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Crypto 101: Understanding 10 terms in the crypto world

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Below is a simplified explanation of 10 crypto jargon that will help you understand more about digital money:

DeFi – Decentralized Finance: Traditional finance relies on trusted intermediaries, but DeFi enables direct asset transactions without intermediaries, potentially making them faster and cheaper.

DAO – Decentralized Autonomous Organization: A group of individuals working together towards a common goal, following rules coded into the project. Bitcoin is an early example of a DAO.

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Distributed ledger – In traditional finance, a central authority maintains a ledger. Distributed ledgers use independent computers (nodes) to record, share, and synchronize transactions. Blockchain is a type of distributed ledger.

Double spend – In traditional transactions, you can’t spend the same money twice. However, with decentralized tokens like cryptocurrencies, it’s possible to copy and spend the same coin multiple times. Blockchain technology helps prevent and resolve this double-spending issue.

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Exchange – A platform where users can buy and sell crypto assets.

Ether (ETH) – The native cryptocurrency token of the Ethereum platform.

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Ethereum – The second-largest cryptocurrency by market capitalization, following Bitcoin.

Encryption – The process of converting digital information into a secure form that prevents unauthorized access.

Fiat currency – Traditional currencies backed by a nation-state’s trust, such as the US dollar, euro, or British pound.

Fork – When a cryptocurrency community makes a significant change to the blockchain’s governing protocols, it’s called a fork. Soft forks are backward-compatible software protocol changes, while hard forks require all nodes to upgrade.

Gas – On the Ethereum network, transactions carry a fee paid in Ether (ETH) called gas. It rewards validators and deters malicious blockchain usage.

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Diana Mutheu
Diana Mutheu
Diana Mutheu is a Tech enthusiast, happy to delve deeper into the African tech space covering Social Media, AI, Startups, Telcos, Cryptocurrency, Big Data, Women in Tech and all matters Tech. Write to me @[email protected]

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