cryptocurrency

cryptocurrency

A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds.

blockchain

A digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly

decentralized finance

DeFi, financial activities conducted w/o the involvedment of an intermediary, like a bank, government, or other financial institution

digital exchange

a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money or other digital currencies

crypto coin

a cryptocurrency that operates on its own blockchain

crypto token

a cryptocurrency that uses the blockchain of another established cryptocurrency

proof of stake

a cryptocurrency transaction verification process that involves miners 'staking' an amount of crypto they already own in order to participate in validating transactions; miners lose their stake if they validate an invalid transaction and an amount of crypto is awarded to the miner who staked the most of their existing crypto and successfully verified the transaction

proof of work

a cryptocurrency transaction verification process that involves miners competing to be the first to solve a complex math puzzle and receive an amount of cryptocurrency as a reward

cryptocurrency wallet

a device, physical medium, program, or a service which stores the public and/or private keys for cryptocurrency transactions

currency

a medium of exchange for goods and services

smart contract

a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code

investing

allocating money with the expectation of generating profit over time

token

built on and uses another blockchain

fiat money

currency issued by the government, not tied to a commodity

coin

has its own blockchain

each block is connected to the hash of the previous block

how do individual blocks of information create a chain?

peer-to-peer network

how is a transaction verified on a cryptocurrency network?

no physical nature, only online

how is cryptocurrency different from government issued currency?

supply and demand, being compared to other cryptocurrencies

how is the value of cryptocurrency determined?

to gain a higher return than inflation, long term

investing

fiat money

money that has value because the government has ordered that it is an acceptable means to pay debts

to grow money quickly, short term

speculating

speculation

the act of conducting a financial transaction that has substantial holds the expectation of a significant gain or other major value

mining

the competitive process of validating a cryptocurrency transaction and adding it to the blockchain in hopes of receiving an amount of cryptocurrency as a reward

FOMO

the fear of missing out on an opportunity that others seem to be taking advantage of

bitcoin

the largest cryptocurrency in terms of market cap

more prone to hacking

the main disadvantage of storing your cryptocurrency in a hot wallet

ethereum

the second largest cryptocurrency in terms of market cap, famous for smart contract technology

market cap

total market value of a cryptocurrency's circulating supply

less secure, trading is stopped if server goes down, high transaction fees

what are the major downsides of centralized exchanges?

slow, easier to hack, no way to recover lost funds, doesn't allow fiat payments

what are the major downsides of decentralized exchanges?

government action, outside influence

what can impact the value of a cryptocurrency?

mortgage companies

what centralized institution is removed from cryptocurrency transactions when compared with traditional transactions?

Ethereum's creation

what event made cryptocurrency more appealing to mainstream banks and large companies?

2008 recession

what event was cited as the inspiration for the creation of Bitcoin?

verify transactions and help keep the ledger free of tampering

what is the purpose of blockchain technology?

pay off debt, contribute to retirement, create an emergency fund

what should you do before you buy cryptocurrency?

proof-of-work and peer-to-peer network

what two features help blockchain remain secure?

do be a joke

what was the original purpose of Dogecoin when it was created?

government says it does

why does fiat money have value?

to be a medium of executing smart contracts

why was ethereum created?