By J. Ferguson and M. Ferrandi
Posted February 8, 2022
Much like the need to learn a new language when living in a distant land, understanding this new vocabulary is important in navigating the world of crypto. Here are some key terms necessary to understand this brave new world:
1. Bitcoin: the first digital currency. Bitcoins are created through a process called “mining” (see below). As of this post, approximately 19 million bitcoins have been mined. According to the formula for creating bitcoin, around 21 million bitcoins will ever be in existence, ensuring a scarce and stable supply.
2. Blockchain: a shared public ledger in which data is transferred between computers, recorded, and stored securely in “blocks.” These records cannot be edited or deleted. Bitcoin relies on blockchain technology to maintain a secure and decentralized record of its transactions. However, recording cryptocurrency transactions is not the only potential application for blockchain technology.
Source: The ABCs of Bitcoin (cifinancial.com)
3. Decentralized: in the context of cryptocurrency, decentralized means that a transaction does not have to be made through a third-party financial institution, such as a bank. This results in users having better control of their own data.
4. Ethereum: This is a platform – or home – where individuals can create applications with which users can interact or provide services in a decentralized environment. The platform is powered by blockchain technology. Users of this platform can also use it to create and exchange various forms of digital property, such as “NFTs” (see below).
5. Ether: is the cryptocurrency used on the Ethereum platform and was first released in 2015. By overall market value, Ether is second in value only to Bitcoin.
6. Mining: as mentioned above, cryptocurrencies are created through this process. As an example, Bitcoin miners receive Bitcoins as a reward for solving a sophisticated mathematical problem on the blockchain.
7. Non-Fungible Tokens: “NFTs” are created when individuals convert artworks, music, videos, and collectibles (e.g., trading cards) into digital assets which can be verified and traded on the blockchain. Many NFTs are traded on the Ethereum platform.
8. Web 3.0 The internet has developed in a series of well-defined stages, now referred to as Web 1.0, 2.0 and most recently 3.0:
➢ Web 1.0 refers to the years from 1991 to 2004. During this period, most interaction with the internet was in the form of loading and reading static web pages. Most users of that era were consumers of content.
➢ Web 2.0 – from approximately 2004 until now. This period saw the rise of interactive experiences between people and the internet (Facebook, Uber, Airbnb). The development was driven by three key innovations: mobile, cloud and social platforms.
➢ Web 3.0. We are currently at the dawn of this stage and some people forecast that it may prove to be the most disruptive to date. This iteration of the internet is frequently referred to as “machine to machine” because it is driven by Artificial Intelligence, blockchain technology and a desire for data autonomy (see comments under “decentralized” above).
If you have read this far you should have familiarity with some of the vocabulary essential to understanding the crypto universe.