The Concise, Non-Boring Glossary for Cryptocurrency Newbies

BTC is not another K-Pop band.

cryptocurrency
PHOTO BY Unsplash ILLUSTRATION Ed Geronia

(SPOT.ph) The strange world of cryptocurrency (often shortened as crypto) can be both exciting and confusing for a lot of people. For those with even just a passing interest, they may have encountered a few buzzwords in their social media feeds. Tech billionaire Elon Musk has often tweeted his fondness for certain cryptocurrencies much to the dismay and delight of the crypto community. Crypto has been the subject of serious financial discussions and irreverent memes. Even for the technically inclined, diving into it is a whole universe of unfamiliar words and esoteric concepts.

Crypto has also made international headlines because of its impact on the environment, the prices of computer hardware, and even some national governments. It’s also not uncommon to hear a few people talk about their crypto dealings similar to how they are dabbling in stocks. When someone is into crypto, you’ll know. Whether crypto is a passing tech fad or something with more far reaching implications down the line, we’ve compiled this noob-friendly handy glossary of terms for those who think that BTC is another K-Pop band.

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Bitcoin, Fiat, Blockchain? This cryptocurrency explainer is just what you need if you don't know what those words mean:

Bitcoin

What it sounds like: A very small coin

What it is: Bitcoin is a digital currency that came into circulation in 2009. Also known by its ticker symbol BTC, Bitcoin has become a global phenomenon since its invention and a single Bitcoin is now worth thousands of dollars. Only 21 million Bitcoins exist and currently, around 18.636 million have been mined and are in circulation. Bitcoins can be sold and resold for cash and perhaps can be considered as digital gold. Bitcoins can be traded anonymously and its circulation is not controlled by banks or governments. While Bitcoin is the most well-known, there are other cryptocurrencies in circulation such as Ethereum, Ripple, Cardano, Litecoin, and Dogecoin to name a few.

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Blockchain

What it sounds like: A British band or a building material

What it is: A blockchain is the underlying technology that powers Bitcoin and other cryptocurrencies. It is a database, or a list of records (a block) that is chained together using cryptography. This ledger is a permanent record of sorts that is viewable to anyone. Data that is entered into this ledger cannot be altered or erased. When used for cryptocurrency, all the transactions are permanently recorded. Because of the way records are stored in the blockchain, this technology has also found its way for other applications such as original content creation, record keeping, and vote tracking to name a few.

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Cryptocurrency 

What it sounds like: A superhero’s weakness

What it is: Cryptocurrency is a type of digital or virtual currency that uses complex cryptography to ensure that the currency is safe and secure. The cryptographic part makes sure that the digital currency cannot be replicated and a counterfeit of it cannot be produced. The concept of a cryptocurrency may have been around since the 1990s but it was only in 2009 that the first cryptocurrency was made. Unlike real-world money, cryptocurrencies have no single issuing body like a central bank or government. Its decentralized nature means that no single entity like governments can control it.

Exchange

What it sounds like: A fancy bar or hangout

What it is: A digital currency exchange is a business that allows users to buy, sell, trade, and exchange their bitcoin for real currency or even other cryptocurrencies. Exchanges are often run by private companies which earn by getting a commission from the transactions. Most digital currency exchanges also have a wallet of their own for trading cryptocurrencies.

Fiat

What it sounds like: A car brand

What it is: Fiat currency is regular money such as the peso or dollar that is backed by a central government or bank. For example the US dollar is a legal tender that is guaranteed by the US government. Other examples of fiat money are paper currencies such as the Euro or the British Pound.

Mining

What it sounds like: Digging into the side of a mountain to find precious minerals

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What it is: Like the precious materials found deep in the earth, there is a finite number of bitcoins. To acquire bitcoin, one can purchase it or mine it. To mine bitcoin, miners have to use computers to solve complex mathematical puzzles. As a reward for solving this puzzle, the miner receives a bitcoin. While it may sound simple at first, mining requires powerful machines, a lot of energy and a whole amount of time to earn bitcoins. In a lot of countries, there are full-scale mining operations consisting of hundreds or thousands of machines that are put up for the sole purpose of mining Bitcoin.

Satoshi Nakamoto

What it sounds like: An anime character

What it is: Satoshi Nakamoto is credited as the inventor of Bitcoin, the first and most widely used cryptocurrency. In 2008, Nakamoto wrote a technical paper that outlined the use of a digital currency. Nakamoto released the first version of software that would lead to the creation of Bitcoins the following year. Currently, Nakamoto is said to own a few million Bitcoins which is estimated to be worth billions of dollars. What is interesting to note is that Satoshi Nakamoto may not even be a real person but a pseudonym for a group of individuals. Who or what is the real Satoshi Nakamoto is one of the ongoing mysteries of the crypto world.

Wallet

What it sounds like: That thing in your back pocket or purse

What it is: A wallet allows you to send and receive digital currencies. While a real-world wallet can store your cash, a crypto wallet doesn’t really store it. Instead, it keeps a record of the user’s balance. A crypto wallet is either a program or a hardware device that can access computer software. In the early days of bitcoin, paper wallets were also used to store a printout of cryptographic keys and QR codes.

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