Core Crypto-Terms Investors Need to Know in 2022
Who could possibly deny that 2021 was the year for cryptocurrencies? Looking back on the market’s recent achievements, we see a pattern of events that are nothing short of remarkable. Despite it being the same year that the Chinese government took steps to effectively ban cryptocurrencies across the board, digital assets still had enough momentum to go on an absolute tear last year.
It was the year that major players in the banking sector adopted cryptocurrencies as an offering to their institutional investors, and mainstream society finally decided to buy in. There were also newcomers that added fuel to the market’s acceleration - NFTs (non-fungible tokens) took the arts and entertainment worlds by storm, and society was introduced to the metaverse once Facebook announced that they would be rebranding as “Meta.”
As we enter another year that’s expected to be just as eventful as the last, the lexicon of cryptocurrency is evolving rapidly. Below are the marquee “buzzwords” that every investor should take the time to understand before investing in the modern cryptocurrency market:
Blockchain: Ultimately, a blockchain is a decentralized ledger of all the transactions that happen across a peer-to-peer network. It is a digital ledger that can store data of any kind, including information about cryptocurrency transactions.
These digital ledgers are essentially a chain consisting of individual “blocks” of data. As new data gets added to the network, a new “block” gets created and is then connected to the “chain. The cool thing about using blockchain technology is that all the transactions can be confirmed without the involvement of a central clearing entity or “middleman.”
Metaverse: Think Roblox and Fortnite – the metaverse is a virtual world. It is a broadly dispersed, interoperable network of 3D worlds that users can experience simultaneously for maximum social connection. The metaverse is powered by a wide array of technologies, including cloud computing, infrastructure, user-generated content, and hardware.
Over the past three years, mega-forces like Google, Apple, and Amazon have invested billions on the creation of the metaverse meaning expectations for the metaverse are incredibly high.
DeFi: Here we have the operational core of the cryptocurrency phenomenon. DeFi is an acronym for decentralized finance. It’s hard to accurately define a $100 billion financial technology that is anticipated to bring down Big Finance and all those traditional, money-hungry bankers, but by using smart contracts that operate using DeFi technology, it is precisely what DeFi is being developed to achieve.
dApps: Decentralized Applications are like any digital app you might find on a smartphone or laptop, with the bonus of employing blockchain technology to prevent users’ data from falling into the hands of the company who is behind the app. For example, cryptocurrency is decentralized money, and dApps are decentralized applications.
NFT (Non-fungible Tokens): The Christie's auction house sold perhaps the most well-known NFT in 2021 - just a smattering of images done by a digital artist known as Beeple…that brought in nearly $70 million.
NFTs burst onto the stage in 2021 and they rightfully demand our attention. In the simplest terms, Non-fungible tokens are pieces of digital content that are linked to the blockchain, the same technologies that power cryptocurrencies like Bitcoin and Ethereum. NFTs are entirely unique and not interchangeable, which means that no two NFTs are alike.
This list is by no means exhaustive, but as Bitcoin and cryptocurrencies continue being adopted by mainstream society, the above terms will grow increasingly more important as more traditional investors dip their toes into the cryptocurrency market.
Author: Greyson Kelly
Greyson Kelly is a business writer living in Milwaukee, Wisconsin. He writes extensively on technological trends, cryptocurrency, and ‘cutting edge’ industry topics. He has an MBA in Business and has over a decade of experience in communications and public relations.