Common Web3 Terminology Explained

0
235

When navigating the world of cryptocurrency, there are a lot of terms and explanations to learn. While it is an extremely fascinating and potentially profitable way to jump into the investment game, you won’t be able to figure out how to go about it if you don’t understand the terminology or the process.

Cryptocurrency is driven by blockchain technology and many believe that the essence of the internet is leaning toward blockchain culture, also known as Web3. Here is a cheat sheet for some essential terms that you will want to know when it comes to the world of blockchain and crypto.

Crypto Rug Pulls

A rug pull in crypto is a treacherous and unfortunate event. Essentially, it’s an exit scam that can wipe out someone’s entire savings. There are various types of rug pulls that can occur, including:

  • Dumping – After developers create a massive amount of tokens they turn around and quickly sell.
  • Liquidity Stealing – when a company creates tokens, collects investments on those tokens, and then yanks any liquidity that exists in the profit pool.
  • Sell Order Limits – when tokens are created by shady developers to make sure they are the only entity that can profit from the specific tokens.

There are also differences in the type of rug pull that can happen, which include hard and soft. Hard rug pulls are scams that are designed to be scams from the very beginning. Sell order limits are a good example of a hard rug pull. Soft rug pulls are less black and white because developers may have had good intentions, but end up doing something unethical in the end. Dumping is an example of a soft rug pull.

Layer 1s

Blockchain technology often stacks upon itself, but in order to do that it has to have a base. Layer 1 is the foundation of an entire blockchain, the first base upon which everything else will be built and Bitcoin is one of the largest Layer 1 blockchain in the world. In fact, another word for Layer 1 is simply ‘blockchain’.

There are additional layers to a blockchain, but none of the additional layers will work without the first one. For example, one of the differences between Layer 1 and Layer 2 is that while Layer 1 provides the infrastructure for an entire blockchain, the second layer will allow scalability for the blockchain to grow. Imagine a building structure. It needs a foundation to add other levels to it. Layer 1 is the foundation for blockchain technology.

Crypto Twitter

X, formerly known as Twitter, has a huge amount of users and dedicated groups, including those who are crypto professionals and enthusiasts. As it is such an influential platform, many people who delve into cryptocurrency head to X to glean crypto news, trends, and advice. Between industry and consumers, this special space is collectively known as Crypto Twitter.

Social media has increasingly become a source of specialized information, including all things related to blockchain technology such as cryptocurrency. However, there are downsides to this. Social media isn’t necessarily always a vetted source of information. While it can certainly be informative of what’s going on in the crypto community, people should be cautious about what they are hearing, reading, and seeing, particularly when investments are on the line.

NGMI vs WAGMI

NGMI means ‘not going to make it’ and refers to a bad crypto investment or move. WAGMI is the opposite, meaning ‘we’re all going to make it’ and generally refers to positive thoughts about crypto investments or developments.

Learning the lingo gives you a leg up on understanding how crypto works. Use this guide to become a smarter player in the game.

I am a young digital marketer and a blog analyst, Author from Uttarakhand, India. I have been into blogging since 2013 and helping businesses with their SEO requirements. I have 12 years of experience; during the journey, I have worked on many websites and made good friends. I research and share my knowledge with everyone to help them succeed as solopreneurs, businessmen, and entrepreneurs. You can also find me on LinkedIn and see my entire journey.