With cryptocurrency’s popularity being what it is, more and more people are becoming aware of Bitcoin, and more people are investing in cryptocurrency. And yet, many people who may be interested are still uninformed about just what cryptocurrency is, and some of the terminology revolving around cryptocurrency. So in this article we will explain what cryptocurrency is, and discuss some of the terminology surrounding it.
What is Cryptocurrency
Cryptocurrency is a decentralized, cryptographically encrypted, digital asset. This means that cryptocurrency is not beholden to banks, or governments, and thanks to the encryption, cryptocurrency is often times safer than fiat money, and transactions made with cryptocurrency are anonymous, and far more difficult to trace than purchases made with credit cards, or fiat money.
There are numerous cryptocurrencies currently circulating the internet. Estimates have shown that there is as many as ten thousand different cryptocurrencies. With that many choices, how can a new investor decide which one to choose. The best way to make this decision is to visit one of the many crypto trading sites. Sites like the one found here offer a number of benefits to new investors, like easy accessibility, investment tutorials, and safety measures. The most important thing they offer is a list of cryptocurrencies supported by the site. Most of these cryptocurrencies are viable option, and with the benefits offered by the site, investors are sure to get the best returns on their investments.
Some of the most popular cryptocurrencies on the current market are Bitcoin, the first and most profitable, Ethereum, Litecoin, Elrond, etc. With the importance and popularity of cryptocurrency growing in the 21st century, we thought it would be a good idea to introduce you to some of the terms you may need to know before you invest.
Bitcoin Mining
The process of bitcoin mining concerns bringing new bitcoin units into circulation, as well as maintaining and developing the blockchain ledger and preventing double-spending. Mining is a straining, and costly process that involves solving a series of complex mathematical equations. Though the process is difficult, many people who are into programming and information technology enjoy engaging in it, as it is a challenging experience.
In order for a bitcoin miner to be eligible for a reward they have to mine 1MB worth of bitcoin transactions. The key word in the sentence being “eligible”, meaning a bitcoin miner might mine a block, and still not get any rewards.
Hard Fork
A hard fork is an update to the blockchain which is backward-incompatible. Hard forks occur when new rules are added to nodes, in a way that conflicts with the past rules of the older nodes. This leads to a split in the blockchain, and two different networks are created. One of them functions on the old rules, and one with the new. Bitcoin particularly has had a long and storied history of hard forks, some of which have made a name for themselves, and are currently looked at as a viable and profitable option in and of themselves. The most popular example of a profitable bitcoin hard fork is Bitcoin Cash, which is currently priced at $500.
Soft Fork
Opposite of hard forks, a soft fork is a blockchain update that is backwards compatible, meaning that the new, upgraded nodes are still able to communicate with the older, yet to be updated ones. To put it simply, a soft fork occurs when a new rule that doesn’t clash with the old rules is added to the blockchain ledger. An example of a soft fork is decreasing the block size of a cryptocurrency.
The most popular example of a soft fork is the Segregated Witness fork, which happened after Bitcoin Cash split from Bitcoin. SegWit’s implementation changed the format of bitcoin transactions and blocks, however old nodes could still validate said blocks and transactions. Five years after SegWit’s implementation, not all of the nodes have been updates, as the process is unnecessary, and leaving them without the update doesn’t break the network.
Altcoin
The popularity of Bitcoin has caused many other programmers to try their hand at creating crypto. Altcoin is a catch-all term that refers to all of the different cryptocurrencies that are not Bitcoin. It is important to note, that altcoin is not a term to describe hard forks or soft forks, but rather cryptocurrencies completely unrelated to Bitcoin. There are quite a few altcoins that have attained huge success on the market today. Let us take a look at a few of them.
Ether coin, sold by the Ethereum blockchain, might just be the most popular, next to BTC. It is ranked second on the crypto market, and it has certainly become a household name in the past couple of years. This is in part thanks to the Ethereum’s blockchain early acceptance of NFT trading. Other altcoins which have seen great success are Dogecoin, Tether, Ripple, Litecoin, and quite a few other cryptocurrencies which can be found on various online trading sites.
