Crypto 101: Here are 10 cryptocurrency terms people use every day from blockchain to NFT – USA TODAY

Kim Komando| Special to USA TODAY

This column was originally published in November 2021.

Despite Bitcoin launching way back in 2009, its only until recently that you cant turn on the news or browse the web without coming across some mention of cryptocurrency.

I got so many questions from my readers and national radio show listeners that I wrote an e-book about crypto to help. I demystify digital currency, mining, and how to get started trading. Tap or click here to get your copy on Amazon.

Sadly, I also hear from people that got fooled by one crypto scam or another. Where there is money, criminals are waiting. Tap or click for five clever crypto scams making the rounds right now and steps to stay safe.

Before we get started, know this is not financial advice. The crypto world is volatile, and you should never risk money you arent comfortable losing. Now, lets take a look at some of the most common lingo:

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Every cryptocurrency transaction is processed, verified, and recorded on a virtual ledger known as a blockchain. When someone buys or sells using cryptocurrency, another entry is made on this virtual ledger.

Think of the blockchain as a series of boxcars from a train. When a cryptocurrency transaction is made, another boxcar gets added to the train.

The blockchain is decentralized. This means its not stored on one machine or even across one network. Instead, the blockchain exists on computers all over the world that are accessible because of the internet.

People and companies help verify each transaction that gets added to the blockchain using their own computers processing power on a decentralized peer-to-peer network. Each transaction is timestamped, individually encrypted, and cannot be reversed or changed. Yes, you read that right crypto transactions cannot be reversed.

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I know what youre thinking: I thought a Fiat was a car. Not in crypto-land. Fiat money is government-issued currency. If youre in the United States, that means the U.S. dollar.

Cryptocurrency, on the other hand, is virtual money.

Cryptocurrencies arent backed by governments or any other standard used with traditional currency. Each token represents the amount you own.

How much each token is worth varies based on the current market value. One day it's up; the next day down. With cryptocurrency, the price fluctuations can happen much faster and are more extreme both positive and negative. A good resource to check the current prices is CoinMarketCap.

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Heres an easy one to remember. An altcoin is any digital currency thats not Bitcoin. There are thousands of cryptocurrencies, with new ones being added all the time.

At the time of this writing, these are the five currencies with the highest market caps. (That is the total market value of the circulating supply.) Since crypto moves so fast, this list may have already changed by the time youre reading.

Bitcoin

Ethereum

Binance Coin

Tether

Solana

To buy cryptocurrency, you need to start with an exchange. Think of an exchange like a crypto middleman. Its an online service that allows you to exchange your fiat for crypto or change crypto into fiat.

If you're familiar with traditional investing, a crypto exchange functions as a brokerage. You can deposit money through a bank transfer, by wire, through a debit card, and other standard deposit methods. You can expect to pay fees for most transactions.

You can also buy crypto through apps you already might be using, like Venmo, Robinhood, or Cash App.

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In basic terms, a cryptocurrency wallet is an app or physical storage device that allows you to store and retrieve your digital currency. Wallets can hold multiple cryptocurrencies, so youre not limited to just Bitcoin, for example.

Whether you use an app or a physical wallet, its important to note that the currency itself isnt stored there. Rather, wallets store the location of your currency on the blockchain.

Wallets are split into two main categories: Hot and cold. A hot wallet is, by definition, connected to the internet. The most secure way to store your cryptocurrency is with a cold wallet one that isnt connected to the internet.

Physical wallets come in different types but are usually specially designed USB drives that directly store your cryptocurrency for later use. Physical wallets provide you the most protection from hackers.

Two popular cold wallets are the Ledger Nano X and Trezor Model One. Of the two, I prefer the Ledger Nano X because it supports 23 different types of cryptocurrencies and has additional features.

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You have probably heard this term associated with Bitcoin, which is created by mining. Computers mine coins by solving complex math problems. The more powerful the computer, the faster it can think.

Now, if your computer is the fastest one to solve the problem, bingo you win one unit of whatever cryptocurrency youre mining.

While there are a few cryptocurrencies out there with an infinite supply, most have a limit. For Bitcoin, that limit is 21 million. The last coin will be mined in 2140 or sooner.

Heres another simple one. DeFi is a shortened version of decentralized finance. This term refers to financial transactions that happen without a middleman, like the government, a bank, or another financial institution.

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Youve heard of them: Nonfungible tokens. Thats a fancy way of saying, This digital item is one of a kind and irreplaceable. It applies to anything you can imagine, from online artwork to songs, viral videos, articles, text logos, and GIFs.

Some people collect vintage cars, wines, famous art and baseball cards. Now, any digital item also can be turned into a collectible. They also act as status symbols online. Check Jimmy Fallons Twitter profile picture for an example.

The only way to buy an NFT is by using cryptocurrency. You can buy an NFT through an auction platform, secondary marketplace, or by participating in a mint. Whats that, you ask?

Minting is how a file, such as a JPEG or GIF, is recorded to a blockchain. After an NFT is minted, it can be sold or traded. If you are participating in a mint, that means you are the first person to buy that work from its creator. You can hold it, sell it, or trade it.

During the minting process, the creator specifies the royalties they receive from future sales. This acts as commission if the work changes hands in the future and is a big draw for artists looking to go digital. If you sell an NFT on a secondary marketplace, it likely gets a cut of the sale too.

Here's a term you might see on social media. HODL stands for "hold on for dear life." Some say it originated as a typo of the word "hold" on a Bitcoin forum way back, but now it's everyday slang.

The idea behind it is simple: If you believe a project or currency will gain more value, just hodl even through dips in the market.

Want to dive even deeper? Pick up Cryptocurrency 101. Its my handy guide to buying, selling, and spending digital currency the safe way.

Bonus Tip: How your TV streaming apps stalk you

Whether you use Netflix, Hulu, Amazon Prime, Disney+, or Apple TV, chances are your favorite apps are tracking you wherever you go. In this episode, you'll learn the secret risks you take when you cut the cord.

Check out my podcast Kim Komando Explains on Apple, Google Podcasts, or your favorite podcast player.

Listen to the podcast here or wherever you get your podcasts. Just search for my last name, Komando.

Learn about all the latest technology on theKim Komando Show, the nation's largest weekend radio talk show. Kim takes calls and dispenses advice on today's digital lifestyle, from smartphones and tablets to online privacy and data hacks. For her daily tips, free newsletters and more, visit her website atKomando.com.

The views and opinions expressed in this column are the authors and do not necessarily reflect those of USA TODAY.

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Crypto 101: Here are 10 cryptocurrency terms people use every day from blockchain to NFT - USA TODAY