Meme coins, defi, and other crypto buzzwords, Sarah Showfety* outlines what people need to know by now.
You could get away with not knowing much about cryptocurrency in 2021, but it’s a new year, and with the crypto market now worth $US3 ($4) trillion, you’ve got no excuse not to become crypto-literate.
Here are some of the year’s biggest buzzwords you should know — and a couple less-new ones to make this brave new monetary world less…well, cryptic.
Blockchain
While not new, you need to know what it means if you want a chance of understanding crypto.
A blockchain is a decentralised, encrypted ledger that records all cryptocurrency transactions throughout the world.
More specifically, it’s a shared database in which blocks of data (such as account balances and transactions) are chained together in chronological order.
On a blockchain, digital information is permanently recorded and un-editable. (Yikes.)
Altcoin
If Bitcoin is the grandaddy of crypto, altcoin is all its “alternative coins” or alternate versions.
The most prominent include: Ethereum, Solana, and Dogecoin.
Stablecoins
A subset of altcoin, stablecoins provide the benefits of crypto with more stability.
(Crypto prices are notoriously volatile — shares of Bitcoin have been known to drop $US9,000 ($12,562) in value overnight.)
Designed to have a relatively stable price, stablecoins (like Tether, USD Coin, and Binance) peg their value to real-world assets — commodities like gold or other currencies, such as the U.S. dollar or Euro.
Meme coins
If someone had told you ten years ago that new forms of currency inspired by memes and online jokes (such as “doge” a misspelling of “dog” that first appeared in an animated web series before being popularised on Reddit) would be available for trade on the stock market, would you have believed them?
Yeah, me neither.
Yet, here we are.
Dogecoin
(DOHJ-coin): This is the most prominent example of the above-mentioned meme coins.
This cryptocurrency was first minted in 2013 as a joke to satirize the wild popularity and (at the time) seeming baselessness of crypto.
It gained wide appeal after being touted by Elon Musk.
Web 3.0/Web3
Essentially, the third iteration of the internet.
If Web 1.0 saw the launch of the original “World Wide Web” with static sites, no ads, and dial-up access, and Web 2.0 ushered the rise of tech behemoths (Amazon, Google) and user-generated content (blogs, podcasts, and social media), then Web 3.0 envisions the web evolving into a decentralised network built on peer-to-peer connections, where individuals, in theory, will retain more ownership of their digital property.
(Key features of Web3 include 3D graphics, artificial intelligence, virtual reality, and semantic metadata.)
Crypto wallet
A place to store your private “keys” or passwords that give you access to the blockchain.
They can be “hot wallets,” meaning virtual (like the mobile app Coinbase Wallet), or “cold wallets” meaning tangible pieces of hardware like Ledger.
Either way, if you want to trade crypto, it’s a must-have.
DeFi
Sometimes referred to as “the Wild West of finance,” decentralised finance is the largely unregulated industry of automated financial instruments that allows crypto users to lend, borrow, speculate via derivatives, and trade crypto directly through a blockchain, without the need for brokerages, banks, or other middlemen.
NFTs
Non-fungible tokens allow buyers to own collectible digital art, music, or games, among other assets that are way more fun than Bank of America stock.
Think of it as hip crypto; it’s not just for fintech geeks, it’s for investors who might feel like spending $US208,000 ($290,326) on an epic LeBron James dunk — digitally, that is.
*Sarah Showfety is a contributor at Life Hacker.
This article first appeared at lifehacker.com.au.
