Cryptocurrency has gained popularity recently while at the same time becoming a polarizing topic for investors. Whether you are a skeptic, a believer, or just a casual observer, it can be helpful to understand the basics of how cryptocurrencies function. While the subject is complex, we’ve broken down a few key definitions to help you understand it better.
These are some terms you should get familiar with.
Cryptocurrencies broadly refer to digital tokens that can be used as a medium of exchange. There are thousands of different cryptocurrencies available to purchase and exchange; however, you may be most familiar with Bitcoin. Others include Ethereum, Dogecoin, Tether, and more.
This is the pseudonym of the person, or group of people, who originally published the Bitcoin Whitepaper. This article debuted the concept of Bitcoin as a peer-to-peer electronic cash system and was published on October 31, 2008. The identity of Satoshi Nakamoto is still unknown to this day.
Think of the blockchain as an online ledger where cryptocurrency transactions are recorded in chronological order. No single entity controls the blockchain. It is completely maintained by a global network of computers.
This term isn’t exclusive to the coal industry. In the Bitcoin program, miners “mine” bitcoins by validating and storing transactional information on the blockchain. Miners are paid for their efforts in newly minted bitcoin. It takes extremely fast computer processing power for this process to be done successfully.
This is where you can access your cryptocurrency. Some people choose to use online cryptocurrency exchange platforms, like Coinbase, to generate their wallet for them. However, others choose to create their own private way to store and access their cryptocurrency.