As cryptocurrency continues to emerge as a financial phenomenon, prospective investors face a learning curve to gain fluency in its terms and trends.
TCORS Capitol Group, LLC. embraces innovation, and strives to operate on the vanguard of technology, finance, and communications. In that spirit, we have generated a quick glossary for those interested in this relatively new and dynamic investment frontier.
Blockchain Technology: A shared database that uses a decentralized ledger to record transactions in groups, or blocks. “Members compete to encode transactions; when a solution is found, the “block” is added to the record of all prior transactions (the “chain”), which is then implemented across the network.” (Forbes) Cryptocurrency subsits on blockchain technology.
Decentralization: When currency is backed by a peer-to-peer network, rather than by a traditional single entity or bank.
Cryptocurrency: “A medium of exchange that is digital, encrypted and decentralized. Unlike the U.S. Dollar or the Euro, there is no central authority that manages and maintains the value of a cryptocurrency. Instead, these tasks are broadly distributed among a cryptocurrency’s users via the internet.” (Forbes) Cryptocurrencies include Bitcoin (BTC), the original and most popular cyptocurrency, and a multitide of further proliferations, including Ethereum (ETH), Stellar (XLM), and Dogecoin (DOGE). (See a current list of the most popular cryptocurrencies here.)
Exchange: A marketplace to buy and sell cryptocurrency.
Wallet: A repository for cryptocurrency holdings (often digital).
Proof of Work/Proof of Stake: Two validation techniques used to verify cryptocurrency transactions. (See Forbes for their incisive analysis.)
Mining: How new units of cryptocurrency enter the market, typically in exchange for verifying transactions. Due to the significant data processing power required, currently mining does not generally occur on the individual level in Proof of Work systems, though individuals (who own cryptocurrency, or “stake”) do sometimes mine in Proof of Stake systems (see this thorough guide to Bitcoin mining).
As cryptocurrency takes foot in the financial sphere, with its inherit volatility and thus its potential for growth, an increasing number of retailers, gift card purveyors, and payment services (notably Paypal), have begun to accept crypto as an alternate form of payment. Though questions regarding protection and regulation arise, cryptocurrency continues to captivate and assert staying power in the future of finance.
Exchanges to explore investment and resources for more information, for the novice and seasoned investor alike, include Coinbase and Bitfinex, amongst others.
For a deeper dive into cryptocurrency policy and analysis, Nasdaq, Time, and Forbes provide comprehensive guides. For up-to-the-minute cryptocurrency news, videos, podcasts, and more, visit Coindesk.