Today we’re going to go through the ABCs of a crypto education. We’ll cover a number of different terms you need to be familiar with to invest in and understand cryptocurrency.
A is for…Altcoins. Your crypto education begins with the thousands of coins that are not Bitcoin. There are an estimated 4,000 altcoins being traded today. Some, like Ripple and Ethereum, are more well-known than others, but each of these coins represents an investment opportunity.
Our crypto education continues.
B is for…Bitcoin, the most well-known and valuable of all the crypto coins. One of the most famous Bitcoin purchases happened on May 22, 2010, when a developer bought 2 pizzas for 10,000 bitcoins. Those bitcoins are worth well over $67 million US dollars. Bitcoin has been around since January 2009.
C is for…Coinbase, one of several U.S.-based coin exchanges where traders can buy and sell cryptocurrencies. Operational since 2011, they have over 13 million users and are considered a secure exchange.
One of the most overlooked and misunderstood elements by newbies of crypto education comes in next.
D is for…distributed ledger. This is better known as the blockchain, essentially a database that is used to transfer coins between wallets and ensures that cryptocoins like Bitcoin can’t be counterfeited.
E is for…Ether, one of the most impressive and interesting altcoins in existence, as it is used to operate the Ethereum blockchain platform. In January it reached over $1,300, an increase of over 12,000%. Try getting those returns on our 401K.
F is for…fiat. We know this is a crypto education glossary, but you have to know fiat is how the cryptocurrency folks refer to your paper dollar bills and coins. There’s nothing we can add to your crypto education with the letter G, so let’s jump ahead.
H is for…HODL, an investment strategy where owners hold on to coins for the long term. The term actually comes from a famous typo in a bitcoin forum.
I is for…ICO, an initial coin offering. This is generally a situation where a company raises fiat by issuing tokens. In best case scenarios, those tokens gain value, and can be traded on the crypto exchanges.
We’re going to jump ahead in the crypto education alphabet to one of our favorites.
M is for…mining, the way coins are verified and added to the blockchain. That may be confusing if you’re new to cryptocurrency, but it is an important part of your crypto education. One of the things that gives coins their value is the limit to the number of coins in existence. Using significant computing power, anyone can “mine” the blockchains and discover new pockets of bitcoins. However, the more coins that are found, the more difficult it is to find mine coins.
We’re nearly done with your ABC crypto education, but we’re making one last stop in W, because they are really important.
W is for…wallet, where you store your digital assets. There are multiple types of wallets, and if you are going to own and trade cryptocurrency you’ll need to decide which type makes sense for you. Two of your options are the online wallet, which you can access via the internet, and the mobile wallet, which you access from your phone. You can also have a desktop wallet, which is more secure but less convenient, or a hardware wallet, which looks like a disk-on-key. Finally, there are paper wallets, which are saved offine on paper. Each wallet has pros and cons, although for investors looking to frequently trade, paper wallets can be the least convenient.