DeFi
September 28, 2022
What is Token Burn and it's effects on price
An A-Z guide on token burning and how it is largely impacting the cryptocurrency industry.
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Many of you are here today because you are stepping into the crypto world. It is really important to know about everything possible in your hands. Cryptocurrency is new for many of you and understanding it is quite challenging and we totally understand.
Like banking, at the start, you are not aware of many terms or phrases and get confused about how things work here. So learning from the base or learning about the terms helps the most. You have to do the same to understand about cryptocurrency.
Let’s understand the basic terms or phrases of cryptocurrency, so you will get a better understanding of the market in the future.
There are various terms and phrases in the crypto market. We will recommend you to understand the terms, it will help you to invest in the crypto market. Here are some of the terms which are the basic ones and will help beginners to commence their journey in the crypto world.
An altcoin is not one coin, you can classify it as a category. After Bitcoin was released, there was a hike in the market, new coins were created, so any coin launched after bitcoin is called Altcoin or Alternative to Bitcoin.
Altcoin coins come in use for various purposes, most of them serving real-world purposes. Some are just made for fun and have no use, yet they are famous because of the hype created on social media. Ethereum is the second-largest coin after Bitcoin.
Bearish or bear in cryptocurrency terms would mean that you think that the market or a token or financial instrument might experience a decrease in its value, i.e., it might experience a trajectory that is downwards. Bearish is the complete opposite of bullish.
The most popular coin with the largest market capital launched back in 2009 is bitcoin. Bitcoin was one of the coins that bought cryptocurrency in the big picture. Many coins were launched and they tried to match the standards set by Bitcoin. The coins launched after bitcoin are termed as Altcoins or Alternative to Bitcoin.
Blockchain is the base of every coin. Every transaction you make is made on the block. Some have a fixed limit while others have an infinite cap. If the block reaches its limit the new block is launched. The concept of blockchain is tough to understand but once you get it, you have cracked the core of the currency.
Bullish or bull would mean that a person thinks that the market or a specific financial instrument or token is going to have an upward trajectory. It is important for a person trading in the Crypto world to identify a bearish or bullish trend as that will help them in figuring out how the market moves.
A coin is called the representative of a network or a blockchain. They are the ones who hold the value, people can buy them, mine, or trade them on some exchange. They are the medium to run a network or a blockchain. Some coins and blockchains share the same name like bitcoin but many don’t.
The term digital gold is simply just a nickname for Bitcoin or any digital currency per say. So, history has it that gold has been one of the most used mediums for exchange and is considered valuable worldwide. Gold is something that is still considered as an investment or a gift or in simple terms an asset which gains value over time.
Now, since the establishment of Bitcoin, it has been growing and reaching new heights. Since then Bitcoin and gold are often compared as a valuable asset and which is exactly why it gained the name of ‘digital gold’.
A crypto exchange is nothing but a platform where crypto transactions can take place. With the help of exchange you can carry out your conversions from actual money to cryptocurrency and vice versa. So basically it is just a medium for trading digital currencies.
Fiat is nothing but the cash you carry in your wallet. It is supported by the government and the value wholly depends on the country. There are many aspects that can affect the value of fiat, but in other ways so does affect the crypto market. So being totally opposite in working, Fiat and crypto share one common thing, and ironically it's from the losing side.
When a blockchain changes or updates its protocols or any basic set of rules that it has then the chain gets split creating a new blockchain that has all the history and data of the older blockchain but is different from it because of the changes that were made to it. When this happens, it is called a Fork.
On Ethereum as well as other blockchains, the cost that is essential to perform any transaction on the network is known as Gas. Based upon the supply and demand of the assets, the miners set a specific price of gas. This is done for the computational power of the network that is required to process the transactions.
Halving of Bitcoin is an event that takes place on a blockchain. It is done so by reducing the cryptocurrency’s value by half, creating inflation in the value, and in turn escalating the demand for Bitcoin. To put it in more simple terms, halving is said to be done when the reward for mining Bitcoins is reduced in half.
Due to this halving, the inflation rate of Bitcoin along with the rate at which units of cryptocurrency enter circulation is also cut in half. It is done as a part of the strategy in order to fix the maximum supply of Bitcoins.
The total value of all the coins of a particular token or cryptocurrency that have been mined is the Market Capitalization of that cryptocurrency. If you want to figure out what the Market cap is for any crypto, then you have to simply multiply the total number of coins of that crypto with the present price of a single coin.
Mining is a process in which cryptocurrencies are generated or you can say coins are generated. This process also involves the verifications of new transactions that take place. The mining process consists of computer systems around the world that verify transactions and secure blockchains.
Non-fungible tokens or NFTs are a new beginning for modern art or digital art. Collectors can collect anything they want which is listed as NFT, they can buy, re-sell anything. There is total transparency on the platform, people can see all the details of trading. The most important thing is it's one of the platforms which can uplift the digital art industry.
A Node is a computer system that connects to any crypto network and supports it. A node supports the network through validation and relaying transactions. While supporting a network, a Node also makes a copy of the full blockchain. There are 2 types of Nodes: Full Nodes And Lightweight Nodes.
A Node Operator is someone who runs the software that stores the complete copy of the blockchain and broadcasts the transactions across the network. If a blockchain has to work, Nodes are very essential. A Node operator would also make sure that the Nodes have all the resources they need to be stable.
P2P stands for peer-to-peer which is basically virtual currency. P2P is simply an exchange of data or assets between two parties with zero involvement of a centralized authority. It involves fully decentralized transactions between two parties (individuals or groups). The P2P exchange is the very base on which Bitcoin is primarily driven. Almost all the P2P exchanges enable the user to purchase cryptocurrencies with either cash or other forms with said security.
When you have a wallet there are two keys that help in your transactions. One of those keys is a private key which is nothing but an encrypted code that belongs to an individual user and is unique. With the help of a private key, your cryptocurrency is safeguarded as only you can access it. One should never share their private key for obvious security reasons.
One of the other keys is the public key which is nothing but the address to your wallet. With the help of this address you can carry out transactions. You can relate it to your bank account number. Unlike the private key, a public key is meant to be shared with others so that they can send you money and vice versa.
Pump and Dump is, at its most basic, a manipulation of the market that is done by buying a huge amount of tokens or assets and then creating a hype in the market about it which increases the price of the said token and once the price has reached the number the person desired, the person will sell away the tokens. The increase in price is Pumping and the selling of tokens is Dumping
To understand a stable coin you can consider it as Digital traditional currency. But in comparison, it follows all the rules and regulations of the crypto market, it has the same value as USD. Stablecoin used or the most popular in the Crypto market is Tether. Tether was launched as RealCoin; later it was rebranded to Tether.
Seed phrase is nothing but a series of words that are available to grant you access to your wallet in case you happen to forget your password. This seed phrase is generated by your wallet. You can think of this seed phrase just like your instagram backup codes that help you login in case you forget your password.
A smart contract is nothing but a program that is stored on a blockchain. This program comes into action when certain pre-established conditions are met for automatic execution. Smart contracts exist to save the time of the users with immediate action with no involvement of a third party.
Many of you consider tokens and coins as the same thing, but the difference is, a coin indicates what a user can buy from it, and a token indicates what amount the user holds. So the true value in your wallet is Tokens and when you buy something, you buy that from your coin.
The phrase 'to the moon' or 'mooning' for short, refers to the circumstance when the price of a particular cryptocurrency sky-rockets and reaches its all time peak and still continues to go higher. Mooning can also mean that the price of the cryptocurrency has doubled in just a short period of time. Earlier the term was used only for Bitcoin but it's used for every token now.
A crypto wallet can be either a physical USB type of thing or it can simply be in the form of a mobile app or a website. The basic function of this wallet is to store a public and/or private key in order to carry out transactions. A wallet is one of the most basic components when it comes to cryptocurrency transactions.
A Whale is a person that hoards a large number of cryptocurrencies or tokens. Whales hold enough cryptocurrency that they can even manipulate the price of a particular token. It is often the Whales that are found to be doing the Pump and Dump in the crypto world.
White papers are simply a document that is released by a crypto project that contains the information about the concept of the project and all its technicalities to inform the investors. It also contains a roadmap of how it can grow and become successful. These usually contain diagrams, statistics, facts, etc. Any crypto startup that wants to succeed creates a white paper.
If you have been part of any crypto community, you must have observed people throwing around random and sometimes weird short forms like HODL. Is that a spelling mistake? Or are people just crazy? Well no, these are some popular cryptocurrency meaningful abbreviations which we are going to discuss in detail.
Let’s begin with HOLD.
As you might already have guessed, it's a misspelled word of “Hold”. But this abbreviation also stands for “Hold on for dear life” and is quite popular among crypto enthusiasts. HOLD or HODLING is a long-term way of going about cryptocurrency. People who buy and hold their cryptos for a very long period of time are called HOLDERS.
The term DYOR is the most important cryptocurrency term you should pay attention to if you are a beginner or new investor in the crypto market. DYOR stands for “DO Your Own Research”. If you want to stay safe and wiser while investing in cryptocurrency, do your own research before investing and don’t run behind hype, tips or calls from people.
ATH simply stands for “All Time High”. This term is used when any cryptocurrency reaches its highest value or price in the whole timespan from its launch. For example, our favorite Bitcoin broke the ATH of $69,045 in November 2021.
This short form is not new to you, right? FOMO means “Fear of Missing Out”. Trading in cryptocurrency involves a lot of emotions from adrenaline rush to fear and anxiety. FOMO usually kicks in when you see a crypto soaring its price and you don't have it. Investors often make wrong designs in FOMO, so be aware and don’t rush in.
FUD stands for “Fear, Uncertainty and Doubt”. It’s a strategy used by certain people called FUDster to bring bearish sentiment to the market or for a particular cryptocurrency. You will see this term often in the crypto community to describe temporary bearish sentiment.
The Crypto market is highly volatile and investors often go through heavy losses and are then called as REKT. This term is a slang for “Wrecked” and often describes heavy loss on trade or in the crypto market.
Defi stands for “Decentralized Finance”. It is a movement to bring decentralization in the financial sector by eliminating the middlemen like banks or the government. The Defi-based applications are decentralized and open to anyone and everyone with internet access.
dApps are the ones that support Defi. It stands for “Decentralized Applications” and the DeFi activities are often carried out by the dApps developed by engineers on the blockchain. Ethereum blockchain is a major network of all DeFi and dapps.
If you are a beginner to the cryptocurrency market, you may get overwhelmed looking at everything going around in the crypto space. There are new concepts and technologies emerging every 3-6 months and it can really get tough to keep up with everything.
Joining a crypto community might help you get started in the whole cryptocurrency market but you need to be familiar with all the terms and short forms you might see around. This article will help you get familiar with most of the terms, if not all.
I hope this article will help you kick start your crypto journey. If you have any other doubts regarding how cryptocurrency works, do read our articles about the same. If there’s any new term you haven’t seen before, feel free to ask us in the comment box given below.
An A-Z guide on token burning and how it is largely impacting the cryptocurrency industry.
Whitepapers and Litepapers are both essential to research related to any crypto project. Get to know what they are and how to use them effectively.
Here is a list of crypto jobs you can apply for along with the resources to find jobs.
