All Crypto Terms And Their Meanings You Need to Know As a Novice (Part 2)

All Crypto Terms And Their Meanings part 2

This is the continuation of All Crypto Terms And Their Meanings part 2

CRYPTOCURRENCY

A cryptocurrency is merely a currency that relies on cryptography. Bitcoin, for example, leverages cryptography in order to verify transactions.

CRYPTOGRAPHY

Cryptography is basically the process of encoding and decoding information so that would-be observers are unable to understand the information being sent.

DDOS ATTACK

A distributed denial of service (DDoS) attack takes place when multiple parties work together to overwhelm a system by inundating it with either requests for information or malicious data.Basically, the nefarious parties involved in such an attack want to prevent a resource, such as a server, from being able to provide some specific service, such as serving a web page.

Some digital currency exchanges have suffered DDoS attacks from nefarious parties looking to cripple these marketplaces and hopefully take advantage of this vulnerability to steal cryptocurrency. While efforts to steal digital assets may not work, an exchange’s users could become unhappy simply because they cannot make trades through the marketplace.

DISTRIBUTED LEDGER

A distributed ledger is a system of recording information that is simply distributed, or spread across, many different devices. The blockchain, for example, is a distributed ledger that was originally created to keep track of all bitcoin transactions.

ESCROW

Escrow refers to a third-party holding financial resources on the behalf of other parties.A third-party would hold funds in escrow when the other entities involved in a transaction may not trust each other.

FiAT CURRENCY

Fiat currencies are currencies that have value because they are minted by a central bank. Fiat means “by decree,” and these currencies have value because some central authority has decreed that they have monetary value. Examples of fiat currencies include the British pound, euro and Japanese yen.

EXCHANGES

Exchanges are basically just marketplaces where traders can make digital currency transactions. If a person wants to buy bitcoin, going to an exchange is the fastest way to accomplish this objective.

FOMO

The term “FOMO” stands for the phrase “fear of missing out.” This occurs when investors start buying up a particular asset based on their expectations that it will rise in value. Market participants can easily flock to an asset should that asset experience sharp gains.

Getting caught up in FOMO can be dangerous. More specifically, buying up an asset because it has recently enjoyed some notable upside can cause one to fall victim to market manipulation.

FORK

A fork is a change in a digital currency’s rules or protocol. Developers update a cryptocurrency’s protocol from time to time. A fork can be either a hard fork or a soft fork. A hard fork is a change to a digital currency’s protocol that makes blocks created using the old protocol incompatible with the new chain.

FUD

Fear, uncertainty and doubt can be summed up using the term “FUD.” The idea behind this is that market participants may spread misleading or inaccurate information in order to cause an asset’s price to decline. A trader may want an asset’s price to fall so they can either short it successfully or buy in at a lower price and increase their chance of generating a gain.

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