Essential Concepts for Beginners Entering the Cryptocurrency Market

Essential Concepts for Beginners Entering the Cryptocurrency Market

If you’re considering getting acquainted with the cryptocurrency market, one of the most popular topics in recent years, we’ve prepared a guide to the fundamental concepts you need to know.

As known, there is a revolution happening in the world of finance with cryptocurrencies. Cryptocurrencies have been attracting significant attention lately, both for the innovations they bring to the traditional financial world and for the investment opportunities they offer to investors looking to diversify their portfolios.

Considering that these markets are highly risky and quite volatile, investors and prospective investors considering directing their investments to cryptocurrencies need to be aware of some basic concepts.

Cryptocurrency Market bitcoin image

The person behind the crypto revolution: Who is Satoshi Nakamoto?

The true identity of the person known as the creator of Bitcoin, who officially revolutionized the world of finance, is still unknown today. He managed to remain anonymous for many years. It is known that the last communication with them was made by a colleague in 2011, and since that date, no news has been received from him.

Let’s take a closer look at the concepts related to the crypto world:

  • Cryptocurrency: It is a virtual currency technology that exists with blockchain technology and has no physical form.
  • Blockchain: It is a type of decentralized ledger that contains records of all transactions added to it as blocks. The blockchain records transactions made with distributed ledger technology in an immutable manner, eliminating the need for a central authority and making the recorded data accessible to everyone.

“Bitcoin” is the first cryptocurrency that emerged in 2009.

  • Altcoin: A term referring to cryptocurrencies other than Bitcoin, meaning alternative coins.
  • Stablecoin: A type of cryptocurrency created to reduce price volatility, with its value pegged to another currency such as the US dollar.
  • Shitcoin: A term used to refer to crypto assets with no utility, low value, and a high likelihood of failure.
  • Memecoin: A type of coin that lacks intrinsic value and purpose, and is used solely for humorous purposes.
  • Token: Tokens are cryptocurrency units created using the blockchain of another cryptocurrency rather than having their own blockchain network.
  • NFT: Short for “non-fungible tokens,” these are digital assets, each of which is unique and therefore cannot be exchanged with one another.
crypto mining
  • Mining: It is the process carried out by individuals recognized as network participants, where they solve complex mathematical problems to validate transactions on the blockchain network. These individuals are called “miners” and they typically receive a certain amount of cryptocurrency as payment for the transactions they validate.
  • Staking: It refers to locking up your cryptocurrency for a certain period to support a specific cryptocurrency network. During the staking process, investors are rewarded with additional cryptocurrency.
  • Airdrop: It is the distribution of free cryptocurrency by blockchain-based projects.
  • Initial Coin Offering (ICO): An ICO, short for “Initial Coin Offering,” is the initial release of a cryptocurrency to the market with the aim of funding a blockchain-based project.

There are two types of wallets where you can store your crypto assets: “Hot wallet” and “cold wallet.”

  • Cold Wallet: Essentially a USB drive, cold wallets allow crypto assets to be stored offline. They are recommended and considered a secure storage method due to their protection against hacking risks.
  • Hot Wallet: A type of cryptocurrency wallet that is accessible online.

One of the most commonly heard concepts in the cryptocurrency world is the terms “bear” and “bull”

bitcoin bull and bear image
  • Bear Market: It is the term used to describe a market where prices are falling.
  • Bull Market: It is the term used to describe a market where prices are rising.
  • Pump: It refers to a sharp upward trend in the price of assets.
  • Dump: It refers to a sharp decline in the price of assets.

Cryptocurrency exchanges are digital platforms that enable investors to buy and sell assets

Unlike traditional exchanges, cryptocurrency exchanges only facilitate the buying and selling of crypto assets. So, which reliable exchanges can one trade on?

  • Binance: Binance is highly preferred because it is the world’s largest cryptocurrency platform. Over 30 million people use Binance to trade with over 350 cryptocurrencies. Additionally, Binance offers a range of other services such as staking, crypto loans, and derivative markets like futures and options.
  • Kraken: Kraken platform, another highly preferred option, is designed to make buying and selling cryptocurrencies quick and easy while on the move. It is a beginner-friendly crypto trading platform. Account creation is free, and you’re ready to take your first step without time-consuming verification processes.
  • exchange, with a daily excess trading volume of $12 billion, supports over 2500 trading pairs and more than 1400 cryptocurrencies. It provides support for both spot and margin trading. Additionally, it offers alternative services including options, futures, and derivative products.

Knowing these concepts ensures account and information security

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  • Two-Factor Authentication (2FA): Method that verifies a user’s identity using two different components. Typically, applications like SMS 2FA and Google 2FA are used alongside passwords.
  • Anti-Phishing Codes: These are codes created to prevent fraudulent attempts known as phishing, where users are manipulated to obtain passwords and similar information. By receiving emails containing these codes, you can ensure whether the email is genuinely from the organization in question. If the email includes a code specifically generated for you, there is nothing to fear.
  • Whitelist: A security measure used in exchanges or cryptocurrency wallets, allowing withdrawals from your address only by specified accounts. It requires two-factor authentication for deactivation.

These commonly used terms constitute the jargon of cryptocurrency investors

  • ATH: An abbreviation for “All-Time High” indicating that a cryptocurrency has reached its highest price level ever recorded in its history.
  • BTD: An abbreviation for “Buy the dip” which means to purchase a cryptocurrency at the lowest possible price.
  • DYOR: An abbreviation for “Do Your Own Research” meaning to conduct your own investigation or research independently.
  • To the Moon: “To the Moon” means that a cryptocurrency’s price is expected to experience a significant rise, akin to reaching the moon.
  • Whale: A term used to refer to investors who hold a significant amount of cryptocurrency assets.
  • FOMO: FOMO, short for “Fear Of Missing Out” refers to the fear that investors experience, leading them to make impulsive trades based on the actions of other investors rather than analysis and logic, for fear of missing out on a better outcome.
  • FUD: FUD, derived from the initial letters of “fear, uncertainty, and doubt,” refers to investors succumbing to these emotions due to news circulating in the market. It often leads to selling pressure from investors, resulting in price declines.
  • HODL: HODL is a term used among cryptocurrency investors, originating from a typo of the word “hold” by an anonymous user on a forum. It means to hold onto cryptocurrencies rather than selling them.


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