Here is a comprehensive glossary for the people looking to journey into the world of Web3 and Blockchain.
Blockchain: A digital ledger of transactions distributed across a network. Blockchains are best known for powering cryptocurrencies like Bitcoin.
Cryptocurrency: A digital currency that is secured by cryptography. Cryptocurrencies are designed to work as a medium of exchange, like fiat currencies such as the US dollar. But they are decentralized and not issued by any government.
Digital wallet: An app that allows you to store, send and receive cryptocurrencies. Digital wallets also provide ownership of your private keys, which are needed to authorize crypto transactions from your wallet.
Private key: A secret number needed to access your cryptocurrency and sign transactions to send crypto from your wallet. Private keys establish your ownership of the public key and allow you to transfer funds.
Public key: A cryptographic code that is paired with your private key to generate your cryptocurrency address. Your public key is shared with others so they can send you crypto, but your private key needs to stay secret.
Cryptocurrency exchange: A platform where you can buy, sell and trade cryptocurrencies. Exchanges allow you to exchange fiat currencies like USD for cryptocurrencies and vice versa.
Portfolio: A collection of cryptocurrencies and other financial assets held for investment purposes. Crypto portfolios contain a balanced mix of cryptocurrencies based on an investment strategy.
Token: A cryptocurrency that represents an asset or utility on a blockchain. Tokens are usually issued by companies conducting an initial coin offering (ICO) to raise funds.
Yield Generating Product: "Yield" refers to the earnings generated and realized on an investment over a particular period of time.
Fiat currency: Government-issued currency like the US dollar, euro or yen. Fiat currencies have value because governments declare them as legal tender, unlike cryptocurrencies which are decentralized.
Diversification: Distributing your investments across different cryptocurrencies and other asset types to reduce risk. A diversified crypto portfolio has a mix of large, mid-size and small-cap cryptocurrencies.
Stablecoin: A cryptocurrency designed to minimize price volatility and maintain a stable value. Stablecoins are pegged to a stable asset like the US dollar to reduce risk. Examples are USDT, USDC, and Dai.
Market cap: The total value of a cryptocurrency, calculated by multiplying the price of the coin by the number of coins in circulation. Used to rank cryptocurrencies by size.
Altcoin: Any cryptocurrency other than Bitcoin. Altcoins aim to improve on Bitcoin's technology or provide other use cases.
ICO: An initial coin offering. A way for crypto startups to raise money by issuing their own tokens in exchange for established cryptocurrencies like Bitcoin or Ether. Similar to an IPO.
Volatility: A measure of the price fluctuations of an asset like a cryptocurrency. High volatility means the price is changing rapidly, which makes for a high-risk investment.
FOMO: Fear of missing out. The anxiety felt when other people seem to be profiting or benefiting from something, usually cryptocurrency investing, and you feel left out. Can lead to emotional investing decisions.
FUD: Fear, uncertainty and doubt. In crypto, this refers to the spread of negative sentiments about a cryptocurrency that scare investors and drive the price down. Often used as a buying opportunity.