The virtual currency sphere is advancing by leaps and bounds. Buying and selling cryptocurrencies no longer surprise anyone. Leading economists predict that soon we will be paying for basic things with bitcoins instead of traditional currency. Undoubtedly, in the age of progressive technologies, it is shameful not to know the basics of digital coins.
Fly-pay.io has prepared a quick guide to terms without which no conversation about buying and selling cryptocurrencies can do.
Mini Glossary on Bitcoin
Cryptocurrency is a complex body of knowledge consisting of specific operations and actions. Understanding these basics makes it easy to grasp the essence and key aspects of cryptocurrency. Let's start with the fundamentals: to navigate the network of the most popular virtual currency—Bitcoin, you need to know four basic things.
Block. In simple terms, a block is a kind of ordinary registry. It operates on the principle that information about each transaction is recorded and placed in a file of 1 MB. The subsequent block contains data from the previous one. A block cannot be changed or corrected.
Blockchain. The entire history of transactions made in the Bitcoin system cannot fit into one block because there is a size limit of 1 MB. Therefore, several informational "bricks" are created. All blocks are connected and arranged into a unified chain, commonly known as the blockchain.
The blockchain carries all the data about every transaction ever made—buying, selling, and exchanging bitcoins. Thanks to this unique information, a trader can always check which operations were performed in the system, such as whether funds were credited to an account.
Nodes. Any electronic device participating in the Bitcoin system is called a node. It contains a copy of the blockchain and participates in confirming or rejecting transactions. A node «reacts» to a specific block by comparing «responses» from other nodes. For example, if it detects rejections from certain nodes, it will not recognize the block either.
Mining. The term denotes the «extraction» of digital currency. During mining, a computer solves mathematical problems, finding a specific code sequence. Correct answers result in the extraction or mining of coins.
A miner is a person who keeps the entire crypto system afloat. They engage in mining, creating new blocks, adding them to blockchains (confirming transactions), and issuing bitcoins as rewards.
Bitcoin miners operate on powerful computers capable of solving complex algorithms and obtaining coins. Upon creating a new block, the person receives 12.5 bitcoins as a reward.
Mini Glossary on the Bitcoin Economy
Altcoins. Alternative coins are any cryptocurrency traded on exchanges other than Bitcoin. As of today, experts identify about 1380 altcoins.
Initial Coin Offering (ICO). The operation of ICO resembles traditional Initial Public Offerings (IPOs)—it is the accumulation of funds and investments for business development. ICO issues virtual tokens that can be bought, sold, or exchanged for other altcoins.
HODL (Holding). A fairly common colloquial term in the crypto world. It implies the unequivocal position of a bitcoin owner who does not want to sell their coins. In this case, long-term or eternal investment is implied. A true holder will not sell their coins until the last bitcoin is mined. And there are only 21 million, by the way.
FUD. If the crypto community talks about FUD, it means unimportant information that generates rumors, which will inevitably affect the bitcoin exchange rate. For example, FUD news: Chinese authorities banned cryptocurrency mining. The information remained at the rumor level, not confirmed by official sources, but influenced the fluctuation of the exchange rate.
SCAM. The Russianized term SCAM means fraud or scam. It has firmly established itself in the virtual environment of investment internet projects that often collect money for their development and then disappear. In such cases, manipulations are justified by hacker attacks or freezing of funds.
Fly-pay.io is confident that now, armed with the basic terms from the sphere of buying, selling, and exchanging cryptocurrencies, you will impress with your knowledge in any conversation.
