What is a cryptocurrency

A cryptocurrency is a form of digital money. Bitcoin, Solana, Tether and Dogecoin are examples of cryptocurrencies. Units of cryptocurrency are called coins or tokens.

A cryptocurrency is a digital payment system that does not rely on banks to verify transactions. It is a peer to peer system that allows anyone, anywhere to send and receive payments. Instead of physical money being carried around and exchanged in real life, cryptocurrency payments are merely digital records in an online database detailing specific transactions. When payments are transferred in cryptocurrency, the transactions are recorded in a public registry. Cryptocurrency is stored in digital wallets.

A blockchain is a distributed peer-to-peer database that has strict rules for adding data. Each cryptocurrency is associated with a blockchain that acts as its open ledger.

The name cryptocurrency arose because encryption is used to verify transactions. The purpose of encryption is to provide security and safety.

One characteristic most cryptocurrencies have is that they have been designed to slowly reduce the production of new units. Consequently, only a limited number of units of the currency will have been produced. This can be equated with the asset class that gold and other precious metals have. It is therefore no coincidence that Bitcoin is sometimes referred to as digital gold.

As an example, the supply of Bitcoins is expected to remain at 21 million units. Since the number of Bitcoins is limited, the value of a Bitcoin will probably increase if the demand increases. So if you believe that Blockchain technology and Bitcoin will receive more attention, it is close to hand to believe that the value will also increase in the long term. Only a small fraction of the world’s population owns Bitcoin.

The first cryptocurrency was Bitcoin, which was founded in 2009 and is still today the most famous. Today there are 1000s of different cryptocurrencies and lots of different purposes the different currencies can be used for.

Common Crypto Terms

There are tons of concepts that are strongly associated with cryptocurrency and blockchains and that are constantly recurring. Here is a list of some of the most common.

TOKEN A fragment of the total number of tokens. Same as coin, but doesn’t have to be a currency, although they can almost always be used as such.

CRYPTO PUMP When people or companies tactically pump up prices, rapid price increase.

COLD STORAGE When you store your cryptocurrencies in a place outside of an exchange, where they are not connected to the Internet and are at risk of being hacked. Ex “paper wallets”.

BURN TOOKEN Sometimes crypto projects choose to burn a bunch of their tokens, which basically means they send them to a special address that everyone can see and validate. When these tokens are removed from the total number of tokens, the value of those remaining is increased. D

CRYPTO DUMP When large amounts of a currency are sold and prices rapidly drop.

BEAR MARKET Bear market. A market where the trend is negative and decreases in value. The general sentiment is fear and pessimism among the actors who trade.

BULL MARKET Bull market. A market where the trend is positive and increasing in value. The general sentiment is positive and almost euphoric and after some time in the Bullmarket FOMO sets in. Many people rush into the market with the fear of missing the train, when everything looks so good.

BLANKA Swedish word that means you bet on the rate going down instead of up. The exact opposite of traditional investing, in other words. Other words for blank to go short/short. Many central exchanges (Binance, Kucoin, Bybit, Bitget etc) offer short selling using leveraged products

AIRDROP A marketing technique where you give away tokens for free. A common example is that you are given various tasks – joining their Telegram group, joining Twitter and writing a post about a project – and in return you get free tokens of this currency. Distribution of cryptocurrency or token to a specific group of recipients. Usually, Airdrops are started by the creators of the cryptocurrency themselves. Often it is about receiving Airdrops if you perform some type of action in exchange. Common types of actions can be only holding a specific cryptocurrency for a certain time, sharing a link with one’s friends or downloading an app.

HODL Originally originated as a misspelling of HOLDING on Bitcoin forums. The term spread and is used in connection when you explain that you, for example, have/hold cryptocurrencies and do not sell. Simply a passive and more long-term investment strategy where you don’t care about short-term ups and downs. The original thread on the Bitcoin Forum exists

ATH All Time High. Most often, it applies to the price of specific cryptocurrencies. For example: “When Bitcoin was in ATH.” this means that then the price was at its highest.

FIAT Common cash such as SEK, USD and EUR.

LEVERAGE Or Margin Trading. Also called leveraged trading. This means that you can increase your