Cryptocurrencies are becoming increasingly important for investors and traders who are looking to expand and diversify their portfolios. In spite of being around for a few years, the marketplace is still relatively new, and the fact that it is entirely online-based and decentralized has contributed to the creation of some confusion regarding its exact functionality. If you want to ensure seamless transactions and record profits and returns that are significantly more elevated than your losses, you need to be aware of the most essential terms and concepts on the market, as they can make a lot of difference for your transaction strategy.
According to Binance, the Ethereum price USD will continue to grow in the near future, becoming more mature and stable. Cryptocurrencies have never been particularly known for their resilience, as fluctuations and price variations are common in the environment and can often be so intense as to cause major corrections in as little as twenty-four hours. If you’re looking to take the first steps into the crypto world, here are some of the terms that can help you feel more familiar with the ecosystem.
Altcoins
The altcoins are all cryptocurrencies other than Bitcoin. BTC, also known as digital gold, was the first crypto to appear on the financial market, and all the ones that came in the aftermath followed suit. All of them are similarly blockchain-based, but the altcoins have also ushered in the development of new technologies in the crypto arena. For example, Ethereum has pioneered developments such as decentralized finance and applications, features that are expected to revolutionize standard markets sooner rather than later.
Bull vs Bear
The concept of bull and bear markets isn’t something exclusive to cryptocurrencies. In fact, all trading markets use these terms in order to discuss price action trends. Bull markets describe a phenomenon where prices trend upward during a given period. It is a time of optimism, with perceptions and market sentiments tending to be overwhelmingly positive. At the other end of the spectrum is the bear market, a time when things tend to become slower, and downswing trends are much more prominent. Significant volatility can ensue during both situations, depending on their intensity.
Block rewards
As the name suggests, the blockchain is made out of several blocks that make up an extensive list of transactions. Each of the blocks contains cryptographic references, a feature that gives the blockchain its characteristics of being unable to alter or modify. The block rewards are another concept that is associated with this area. They take the form of crypto coins that have been newly minted, which are used as an incentive for miners to keep performing this activity since they are essential for the well-functioning of the system.
DAOs
Decentralized Autonomous Organizations, or DAOs for short, are enterprises based on the blockchain. Their system was developed to ensure decision-making, entity ownership, and management functions. Their aim is to decrease centralization as much as possible, a process typically achieved by allowing the community to govern the future of the organization and its projects.
ERC-20
The ERC-20 is a standard used on the Ethereum network, one of the most extensively used in the crypto ecosystem. The ERC-20 lets developers easily create digital currencies, ensuring they are fully compatible with the existing infrastructure. This guarantees that transactions remain smooth and that the marketplace can function accordingly. A similar concept is the ERC-271, a network standard that has been implemented for non-fungible tokens. This standard can be used to aid in the creation of digital collectibles, as well as tokenize items that exist in the real world and give them an online equivalent.
Fear of missing out
The fear of missing out, a concept that investors often refer to by the acronym FOMO, is essentially a type of social anxiety. Its fundamental aspect refers to the fact that the person experiencing FOMO will feel that others are experiencing fun and the positive effects of a product or event while the one experiencing FOMO is left out. It’s a common concern in a fast-paced world and especially prevalent within a changeable market such as cryptocurrencies. Traders and investors create their portfolios in order to record profits and see gains, so it makes sense that they wouldn’t want to feel like they’re not making the most out of stellar opportunities. While it can be a legitimate fear at some times, there are also situations in which FOMO is largely an exaggeration and simply the result of overthinking.
Investors need to learn how to control this tendency, or they risk becoming too emotional in their transactions and strategies. This typically means that their portfolios are also more vulnerable and that the likelihood of capital losses is more elevated.
Gas
Another Ethereum-specific concept, Gas is the fee that is charged in order to perform operations on the ETH network. Sending transactions and interacting with smart contracts both attract gas fees. The typical unit of measure is the Gwei, a small fraction of a standard Ether coin. When fees are too elevated, the marketplace can become unsustainable for many investors, who are either forced to retreat or diminish the pace of their transactions until values return to more stable areas.
Market capitalization
The market cap level of a cryptocurrency is calculated by getting the price of an asset and multiplying it by the circulating supply. The resulting figure constitutes the total value of an asset and its entire market. The market capitalization is frequently used as a marker of success. Within the cryptocurrency environment, Bitcoin has the highest market capitalization, with Ethereum coming in second.
Whale
Whale investors are the ones that own a large quantity of capital, and whose transactions have the potential to change markets and modify prices. Whale investors can either be institutional or retail investors, as well as wealthy individual investors who simply afford to complete large transactions without the risk of suffering major losses.
Cryptocurrencies are still relatively new, but they’ve attracted a large number of followers due to their ability to maintain anonymity and increase their value over time. However, in order to boost their success rates, investors must do their research and become knowledgeable about the intricacies of the market.