Top Cryptocurrency Terms and What They Mean

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The downward spiral of FTX and its former CEO, the “Crypto King”, has garnered massive media attention and thrust cryptocurrency conversations back into the spotlight.

But for many, the language of crypto – bitcoin, blockchain, crypto exchange – still remains cryptic.

Do not worry.

If you’re hearing these words for the first time or just need a refresher, here are some key terms and what they mean…

Bitcoin

Bitcoin is a type of digital currency (cryptocurrency). Similar to traditional currencies, such as dollars, pounds or euros, there are many types of digital currencies. Other popular ones include Ethereum and Dogecoin. Unlike traditional currencies, however, Bitcoin is not backed or controlled by centralized financial institutions. Instead, it’s decentralized. This makes it popular for people who believe decentralization can bring financial freedom, but it also makes it extremely volatile – its value rises and falls with Bitcoin buyers and sellers.

blockchain

Blockchain is the technology that underpins all cryptocurrencies and many other products like NFTs (Non Fungible Tokens). All purchases, sales and exchanges of cryptocurrencies are recorded on this virtual spreadsheet, which is organized in blocks linked together in a giant chain. Each cryptocurrency transaction is individually recorded on the blockchain by an extensive network of volunteers verifying its authenticity using computer programs. Since the blockchain is decentralized, it is not stored on a machine or network or owned by a single company. The information is accessible to everyone.

Cryptocurrency

Cryptocurrency is the term used for digital currencies like Bitcoin that exist on the blockchain.

Crypto exchange

A crypto exchange is the digital platform where investors can buy, sell and trade cryptocurrencies. Similar to traditional investing, a crypto exchange acts as a brokerage where people can transfer traditional money, like pounds or dollars, from their banks to cryptocurrencies like Bitcoin or Ethereum. Most transactions come with fees.

Crypto wallet

A crypto wallet is a place where investors hold their cryptocurrency. It stores virtual assets much like a traditional wallet stores money. There are two types, a hot wallet and a cold wallet. Hot wallets are connected to the internet, and therefore more accessible for quick transfers and easy access. Cold wallets are physical devices such as specially designed USB drives that store cryptography offline, usually for safer, longer-term storage.

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