12.3.2024
Following our deep dives into the 'A' and 'B' of crypto concepts, we're going forward! Now in part 3, we turn our attention to letter 'C', exploring critical terms and ideas in the crypto and blockchain world.
Those concepts are considered important for anyone who is just coming into space and curious to grasp the fundamental language of crypto.
Are you ready? 👀
1. Cryptocurrency: A digital or virtual form of currency secured by cryptography, making it nearly impossible to counterfeit or double-spend. Bitcoin and Ethereum, are popular examples.
2. Consensus: Consensus mechanisms ensure agreement among network participants about the validity of transactions. Proof of Work (PoW), Proof of Stake (PoS), and Delegated Proof of Stake (DPoS) are common consensus algorithms.
3. Compound interest: Refers to the amount obtained on reinvested interest accrued from the initial principal. In other words, compound interest is interest on interest. It is a faster way to grow your wealth, and it works when you reinvest the interest gotten on your capital.
4. Candlesticks: A tool used in chart reading, which shows important details about the price of the asset at the time of recording the candlestick. Candlesticks can either be green (sometimes blue) or red (sometimes black), and these colours depict various price movement directions. A red candlestick means that the price closed lower than it opened within that time frame, and a green candlestick means the price closed higher than it opened. Candlesticks are used in the technical analysis of cryptocurrencies.
The anatomy of a candlestick
5. Capital: Simply the money you use to invest in an asset. This is the amount you hope to get profits on.
6. Capitulation: Refers to when an investor sells an asset for much lower than it was bought due to a large loss in the asset’s value. This usually happens when the investor has lost faith in the asset and believes it cannot go up in value again.
7. Censorship resistance: Is defined as the quality possessed by something that allows everyone to participate in what it offers and does not allow anyone to stop others from participating as well. Censorship resistance is a major selling point of cryptocurrencies, as anyone with access to an internet connection can partake in buying and selling cryptocurrencies through a DEX, without permission from anyone.
8. CBDC: Refers to “Central Bank Digital Currency” and it is a digital currency issued by central banks whose operations are regulated by the government.
9. Centralization: Refers to the presence of a central governing body that makes decisions without input from anyone outside the body. In the crypto-verse, a centralized blockchain is one in which there is a single (or a small number of) node(s) governing the operations of the blockchain.
10. Centralized Exchange: A platform where users can trade cryptocurrencies directly with the exchange acting as an intermediary. Examples include Binance and Coinbase.
11. Cross Chain: Refers to the technology that connects different blockchain networks together and allows for the exchange of information and value between them. An example of cross-chain infrastructure is a cross-chain bridge (which we discussed in our “B” concepts article)
12. Cold Wallet: This refers to a hardware form of storage for cryptocurrencies and it is generally considered to be safer. Since a cold wallet stores crypto offline, it cannot be hacked and is therefore useful to store large amounts of crypto. Hardware wallets like Ledger Nano S are popular cold storage options.
13. Collateralization: Is defined as the process of using one asset as collateral to borrow another asset.
14. Confirmation: A blockchain confirmation is a measure of how many blocks have passed since a transaction was last added to the blockchain. The more the number of confirmations, the more legitimate the transaction is.
15. Consensus: Is a state in which all participants of a network agree on the order of blocks on the blockchain. Consensus helps make decentralized record-keeping similar to a centralized database.
16. Contract: A contract (usually called a smart contract) is a piece of code that allows certain actions to be performed on the blockchain without input from any third party. The staking functionality is powered by smart contracts. No one manually fills up your gains for you, but it is all done by smart contracts. It is also worth noting that smart contract functionality is only possible on blockchain networks.
17. Custodian: A person or an organization that is tasked with the responsibility of safely keeping customers’ or organization’s funds for a variety of purposes.
18. Crypto Bubble: Refers to a rapid increase in the valuation of cryptocurrencies followed by a sharp decline, often fueled by speculative investment and hype. The crypto market has experienced several bubbles throughout its history.
19. Cryptography: Is the practice of secure communication in the presence of third parties. In blockchain, cryptographic techniques like hashing, digital signatures, and encryption are used to secure transactions and data.
20. Circulating Supply: Refers to the total number of coins or tokens available in the market and actively being traded. It excludes coins that are locked, reserved, or not yet mined.
As we wrap up our 'C' segment, we hope it's shed some light on the crypto world for you! Keep an eye out for 'D', as our A-Z journey continues.Thanks for exploring with us—there’s plenty more to learn ahead! 📚
*This article is also published on txFusion Medium channel.
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