10 Native Blockchain Terminology You Ought to Know

The world of cryptocurrency and blockchain technology can be confusing for newcomers. There are a lot of specialized terminologies used to describe various concepts within the industry, and it can be difficult to wrap your head around them. 

This article will define some of the most important native blockchain terms you ought to know. 

1. Blockchain 

A blockchain is a distributed database that maintains a continuously-growing list of records called blocks. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Bitcoin nodes use the blockchain to differentiate legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere. 

2. Crypto 

Crypto is another name for Cryptocurrency. A digital or virtual asset that uses cryptography to secure its transactions and control the creation of new units of the currency. Cryptocurrencies are decentralized and not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. 

3. Nodes 

A node is a powerful computer that runs the bitcoin software and helps to keep bitcoin running by participating in the relay of information throughout the network. Bitcoin nodes can validate transactions, add them to their copy of the ledger, and then broadcast these ledger additions to other nodes. 

4. Mining 

Bitcoin mining is how new bitcoins are created. Miners take transaction fees attached to all Bitcoin transactions and are awarded newly created bitcoins. Mining is also the mechanism used to introduce bitcoins into the system. 

5. Token 

A token is a unit of value representing a digital asset or utility. Tokens are often issued by a blockchain project during an initial coin offering to fund development. They can be used to purchase goods and services or traded on exchanges for other cryptocurrencies. 

6. Encryption 

Encryption is a process of transforming readable data into an unreadable format. This is done using a cipher, which is a mathematical function that takes plaintext as input and produces ciphertext as output. Cryptocurrencies use encryption to secure transactions and control the creation of new units of the currency. 

7. DeFi 

Decentralized finance is a financial system that runs on the Ethereum blockchain. DeFi applications are built on Ethereum smart contracts and allow users to lend, borrow, and trade without the need for a central authority. 

8. Whales 

A whale is a large holder of cryptocurrency who can influence the market by buying or selling large amounts of coins. Whales are often institutions or wealthy individuals who invest in cryptocurrency for long-term gain. 

9. HODL 

HODL is a popular term in the cryptocurrency community that refers to holding onto your coins for long-term investment. 

10. Wallet 

A wallet is a digital wallet that stores your private keys and public addresses. It allows you to send and receive cryptocurrency. There are many different types of wallets, including paper wallets, software wallets, hardware wallets, and online wallets. 

Knowing these terms will help you understand blockchain and help you make informed investment decisions. Consult a financial advisor to learn more about investing in cryptocurrency.