Fiat money is currency established by a government order. It has no intrinsic value. Let’s think of this in terms of a gold coin and a paper banknote. The gold coin has intrinsic value because of the precious metal it is made of. Paper money doesn’t have any intrinsic value, because the value of paper needed to print a single banknote is negligible. Fiat money has value only because a government declares that it does, or because parties engaging in an exchange agree on its value. The main problem with fiat money is that a government can lose the ability to maintain its value, which can lead to hyperinflation.
A crypto wallet lets you store your money as you would in a normal wallet. The only difference is that your crypto wallet stores cryptocurrencies, not cash. More precisely, it stores the private and public keys to your coins. You can’t put a crypto wallet in your pocket, however, because it’s a piece of software that interacts with the blockchain to send, receive, and keep track of your crypto assets.
There are two types of crypto wallet: hot and cold wallets. The difference depends on their connection to the internet. You can access a hot wallet directly through the internet, or via a device that has an internet connection. Cold wallets, on the other hand, exist offline, on devices that aren’t connected to the internet. Examples of cold wallets include USB drives, paper wallets, and even brain wallets. For more information on wallets, read this article: Cryptocurrency Wallets: How To Keep Your Coins Safe
Altcoin stands for “alternative coin.” The term refers to every crypto coin created after Bitcoin. Altcoins differ from Bitcoin in some respects because their developers believe they will fix Bitcoin’s problems.
Litecoin was one of the original altcoins; it was created to act as “silver to Bitcoin’s gold.” Compared to Bitcoin, it needs less time to generate a block and it has a larger supply of coins. Today there are more than 1,600 altcoins on the market.
Blockchain is the fundamental technology behind cryptocurrencies. It enables people to transfer value online by distributing digital information, but not copying it.
Blockchain is a ledger – a list of records that link together using cryptography. These records are called “blocks,” and they join to form a “chain,” hence the name “blockchain.” This is a new, permanent, and secure way of storing information, and it has applications beyond cryptocurrencies. For more information on blockchain read this article.
Cryptography is the science of secure communication or sharing of information. Let’s explain it using two people: Bob and Alice.
If Bob wants to share a secret message with Alice, he could scramble that information in such a way that only Alice can understand it. The process of scrambling messages is called encryption, and unscrambling them is called decryption.
Here’s a simple example of encryption in action. Bob wants to send his email password to Alice, but he doesn’t want it to fall into the wrong hands. He could encrypt that password with a key, then send the key to Alice so she could decrypt the message. To make a simple key, Bob could replace every letter in the alphabet with the corresponding number: A is 1, B is 2, C is 3, and so on. Z is of course 26. If his password is ”hello,“ he will send the following message to Alice: ”8 5 12 12 15.“ No one should be able to understand what those numbers represent without the key. Alice receives the message, decrypts it with the key, and reads the information.
Of course, this is just a basic example to show the idea behind public-key cryptography. Encryptions for Bitcoin transactions are much more complex, which is what makes them secure.
HODL is just a typo of the word “hold.” GameKyuubi – a member of the bitcointalk.com forum – misspelled the word while writing about holding his coins and not selling them. Instead, he wrote: ”I AM HODLING.“ People didn’t let the mistake slide. They started to write HODL in his post, and soon it became a thing. Later, HODL evolved from a typo into an acronym meaning Holding On for Dear Life. You can see the original post here: I AM HODLING.
You’ve probably heard about initial public offerings (IPOs). This is when a private company or corporation raises investment capital by offering its stock to the public for the first time.
An initial coin offering (ICO) is kind of the same, only in the crypto world. An ICO happens when a crypto start-up sells its own coins (similar to stocks) to public investors. Investors hope the company will be successful and the coins they purchased will grow in value. Think of it like a massive Kickstarter campaign for cryptocurrencies.
Mining is the process of computers validating transactions within a cryptocurrency’s network. By doing this, they add blocks onto the blockchain. Each network participant – known as a miner – collects unverified transactions independently in order to create a new block.
A block is a file in that stores transaction records. These records show all the movements of cryptocurrency from one address to another. Each block gets connected to the previous block if all other computers confirm it as valid.
Computers compete to connect the block to the chain first by solving complex mathematical equations. The first successful computer earns a certain number of BTC as a reward. It also gets all the transaction fees from users. These rewards act as incentives for miners to participate in and maintain the network.
Bitcoin is both a cryptocurrency and the software that enables it. Let’s think of the currency as “BTC” and the network as “Bitcoin.”
Created in 2008, BTC is the world’s first decentralized cryptocurrency, a form of electronic cash. It is a digital currency that works without the need for any third parties like central banks. As such, users can trade BTC directly, without any middlemen. The subunits of BTC are called millibitcoin (1⁄1000) and satoshi (1⁄100000000).
The creator of both the Bitcoin network and BTC is known by the pseudonym Satoshi Nakomoti. However, this person’s true identity remains unknown.