Getting into the cryptocurrency world means implies that you need to understand the industry background and some of the basic technical terms and concepts. So, before you get whisked away by this interesting and thrilling space, pin down the “need-to-knows” and jargon. This is recommended, especially if you start investing and taking your hard-earned fiat and using it in the crypto sphere. TC World News
A brief background
So, let’s sum this up. The origins of cryptocurrency go back as far as 1998 and a computer scientist named Nick Szabo who developed Bit gold but, the actual creation of a viable cryptocurrency was ten years later in 2008, by Satoshi Nakamoto, whose whitepaper outlined how a linear, time-stamped network could fuel a cryptocurrency called Bitcoin.
Thus, the coin/currency/token/digital asset (these terms are interchangeable) is stored on the chain — a distributed ledger. The main feature of true cryptocurrency is that there is no central control over the currency, unlike banks or governments. You do, however, get centralized cryptocurrencies where there is a measure of control exerted. Check out this list of centralized and decentralized crypto. The blockchain and cryptocurrency industry’s overall sentiment and purpose are to be a democratic alternative to traditional currency.
As you dabble and delve into crypto, you will become very aware that there is a strong community backing this new industry. The community has a powerful ethos and purpose related to individual control of their financial destiny and provides financial access to users that may not qualify for traditional financial services.
Decentralized blockchain networks are chains of validation nodes. These nodes are basically stakeholders that verify transactions. There is no central authority, and the system is set up based on parameters determined by the code upon which the blockchain operates. Several blockchains exist, and they have their own currencies — for example, the Ethereum blockchain fuels the ETH cryptocurrency.
It is worth noting the players involved in the cryptocurrency culture or even subculture.
Un-jumbling crypto wallet jargon
Understanding the background, how the tech was built, and who continues to maintain, participate in, grow and invest in the blockchain and cryptosystem should give you an idea of where or how you want to fit in. So whether you aim to mine crypto with the view to becoming a venture capitalist that supports and funds exciting and innovative projects or if you want to simply trade crypto or perhaps yield farm, everyone has to start in the same place — getting the best crypto wallet. Without a crypto wallet, no transactions can be made.
And that is where this list will begin. It will have a dual purpose in that it will offer an explanation for terms and sequentially transport you along your journey for entering the crypto sphere.
1. Decide on a wallet
Ï Hardware and software wallets
Hardware wallets are physical storage devices like an advanced USB that stores your currency. A software wallet is basically like online banking. To access your crypto, which can also be called digital assets, you need to provide the private keys which open access to your currency and give you the ability to transact.
Ï Custodial and non-custodial wallets
A custodial wallet is usually run by a central or semi-centralized blockchain, just like a traditional bank. A centralized wallet stores your private key and provides backup and security for your crypto. For some starting in crypto, this can be reassuring.
Non-custodial wallets are software wallets to which you are the only one that has the keys to access the data. No one but yourself has custody of this information, so if you lose the private key information, there is no way to recover the wallet’s assets.
A non-custodial wallet can be referred to as a Decentralised Finance or DeFi wallet. This is true decentralization of financial power and responsibility.
One of the best Defi wallets on the market is the Eidoo wallet, which gives you access to a full DeFi ecosystem through their DeFi wallet app, which also integrates a DeFi Visa Crypto Card or the eidooCARD.
Ï Public and private keys
In case you hadn’t realized as yet, keys are special passwords that are cryptographic. There is a public key that is matched with a private key. Whatever is encrypted with a public key can only be decrypted by the private key. When signing up for the wallet of your choice, you will be guided through the process of securing your keys. It is essential to keep the private key somewhere safe.
Ï KYC — Know Your Customer
The blockchain and crypto community, as you know now, are driven by decentralization, protecting privacy, and, to some extent, anonymity. For the most part, the community prefers anonymity, but crypto users, when utilizing a crypto wallet, need to verify their identity when interacting with Fiat, for regulatory purposes. The process of verifying your identity is called KYC and is aimed at curbing illegal financial acts like money laundering, tax fraud and financing terrorism or illegal activities.
2. Buy and trade some crypto
Ï Transaction fees
Once you have your wallet, you will be able to buy the cryptocurrency of your choice using fiat. Fiat currency is normal traditional money — the currency of where you live. Any transactions conducted have a fee associated with them just as a normal bank but crypto fees are called gas fees. The Gas price is the amount you pay for every unit of gas just like the cost for a liter of petrol for your car.
These fees enable and power the transactions and are usually paid for in the form of a utility token depending on the blockchain — more about that below under tokens.
Different types of transactions require differing amounts of gas depending on the degree of computational difficulty. Also, the term gas limit refers to how much you are willing to spend on a specific transaction, if you don’t specify enough gas the transaction cant be completed and will fail but because work has been done on the transaction the gas you did specify won’t be re-imbursed.
Ï Exchange
Usually, you will buy or rather exchange your fiat on a crypto exchange. There are several different exchanges — they are the marketplaces where trading currencies happen almost like a stock exchange or changing your Euros into another currency on the forex exchange. It should be noted that there are centralized and decentralized exchanges, and as in the case of the wallets, the former has a central body that controls it. Simultaneously, the latter is distributed to nodes that uphold a central smart contract, which underpins all exchange operations and has been agreed upon by all stakeholders.
There are so many types of cryptocurrencies available. If you are part of any crypto communities on Telegram or follow crypto enthusiasts on Twitter, then knowing what they are generally referring to is very helpful. For example, Altcoin can’t, and won’t be found on any exchange. It is a collective name for all coins that are not Bitcoin.
Tokens represent a unit or portion of a cryptocurrency and may be considered securities in some jurisdictions depending on the specific rights of the token holder. Typically when a new cryptocurrency is introduced, parties who are funding the new currency are given tokens representing their participation, or investment.
