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Crypto Cheat Sheet for Beginners

Crypto Cheat Sheet for Beginners

1. Basic Crypto Terms

  • Cryptocurrency:
    A type of money that only exists online. It uses special codes to keep transactions safe.
    Example: Bitcoin is a cryptocurrency.

  • Blockchain:
    Think of it as a digital notebook where every transaction is recorded. This notebook is shared with everyone, making it hard to change any entries.
    Example: When you send Bitcoin, the transaction is added to the blockchain.

  • Decentralization:
    This means no one person or company is in charge. Instead, lots of people help manage and check the system.
    Example: Instead of a bank controlling your money, the network of users validates transactions.

  • Wallet:
    A digital wallet is like your online purse or bank account where you keep your cryptocurrency.
    Example: A hot wallet is online (like an app), and a cold wallet is offline (like a USB stick).

  • Public Key:
    This is like your email address for crypto. You share it with others so they know where to send you money.
    Example: If you want to receive Bitcoin, you give out your public key.

  • Private Key:
    Think of it as the password to your wallet. It must be kept secret because it lets you access your funds.
    Example: Never share your private key, just like you wouldn’t share your email password.

  • Mining:
    The process of using computers to solve puzzles that help verify transactions on the blockchain.
    Example: Bitcoin mining is how new bitcoins are created and how the network stays secure.

  • Staking:
    This is like putting money in a savings account to earn interest, but with cryptocurrency. You lock up your coins to help run the network and get rewards.
    Example: Some cryptocurrencies let you stake coins and earn extra coins over time.

2. Types of Cryptocurrencies

  • Bitcoin (BTC):
    The first and most popular cryptocurrency. It’s often called "digital gold" because of its value and rarity.
    Example: People use Bitcoin to store value or make large transactions.

  • Altcoins:
    Any cryptocurrency that is not Bitcoin. There are many types, and each has its own features.
    Example: Ethereum (ETH) is an altcoin that also allows smart contracts (automated deals).

  • Stablecoins:
    Cryptocurrencies that are tied to real-world money (like the US Dollar) to keep their value stable.
    Example: USDT and USDC are stablecoins, so their value doesn’t change much compared to other cryptocurrencies.

  • Meme Coins:
    Coins that started as jokes or memes but sometimes become popular.
    Example: Dogecoin began as a meme but is now widely known.

  • Utility Tokens:
    These tokens give you access to a product or service within a project or platform.
    Example: A token used on a gaming platform to buy items within the game.

  • Security Tokens:
    Digital tokens that represent ownership of real-world assets like a share in a company.
    Example: A token that works like a digital stock, giving you a part of a company.

3. Trading & Market Terms

  • Spot Trading:
    Buying and selling cryptocurrency for immediate delivery.
    Example: When you purchase Bitcoin on an exchange and it shows up in your wallet right away.

  • Futures Trading:
    A way to bet on whether the price of a cryptocurrency will go up or down in the future, without owning it right now.
    Example: You might agree to buy Bitcoin at a set price next month.

  • Leverage:
    Borrowing money to increase your trading size. This can lead to bigger gains, but it also increases the risk of big losses.
    Example: If you use 2x leverage, a small price move can double your profits or losses.

  • Margin Call:
    A warning you get when your borrowed money is at risk because your investment is losing value.
    Example: If your leveraged trade starts losing too much, you might be asked to add more money to keep it open.

  • Limit Order:
    An order to buy or sell cryptocurrency only at a specific price or better.
    Example: You might set a limit order to buy Bitcoin only if its price drops to $30,000.

  • Market Order:
    An order to buy or sell immediately at the best available price.
    Example: When you use a market order, you get the current price without waiting.

  • Liquidity:
    How easily an asset can be bought or sold without affecting its price.
    Example: Bitcoin is very liquid because many people trade it, meaning you can buy or sell it quickly.

4. Technical Analysis Terms

  • Support:
    A price level where a cryptocurrency often stops falling because many people are buying at that price.
    Example: If Bitcoin often bounces back when it hits $30,000, then $30,000 is a support level.

  • Resistance:
    A price level where a cryptocurrency often stops rising because many people are selling at that price.
    Example: If Bitcoin usually falls after reaching $40,000, then $40,000 is a resistance level.

  • RSI (Relative Strength Index):
    A tool that measures if a cryptocurrency might be overbought (too many people buying) or oversold (too many people selling).
    Example: An RSI above 70 might mean the coin is overbought, and below 30 might mean it is oversold.

  • Candlestick Patterns:
    Visual patterns on a price chart that show how the price has moved. They can give clues about what might happen next.
    Example: A “Doji” pattern shows uncertainty, which might signal a change in price direction.