The world of crypto: ICO to DAO to POS, a quick guide to some key crypto terms

The world of crypto: ICO to DAO to POS, a quick guide to some key crypto terms


It is no secret that the world of cryptocurrency can be intimidating to anyone new to it. With so many unknown terms swirling around it, it’s easy to feel that you need someone knowledgeable to understand what’s going on. Fortunately, we’ve got you covered. If you’re reading this, you’ve probably already heard of Bitcoin (and possibly Ethereum as well). But other than these two, there is a whole world of other digital currencies – called altcoins or tokens – now available to online investors. And while beginners may find the terminology as confusing as trying to speak the Elvish language, there’s no reason why you can’t dive into the world of “crypto” and learn about it – whether it’s investing, mining, or just seeing how this whole phenomenon works.

Today we will explain commonly used terms and phrases related to the topic of crypto assets and blockchain technology.

ICO and airdrop

An Initial Coin Offering (ICO) is a way for startups to start their crypto businesses by issuing tokens to the public. EOS (Photovoltaic System), which has become one of the most popular blockchain protocols, started its life as a project with an ICO (Initial Coin Offering), raising $4 billion. ICOs are used by blockchain startups to fund the creation and launch of their product. They do this by selling their digital tokens to investors looking to make a profit in the future. Investors are usually rewarded with higher returns if the value of the token increases as more people use it.

Airdrop: A free gift of tokens by a company to promote its business or to boot its token economy by distributing tokens to existing crypto users.

FUD and FOMO

The cryptocurrency market is often the site of emotions of all kinds: greed, hope, confusion and doubt. Whether you are an investor or a trader, it is important to identify these feelings and try to keep them in check. FUD stands for fear, uncertainty and doubt. It refers to spreading false information to arouse suspicion in the minds of investors, causing them to sell their tokens which in turn leads to a lower price of the respective token. This is one of the most common ways for scammers to profit from cryptocurrency.

FOMO is the fear of getting lost. This points to the “you should pick them all up” mentality that drives people to invest in every promising coin they hear about.

Hodel and Schilling

Both hodl and shilling are used as verbs in the crypto world. hodl is a misspelling of the word “Hold” and is used to refer to holding your investment despite its ups and downs. HODL It was first used in a Bitcoin forum in 2013 where an investor said, “I’m hanging out.” Since then, it has become the battle cry of people who refused to give up their investments and ride the storm. shilling It is the paid promotion of a product or service, usually on social media. In cryptocurrencies, shillings are usually made by scammers who try to raise the price of a low-quality token by spreading fake news about its future.

DAO and NFT

A Decentralized Autonomous Organization (DAO) is an organization that is managed through a smart contract on the blockchain. The idea was to create a venture capital fund that would not be managed by a central person but through code that would be open-source, transparent, and based on democratic voting. However, the first DAO turned out to be a disaster because it had a coding error that allowed someone to steal $50 million. NFTs are non-fungible tokens that are unique, like tickets to a football match or a museum. They are used for rare items where you cannot create multiple copies, such as a one-of-a-kind artwork. NFTs can be used for anything rare.

POW and POS

A blockchain network is a ledger of all transactions made between members of the network through their computers. It can be accessed by anyone using the network. To ensure that everyone follows the rules and that transactions are secure, the computers on the network must approve the transactions that have taken place and arrange them in a chronological manner. This is called “mining”. Proof of Work (PoW) is the most widely used consensus mechanism in the blockchain. Computers on the network compete to solve a mathematical puzzle. The first computer to solve the puzzle and verify the transaction receives a reward in the form of tokens.

Proof of Stake (PoS): With this method, network members have to lock their tokens in order to have the right to verify transactions and get a reward. The more tokens they lock, the more they can verify it. This method removes the need for computers to solve complex mathematical puzzles in order to secure the network.

Altcoin

Altcoin literally means another currency. You may have heard people refer to Bitcoin as the “king” of cryptocurrencies. And that’s right: it was the first digital currency, and it’s still the most popular. But she’s not the only one – in fact, it’s far from that. The fact is that since Bitcoin was first released in 2009, more than 3,500 coins and other tokens have been created. Many of these “altcoins” are based on alternative blockchain technology, which is technology that is not based on the same powerful computer systems that Bitcoin uses.

Decentralized Applications (DApps)

A decentralized application runs on a network of computers that are not controlled by a single authority. It is a way of designing software that is not controlled by a single company or person. This was made possible thanks to the advent of blockchain technology, which enables the system to operate independently, without a central source of control. The most notable example is cryptocurrency, which is operated through a largely decentralized blockchain-based network. There is no single source of control that regulates the network, and it is open source.





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