Blog Crypto A Cryptocurrency Primer: Guide to the Lingo

A Cryptocurrency Primer: Guide to the Lingo

date September 16, 2022 time 5 min read 104 views

It can be hard to understand the terminology surrounding cryptocurrencies and blockchain technology. This cryptocurrency primer will demystify the jargon and help you better understand how these two exciting developments work. We’ll go through some of the key lingo and break it down so you can confidently join the next crypto conversation.

Cryptocurrency Primer: A Glossary

In our cryptocurrency primer, we’ll take a in-depth look at some of the key terms you need to know. Once you’ve got these basic terms, you’ll have a foundation to learn and develop your crypto knowledge.

Cryptocurrency

Cryptocurrencies are a form of digital money that uses cryptography to allow users to send and receive payments securely without the need for a third party. Cryptocurrencies are decentralized, meaning that no single entity controls the currency and transactions. Each user has a copy of a “blockchain” which contains the details of all the transactions that have taken place in the past. We’ll cover blockchains later on.

Cryptocurrencies are a form of digital money set to fuel Web3.
Cryptocurrencies are a form of digital money set to fuel Web3. (Source: Unsplash)

In essence, cryptocurrencies are the fuel that runs the blockchain. You can use crypto to exchange goods and services without the involvement of traditional banks or financial institutions. 

Examples of Cryptocurrencies

Bitcoin: The first cryptocurrency to emerge on the market back in 2009. It was the first real application of blockchain technology and the model on which other cryptocurrencies are based.

Ethereum: The second largest crypto by market cap, launched in 2015. It was one of the first smart contracts platforms with which you can develop and run your own applications.

USDT: A stablecoin which is pegged to the dollar, making it useful for transactions or as an investment. The Tether project launched in 2014 and since then has become one of the world’s largest providers of digital tokens.

Blockchain

Blockchain technology is a distributed database maintained by a network of computers connected via the internet. A blockchain records every single transaction on the network and comprises blocks of data containing individual transactions in chronological order. Each block also contains its own unique hash code, which helps to identify it as a valid transaction. This ensures that each transaction is 100% secure and verified and cannot be modified in any way.

The main appeal of blockchain is the security it offers to all its users. As the technology is decentralized, there’s no central authority overseeing the transactions. Because of this, users are theoretically in control of their own funds and can make payments without any restrictions. 

Crypto Wallets

Crypto wallets are digital storage facilities that allow you to store, send and receive digital currency. There are two different types of wallets: Cold and hot wallets.

Hot wallets are great for convenience and ease of use, but not the most secure option.
Hot wallets are great for convenience and ease of use, but not the most secure option. (Source: Unsplash)

• Hot wallets refer to accounts connected to an online exchange where you can buy and sell your cryptocurrencies in exchange for fiat currency. These are convenient because due to its accessibility and instant transactions. The downside is the vulnerability to hacking and digital theft.

• Cold wallets are those accounts that are offline and stored on your computer or mobile device. These are far more secure than cold wallets, due to various protections such as 2FA logins and passwords. However, they are not as convenient if you want to make regular and quick transactions.

Decentralization

The definition of decentralization is the distribution of power away from a central point to smaller organizations or individuals in the community. This concept is applied to cryptocurrencies by breaking large networks into smaller parts to ensure the complete decentralization of the network. This means that no single organization or individual controls the currency, and all users have access to the same information allowing them to make independent decisions about how it is used and by whom.

Staking

The decentralized model is supported by crypto staking, where holders of a particular cryptocurrency can volunteer to have their holdings used to secure and maintain the network on which the currency is based. In return, they receive a reward for securing the network in the form of new coins distributed among the network participants. The amount of reward depends on the amount of stake an individual holds. The more tokens held, the greater the reward.

You can stake MCT – MyConstant’s native token – and earn up to 18% APR for a 180-day term. 

Proof-of-Stake (PoS)

Proof of Stake is a method of validating transactions on a blockchain that involves using a validator’s holding of coins as a “stake” in the system. Each validator must have a stake in the system to process transactions and participate in the consensus algorithm, which governs the validation of transactions on the network.

Proof of Stake was developed as an alternative to the Proof-of-Work consensus which shaped much of the early crypto projects.

Proof-of-Work (PoW)

– PoW requires miners to complete computationally intensive tasks to be rewarded for their work. Miners compete to solve cryptographic puzzles and receive newly generated coins in exchange. The process is called mining because each miner is like a prospector in search of valuable resources like gold. However, instead of valuable minerals, they search for digital treasure in the form of blocks on the blockchain.

Bitcoin is a PoW network where miners spend thousands of dollars of equipment to carry out intensive computational processes to validate transactions in exchange for newly generated bitcoins. This has led to serious environmental concerns about the Bitcoin network, which requires more energy than entire countries.

Crypto Lending

Crypto lending is the act of borrowing or loaning digital assets in exchange for a percentage return on those assets. The borrower must put up collateral to secure the loan. If the loan is not repaid, the lender has the legal right to claim the collateral and sell the digital asset to recover the funds owed.

It can also mean the crypto is used as collateral for a loan that is given in the form of fiat currencies such as dollars or euros. This type of lending can benefit borrowers because it allows them to obtain more fiat currency at lower interest rates than they can through traditional banking institutions and with more flexibility. 

At MyConstant, you can earn up to an inflation-busting 15% APY through crypto lending.

Invest in MCT

Now that you’ve finished the cryptocurrency primer, why not take a look at our new native MCT token

It allows you to convert between multiple cryptocurrencies and access all kinds of other financial products, including investing and staking—all with a single coin. This way, you can experiment with different projects and ways to earn money.

Perks include:

  • Up to 18% APR from staking
  • 20% more interest from MyConstant investing products 
  • 20% reduction in borrowing fees on MyConstant 
  • 50% discount on NFT fees through MyConstant 
  • 50% discount on crypto swap fees on MyConstant 

It’s now available on PancakeSwap for US users, and everyone else can access it directly through MyConstant. Sounds good? Sign up today to start benefiting from your new knowledge acquired in our cryptocurrency primer.

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George Schooling

George Schooling

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