Decentralized finance is the 21st century trend in the domain of finance. Cryptocurrency is the form of decentralized finance.
Coming to the point, the knowledge of cryptocurrency terminology is important for every crypto enthusiast. In case you plan on investing in cryptocurrency in 2021, correct knowledge can help you invest wisely in this domain of finance.
Some Key Terms For Crypto Investors To Know:
Have some patience and trust your ability to learn new terms of decentralized terms. Explained below is the list of some of the crypto terms for you to know about before investing in cryptocurrency 2021.
ICO stands for Initial Coin Offering. It is a kind of campaign that cryptocurrency startups launch to raise fund for their cryptocurrency project. ICO can be completed either in one phase or in multiple phases. The price of the cryptocurrency likely to be launch could vary during every phase of ICO.
IEO stands for Initial Exchange Offering. IEO is not launched by the cryptocurrency startups. Instead, Cryptocurrency exchanges launch IEO to help cryptocurrency startups raise funds for their cryptocurrency projects.
The exchanges known for performing IEO are always ready to fulfill the commitments promised. The cryptocurrency projects that decide to opt for IEO have to pay listing fee to the cryptocurrency exchange hired.
STO stands for Security Token Offering. STO is very much similar to the ICO. All investors are issued a coin or token. The coin or token issued represent investors’ investment. STO is an investment contract into an underlying investment asset. Stocks, bonds, funds and real-estate investment trusts are a good example of it.
STO represents is good medium to be familiar with the ownership information of the product that gets recorded on a blockchain. It can also be a hybrid approach between ICOs and IPO (Initial Product Offering).
Most of the crypto tokens based are based on ERC20 protocol. ERC stands for Ethereum Request for Comments. The purpose of this protocol is to govern tokens on Ethereum blockchain. The suffix 20 represents the unique proposal ID.
This is another key thing you should know about before investing in cryptocurrency in 2021. It is a form of listing service that cryptocurrency trading exchanges offer to cryptocurrency startups.
The purpose of ICO/IEO/STO listing is to help cryptocurrency projects gain some exposure on digital front and attract some investors. But cryptocurrency startups have to apply for ICO/IEO and STO listing on exchanges. Only then cryptocurrency exchanges list any ICO/IEO and STO.
Token or Coin Listing:
This form of listing service is also offered by cryptocurrency exchanges. The purpose of token or coin listing is to help cryptocurrency projects gain some financial exposure.
This is why many cryptocurrency project owners are seen chasing exchanges. They email exchanges about or fill-up their coin or token listing forms for this purpose. In simple words, coin or token listing helps cryptocurrencies get listed on decentralized exchanges for trading purpose.
This is another key thing you should know about before investing in any cryptocurrency in 2021. It is a kind of self-executing contract. A smart contract has the terms and conditions of agreement. This agreement is between the buyer and seller. This agreement is written in the form of a very secure coding.
This code and the agreement exist throughout t he blockchain network. This code performs a number of tasks. The list includes but is not limited to the following only:
- Controls the execution.
- Makes transactions easy to track.
- Makes transactions irreversible.
- Allows reliable transactions to be carried out among disparate and anonymous parties.
Smart contract eliminates the requirement of any central authority, legal system or enforcement mechanism for this purpose.
This is something that most off the cryptocurrency enthusiasts do not have any idea about. A block explorer is an online blockchain browser used for displaying information about any cryptocurrency in human readable form.
The list of information you can see about any cryptocurrency using block explorer includes but is not limited to the following only:
- Transaction histories
- Balances of addresses
The most popular example of a block explorer or blockchain browser is the Etherscan.
Coming back to the point, before investing in any cryptocurrency in 2021, this is not the end of the list of cryptocurrency terminology you must educate yourself about. You can do some research about it on your own or we will continue to your knowledgebase about it.