Being new to blockchain is seemingly one of the most complex things these days. As a matter of fact, one of the main reasons people are scared to expose themselves to blockchain is because of the many difficult to imagine terms, used in the industry.
You get bombarded with things like FUD, HODL, hot wallet, everyday and it’s get really tiring to wrap your head around these terms.
I remember when I was new to the industry, like you. I felt so frustrated, coming across these words and having no clue what they meant, even though they are English words. It seemed like I was learning a new language sometimes.
This article is inspired by those moments in my life. I have deliberately made them short and as easy as eating your favourite meal.
In no particular order, the below are the terms and their meaning.
To me, this was the first point of confusion. I was confused because, I couldn’t reconcile what the relationship is between ‘block’ and ‘chain’. It took me sometime to understand that a Blockchain form of record keeping that is done digitally. It is the rock on which cryptocurrencies is built upon.
Blockchain is the result of successive blocks that build upon one another, producing an everlasting and unchangeable ledger of transactions. If you want to picture what a blockchain is in your mind’s eye, imagine a long train that makes anything you record on the body of it couch permanent and irreversible.
A coin is a store of digital value that exists on a and blockchain or cryptocurrency network. Some cryptocurrencies share the same name for both the network and the coin. Take for example, Bitcoin. Others may have different names for each, like the Ethereum blockchain, which has a native coin called ether.
The word token is one of the most popular words in the industry. It has a broad meaning as many people use it, as a matter of context. I don’t want to further bombard you with double meanings of words. So, I’d define the it in the most common use case.
Tokens are cryptoassets or cryptocurrencies that run on top of another cryptocurrency’s blockchain. You’ll encounter this usage if you become interested in decentralized finance (or DeFi). While a cryptocurrency like Bitcoin has its own dedicated blockchain, DeFi tokens like Dai and ENJ run on top of, or leverage, an existing blockchain, most commonly Ethereum’s.
4. Decentralised Finance (DeFi)
Decentralized finance, also known as DeFi, uses blockchain technology to manage financial transactions between two or more people, without the need for bank or any third party agent.
5. Stable Coin
Stable coins are cryptocurrencies that are pegged to the normal government backed currencies like the USD, GBP etc. These coins are less volatile than the traditional crypto currencies.
A node is just another fancy word for a computer. It is a computer connected to a blockchain that can run functions like sending and receiving data to other computers on the blockchain.
A fork is an event that happens whenever a community makes a change to the rules that governs a blockchain. When it happens, the chain splits — producing a second blockchain that shares all of its history with the original, but is headed off in a new direction.
Altcoins are coins that are not Bitcoin. This means that all other coin asides Bitcoin is an altcoin. Ethereum is one of the most popular altcoin out there.
Bitcoin is the first and most mainstream crypto currency in the world. Bitcoin was launched on Jan. 3, 2009 by someone who used a pseudonym Satoshi Nakamoto. While its value has skyrocketed steadily since the day of it launch, it has also seen fluctuations. Bitcoin is currently trading at $62000 to 1btc as at the time I’m writing this article.
10. Initial Coin Offerings (ICOs)
Before I explain what an ICO is, I want to paint a picture in your mind. Imagine you have an idea to build the next big thing in crypto. Let’s call this idea, Javacoin. You have this Javacoin idea and you are sure it will take the world by storm, but unfortunately, you don’t have the money to build Javacoin. So, you seek funds from people who believe in your project by offering them an ICO.
Now, let’s say 20 people saw and liked your ICO. Because they think, your Javacoin will truly take over the world and make them stupidly rich in the future. They buy your ICO, there raising funds for you.
Simply, an initial coin offering (ICO) is a capital-raising activity in the cryptocurrency and blockchain environment