Cryptocurrency: Its Future and Benefits

Getting into the crypto realm can be scary initially for a variety of reasons. One is the intimidating issues surrounding the subject and the seemingly innumerable terminologies.

Here, we'll be simplifying blockchain and cryptocurrency terminology to broaden your knowledge and facilitate your understanding of this topic. Starting with arbitrage and on to zero-knowledge proofs, we'll review some essential and popularly used phrases and expressions in the cryptocurrency world.

What is Blockchain in Cryptocurrency?

Blockchain technology encompasses several areas and practices such as money and finance, computer sciences and cryptography. Cryptocurrency and blockchain are known to accommodate terms across multiple languages into one. Furthermore, it is known worldwide. Hence, terms in cryptocurrency are dependent on regions.

Terminology in blockchain also cuts across several cultures. If you are unfamiliar with blockchain, odds are some references will come off as rather vague. But, when you are well acquainted with the popular terminologies, you'll come to understand the industry more.

Cryptocurrency Terminology

Some popular cryptocurrency terms include but are not limited to:

Airdrop: This is a strategy for marketing that crypto projects use in the distribution of tokens in a bid to make them popular and increase their adoption. It involves distributing their native cryptocurrency to present to potential users for free. Through giving out free coins or tokens in an airdrop, platforms desire to not only promote their services but also create value for potential or current users.

Altcoin: A token or cryptocurrency which is not bitcoin is known as an altcoin. These not so popular cryptocurrencies are separated by market cap and utility.

Application Programming Interface (API): This kind of software allows communication between two applications. For instance, APIs can obtain information on weather or prices from one application and provide viewing it in another.

Arbitrage: This simply refers to profiting from price differences between markets. An instance would be the case of a token selling for a lower price on one market or exchange which could be purchased and resold at an increased price on other exchanges for profit.

Block: Within the blockchain, data on transactions are stored within a data structure known as blocks. Blocks store transactions awaiting validation on a blockchain network. On validation of the data, a block is appended to the blockchain. Furthermore, this process cannot be altered without the agreement of the entire network - hence the term immutable.

Block Confirmation Time: This refers to the time taken to record a transaction on the blockchain once it is broadcast. Usually, this is a standard to measure the average speed of a network and the duration taken for miner nodes to collect transactions.

Blockchain: A blockchain is a type of database for recording transactions distributed across a network of nodes. Public blockchains are not centralized. While private blockchains have many of the same principles in common, they're across a permissioned network.

Coin: On a general note, all cryptocurrencies are basically coins. But there's an existing distinction between tokens and coins. In more technical terms, coins are first-generation cryptocurrencies that are original to certain blockchains.

Cold Storage: This is an offline wallet for keeping cryptocurrencies. On a general note, cold storage wallets are physical devices often similar to the popularly known USB storage devices.

Cryptocurrency: Cryptocurrencies are digital currencies making use of cryptography and blockchain technology. They are assets and an exchange medium. Also, they are not controlled by a government or banks.

Decentralization: Decentralization refers to a setting whereby activities are distributed outside the control of a central authority or single point of failure.

Benefits of Cryptocurrency

Cryptocurrencies have numerous benefits. They include but are not limited to:

● 24/7 markets
● Freedom associated with transactions
● Cross-border payments
● Portfolio diversification
● Inflation hedge
● Low risk, high security
● Ease of transactions
● Exponential industrial growth

Future of Cryptocurrency

Cryptocurrency has become known worldwide in the last decade, although much surrounding this evolving technology is vague and a lot is still to be learned. There are however numerous concerns and worries swirling around the technology and its ability to disrupt the already existing generational traditional financial systems. The future of cryptocurrency is still very much in question as there have been both critics and supporters of this technology in the last years. Although it is still evolving and the human race has no doubt seen the numerous benefits it has to offer, there's still so much to be discovered in the near future including policies that would affect its acceptance or rejection worldwide from the government.

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