10 Cryptocurrency Terms Every Beginning Trader Should Know

Did you know that in 2019 the value of Bitcoin went up almost 400% in 150 days? The explosive growth of cryptocurrencies has attracted many to invest in them.

However, as cryptocurrencies are a relatively new phenomenon that has only appeared in the last years, many do not know how to enter the market.

If you are interested in trading there are some basic things that you need to know such as the vocabulary employed. What are the most important cryptocurrency terms?

Why not follow our in-depth guide below to find out the vocabulary you need to know.

1. Altcoin

Altcoin is an alternative currency, basically any alternative cryptocurrency to Bitcoin. There are reported to be more than 1000 altcoin currencies available at this time.

Some are simply alternative currencies, others have some slight technical differences, that is, they follow a different protocol to Bitcoin.

With so many altcoin currencies available today, it is important to research a currency before you invest in it. In addition to this, you can work with an investment company that will do the research for you and ensures that your money is invested as safely as possible.

2. Arbitrage

Cryptocurrencies may be traded on more than one exchange. This gives traders the opportunity for arbitrage. This means that traders can take advantage of price differences between exchanges.

For example, bitcoin may be selling for $10000 on one exchange and $10100 on another. A trader can purchase on the first exchange and sell on the second for a tidy profit. This is known as arbitrage.

3. Blockchain

Blockchain is a system that supports cryptocurrency actions. It consists of a distributed ledger made up of a series of blocks. Each block contains records of transactions.

The ledger is open for viewing by anyone involved in the project, the designers created it to be open plan and accessible. It is always secure because the transactions, or contents of the cells, are un-erasable after recording in the ledger.

This means a 100% transparent system that is 100% trustworthy. This is the reason why blockchain technology is perfect as a foundation for cryptocurrency financial trading. It is even beginning to impact other businesses such as shipping and supply chain.

4. Escrow

Escrow is one of a number of services provided to ensure that finances are stored as safely as possible. In this case, after a transaction or project has been started a third-party company would hold any financial resources until both parties are satisfied.

This is just one of many services available to assist new entrants to the bitcoin trading market. Others, such as Crypster bitcoin trading, aim to provide increased chances of making a profit whilst ensuring minimum risks.

5. Exchanges

These are marketplaces where traders can make digital currency transactions or exchanges. In exchanges, rates and prices of exchange are made available openly. This means that if a person wants to trade this is the fastest way to accomplish the transaction.

6. Initial Coin Offering

Every venture needs capital to start up. Often cryptocurrency companies raise this capital by means of an initial coin offering.

This basically equates to initial public offerings in other exchanges. The company will offer a limited number of digital tokens to the public at a base rate. The money received from initial purchases is used to fund further development.

7. Market Cap

Market Cap is a shortened form of market capitalization, a term referring to total market value.

This is easy to calculate. In the case of Bitcoin, take the number of BTC and multiply it by the currency’s current price.

8. Mining

Crypto mining is the name given to the creation of new items of currency or coins. In the case of Bitcoin, each time a new block is mined the network will release new bitcoins.

Mining is not cheap and requires an investment in electricity and hardware. However, the reward for the miner is shiny new bitcoin coins.

9. Pump and Dump

This is a clever, yet underhanded, strategy for inflating the value of a cryptocurrency. A group of individuals will communicate and work together to inflate the price of a currency. This could be by strategizing over a private social network.

Once the price has been inflated they will dump or sell their currency likely causing a crash. This is not necessarily illegal, however, it is unethical.

10. Satoshi Nakamoto

This is the name of the man credited with the creation of Bitcoin. In 2007 he wrote the code behind bitcoin. In 2008 he released the famous “white paper” regarding the use and purpose of bitcoin. Then in 2009, the first coins were mined.

Satoshi Nakamoto is not thought to be his real name. Over the years many people have claimed to be Nakamoto, however so far all have been disproven. In fact, no one knows whether it is an individual or a group of developers that created the initial bitcoin technology.

Whilst this is the name given to its creator, no one has ever found the creator of bitcoin. Therefore the legend continues…

Cryptocurrency Terms and Much More

If you are new to the cryptocurrency market there can seem to be so much to learn. Whether this is cryptocurrency terms or the latest market development, it can all seem very overwhelming.

If you are in this situation, we are here to help. We leverage our years of experience to provide informative and authoritative guidance on finance and business. Why not follow our blog to see how we can start helping you today.