10 must-know intermediate crypto terms explained
In the world of Cryptocurrencies, there are many things that seem more complicated than they really are because of the terms people use. These terms are sometimes so integrated into the crypto communities that they are used basically everywhere. However, for outsiders and newcomers, this can be quite confusing having never heard of these words. So to help you Crypto curious/nubies get started we have provided 10 intermediate must-know crypto terms for you.
Is a machine similar to a normal ATM where you can get your cash from but instead of fiat currency it gives you Bitcoin.
Is an online tool that lets you look up transactions previously made on a blockchain network like Bitcoin. Besides the transactions, you can also see the balances that are being held on a certain address and a few interesting stats about that blockchain. Every different blockchain network has a different block explorer that lets you look up transactions. Meaning that you can not look up a Bitcoin transaction on an Ethereum block explorer and vice-versa.
A cold wallet is a cryptocurrency wallet that is not connected to the internet. Usually, hardware wallets are physical items that are not connected to the internet thus making them cold wallets. For storing large amounts of cryptocurrency it is safer to store them on a cold wallet as opposed to a hot wallet.
A hot wallet is a cryptocurrency wallet that is connected to the internet. These wallets are usually easier to set up and use. Most of the mobile wallets out there are hot wallets as they are constantly connected to the internet. Hot wallets are great to use as spendings wallets but for larger amounts of digital currency, it is safer to store them on a cold wallet.
A paper wallet is a physical document usually a piece of paper (that’s why the name paper wallet) that contains the private key or seed phrase of a blockchain wallet. Because it’s not possible to connect a piece of paper to the internet, hacking a paper wallet is simply impossible, however, there is always the risk of losing or destroying a paper wallet.
Is the least used form of wallet out there, where one individual completely memorizes all the 64 characters of their private key or all 12 words from their 12-word recovery phrase. A brain wallet is definitely the safest form of the wallet there is, that is if you don’t forget even 1 character.
A custodial (wallet) is an organization, company, or individual that stores the private keys for you, giving them full control of your funds similar to money on a bank account (note: this does not mean that a custodial has the same protection of your money as a bank does). Examples of custodial are Exchanges, Crypto banks, lending platforms, and some wallets as well.
Stands for “Do Your Own Research”. This comes from the fact that in the crypto world many people have different ideas and believes and very few of these people are really financial advisors, so it is very important you do not just copy anyone. But always Do Your Own Research First (DYOR), before making a decision.
Stands for Decentralized Finance, which is the use of financial tools on the blockchain making them Decentralized. Tools as borrowing, lending, and many more.
Second Layer Solutions
A set of solutions built on top of a public blockchain to improve its scalability and efficiency, especially for small transactions or actions. For example, the Lighting Network is a second layer solution for the Bitcoin network, which provides fast and cheap transactions that occur outside of the Bitcoin Blockchain.
We hope that these 10 Intermediate crypto terms help you get a better understanding of the crypto space. If you have any more crypto-related questions feel free to ask them on our socials.
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