Top 4 Cryptocurrency Terminologies
Top 4 Must Know Cryptocurrency Terminologies
Over time, each industry develops its own terminology, creating certain terms and a specific language that isn’t always self-explaining.
To a newcomer to a business or sector, this can be a huge challenge, particularly as they come across words and acronyms that make little sense.
The industry of cryptocurrency is no different.
Understanding all the terminology and acronyms, particularly in the hyper-complex world of cryptos, can be a very complicated endeavour.
Although this industry is fairly new, operators have established a widely accepted terminology to define the usability of cryptocurrency exchanges and blockchain technology in this space.
This article explores the most common words and phrases for cryptocurrencies and provides a strong foundation for people who want to pursue this innovative asset class.
The word “circulating supply” refers to the number of coins or tokens in cryptocurrency that is publicly available and circulate on the market.
A cryptocurrency’s circulating supply can increase or decrease over time. For eg, BizzCoin’s circulating supply would eventually rise to 320 million coins. Alternatively, coin burn incidents enable the circulation stock to decline and coins to eventually be withdrawn from the market.
The circulating supply refers to the coins which are publicly accessible and should not be confused with the total supply or max supply. The total supply is used to quantify the number of existing coins, that is, the number of coins already issued minus the burned coins. In principle, the total supply is the sum of the circulating supply and the coins that are locked up in the escrow. The total output, on the other hand, quantifies the cumulative number of coins that can now remain, plus the coins that will be produced or made usable in the future.
Cryptocurrency Market Cap and Calculation
The term market capitalisation (or market cap) applies to a statistic within the blockchain sector that calculates the overall value of a cryptocurrency. This is determined by comparing the current selling price of a specified coin or token with the total amount of circulation coins.
Market Cap = Current Price x Circulating Supply
For example, when each unit of a cryptocurrency is exchanged at $10.00, and the circulating supply is equivalent to 50,000,000 coins, the market capitalization will be $500,000,000 for this cryptocurrency.
Although the market cap may offer some insight into the scale and success of a business or cryptocurrency initiative, it is necessary to remember that it is not the same as cash inflow. And it’s not reflecting how much capital there is in the economy. This is a common misconception, as market cap calculation is directly dependent on price, but in fact, a relatively small price variation can have a significant impact on market cap.
What Is Gas (Ethereum)?
Gas relates to the cost or price value provided on the Ethereum blockchain network to effectively perform a transaction or execute a contract. Priced in crypto-currency ether sub-units, defined as gwei, the gas is used to distribute ethereum virtual machine (EVM) services such that decentralized software such as smart contracts can be self-executed in a stable manner.
The actual gas price is calculated by the miners of the network, who will refuse to accept a purchase if the gas price fails to meet their threshold.
The gas concept was introduced to maintain a distinct value that merely indicates the consumption on the Ethereum network toward computational expenses. Using a different device enables differentiation between the real cryptocurrency value and the computing expense to be preserved. Here, gas applies to transaction costs for the Ethereum network, not the fuel for your engine.
Crypto tokens, also referred to as crypto assets, are specific types of virtual currency tokens residing on their own blockchains and expressing an asset or utility. These are more commonly used for a fundraiser with crowd selling but may still be seen as a replacement for certain things.
For example, one may have a crypto token on a blockchain that represents x number of customer loyalty points used to manage such details for a retail chain. There could be another crypto token which gives the token holder the right to watch 10 hours of content streaming on a blockchain for video sharing. Another crypto token on a single blockchain may also reflect certain cryptocurrencies, such as a crypto token becoming equivalent to 15 BizzCoins. These crypto tokens are tradable and transferable between separate blockchain members.
Those are the popular terminology and acronyms in cryptocurrencies used in the sector, which can help provide a deeper picture of the business to a new investor.
Seeing that this is such a diverse and rising sector, more market-relevant terminology is expected to be introduced in the future!
Pay attention to what’s happening next in the crypto sector, keep focused on the new developments in cryptocurrency, and spend like a master earning the sweet cash far quicker!