Bitcoin, one example of a digital currency, functions as a medium of exchange like cash, but isn’t backed by a government or have the status of legal tender.
Getty Images
In this brave new world of crypto and the blockchain, it pays to know the language. Here’s a list of terms around virtual currencies and the technology that supports them
Cryptocurrency
Digital currencies — such as Bitcoin — that function as mediums of exchange like cash, but aren’t backed by a government or have the status of legal tender. These virtual currencies are supported by encryption and other cryptographic technologies and allow for secure online transactions without third-party middlemen.
Blockchain
The technology that supports cryptocurrency. Blockchain is an encrypted database powered by computer networks that can store, create and share information. Information is stored as “blocks” of data and can be perceived in much the same way as cellular phone minutes or bytes of data. Those blocks are protected by encryption and can be connected to one another — the blockchain. As data comes in and fills a block, that links to the previous block.
Web3
Web3 is described as the latest iteration of the Internet built on blockchain technology.
Non-fungible tokens (NFTs)
Non-fungible tokens are financial securities made up of digital data that cannot be copied and are stored in the blockchain. These tokens can be transferred by the owner and thus can be sold and traded.
Mobile wallets
Mobile wallets are digital ways to store credit, debit, ID and gift cards allowing users to make purchases using mobile smart devices instead of plastic credit, debit or gift cards.
Private keys
A password sequence of letters and numbers that lets you alone access your crypto assets. A private key is, in the words of Coinbase, a password “that unlocks the virtual vault that holds your money.”
Public keys
An online address that allows you to send and receive funds.
Keys can be stored online in a virtual or mobile wallet; or offline in so-called “cold storage” — anything from a computer not linked to the Internet to an old-fashioned notepad.
Market capitalization
The value of an individual coin multiplied by how many of the coins exist. Holders use the measure to compare currencies.
Stablecoins
Any cryptocurrency designed to have a relatively stable price whether pegged to a virtual currency, money, gold or commodities.
Fiat Currency
Money. What the crypto industry calls standard legal tender such as the dollar, pound or yen issued by a government.
This story was originally published June 21, 2022 5:00 AM.
.JPG)
Darrell Smith is The Sacramento Bee’s Elk Grove reporter. He joined The Bee in 2006 and previously worked at newspapers in Palm Springs, Colorado Springs, and Marysville. Smith was born and raised at Beale Air Force Base, near Marysville, and lives in Elk Grove.
