The crypto industry has been around for over a decade, and it continues to evolve at a breakneck pace. With its own unique jargon, it can seem intimidating at first glance. However, grasping some basic terms can make navigating the crypto world much easier. Whether you're a beginner or looking to deepen your understanding, we've compiled the top 20 crypto terms you should know.
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Bitcoin - The first and most well-known cryptocurrency, often referred to as digital gold. It was created in 2009 by an anonymous person (or group) known as Satoshi Nakamoto. Bitcoin introduced the concept of a decentralized digital currency.
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Ethereum - A decentralized platform that enables smart contracts and decentralized applications (dApps). Created by Vitalik Buterin in 2015, Ethereum goes beyond Bitcoin by allowing developers to build and deploy their own decentralized services.
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Altcoins - Crypto assets other than Bitcoin, such as Ethereum, Litecoin, and Ripple. Altcoins offer various improvements and alternatives to Bitcoin’s original protocol, addressing issues like transaction speed, privacy, or smart contract functionality.
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Blockchain - A distributed ledger technology that records transactions across multiple computers. This decentralized structure ensures security and transparency, making it the backbone of crypto.
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Halving - An event in Bitcoin where the reward for mining new blocks is halved, occurring roughly every four years. Halving reduces the rate at which new bitcoins are created, affecting supply and potentially increasing demand and price.
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Proof of Work (PoW) - A consensus mechanism used in Bitcoin and other cryptocurrencies that requires miners to solve complex mathematical problems to validate transactions.
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Proof of Stake (PoS) - A consensus mechanism where validators are chosen based on the number of coins they hold and are willing to "stake" as collateral.
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Public Key - A cryptographic key that can be shared publicly and is used to receive funds. It’s part of a pair with a private key and is essential for secure transactions.
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Private Key - A cryptographic key that must be kept secret and is used to access and manage one's cryptocurrency. The private key allows you to authorize transactions, making it crucial for security.
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Smart Contracts - Self-executing contracts with the terms of the agreement directly written into code. These contracts automatically enforce and execute agreements, reducing the need for intermediaries.
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Cryptography - The practice of secure communication, essential for protecting data in cryptocurrencies. Cryptographic techniques ensure the integrity, confidentiality, and authenticity of information.
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Wallet - A digital tool used to store, send, and receive crypto. Wallets can be software-based (hot wallet) for easy online access or hardware-based (cold wallet) for offline security.
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White Paper - An authoritative report or guide that explains the technology, purpose, and mechanics of a new crypto project. White papers are essential for understanding the vision and functionality of new crypto assets.
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Decentralized Finance (DeFi) - Financial services using crypto assets that aim to recreate traditional financial systems, such as banks and exchanges, without intermediaries. DeFi offers innovative financial products and services with increased transparency and accessibility.
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Decentralized Applications (dApps) - Applications that run on a blockchain network rather than being hosted on centralized servers. dApps leverage blockchain’s security and transparency for various use cases, from finance to gaming.
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Initial Coin Offering (ICO) - A fundraising method where new cryptocurrencies sell their tokens in exchange for Bitcoin, Ethereum, or other cryptocurrencies. ICOs are used by startups to bypass traditional capital-raising methods.
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Token - A digital asset that represents a unit of value, often issued on a blockchain. Tokens can represent various assets, including digital currencies, utility tokens for accessing services, or security tokens representing ownership.
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Bull Market - A market condition where prices are rising or expected to rise.
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Bear Market - A market condition where prices are falling or expected to fall.
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Crypto IRA - A unique investment vehicle that allows investors to buy and sell crypto assets within their tax-advantaged IRA. Crypto IRAs combine the benefits of crypto investments with the tax advantages of retirement accounts.
To learn more about other key terms and the overall industry, check out our glossary page and our learn center!
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This article is for information purposes only. It does not constitute investment advice in any way. It does not constitute an offer to sell or a solicitation of an offer to buy or sell any cryptocurrency or security or to participate in any investment strategy.
iTrustCapital is a cryptocurrency IRA software platform. It is not an exchange, funding portal, custodian, trust company, licensed broker, dealer, broker-dealer, investment advisor, investment manager, or adviser in the United States or elsewhere. iTrustCapital is not affiliated with and does not endorse any particular cryptocurrency, precious metal, or investment strategy.
Cryptocurrencies are a speculative investment with risk of loss. Precious metals are a speculative investment with risk of loss. Cryptocurrency is not legal tender backed by the United States government, nor is it subject to Federal Deposit Insurance Corporation (“FDIC”) insurance or protections. Clients do not receive a choice of custody partner. The self-directed purchase and sale of cryptocurrency through a cryptocurrency IRA have not been endorsed by the IRS or any regulatory agency. Historical performance is no guarantee of future results.
Some taxes and conditions may apply depending on the type of IRA account. Investors assume the risk of all purchase and sale decisions. iTrustCapital makes no guarantee or representation regarding investors’ ability to profit from any transaction or the tax implications of any transaction. iTrustCapital does not provide legal, investment or tax advice. Consult a qualified legal, investment, or tax professional.
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