Looking to invest in cryptocurrency but terms like bitcoin, Ethereum blockchain, gas, minting and mining seem too confusing to you? If your answer is yes, then you must first learn the lexicon commonly used in the cryptocurrency ecosystem.
Let’s begin with ‘cryptocurrency’. It is a type of currency that is encrypted and digitised for trading. It uses algorithms to monitor the creation and transfer of funds between buyers and sellers. All crypto transactions take place without the involvement of financial intermediaries like banks.
That’s not all. The entire process of trading cryptocurrencies includes many steps of which any entrant should have thorough knowledge about.
When a verified cryptocurrency transaction takes place between a buyer and a seller, it is recorded in a digital ledger called a blockchain. Each transaction is time stamped and individually coded with the help of the virtual ledger.
Blockchain is also the underlying technology that is used in cryptocurrencies.
You can think of it as a series of blocks that build upon one another. A blockchain network will keep adding cryptocurrency or other transactional data, making it an unceasing and irreversible process. When it reaches its capacity, a new block gets added to the chain.
It can be accessed using the internet, on any laptop or computer. This also means blockchains are decentralised and are not confined to one location, laptop or network.