As far as investments go, cryptocurrency is still relatively new. Indeed, people have been trading stocks and shares and investing in real estate for decades. By contrast, crypto is only 20 or so years old – at most! As a consequence, there are lots of terms and things that people don't understand. The fact that cryptocurrency is a digital asset only confuses things – you get so many different technical terms.
We can't run through every single term in the industry, but we can pick out some of the key terms that you need to get to grips with…
We'll begin with a term that confuses many people. Blockchain is a technology that's used to help organize data and keep records safe. The data in these records can't be altered after it is recorded, and lots of information is stored in blocks. Blocks are basically where many cryptocurrency transactions take place and are combined together. The blocks then make up a chain of verified transactions, which is what a blockchain is.
Mining is a term you will hear a lot in the cryptocurrency space, but it's not something that the average investor will need to worry about. Effectively, when people mine Bitcoin – or any other cryptocurrency – it means that new ‘coins' are entering the circulation. This is done by using very complicated computer software that solves different problems to create the cryptocurrency. It sounds confusing, and that's because it is. Nowadays, you have organizations like My Blockchain Life that deal with mining for you. So, you don't ever have to worry about manually doing this yourself – unless you're bored and want to find out how.
This is one of the newer terms in the industry, and it refers to a digital contract of sorts that's written into the coding of a blockchain. The terms and conditions are part of the coding, and it works like a normal contract. The whole idea is that a smart contract removes the need for any middlemen, so transactions can be completed faster and more cheaply.
You see this thrown around a lot, and it has nothing to do with the Italian car manufacturer. Instead, fiat currency refers to all the traditional forms of currency seen throughout the world. USD, for example, is a fiat currency. This means it is controlled and distributed by the government, making them completely different from cryptocurrencies.
No, it's not what you think it means! In the cryptocurrency world, mooning is a way of describing something that's growing in value. It's a term that was coined online, and many people now talk about sending things ‘to the moon.' If you ever see someone talk about a cryptocurrency that's mooning, you should pay attention as it means it is on the way up.
For those of you that are serious about crypto investments, the best advice is to read up on all the different terms. Think of these ones as your starting point, then go out and find other ones. When you understand what people are talking about or referring to, it makes your whole life so much easier.