A Simple Introduction to Cryptocurrency
Let’s start by taking a sip. Cheers!
This is just a little note on the introduction to Crypto currency. Although it's random thoughts, it's filled with great value. Let me start with some Crypto terms you should be familiar with.
CRYPTOCURRENCY TERMS YOU NEED TO KNOW:
1. FOMO: Fear Of Missing Out.
A situation where you hurriedly buy a coin when the price is moving so as not to miss out if it should go higher).
2. Airdrop: A campaign strategy where a new coin distributes a certain number of coins/tokens in order to gain popularity and create a community.
3. FUD: Fear, Uncertainty, Doubt.
It is a negative perception of certain cryptocurrencies. A situation where you hurriedly withdraw from a coin due to a feeling that the coin could lose value.
4. ATH: (All Time High) The highest amount a coin has attained.
5. Private Key (Seed) - A sort of password or phrases used for protecting and accessing funds in a crypto wallet.
⚠ Should be kept safe.
6. Pumping - An extraordinary huge increase in a price of a cryptocurrency.
7. NGMI- (Not Gonna make it)
A slang used by crypto enthusiasts to emphasize that users could miss out on huge profits on a certain cryptocurrency.
8. Bullish: A belief that a Cryptocurrency will move up in value.
9. Bearish: A belief that a cryptocurrency will move down in value.
10. ERC-20:
Any coin built on ethereum is an ERC-20 token. It is a very expensive network. Their fee is high. I mean very high.😫
11. Bep-20
Any Coin built on Binance Smart Chain is a Bep20 (BSC) token.
12. Ape in:
To invest in a coin without doing your own research.
13. Trc-20 - any coin built on Tron network is Trc20. It's the cheapest and fastest network😍
14. Rug pull:
A type of attack unique to DEFI where a vulnerability to the smart contract is abused and the token value drops to $0.
15. Digital Wallet - A wallet that is used for storage of digital currencies, usually installed on a PC or mobile App.
16. Shitcoin:
An altcoin that may lose it’s value because the altcoin itself was not created in good faith, or because the price of the coin was based purely on speculation.
17. DIP:
This is a popular term. It means a decline in Value of a cryptocurrency.
18. ESCROW:
This is simply a middleman in a transaction.
19. Impermanent loss - This is when a liquidity provider has a temporary loss of funds because of volatility in a trading pair.
20. Farming - staking your coins for a particular period of time while you receive rewards for doing so, usually on DEFI.
21. Fundamental Analysis- This basically what you should do when asked to DYOR.
For example, you might look at its use cases, the amount of people using it, or the team behind the project. Your goal is to reach a conclusion on whether the asset is overvalued or undervalued.
22. Diamond hands:
A patient hodler of a coin
23. Paper hands:
Someone who sells easily usually after a slight dip.😂
24. Shill:
To peddle and try to sell a coin with subtle persuasion.
25. Degen/Degen Trader:
Someone who gambles and scraps through projects for quick profits.
26. Fiat:
Government-issued currencies i.e Naira, Dollar, etc.
27. Blockchain:
The technology of cryptocurrency that keeps the system secure and decentralized. It's like the heart of Crypto.
28. DEFI (Decentralized Finance)
An ecosystem that operates independently, free of third parties or exchanges.
Defi involves the use of decentralized exchanges and wallets (like Trust Wallet, MetaMask, etc) to trade tokens.
29. White paper:
A white paper is a document that outlines what a cryptocurrency is created to do and how it will achieve it.
30. CEFI (Centralized Finance)
It had always been the standard for trading Crypto before DEFI.
CEFI involves the use of companies operating exchange platforms like Binance, FTX, LATOKEN, etc.
31. Tokenomics:
This is a combination of Token & Economics. It helps understand the supply and demand characteristics of a cryptocurrency.
32. ICO (Initial Coin Offering)
This is where a new cryptocurrency gives away some coins at a discounted rate usually to finance the project.
33. IDO (Initial DEX Offering)
It refers to the launching of a cryptocurrency on a decentralized exchange (DEX) usually at a price lower than the listing price in order to raise funds.
34. Market cap:
The total trading value of a cryptocurrency.
To calculated it, do:
Current Price x Circulating Supply = Mcap
For example, a coin with 1 million coins in circulation selling at $1 would have a market cap of $1million.
35. Tokens:
There is a difference between Coins and Tokens. A coin is an asset that is native to its own blockchain. E.g Bitcoin, Ethereum, Solana, etc.
On the other hand, tokens are created on existing blockchains. I.e Every cryptocurrency created under BSC, SOL, ETH or any other blockchain is not a coin but a Token. E.g $AFEN (Bsc), $COPE (Sol), $UNI (Eth).
Tokens are the backbones of DEFI & exist to be used with DEX.
36. Stablecoin:
A cryptocurrency that is tied to the value of the US dollar to make it more stable and less volatile. E.g USDt, BUSD
37. Pump and dump:
This is kind of like a scam where influential people who own a large share of a Coin encourage others to buy to artificially pump the price.
Once the price reaches a high point, they sell off all that they own and the price falls drastically.
However, some of these coins can eventually become great coins.
38. Gas:
A fee for validating a transaction. Ethereum gas fee is the most expensive.
39. Bagholder:
This term is for someone left with a cryptocurrency after a pump and dump. E.g Everyone holding Shitcoins after they fall🥴. Na OYO be that😂
40. Moon:
A belief that a Cryptocurrency will rise exponentially in price.
To the moon🚀
41. Rekt:
It is a slang for ‘wrecked’. It implies that the user lost a lot of money on cryptocurrency.
42. NFT (Non Fungible Tokens):
NFTs enable people to buy and sell collectibles like art, music and trading cards using smart contracts.
NFTs can work like any other speculative asset, where you buy it and hope that the value of it goes up one day, so you can sell it for a profit.
43. HODL:
A drunken misspelling of the word ‘hold’, which is now a slang people use when they say they are going to wait and hold onto a cryptocurrency.
44. DYOR (Do Your Own Research):
This often aims to reduce the number of uninformed investors in cryptocurrency. It encourages them to research and understand a cryptocurrency before investing.
45: NFA (Not a Financial Advise):
The term is also often used as a disclaimer when cryptocurrency traders and enthusiasts make public posts or share their market analyses on social media platforms.
The market cannot be 100% predictable and even a “Correct” analysis can fail so it’s important that users apply discretion while investing. For example, most people including Elon Musk believed that May 8th, 2021 was for Doge to pump massively. Las las, e choke😂
Some say NAFA.
46. Whale:
A crypto whale is wealthy individual or a company that can move large amounts of cryptocurrency in one go. This can have a big impact on the market.
47. Dildo: To the world, it means something else. But in crypto, it is a case where there is a massive pump and the green candlestick on the chart is very long.
There are series of definitions as to what Crypto is about. You can Google and get lots of detailed and sophisticated explanations.
48. WAGMI
This stands for "We All Gonna Make It". Some use WGMI, which stands for "We Gonna Make It."
In a layman way of seeing it, cryptocurrency is basically digital currency. Just as we have fiat currencies like naira, dollar, euro, pounds, etc, we also have Crypto currencies like Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), Doge coin (Doge), Fantom (FTM), etc. There are tons of crypto Currencies (over 5,000) in existence.
Just as you need a bank to run transactions for your fiat currencies, same thing applies to crypto. We have what we call a wallet. That’s proportional to the traditional bank. There are two basic types of wallets – cold wallet and hot wallet.
The only significant difference between the hot and cold wallets is whether the wallet is connected to the internet.
Hot Wallet
Hot wallets are the wallets that are required to be connected to the internet, and because of this, these wallets are less secure. These wallets are highly accessible because of the internet, but these wallets are more vulnerable to security threats and attacks by fraudsters.
Traditionally, every crypto wallet has a key (seed phrase). I explained this in the crypto terms I shared earlier. However, the hot wallet controllers hold the seed phrase and create room for you to log in with your email and password. So if you forget your password, you can reset it via email. Examples are Binance, KuCoin, Gateio and other CEX (Centralised Exchanges).
Hot wallets are more user-friendly, but there is always a risk to users’ security and privacy. The basic danger about hot wallet is security.
Let me explain further. If someone hacks Facebook, the person is automatically in control of everyone’s (Facebook users) Facebook account, right? It’s same thing that happens if someone hacks the 'headquarters' of a hot wallet.
If Binance gets hacked, all Binance account owners and Crypto assets are also hacked because they have the private key (seed phrase).
Cold Wallet
Cold wallets are the types of cryptocurrency wallets for cold storage. These wallets store crypto tokens in offline mode and provide improved security. Cold wallets are always a safer option than other wallets because these act as a vault to carry out daily transactions. Here, they don’t need your email or phone number for anything. They just give you your seed phrase (often 12 words) and that’s all.
If you misplace the seed phrase, that's all. There's nothing you can do about it, unlike the hot wallets where you can click on "forgot password" and reset everything via email.
Examples are Trust Wallet, MetaMask, Klever, SafePal, etc.
That’s all I’ll talk about regarding wallets.
This article is for newbies and as such, too much information won’t help. I’m trying to be as simple as possible.
Moving on...
Fiat currencies need bank to run. It’s also important to have an account number in the bank. This is also similar to crypto. We have what we call an address (account number).
If I have to send you money, you’ll give me your account number and the bank. In crypto, I’ll need your address to send you a coin or token.
The address depends on the asset you want to receive. To receive BTC, you’ll have to copy your BTC address and send to whoever wants to give you. Let me copy my BTC address to show you what it looks like.
18A44h74B2XsmSyGW8iyCGYcUU3YZGK5mD
That’s what an address looks like. And that being said, let me go back to something I missed.
Someone once asked me, "Are you into BTC or crypto?"😂
BTC is a cryptocurrency too. Please, don’t mistake that.
There are only two types of coins.
1. Bitcoin
2. Altcoin or alt (alternative coins)
Any coin that is not BTC is an altcoin. So, ETH, Zec, Ftm, etc are all altcoins.
It’s under altcoins that we find tokens, meme/shit coins… Story for another day.
There are several ways people make money from cryptocurrency But before that, know that:
1. Cryptocurrency is not a get-rich-quick scheme
2. You can make 10x in crypto; and you can also lose 10x
3. Don’t expect your coin to be going only upwards. It’s a volatile market. It has to go down too
4. Crypto rewards the patient. But that’s if you didn’t buy 'rubbish’.
In January, Fantom was $0.06. If you bought with $20 then, you’d have over 290 ftm. Some days ago, that same ftm was over $2. So, $2 multiplied by 290 (that’s $580 in today’s value). This is what I mean by “Cryptocurrency rewards the patient".
This doesn’t mean that it was going only up. However in the long run, it’s a massive profit.
That brings us to the first way of making money in crypto – Investing.
Other ways include trading, airdrop, farming/staking, fork, etc
I explained all these here https://link.medium.com/NXfz4gf9rlb
To succeed with Crypto, you have to learn about Fundamental analysis and Technical analysis.
Here's why:
Fundamental analysis helps you to know what to buy; while technical analysis helps you to know when to buy.
This was further explained: https://link.medium.com/Bc2nqOacslb
By the way, my book "Abrahamic Model" is available in soft copy. I wrote about business, finance and personal development therein.
You can grab a copy here: https://tinyurl.com/abrahamicmodel
On Amazon: https://www.amazon.in/-/hi/Godstime-Ukah-ebook/dp/B089LZFZMF
