The world of blockchain is new and exciting, but it can also be confusing. The terminology used in the crypto space does not always translate well to other fields, and sometimes even experienced traders can get confused.
So if you’re a new trader who wants to master your market before investing, this is the perfect article for you! You’ll go over cryptocurrency, tokenization and everything else you need to know about trading (and investing) in order to make smart decisions about money.
Cryptocurrency
Cryptocurrency is a digital or virtual currency that uses cryptography for security. A cryptocurrency does not physically exist but can be used for online trading. It acts as a medium of exchange between two parties, in this case, the cryptocurrency and the government-issued currencies such as the US dollar or euro. Everyone must adhere to the crypto protocol in case they are using them.
Token
A token is a unit of cryptocurrency. It is also a part of blockchain technology, which is the underlying structure for digital currencies like Bitcoin and Ethereum. A token represents the ownership of a particular asset or utility, such as an investment in equity, debt securities or real estate.
A cryptocurrency can be considered an example of security token because they are backed by assets such as gold or oil reserves. The term cryptocurrency can apply to any form of digital currency that uses cryptography as part of its security measures.
Exchange
An exchange is a platform for trading cryptocurrencies. It’s an online website where you can buy, sell and trade cryptocurrencies in exchange for other digital coins or fiat currencies (like the US dollar).
Exchanges may also offer additional features such as margin lending (or margin trading), future contracts that allow investors to speculate on the price movements of certain assets such as stocks or commodities like gold; futures contracts are traded through exchange-traded funds (ETFs), which issue shares representing interests in underlying assets.
Initial Coin Offering (ICO)
Initial Coin Offering (ICO) is a means of crowdfunding through the release of a new cryptocurrency or token to fund project development. ICO is a popular way to raise funds for new cryptocurrency projects. During an ICO campaign, a percentage of the newly issued cryptocurrency is sold to investors in exchange for legal tender or other cryptocurrencies such as Bitcoin.
Mining
Mining is the process of adding transactions to a public ledger called the blockchain. The blockchain is a chain of blocks which contain data on all the transactions that have ever taken place on the network. The process of adding transactions to the blockchain is called mining.
Miners are rewarded in bitcoin for their services and are usually paid in transaction fees and newly minted bitcoins.
Wallet
A wallet is software, hardware or paper used to store cryptocurrencies. Wallets will be kept in a secure place like your house, office or safety deposit box. You can use different types of wallets for storing your cryptocurrency depending on the type of currency you are using and the convenience of use.
Hardware wallets are devices with special features that allow you to store and use cryptocurrencies securely offline.
Blockchain is a powerful technology that can revolutionize the way you do business. It’s not just about cryptocurrencies. This technology has the potential to transform industries like healthcare, finance and even governance. But before you can start working with it, you need to understand some key concepts and terms related to blockchain.
