Crypto 101 : A Comprehensive Crypto Glossary for Beginners III

2024/03/29

Welcome back! Here’s another one of our Crypto 101 series on crypto glossary. If you've ever felt lost in the world of crypto jargon, you're in the right place. In this article, we're going to break down some essential terms in plain English, so whether you're a curious newbie or a seasoned hodler, you can navigate the world of digital currencies with ease.

1. Hot/Cold Wallet

Think of hot wallets like your digital wallet, provided by exchanges or third-party services – they're online and convenient for quick access but vulnerable to hackers. Cold wallets, on the other hand, are like your crypto piggy bank – they're offline and offer extra security since they're not connected to the internet, e.g. a flash drive or hard drive.

2. Gas

Gas is like the fuel you need to power transactions on blockchain network. Every time you make a transaction, like buying or selling Ethereum-based tokens, you'll need to pay a small fee in Ether (ETH) to keep things running smoothly. These fees compensate Ethereum validators for processing transactions and act as a safeguard against malicious activities on the blockchain.

3. DAO

It stands for decentralized autonomous organization. DAOs are like digital communities where everyone plays by the rules written into the project’s self-executing computer code. It's a bit like a virtual club where members work together towards common goals without a central authority calling the shots. Notably, Bitcoin (the project) stands as the earliest example of a DAO, illustrating the decentralized nature of blockchain projects.

4. Know Your Customer (KYC)

KYC is just a fancy term for the process some crypto exchanges use to verify your identity. It's like showing your ID when you open a bank account – it helps keep things secure and compliant to regulatory compliance. It's not universally mandated, but many crypto exchanges adhere to its regulations.

5. Distributed Ledger

A distributed ledger distributes transaction records to nodes on the network, recording data such as timestamps, sender, and recipient information, which everyone can view. The decentralized management of distributed ledgers is the cornerstone of supporting cryptocurrency operations.

6. Node

Nodes are like the messengers of the crypto world. They're computers or devices that help keep the network running smoothly by passing along information and verifying transactions, holding a copy of a blockchain.

7. Meme Coin

Ever heard of Dogecoin and wondered what that is? That's a meme coin. It's an altcoin based on internet jokes and memes. Meme coins are all about having fun in the crypto world while still being a legit form of digital currency.

8. Public Key

Your public key is like your crypto email address – it's the address of your crypto wallet that you share with others so they can send you crypto. It's safe to share because it's only for receiving funds, not spending them. Each one comes paired with a private key.

9. Private Key

Your private key (a.k.a secret key) is like the secret password to your crypto stash, you can access, manage your assets and authorize transactions with it. It's super important to keep it safe because whoever has it can access your crypto assets in your wallet. It's the key to your crypto kingdom!

10. Satoshi

Satoshi is the smallest unit in Bitcoin, just a fraction of a penny ( 1 satoshi is equivalent to 0.00000001 BTC), named after Bitcoin's mysterious creator, Satoshi Nakamoto. Nobody knows for sure who Satoshi Nakamoto is – it's one of the biggest mysteries in the crypto world!

And there you have it, part 3 of our Crypto 101 series on crypto glossary for beginners! By understanding these basic terms, you're already one step closer to becoming a crypto pro. So whether you're trading, hodling, or just curious about this fascinating digital world, remember that knowledge is power. Happy crypto-ing!

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