Cryptocurrency: Basic Terms 2

In the pastarticleWe've discussed the history, fundamentals, and basic terminology of cryptocurrency. Today, we'll continue our discussion of these terms.

There are terms you can learn simply for fun, but there are also those you absolutely must know. In this article, we'll cover the key cryptocurrency terms you need to know if you want to survive in the Web 3 era.

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Address

Cryptocurrency coins are identified inblockchainby unique addresses. You can think of the blockchain as a GPS, and your cryptocurrency address as a mailing address. Without an address, the coin is not stored; the blockchain cannot confirm or verify its existence. Therefore, without the correct wallet address, you cannot own the coin.

Every time a transaction is confirmed, your wallet's state is updated with the current address. Most addresses look something like this:

19XYZN5QStMeQpubFiNc7iqXZhei

DApps

DApps (decentralized applications)– decentralized applications. These are open-source applications that run on decentralized systems like Ethereum or Ethereum Classic. In decentralized systems, computation is performed by each node (computer), unlike centralized and distributed systems. Ethereum is considered the "mother" of dApps, and its open-source nature allows developers to build new applications on top of its blockchain.

All dApps have several common features:

• open source;
• decentralization;
• Incentives – validators are rewarded with cryptographic tokens;
• protocol encrypted in the form of a blockchain.

The market value of some ETH-based dApps is currently estimated in the millions. And theoretically, these apps could become as valuable as any other company or product.

DeFi

DeFi (Decentralized Finance)– decentralized financial services. This is a general term for decentralized alternative instruments similar to traditional financial market instruments.

Their main characteristics:

• public accessibility;
• They are open-source projects, primarily based on smart contracts - algorithms designed to generate, manage, and provide information about the ownership of something.

DeFi Applications:

• lending secured by digital assets and platforms for trading tokens and derivatives;
• Shared support for startups – investors transfer funds to a SMAT contract account, receiving startup shares in exchange;
• support for decentralized autonomous organizations;
• provision of banking services, including supply chain financing, mortgage lending, and small business lending;
• insurance, etc. 

DLT

DLT (Distributed Ledger Technology)Distributed ledger technology (DLT) is a method for storing records and information, providing a place where all transactions made on the blockchain can be viewed. DLT is like a ledger, allowing you to record and view entered data. A distinctive feature of DLT is that it uses multiple independent computers—"nodes"—to operate, unlike a traditional ledger, where all information is stored centrally. Each node can make changes to the ledger. After new information is entered, all nodes vote, and if they agree, the new data is saved in the ledger.

Gas

GasA gas fee is a unit of measurement that represents the fee for an action or transaction. When you make a transaction on the blockchain, you must pay a fee. This fee is called the gas price. Essentially, you're paying a miner to come out and mine cryptocurrency for you. You can pay a higher fee for faster transactions or a lower fee for a slower transaction.

Gas prices are one of the biggest challenges facing cryptocurrency markets. If a way to reduce electricity costs for transactions can be found, cryptocurrency's popularity will grow faster.

ICO

ICO (Initial Coin Offering)An initial coin offering (ICO) is the initial release of a new digital asset. It's a form of raising capital by selling investors a certain amount of cryptocurrency, generated through a one-time or accelerated generation. Compared to a traditional initial public offering (IPO), an ICO is a new method for projects and startups to secure funding. Almost anyone can participate in an ICO. 

KYC

KYC (know your customer) is a term used to describe a company's compliance with a client's trustworthiness. It's a method of identity verification and customer identification. For example, a client is asked to remember a security keyword to verify their identity before conducting a financial transaction. Leading social trading platforms such as eToro and Coinbase implement KYC as a mandatory part of the registration process. Customer verification may be performed for new banking clients as a means of combating money laundering and terrorist financing.

As governments around the world try to regulate cryptocurrency financially and connect blockchain transactions to citizens, we'll be seeing this acronym a lot.

NFT

NFT(non-fungible token)Non-fungible tokens are a new trend in global markets that continues to gain popularity. These tokens enable virtual transactions between collectibles, primarily in the fields of art, music, and trademarks, using smart contracts.

PKey

PKey (private key)– private key. This is important confidential information consisting of symbols, numbers, and letters. If someone else gains access to your private key, you risk losing your wallet funds. The key is necessary for verifying transactions when selling or withdrawing cryptocurrency.

PoA

PoA (Proof of Authority)Proof of Authority (PoA) is a mechanism based on the consensus of known and authoritative validators to provide computing power to the network. In a blockchain operating under Proof of Authority (PoA), several specific nodes are granted the right to confirm a miner's ability to create a block. This mechanism ensures fast transactions, but they are more centralized.

In the next article, we will continue our analysis of cryptocurrency terms.

Cryptocurrency for Ukraine and businesses

Cryptocurrency is a convenient and already quite popular way to pay for goods and services. Its use in Ukraine is becoming increasingly simple and straightforward. At the end of 2020, the Verkhovna Rada adopted the Law "On Virtual Assets," which granted cryptocurrencies legal status. After the war began, donations to providefinancial support to Ukraineare also received in cryptocurrency. Many companies accept cryptocurrency payments for goods and services ordered onwebsite, in online and offline stores. 

When working in the online space, it is important to remember that the reliable operation of a website – one of the main business tools – is ensured by a correctly selectedhostingIt can be purchased atNIC.UAYou can also register a suitable one here.domainand orderSSL certificatefor safe customer service.