Cryptocurrency has become the latest financial and accounting trend across the globe in recent years. It’s going to grow in popularity fairly fast, so the chances are you will need to have an understanding of it.
As with anything new, there are many new technical terms associated with cryptocurrency that can be quite difficult to understand at first.
We have put together a jargon buster for you to refer to if you ever come across the below terms:
Mining – Crypto mining refers to the process of gaining cryptocurrencies by solving cryptographic equations with the use of high-power computers. As the outcome of this work, the miners receive pay with cryptocurrency.
Blockchain – Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain.
Airdrop – An airdrop is a distribution of a cryptocurrency token or coin, usually for free, to numerous wallet addresses.
Initial Coin Offering – An Initial Coin Offering is an unregulated process by which funds are raised for a new crypto venture via the issue of a cryptographic token.
Wallet – The software used to send and receive bitcoin and other cryptocurrencies.
Hard Fork – A hard fork is when a single cryptocurrency splits in two. It occurs when a cryptocurrency’s existing code is changed, resulting in both an old and new version.
Fiat Money – This type of money is generally an established currency, often by government regulation e.g., GBP/USD.
Ledger – A cryptocurrency public ledger is a record-keeping system. The ledger maintains participants’ identities anonymously, their respective cryptocurrency balances, and a record of all the genuine transactions executed between network participants.
Private Key – A private key is like a password. It’s a string of numbers and letters that allows you to access and manage your crypto funds.
These are the most common jargon words associated with the world of cryptocurrency, but there are many more.
If you need help understanding anything to do with cryptocurrency, and the accounting and tax implications it has for you and your
business, please get in touch with our team today on 01952 882434 or [email protected]