodl or concerned about a blockchain.
First appearing on the BitcoinTalk forum, hodl is a Bitcoin meme that means “hold” – as in holding onto your digital currency rather than selling it. Hodl is often used as a way to express bullish sentiment on any coins (or dicks, etc.) you’re trading or investing in.
Some references say it’s an acronym standing for hold on for dear life. While others say it was a typo on a forum when the unknown trader typed “I’m going to hodl” instead of “I’m going to hold” when the price was fluctuating wildly. You can monitor the Bitcoin current price online.
Bitcoins can be subdivided down to eight decimal places. Each subdivision of bitcoin is called a satoshi. Named after the mysterious creator of Bitcoin, Satoshi Nakamoto, 100,000,000 satoshis equals one bitcoin. If you want to get really technical, one satoshi equals 0.00000001 bitcoins.
The blockchain is the decentralized ledger that keeps track of all Bitcoin transactions. It’s built from thousands of computers around the world, and each block must be verified by a consensus.
The wallet is a digital storage location for your cryptocurrency. It’s basically a place to keep and store your coins safely so you don’t lose them if the site goes down or your computer crashes. There are several types of wallets.
Exchanges like OKX and Kraken are wallets where you can store funds in exchange for crypto coins (Bitcoin, Ethereum, etc.). They act as “hosts” between users who want to trade or invest and investors who have coins stored there.
Exchanges are what you use to buy and sell Bitcoins. They’re basically the middlemen between you and the seller or buyer, who cannot interact directly – they can only trade with each other through the exchange. There are a variety of different exchanges:
- Centralized exchanges, like Kraken, which are controlled by trusted third parties. They use fiat currencies like US dollars or euros to trade digital coins for cash (and vice versa).
- Decentralized exchanges, like Bitsquare and Binance, which don’t require any third-party involvement at all – you can trade directly with other users without an intermediary.
When you’re investing in an Initial Coin Offering (or “ICO”), also called an “Initial Token Offering” (or “ITO”), you’re actually taking part in the creation of a new cryptocurrency – usually hosted on top of Ethereum or similar protocol.
7) Smart Contracts
Smart contracts are computer programs that store and verify transactions within a blockchain network. The goal of smart contracts is to eliminate third-party intermediaries – which means they can run without the need for trust or oversight. They can also be self-executed, which means they have a direct impact on what happens with the digital currency involved in them (instead of waiting for human intervention).
While cryptocurrency jargon can be confusing sometimes, it’s also a great way to keep up with what’s happening in the digital currency world. The more you know, the sooner you’ll be able to make the right financial decisions and get ahead of both the crypto market and your own investment goals.