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Cryptocurrency terms to know

If you wonder what a blockchain is, here's a guide for you.

July 30, 2022 at 2:29PM
Cryptocurrency, such as Bitcoin, is an unregulated financial system heavily influenced by mathematical models. (Kin Cheung, Associated Press file/The Minnesota Star Tribune)

Cryptocurrency is an unregulated financial system heavily influenced by mathematical models. While a bank transaction involves depositing or withdrawing a set amount of a regulated currency such as dollars or euros, backed by governments with real assets, digital money is unregulated.

That means consumers need to do more research on their investments. Consumers will never have a physical coin or bill but instead have transactions electronically recorded.

To help understand this decentralized network of money exchanging, we've used a list of definitions provided by Coinsource, a company that operates Bitcoin ATMs across the U.S., including Minnesota.

Coin: Like U.S. currency, this is a digital asset that is created by an independent blockchain, usually a cryptocurrency company. Also called a token, the most popular is Bitcoin, with other examples being Ethereum or Binance.

Digital asset: An asset is created digitally with set parameters revolving around scarcity, transferability and exchangeability attributes. This helps establish the market value of your coins.

Blockchain: In its most basic terms, it's an encrypted digital ledger that records your cryptocurrency transactions. It keeps track of how much of a certain type of currency you have, how you have spent it and if your digital asset has gained or lost value.

Initial coin offering: An ICO in short form, this is a crowdfunding strategy for startups where those who contribute tokens for a specified return.

Mining: This is the verification process in which blocks are added to a blockchain. It basically is a series of computer computations and requires a data center.

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Non-fungible token (NFT): A token with an inherent quality that cannot be exchanged for another token.

Stablecoin: A cryptocurrency that is pegged to a stable asset such as the U.S. dollar.

Whale: A whale is a significantly large investor in Bitcoin, or another asset.

about the writer

about the writer

Nick Williams

Prep Sports Team Leader

Nick Williams is the High School Sports Team Leader at the Minnesota Star Tribune. He joined the Star Tribune as a business reporter in 2021. Prior to his eight years as a business reporter in Minnesota and Wisconsin, he was a sportswriter for 12 years in Florida and New York.

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