1. Defi
Defi or decentralized finance is a blockchain-based form of finance that doesn't rely on financial intermediaries like banks or exchanges to offer traditional financial instruments like loans. Instead, Defi utilizes smart contracts on blockchains, with Ethereum being the most common platform used for this purpose.
2. DApps
DApp is short for a decentralized application or computer application running on a distributed computing system.
DApps are an application of distributed ledger technologies or DLT, such as the Ethereum blockchain. They are also known as smart contracts that self-execute on meeting pre-fed criteria.
3. ICO
ICO is short for initial coin offering, cryptocurrency industry’s equivalent to an IPO or initial public offering. A company looking to create a new coin, app, or service may launch an ICO to raise funds.
4. Staking and Lending
Staking and lending are two concepts used by crypto traders to earn tokens. Lending is when users lend their cryptocurrencies in return for interest payments. On the other hand, staking is when users pledge money to a network to help it validate transactions.
5. Gas Fees
Gas fees are payments made by users to compensate for the computing energy required in processing and validating transactions on the Ethereum blockchain. Ethereum miners who perform the computational work on the network are awarded this fee for their services.
Another associated term is gas limit, which refers to the maximum amount of gas you’re willing to spend on a transaction. Miners have the option to ignore transactions where they find the gas limit to be too low.
6. Altcoins
Altcoins are any crypto coins not named Bitcoin. Currently, Ethereum is the world’s largest altcoin.
7. Crypto wallet
A crypto wallet or a cryptocurrency wallet is an app that allows cryptocurrency traders to store and retrieve their digital currencies. While you don’t need a crypto wallet for cryptocurrency trading, it certainly helps keep all your digital assets together.
8. POW vs. POS
Investopedia defines proof of work (POW) as a decentralized consensus mechanism requiring network members to solve an arbitrary mathematical puzzle to prevent anybody from gaming the system. The proof of work concept is used widely in cryptocurrency mining for validating transactions and mining new tokens. However, working the system on scale requires enormous energy, which is why proof of stake (POS) was introduced as an alternative to POW.
Under the POS system, a person can mine or validate block transactions according to the number of coins held by them. Thus, the more coins owned by a miner, the more mining power they have. Some of the popular POS altcoins are ADA Cardano, TRX Tron, and CROM Cryptomusic.
9. Short and Long Positions
In crypto terms, long and short positions indicate the two possible directions of a price needed to generate profits or avoid losses. In a long position, you hope for the cost to increase from a given point. So, you “go long” and buy the cryptocurrency and wait for the price to rise. On the other hand, you expect the prices to decline from a given point in a short position. This means you “go short” and sell the cryptocurrency to avoid loss.
10. Technical Analysis
The crypto market is quite volatile, and you need a sound strategy to guide your investments. Technical analysis is a trading discipline that analyses statistical trends gathered from trading activity to identify trading opportunities.
Technical analysis is typically based on three assumptions:
- Prices move in trends.
- The markets discount everything.
- History tends to repeat itself.
11. Whale
In the crypto world, whales refer to individuals holding large amounts of coins of a particular cryptocurrency. As whales have large quantities of coins, they can exert enough power to manipulate the valuation of the said cryptocurrency.
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