Top 10 Crypto Jargons One Should Know
- Crypto jargon is the industry slang used while explaining investment opportunities.
- The Fear of Missing Out is a market sentiment that causes investors to make decisions without proper research.
Top Crypto Jargons
1. Whales
Crypto whales are investors who hold large amounts of crypto assets in their wallets. They are referred to as “whales” because of the size of their investment compared to other retail investors. Crypto whales influence market prices by manipulating investors’ sentiment. For example, if a whale bought 6% of a coin in circulation and then opened a sell order to dump all of it, retail traders may believe that the asset is no longer a good investment and sell off theirs, further pushing the price downward.
- Altcoin
Altcoins are all the crypto coins and tokens that were created after Bitcoin. They are regarded as alternatives to Bitcoin. Most altcoins were created as modifications to Bitcoin. For instance, to solve the high computational resources needed to mine Bitcoin, Ethereum 2.0 was created to use validators instead of miners. Also, Solana solves Bitcoin’s scalability problem by processing up to 65,000 transactions per second.
- 51% Attack
A 51% attack occurs when a group of miners controls more than 50% of a blockchain’s minting power. The hacker must have control of more than 50% of the mining power in a Proof-of-Work blockchain and the majority of the staked token in a Proof-of-Stake network. This makes attacking the blockchain expensive for large networks like Bitcoin and Ethereum.
4. Non-Fungible Tokens (NFTs)
NFTs are digital assets that are not interchangeable. 1 ETH in a Trust wallet is equal in value to 1 ETH in any other crypto wallet and can be exchanged for each other. But this is different with NFTs, 1 NFT painting of a house is not equal to another NFT house painting, even if both houses look alike. This is because each NFT contains a record of ownership and a digital certificate that states the amount and time at which it was bought.
- Smart Contract
Smart Contracts are programs built on blockchains that self-execute when certain conditions are met. They are built on “if, when, then” conditions. For instance, a developer can build a gaming application on Ethereum with its smart contract having conditions that players can only access in-game tools “if ” they buy them using ETH.
- Decentralized Finance (DeFi)
Decentralized Finance involves using blockchain technology to provide financial services. DeFi is accessed through decentralized applications, which include DEX like Uniswap and Curve, decentralized lending platforms like Aave, decentralized insurance platforms, and DAOs.
- Airdrop
Airdrop is a marketing strategy that involves distributing crypto assets in exchange for referrals, email addresses, or contributions to the network. Airdrops are usually used to promote new crypto projects.
- Gas Fee
Gas represents the computational resources needed to execute transactions on Ethereum. The fee paid to validators to cover these resources is called the gas fee. The gas fee is made up of the Base fee, which is the least amount you can pay for executing a transaction, and the priority fee, which is your tip to the validators.
- Fear of Missing Out (FOMO)
FOMO is a market sentiment where investors fear that they are missing out on a profitable opportunity. This fear causes traders to open positions or delay closing trades without conducting proper research. The Fear of Missing Out is usually fueled by social media hype.
- Do Your Research (DYOR)
Before buying a crypto asset, you must do your research. Read the project’s whitepaper and website, check the qualifications of the team, and assess the asset’s utility.
DYOR helps investors make informed decisions.
Conclusion
Understanding important vocabulary is critical in the complicated world of Bitcoin investing. Whales, powerful owners of huge assets, have the ability to influence market sentiment. Altcoins provide alternatives to Bitcoin, frequently addressing its shortcomings. Beware of the 51% assault, which may disrupt blockchains by seizing control of mining power. Non-fungible Tokens (NFTs) offer a single point of digital ownership. Smart contracts execute themselves based on conditions. Decentralized Finance (DeFi) on blockchains reimagines financial services. Airdrops help initiatives by disseminating assets. In Ethereum transactions, gas costs cover computational resources. Fear of Missing Out (FOMO) motivates rash actions, but “Do Your Research” (DYOR) enables educated judgments.
