Understanding Cryptocurrency – Part II – Basic Terminology – hackernoon.com

Cryptocurrency has different seasons of Spring, Autumn, and Summer. Bitcoin season and Altcoin season change with the demand and supply. Smart contracts are not agreements written on paper but a technology that was introduced by Etherium into the world of Cryptocurrency. The market cap is basically the value of your business on a particular date on that very particular date. Bitcoin is the most valuable Cryptocurrencies because it gives others a platform to build their own businesses. For instance, Shiba Inu was built on Etherium, which makes Etherium the second most valuable Crypto.

Vaibhav Bhargava

A meditator & a nature lover. I am a morning person who is dedicated to achieving the goal set but also enjoying life

After reading the first article, you may have gained a little knowledge about what Cryptocurrency is and what its basic terminologies are. The terminologies we talked about were Altcoin, Blockchain, Private key, Public key, Gas, Bull market, Bear market, and Volatility.

The understanding about these terms might not have made you the subject expert yet, but in this article, we will be discussing a few more terminologies that can help you out. We know how Crypto-curious you’ve been after the previous article. 😉 So, here we will be discussing more such terminologies that will help you in taking a step towards being the subject expert. Ready? Let’s go! 

Mining – Did you think of mining as a process of extracting some valuable minerals from the Earth? Well, the mining that we will be talking about is way different. It is a methodology of protecting the network. It is with the process of mining the Bitcoins are put into circulation. There are innumerable miners that are making use of the mining rights to get through the computational puzzles. Once the puzzle is solved, the last block is mined and as a result of it, more Bitcoin is put into circulation. What makes mining important is the security. Now you may wonder, why do we need to be secure if we don’t share our private key with someone? This is because Bitcoins can be hacked with an equivalent amount of hash power against the present hash power. Because of the Bitcoin mining network being very extensive, it makes it next to impossible to hack Bitcoin. Other than keeping the network secure, mining is also said to be a proof of work as the Cryptocurrencies are generated through the proof of working. This may be a lot to process at once, but mining is a very important term to understand. 

Bitcoin Season and Altcoin Season – Like we have different seasons of Spring, Autumn, and Summer, Cryptocurrency also has Bitcoin season and Altcoin season that change with the demand and supply. Now investing money is not only a tough decision, but it also requires ample research to know where the money flow is going. Because Bitcoin is the first and most famous Cryptocurrency, the money flow starts from there and then filters down to other Cryptocurrencies. Now how do you know which season it is? There is a chart called Altcoin Season Index that helps you to understand whether it is Bitcoin season or Altcoin season. It must have become apparent that in the Bitcoin season, Bitcoin exceeds the rest of the market. And when it’s the Altcoin season, the Altcoins excel the remaining market.

Etherium – We have mostly heard about Bitcoin because of its popularity as being the first Cryptocurrency. What seconds the list is Etherium. Applications in Cryptocurrency are built using Etherium. Hence, it is an operating system. Just like we have operating systems like Mac OS or Windows for Apple and Microsoft computers respectively, the same is Etherium for Cryptocurrency. For instance, Shiba Inu is a Cryptocurrency which was built on Etherium blockchain. This makes Etherium the second most valuable Crypto after Bitcoin as it gives others a platform to build their own businesses.

Smart Contracts – We’ve all heard about contracts for different proposals. In the same manner, we have smart contracts in Cryptocurrency. They are smart in the sense that they work basically on two words, ‘if and then’ followed by when. If a situation is fulfilled, then the following outcome is achieved when we follow the protocols. For instance, if you do X, then Y will happen or will be the outcome of doing X. Smart contracts are not agreements written on a paper, but a technology that was introduced by Etherium into the world of Cryptocurrency. They are basically a program embedded with logic. To build an application in Crypto, you need a smart contract.

Market Cap – No, this is not a fancy hat we are talking about. But market cap in Cryptocurrency refers to the values of all the Cryptocurrencies combined or put together. Let’s say there are 13,000 Cryptocurrencies, so the market cap of all of them combined would equal $2.9 trillion. You can also calculate the individual market cap for different coins like Bitcoin, Etherium, etc. Now comes the question about the formula that derives the market cap. It is calculated by multiplying the total number of coins in circulation to the current market value of a single coin. Let’s understand this with a simple explanation. If you think of Cryptocurrency as a business that you are taking on a platform like Shark Tank, they will be asking you the worth of your company before investing. Now how do you find out that worth? It’s simple. The market cap is basically the worth of your business on that very particular date. While price is a way to measure the value of Cryptocurrency, the market cap helps the investors to dig in to their research mode and find out the complete story and compare values of different cryptocurrencies. 

Volume – When we talk about volume in general on your TV or speaker, it is not constant. Meaning, it goes up and down by the actions you perform on the remote or on the device itself. In Cryptocurrency, volume is a much more important term that can also go up and down depending on various reasons. It is basically used to define the potential trajectory of a particular coin. Volume in Crypto displays the money going in and out of a coin. While doing technical analysis, volume is an important factor to keep in mind because it shows in detail whether people are buying the coin or selling it. A few years back, there was a peak in the selling value of Bitcoin when its value dropped from $58,000 to $27,000 approximately. So, volume gives us a brief idea about how much benefit and utility that Cryptocurrency holds and how much people are actually investing in it at a given time. 

I hope by reading more about the basic terminologies, you must have learned a little more about the subject. Cryptocurrency is not a tedious subject, but it does require thorough research and knowledge. I suggest you start reading more about Cryptocurrencies on authentic platforms if you wish to become a Crypto investor any day soon. Besides reading, you can follow Crypto influencers on social media platforms like Twitter or Youtube to stay updated with the latest trends and news going on. 

You can connect with me here.

Happy Reading! 🙂 

by Vaibhav Bhargava @vaibhavpr.A meditator & a nature lover. I am a morning person who is dedicated to achieving the goal set but also enjoying lifeRead my stories

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