Various terminologies used in Cryptocurrency
Coming to the cryptocurrency, there are some vital terminologies that must be known in order to get started with this digital asset for all digital transactions. Hence, following you will find complex terminologies in context of cryptocurrency all that made this marvel possible.
Vital terminologies associated with the Cryptocurrency :
- Blockchain –
The blockchain is a single piece of technology that is common across all cryptocurrencies. It is considered as holy grail of whole crypto world. Basically, blockchain is an online ledger that is completely tamper-proof. Once some transaction is recorded on this ledger, it stays on it forever.
- Transactions –
Any operation done on a crypto network is considered as a transaction. These transactions are recorded on the public blockchain and are available for everyone to view. Whenever you send a certain amount of crypto assets to someone else, a transaction hash is generated. You can use the blockchain explorer of a particular network and search for your transaction on that blockchain.
Whenever a transaction is done, it is sent to network and remains pending. During this state, transaction can still be forged.
- Miners –
The process used by most of cryptocurrencies to confirm and verify a particular transaction is called mining. Users use their computer’s processing power to solve complex mathematical problems, which are used to verify transactions. These users are called miners.
Every time a miner mines a block, new coins are minted on network. This is what adds new coins into supply. Miners are rewarded in terms of respective coins for their contribution to network. Miners also receive a fee from users and this fee is called mining fee.
Even though process of mining creates new coins, all cryptocurrencies are hardcoded to have a particular cap on maximum supply of coins that can exist on network. Once, maximum cap is reached, no newer coins will be minted. This ensures that network always has a finite set of coins.
- Crypto Wallet –
A wallet is a place where you keep your fiat money to pay someone you want.
In same way, a crypto wallet is a place where you store your cryptocurrency. A crypto wallet maybe just a piece of paper, software on your PC or phone, a file on a hard drive, or even a small hardware device specifically designed to store them. These wallets store your public and private keys. To receive coins, you need to provide your public key, and to be able to spend coins you need to use your private key. It is as simple as that.
There are numerous wallets available out there. However, not all of them give you access to the private keys. It is always advised to use only those wallets where you have access to private keys or to use hardware wallets that have been specifically designed for the purpose of storing cryptocurrencies only.
With cryptocurrencies being so valuable, it is advised that everyone uses a hardware wallet as it is the most secure way to store cryptocurrency. Ledger Nano, Trezor, and KeepKey are some of most popular hardware wallets.
- Ownership –
You might have come across phrase, “You control your own money when you use cryptocurrency, ” previously and may not have understood what it actually means. With cryptocurrency, you get two addresses; one is used to receive coin whereas, other is used whenever you want to spend or transfer a coin. The one used to receive a coin is called public key/address and can be shared with anyone.
The latter is called private key and it needs to be kept a secret. Without private keys, coins in your wallet are as good as being lost. No one on planet has access to your funds without the private key to your wallet. Since no one other than you know this private key, you are only one who has full control over your funds. This is one luxury you don’t enjoy when you keep your money in a bank account.
Hence, these are some of vital terminologies everyone of you must be aware of in order to extract benefits of this digital asset, cryptocurrency.