5 Important Crypto Terms For When You're Just Starting Out

Are you just getting started in crypto or looking for a recap of the industry's key terms? In either case, head here for our first primer on the most important crypto terms to know.

Ian LeViness

2021-04-21 3 min read

When you read about Bitcoin for the first time, you'll find yourself left with more questions than answers. Through personal experience, I can say that the key reason is the crypto industry loves to use a heaping amount of jargon. Here, I aim to begin to break down the 10 most important terms to know as you dive further into the crypto-sphere!

1. Cryptocurrency- An asset that lives on a blockchain and/or inside of a technical framework that works like a vault and mint, called a smart contract. Cryptocurrencies exist in the form of "hashes" or randomized letters and numbers that are stored on the blockchain(or smart contract) they're tied to. Typically, the consensus is that they gain their value through supply and demand plus network effects, meaning that in general, the more people that use them and/or want to use the services they might be tied to, the better. Some cryptocurrencies, like Bitcoin, also gain value through publicly verifiable and perpetual scarcity and others like Ether, also gain value through their usage as the fuel for a network.  

2. Blockchain- A decentralized, distributed database. Think of a blockchain like a spreadsheet that's owned by many users at once, instead of one entity. Now add in the fact that it can create and facilitate as well as track the movement of valuable assets and you've got the gist of all of its' functionality. For the most part, blockchains tend to be open-source and public, therefore, anyone can usually get involved in running them, provided that they have the right hardware(a powerful enough computer). 

3. Bitcoin- The first cryptocurrency ever and the network that it depends on. Just like any cryptocurrency, Bitcoins exist on a blockchain as hashes. When someone purchases a Bitcoin(or any amount of Bitcoin), that "hash" is tied to the wallet of the buyer, publicly verifying who owns the Bitcoin(or Bitcoins) involved, forever. Generally, the consensus in and out of the crypto industry is that Bitcoin gains its' value by being the first and the most secure cryptocurrency, as well as being an endlessly portable store of value and safe haven. In other words, Bitcoins can be moved anywhere in a matter of moments in only a few clicks, and over the long-term, crypto's lead currency has also demonstrated progressively less positive correlations with other, more traditional assets like stocks and gold.  

4. Hash- A randomized string of letters and numbers. Generally, hashes make up most of the data living in the crypto-sphere including cryptocurrencies themselves, as well as all of the transactional data tied to them and their networks. Hashes are generated using algorithms like the SHA-256 algorithm, all of which are one-way mathematical functions that take in data and spit it out as a fixed-length string of letters and numbers that looks like a secret code. In Bitcoin's case, the SHA-256 algorithm's output is specifically a 64-character string, in this respect.

5. Cryptocurrency Wallet- Your bank account for the crypto world, with which you may actually own your funds at all times. Like everything else in the crypto world, crypto wallets are encrypted with hashing algorithms, thus making them arguably far more secure than traditional bank accounts since their encryption is nearly impossible to fully crack. On the most basic level, each cryptocurrency wallet is made up of three values called a public key, a private key, and a public address. The first tends to function like a bank account number and an IBAN/routing number rolled into one, while the latter is like your password and proof of identification, as well as an assurance that you own certain funds. With that being said, the last value, a public address, or "Bitcoin address"(insert the name of the crypto you're using), is what you use to receive crypto into your wallet. Therefore, it's like an account number as well as all the required information for a successful money transfer, rolled into one. As a general rule, your address is the only part of your crypto wallet you should ever show to anyone. 

With everything we do here at the Blockdemic Lab, we aim to make content that's to the point and as easily digestible as possible. In that vein, we'll stop our exploration of the crypto-sphere here for now but if you have any questions, further thoughts or you simply find yourself itching to discuss any and all things crypto, reach out to me on Twitter or via email, any time! Until next time, remember that this industry's an uphill climb but the further up you get, the more of a foundation you have to attack its' more difficult concepts and frameworks. If you stick with us, you'll quickly find yourself at that place!

Get in touch