Three Terms Every Crypto Money Trader Should Know: Smart Contracts, Mining and Hard Fork

When investors enter the world of blockchain investment for the first time, they learn that there are many more technical terms than normal markets.

These terms may increase the difficulty of grasping the market and the lack of understanding may disappoint new crypto enthusiasts in many ways. This is why it is important to understand the similar differences between the crypto money market and the blockchain world, not to start missing and not to miss opportunities.

The complexity of these technical terms should not stop you from joining a billion-dollar market.

We have prepared this article for new investors who have stepped into the world of blockchain investment to solve this complexity. In this article, you will be introduced to the three most important terms in the field of blockchain.

Smart Contract
It doesn’t take long for a new crypto currency trader to see the term smart contract.

Smart contracts help individuals to exchange money, goods or information without having to drive. These agreements ensure that the works subject to the contract are fair and transparent.

Today, thanks to blockchain technology, we can use smart contracts to create a fair and transparent world defined by simple provisions.

Let’s look at a short example for a better understanding.

You rented a new apartment and made a lease.

According to this rental agreement, the first day of each month, you have to pay 2000 pounds for the apartment.

In a world without smart contracts, you need to transfer money from the bank, hand over it, or write and post a check as is common abroad to pay the landlord this money. It is important that you do this on time so that the rent is not delayed. All this is not nice.

With smart contracts, you don’t have to deal with them.

If you and your host sign a smart contract on a specific date, which day and how much you pay each month, this smart contract allows the money to be taken directly from your account and delivered to your landlord on time.

Moreover, the benefits of smart contracts are not limited to this. For example, you can add a clause to the rental agreement to give back the deposit amount you paid while keeping the apartment. Thus, when your lease expires, the deposit amount can be automatically returned to your account just like the automatic rent payments you make.

Essentially, smart contracts can be used for much more purposes.

They can be used to make supply chains more efficient, or they can be used in financial contracts to ensure that a party is not deceived.

In this way, smart contracts can change the world.

Mining
While many investors who step into the market will never be crypto money miners, it is extremely important to know what crypto money mining is.

So, why is mining important? Because without crypto currency miners, most of the available crypto currencies on the market would not work. This includes Bitcoin, the world’s most famous crypto currency.

Crypto currencies use a verification method known as Proof of Work (or PoW). In order to verify the millions of transactions that can take place in the block chain, crypto coin miners work to solve the algorithms required for this verification.

When miners solve an algorithm, the last process is added to the block chain and these processes are repeated in the same way.

Crypto coin miners do this because they receive a “block award hizmet for this service. Undoubtedly, the first Bitcoin miners made a lot of money.

But mining is a bit more difficult today, because the algorithms to be solved become more complex. This means that miners have to invest more to continue their work.

Today, on the other hand, many blockchains are looking for ways to eliminate mining models. This is due to a number of disadvantages of mining. For example, Ethereum is testing a different process verification method called Proof of Stake (PoS).

Hard fork
The last important term that every crypto currency trader should know is hard fork.

Hard fork means that a blockchain network changes its code to a completely new version.

In an ordinary hard fork operation, new rules that govern and modify the existing structure of the blockchain network are included in the system. This causes a network split. This is because the older version of the code is no longer compatible with the newer version.

These divisions sometimes offer great earning opportunities because hard fork crypto is important for money traders.

To understand this better, we can look at Bitcoin Cash. Bitcoin Cash is the result of a Bitcoin hard fork.

Just before the hard fork took place, the Bitcoin community was split in two. The block size and the scaling problem affecting the Bitcoin network were inevitable.

The majority of the Bitcoin community wanted to attempt a more superficial correction for these issues.

A smaller portion of the community was not satisfied with this approach. Thus, changes were made to the code and the result was Bitcoin Cash.

This is where things get interesting. Before the creation of Bitcoin Cash, all investors with Bitcoin were able to have Bitcoin Cash free of charge.

So why?

Although post-division Bitcoin Cash and Bitcoin were significantly different crypto coins, they still came from the same root.

This has also enabled Bitcoin traders to have Bitcoin Cash free of charge, depending on where they store their Bitcoin before the hard fork.