Cryptocurrencies are very enticing at the moment. They tend to appreciate in times of crisis and people are starting to truly see them as stores of value. More people know about them too and understand their applications. With that being said, the wide majority of people only have a vague idea of what crypto is.
There is also a lot of jargon used in the crypto world, and if you don’t understand it, you won’t understand much of the discourse around cryptocurrencies.
Here are some of the crypto terms you should know before investing.
FUD is kind of a conspirational term used in cryptocurrency, but you’ll hear it a lot and many people in crypto circles believe in it. FUD stands for “fear, uncertainty, and doubt”. It stems from the belief that major banking institutions and the structure that supports them (mainstream media, market analysts, observers, etc.) are either actively trying to kill crypto with misinformation or will discredit it instead of admitting that they know nothing about it.
You may or may not believe in FUD, but you still have to pay attention when people call it. If some announcement is largely discredited as FUD by the people, then you can expect it to not have as much of an impact on the market. So, always verify announcements and news with the public and how much credence they give to them.
Exchanges in crypto are roughly like they are in the stock market, but not exactly. First of all, pretty much anyone can start a crypto exchange and they’re not as tightly regulated as national stock exchanges. Another difference is that exchanges will be in charge of storing some of the assets that are transacted through them.
This is why it is very important to choose a good exchange when trading crypto. You have to go with an exchange that is easy to use, secure, and has been around for a long time. Cryptology is a good example of a trustworthy exchange and they take the security of investors and assets very seriously. There are many others, however, so make sure that you do your research on any of them before picking one.
The term “cryptocurrency wallet” confuses many people but is one that you absolutely have to understand before starting. First of all, a crypto wallet doesn’t really “store” cryptocurrency per se. It’s only used as an identifier to authenticate transactions on the blockchain.
A cryptocurrency wallet is a combination of two cryptographic keys. One represents your public address, and the other one is your private key, which has to be hidden from the public.
Try to think of your public address as your street address and your private key as the key to the mailbox. People can see your address and see who you sent crypto to and who sent crypto to you, but only with your private key will you be able to access that money.
When choosing wallets, you’ll be faced with many choices. You can pick a software wallet that can be installed on the device of your choice or a hard wallet which will be a piece of hardware disconnected from the grid.
Both have their pros and cons. Hard wallets are harder to hack while soft wallets are seen as more convenient. You can use both at the same time too. So, learn about them in detail so you can choose the right one for your needs.
These are all words and expressions you’ll hear when navigating crypto spaces. There are many others, however, so don’t make the mistake of going in blind, and take the time to study the markets and terms before you enter the space.