As cryptocurrency becomes more popular, more businesses and individuals around the world are starting to trade them. In many ways, cryptocurrencies are just like fiat currencies. For example, they have exchange rates, and these rates vary from currency to currency. This means if you want to buy an entire coin of particular crypto, you need to pay the fiat amount equal to its current exchange rate. For example, say the current exchange rate of Bitcoin, one of the most popular cryptocurrencies, is $59,000. That means you have to pay that amount to own an entire Bitcoin. In short, the crypto exchange rate is the price of a digital coin converted to fiat currency, like USD, Pounds, or Euros.
However, the world of crypto is not as simple as it seems. For instance, there are many unique terms associated with cryptocurrencies and their exchange rates. The first step to successfully investing in cryptocurrency is to understand its related terms.
This article will give you the glossary of all useful terms that to cryptocurrency exchange rates.
What are the important terms related to cryptocurrency exchange rates?
Any crypto coin other than Bitcoin. Altcoins include Ethereum, Binance, Tether, etc.
Arbitrage refers to the process of purchasing cryptocurrency on one exchange medium and then selling for a higher price on another exchange.
ATH, also called All-Time High, is the highest price that a digital asset has reached or that the trader has paid for a digital asset since its listing.
ATL, also called All-Time Low, is the lowest price of a digital asset since its listing.
A Blockchain is a decentralized digital ledger that records transactions and tracks digital assets. This technology keeps the whole cryptosystem secure.
Circulating Supply refers to the approximate number of coins or tokens in use or circulating in the public crypto market. In other words, the circulating supply is the total number of coins available for trade.
This is a type of crypto wallet where you store your cryptocurrency offline. Cold wallets are not connected to the internet. They are generally mostly devices like a USB, that are safe from cyber-attacks and protect your crypto holdings from hackers and theft.
These are secondary contracts that derive value from an underlying asset, like Bitcoin or any other trading cryptocurrency.
Crypto exchanges, also called digital currency exchanges, are marketplaces where users purchase, sell or trade cryptocurrency. For example, you can use a crypto exchange to buy crypto using fiat or regular currency, such as USD, Euros, or Pounds. You also use exchanges to convert one cryptocurrency to another, such as Bitcoin to Ethereum.
Double spending refers to the process of sending the same cryptocurrency to two different wallets. In other words, double spending is making two payments using a single amount of cryptocurrency to deceive the recipient. Double spending is basically fraud and theft.
National currency issued by the government of a country. These currencies aren’t backed by any physical commodity and don’t have any intrinsic value. Fiat currencies include USD, GBP etc.
Gas is a term associated with the Ethereum platform, which refers to the fee or price that you pay to make a transaction. In other words, Gas is the price you pay to a miner to receive crypto for you.
A hot wallet is a crypto wallet that is online (connected to the internet) and software-based. These wallets can be easier to hack than cold (offline wallets).
A limit order lets users buy or trade a cryptocurrency at a specified limit price or better. With a limit order, you can specify (limit) the price at which you will buy or sell crypto.
Liquidity is the measure of a coin’s ability to easily and quickly convert into cash or other crypto coins. A liquid cryptocurrency usually trades at its current market price.
A maker is a trader who adds liquidity to an exchange or order book. The fee that a maker charges for adding liquidity is called the maker fee.
Market Capitalization/Market Cap
The total market value of a cryptocurrency – the market cap of a cryptocurrency is the product of the current value of a particular coin and the current number of that coin in circulation.
Buying or selling a cryptocurrency immediately at the current best market price available.
Max Supply/Maximum Supply
The maximum number of coins or tokens that will ever exist or that will ever be created in the cryptocurrency’s lifetime. There are no new coins once a cryptocurrency reaches its maximum supply.
The process of creating new crypto coins (without using money) by solving complex puzzles or cryptographic equations using powerful computers/miners.
A form of cryptography consisting of strings of numbers required to verify your transactions when you withdraw or sell your cryptocurrency.
A string of characters and numbers that people use to buy cryptocurrency. For instance, if you want to sell something in exchange for cryptocurrency, you provide your public key to the buyer to receive your cryptocurrency.
Proof of Work (PoW)
An algorithm in cryptocurrency that miners use to validate transactions by mining new blocks. In other words, PoW is a means of adding new transaction blocks to a blockchain of cryptocurrency.
A taker is a trader who removes liquidity on the exchange or from the order book, and fees that the taker charges for taking liquidity out are called taker fees.
Transaction per Second (TPS)
In cryptocurrency, TPS is the measure of how many transactions a network or cryptocurrency is capable of handling per second.
Volume or Trading Volume
Trading volume is a metric that refers to the total amount of coins that have been exchanged in a specific certain period of time, typically 24 hours. This metric gives you an idea of the popularity of a coin and how frequently it is exchanged.
A device or an online app where you can store your crypto or digital assets and retrieve them to make transactions. A wallet is not a necessary item to spend your cash, but it gives you a place to keep all your digital currency in one place. Wallets can be cold or hot.
What Else Do I Need to Know to Get Started With Cryptocurrency?
While understanding the common terms related to crypto and cryptocurrency exchange rates is important, you also need to know the actual cryptocurrency exchange rates to invest in them successfully.
Knowing the current and historical exchange rates of different cryptocurrencies enables you to evaluate which cryptocurrency is the most profitable to invest in. Owners of cryptocurrencies also need to keep tabs on exchange rates to determine when is the best time to sell their cryptocurrencies. Additionally, exchange rates between two cryptocurrencies are also important to see when is the right time to convert your coins to some other crypto coin.
But what’s the best way to get accurate cryptocurrency exchange rates? Using a reliable Cryptocurrency Exchange Rates API like coinlayer is an easy way to get accurate and up-to-date current and historical crypto market data. coinlayer API collects data from reliable crypto exchange providers and supports 25 exchanges and over 385 different coins.
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