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New terms for a new world

Updated: May 20, 2021

One of the reasons why it is so difficult to understand the world of cryptocurrencies, is because the information is too scarce or too technical. In general, is assumed you already know these concepts, but why would you?

To give a little help, here are some of the acronyms and new words you will most likely come across:

BTC and ETH: these are the abbreviations used to name -in this case- Bitcoin and Ethereum. Every cryptocurrency has a name and an abbreviation. Here are some examples:

  • Bitcoin = BTC = XTC

  • Ethereum = ETH

  • Polkadot = DOT

  • Cardano = ADA

  • Uniswap = UNI

This is just a small sample. The website Coin Market Cap, has a handy list of over 4,600 crypto with their name and abbreviation.

Fiat: is the name given to regular money. Some examples of fiat are US dollar (USD), Euro, British pound (GBP), and Chilean peso (CLP).

NFT: is the abbreviation of Non-Fungible Token. When something is fungible, they can be interchanged for another identical item. Think for example on a £5 note, if you use the one you have in your pocket or another you are borrowing from a friend, it doesn’t matter. Their value is the same and you can buy exactly the same things, because the notes are replaceable. By contrast, an NFT is by definition absolutely unique. Each Token is irreplaceable, therefore, they cannot be interchanged.

DeFi: short for Decentralised Finance. It is one of the ideas driving crypto: the notion that financial instruments (e.g., loans and bonds) can be created without the involvement of centralised finance infrastructure, like governments or banks.

Miner: in short, they are the ones creating new coins. These people or organisations operate highly specialised (and quite expensive) computers to run calculations that will generate new coins. Every time a valid solution to the blockchain algorithms is found, a new coin (Bitcoin, Ether, Cardano, etc) is added to the blockchain. The miners work to “extract” the new coins, hence the name.

These are complex concepts that will be explored further in upcoming posts. But for now, is time to relax.

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