Bitcoin Unveiled: Essential Cryptocurrency Jargon Explained for Beginners

The article provides explanations for key terms associated with cryptocurrencies for those who may be unfamiliar or in need of a refresher.

1. Bitcoin:
   • Bitcoin is a type of digital currency or cryptocurrency.
   • It is decentralized, not backed or controlled by centralized financial institutions.
   • Its value is volatile, influenced by the buying and selling decisions of Bitcoin users.
2. Blockchain:
   • Blockchain is the underlying technology for all cryptocurrencies and products, like non-fungible tokens (NFTs).
   • It is a virtual spreadsheet recording all cryptocurrency transactions.
   • Transactions are organized in blocks linked together in a chain, hence the name.
   • Mining is validating transactions and updating the blockchain, with the first person rewarded in Bitcoin.
3. Halving:
   • The cap for mined Bitcoins is 21 million, and roughly every four years, the reward for creating new blocks is halved.
   • The next Bitcoin “halving” event is expected in spring 2024.
4. Exchange-traded funds (ETFs):
   • ETFs are portfolios that allow investors to bet on multiple assets without directly buying them.
   • Traded on stock exchanges like shares, their value depends on the real-time performance of the overall portfolio.
   • Spot Bitcoin ETFs buy the cryptocurrency directly at its current price, enabling new investors to enter the Bitcoin market without dealing with digital wallets.
5. Crypto Exchange:
   • A digital platform where investors can buy, sell, and trade cryptocurrencies.
   • Acts as a brokerage, facilitating the transfer of traditional money into cryptocurrencies.
   • Transactions often involve fees.
6. Crypto Wallet:
   • A place where investors store their cryptocurrencies, similar to a traditional wallet holding cash.
   • Two types: hot wallets (connected to the internet for quick transfers) and cold wallets (offline devices for safer and longer-term storage).
7. Ethereum:
   • The second-largest cryptocurrency after the Ether token represents Bitcoin.
   • Ethereum also refers to the blockchain supporting it.
   • Supports various applications and digital assets, including non-fungible tokens (NFTs).
   • In 2022, Ethereum switched to a greener operating system requiring less energy.

The article aims to demystify these terms and provide clarity for individuals navigating the world of cryptocurrencies.