Key Terms About Blockchain and Crypto

Virtual currencies are perceived as money over the Internet. We can all use cryptocurrencies for online shopping and investments at a very low cost. So, needless to say, cryptocurrencies are one of the most talked-about subjects around the world.

Moreover, blockchain technology which is the foundation for crypto is also drawing people’s attention due to the numerous benefits it offers for both the public and business sectors. That being said, if you’re looking to learn more about blockchain and crypto, in this article, we have compiled a list of important terms about these topics.

Blockchain vs. Crypto

Blockchain technology and cryptocurrencies are sometimes used interchangeably, but they’re completely different because blockchain technology is literally the technology that powers the existence of cryptocurrencies, and it’s also the payment system where cryptocurrencies are processed on other to the system. Cryptocurrencies, on the other hand, are virtual currencies that are transferred over the blockchain network.

NFTs are also based on blockchain technology and are considered innovative solution that offers you a unique opportunity to support your favorite artists directly. Here you can see an interesting article on how to create NFTs and learn all about them. The decentralized nature of the blockchain network allows businesses and crypto enthusiasts to create blockchain-based innovations, which is why NFTs are based on Ethereum’s blockchain in the first place.

Blockchain technology is defined as a public digital ledger where the crypto transactions are added to a block of transactions, hence the name blockchain. Moreover, they are linked via cryptography. Because this is a hash link data structure, it is considered an extremely safe, peer-to-peer-based, decentralized database that cannot be controlled by any individual or entity.

It is therefore considered a robust network in the face of social-economic trends, social unrest, or global political events. For example, Bitcoin’s bull cycle in 2020 started after stock markets across the world crashed. This had no impact o Bitcoin’s value, which continued to rise steadily during the remainder of 2020.

Crypto Exchange Sites

Crypto exchange platforms are similar to online trading sites where you can buy stocks, bonds, futures, and other assets. However, crypto trading sites are specifically designed to allow crypto trading and also are primarily the marketplaces where consensus regarding the crypto prices is reached because the market is decentralized; there isn’t one specific crypto exchange site. This means that you can pick and choose the online trading platforms that offer you an opportunity to invest in specific cryptocurrencies and exchange your fiat currencies for crypto.

Crypto Mining

The crypto mining process encompasses adding blocks of transactions to the blockchain ledger by the miners on the network, which are also responsible for confirming the legitimacy of the crypto transactions. The miners add the transactions to a so-called block, and the block actually represents a form of blockchain technology that is associated with a unique time stamp, a new hash for every secure block, and a reference to the previous block.

Also, the data about transactions in the blocks is publicly visible to everyone because the blockchain network supports complete transparency. The mining process is necessary because it resolves the double-spending problem and it again prevents it from happening completely in the blockchain network. The miners receive compensation for their work, specifically transaction fees and crypto tokens.

Double Spending

Double spending is a problem that can occur with crypto transactions because they are virtual cryptocurrencies, so the double-spending problem happens when one crypto transaction at the same time can be made by two different recipients. For this purpose, the blockchain needs to use the mining process in order to verify the crypto transactions and to ensure that they are unique.

Nodes

A node is actually a computer system in the network which has a copy of the blockchain network because this is a peer-to-peer-based network; each node has a copy of the entire blockchain. The miners of the network work on the so-called nodes or computer systems in order to facilitate the mining process and add new blocks of transactions.

This is a distributed system where the data is synchronized and visible to every node across the network, and it’s worth mentioning that no single node has the power to take control over the other notes in the network, which is the entire purpose of the blockchain.