The subject of cryptocurrencies is trending and will continue for some time to come. There are overwhelming indicators to say that cryptocurrency is the future. Unfortunately, I feel that many people still have no idea what cryptocurrencies are. Consider this: if you are not regularly on the internet or social media you might have never heard about cryptocurrency. In Zimbabwe, millions of Zimbabweans do not have that access. As for those with access, it is also many of them who are not yet conversant with cryptocurrency. There is a lot of teaching to be done to make more people understand this field. That is why it would be beneficial to share with you simplifications of some common crypto terms.
Blockchain
By definition, a blockchain is a decentralized digital ledger that keeps a store of transactions. You can best understand by considering the traditional ledger most of you might be familiar with. A blockchain is a technology upon which cryptocurrencies operate. For example, when you send or receive cryptocurrency into your wallet, those transactions are stored on a digital ledger. That digital ledger is decentralized meaning that it is not stored in one central location. Each transaction is what is essentially called a block. So when one transaction is ratified it connects to the next thus forming what we the blockchain.
Cryptocurrency
In simple terms, a cryptocurrency is a digital and decentralized currency. It can be used as a store of value, can be used to buy or sell, and can be traded for other cryptocurrencies or fiat currencies. It is more or less like your fiat currencies (e.g. US dollars) but with certain fundamental differences. For example, cryptocurrencies do not have physical forms e.g. coins or notes – they are solely digital. Two of the most common cryptocurrencies are Bitcoin and Ether. In Zimbabwe, we also have our very own first cryptocurrency that is upcoming called Zimbocash (abbreviated Zash).
Bitcoin (BTC)
Bitcoin is the first-ever cryptocurrency to be introduced in the world. It is abbreviated BTC and was launched in 2009. It is the topmost cryptocurrency right now with a value of more than US$60000.
Ethereum
People mostly called the cryptocurrency Ethereum but it is Ether (abbreviated ETH). Ethereum is the blockchain that it operates on. This is unlike Bitcoin where the crypto and the blockchain it operates on are the same. Right now 1 ETH is over US$4500. By the way, Ethereum was launched in 2015 and to date it is the second most valuable cryptocurrency.
Coin
A single unit of any cryptocurrency is called a coin. If I say that I have 1000 Zash that is as good as saying that I have 1000 Zash coins. This basically to any cryptocurrency e.g. 10 BTC and 10 ETH simply mean 10 Bitcoin coins and 10 Ether coins respectively.
Altcoin
Bitcoin is so popular that many people think cryptocurrency and Bitcoin mean the same thing. As in, they think Bitcoin is another name for cryptocurrency or vice versa. It stems from how popular and highly valuable Bitcoin is. So any other cryptocurrency besides Bitcoin is called an altcoin – just a compound word for alternative coin. Ether, Zash, and so on are altcoins; in fact, there are thousands of altcoins in the world today.
Keys
Cryptocurrencies are digital currencies right, so that means they have no physical form. This makes it inevitable to do transactions through the use of wallets. There are so many different types of crypto wallets you can choose from. When using such wallets there are two types of keys you use namely, public keys and private keys. The public key is what someone uses to send you cryptocurrency. Your private key is what you use to gain access to your wallet. Your private key is confidential and must be kept secure. Consider your mobile money wallet – EcoCash or One Money, for example. Your number is like the public key and your PIN is like your private key.
Exchange
This is a platform where you can buy, sell, or trade cryptocurrencies. There are so many of them out there and it is up to you to do your homework to find one that works for you. Some of the common cryptocurrency exchanges are Coinbase, Binance, and Kraken, amongst hundreds of others.
Mining
In a blockchain, you can think of the blocks as transactions or computers that validate those transactions. That is why it is termed decentralized; it is the computers forming that blockchain that validate the transactions. How they get to be chosen in turn to handle the various transactions depends on the protocol of the blockchain in question. When a computer on the network gets a turn to handle a transaction, there is a reward for doing that. Thus when you have computers on a blockchain network you can earn money through this framework. This is what is referred to as mining in cryptocurrency.
NFTs
NFT stands for non-fungible token and it is not easy to define it in one statement. I once did an entire article on this. In the simplest of terms, NFTs are digital assets stored on a blockchain that can be traded i.e. exchanged, sold, and transferred, amongst other things. With NFTs you can assume or give ownership, manage, gain or give permissions, and or transfer assets (digital or physical). Some quick examples of NFTs are virtual properties, digital art, or title deeds to physical properties.
These are 10 of the common cryptocurrency terms you need to know. I am sure the simplifications I did will help you grasp them such that you start your journey of exploring cryptocurrencies. Like I mentioned here in Zimbabwe we have an upcoming cryptocurrency called Zimbocash (abbreviated Zash). When Bitcoin in 2009 started its value was US$0.0008. In early 2011 its value rose to US$1 and today its value is over US$60000. Right now the value of 1 Zash is US$0.05 – at one point it reached US$1.37. So it is interesting to see how Zash will fare moving forward.
