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Cryptocurrency Terminology

A list of the most important and commonly used cryptocurrency terminology and slang for the average crypto investor, trader and general user.

3 years ago

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A list of the most important and commonly used cryptocurrency terminology and slang for the average crypto investor, trader and general user.



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Address

Each cryptocurrency “wallet” is identified on the blockchain by unique addresses. You can think about the blockchain as a GPS and your cryptocurrency address as its targeted mailing address. Without an address, no coin is stored; the blockchain can’t confirm nor verify its existence. So, without a proper wallet address, you can’t own a coin.

Algorithm

The computational formula used to generate keys that keep transactions secure. Cryptocurrencies rely on three main keys: Hash, Public Key and Private Key.

Altcoins

Because Bitcoin was the first cryptocurrency, any cryptocurrency that is not Bitcoin (like Ethereum, Litecoin and Cardano) is called an altcoin.

Arbitrage

Buying cryptocurrency on one exchange and selling it for a higher price on another exchange.

ASIC

Application-Specific Integrated Circuit: A specialized circuit designed for computers that mine a specific type of cryptocurrency only and perform no other function. A Bitcoin ASIC circuit can only mine Bitcoin and not Ethereum.

ATH

All-Time High: Refers to the highest price (or market cap) that an asset has reached since its listing or inception. As the price used to define the “all-time high” is the last done, it just refers to the highest price a trader paid for an crypto.

Bagholder

Simple crypto slang for someone who holds a certain amount of coins or tokens. Such as “Micheal Saylor is the biggest Bitcoin bagholder”.

Bitcoin

The first cryptocurrency. Launched in 2009, it was the first-ever crypto coin and remains the most valuable and largest cryptocurrency. It is also the most secure, decentralized and scarce.

Block

A block is a computer file that keeps a record, or ledger, of cryptocurrency transactions completed during a given period and is worth a specified number of coins. For example, one block in the Bitcoin blockchain is worth 6.25 Bitcoins, a number which will halve every four years until 2140 when the last block is created. Blocksize varies between blockchains. Bitcoin’s theoretical limit is 4MB, while Bitcoin Cash allows anything from 8MB to 32MB.

Blockchain

A network of independent but connected blocks, copies of which are distributed within a decentralized computer network. One Bitcoin transactions are added to a block and the new block is created, that transaction is verified and updated throughout the blockchain.

Block Explorer

A search engine that enables you to participate in blockchain transactions and provides access to data in blockchains – essentially an open ledger of all transactions ever. Examples include blockchain.com, blockstream.info, blockexplorer.com, blockcypher.com and btc.com.

Block Height

The total number of connected blocks in a blockchain.

Bear Market

An extended period during which the price of a cryptocurrency is falling.

Bull Market

An extended period during which the price of a cryptocurrency is rising.

Capitulation

Selling a cryptocurrency at a significant loss due to loss of hope that its value will ever go up.

Casascius Coin

Physical metal bitcoins created by Bitcoin user Casascius (Mike Caldwell) which are embedded with a piece of paper that contains the private key for a specific number of Bitcoin. A total of 27,673 Casascius coins were minted, worth a total 59,383.9 BTC.

Chain Linking

The process of linking two different Blockchains, for example Bitcoin and Ethereum, so that crypto coins can be transferred between them. For a successful transfer, the transaction must be recorded and verified in both blockchains at the same time.

Coin Mixer

A software that makes Bitcoin transactions anonymous and untraceable. It achieves this by taking one transaction, mixing it up with others, and then sending it back to the owner on a different address and in different amounts.

Cold Wallet

The storage of the Public and Private Keys of your wallet offline by printing them on a piece of paper, or saving them in an external hard drive that is not connected to the internet, in order to prevent loss through hacking. Cold storage is recommended when you have a large number of coins in your wallet.

Consensus

The algorithm by which transactions are verified and submitted. The main types of consensus algorithms are Proof of Work (PoW), Proof of Authority (PoA) and Proof of Stake (PoS).

Cryptography

The act of creating or solving codes. Cryptography is used to keep cryptocurrency secure.

dApps

Decentralized Apps: Apps or programs that run on a blockchain and outside of the control of a central authority. For example, if Twitter was a dApp, once a message is posted, no one could delete it, including Twitter.

DCA

Dollar Cost Averaging: The practice of buying a fixed amount of cryptocurrency on a weekly, monthly or annual basis regardless of price fluctuations. This removes emotions from the investment process and maintains consistency and benefits from price falls.

Decentralized

In cryptocurrency, decentralized means that there is no central point of the network. Instead, it is spread over a series of users (nodes).

DeFi

Decentralized Finance: A financial service that is based on blockchains and relies on smart contracts to facilitate access to financial and banking services. Because DeFis are automated, they provide everyone with access to services that were previously exclusionary.

Distributed Ledger

Another name for a blockchain.

Double Spend

An attempt to send the same payment of cryptocurrency to two different wallets.

Encryption

The process by which legible text is converted into illegible text called a hash or a key by use of an algorithm. This process, also known as cryptography, is the origin of the name cryptocurrencies.

Escrow

A third party within a blockchain, like BitPay, that holds cryptocurrency safely until the seller receives payment before they are released to the buyer.

ETH

The native cryptocurrency of the Ethereum network.

Ethereum

Ethereum is a blockchain based on its own coin called Ether. Unlike the Bitcoin blockchain, Ethereum allows decentralized applications to be built onto it, which enables Ethereum to go beyond mining and offer other functions such as decentralized financial services, games and all kinds of decentralized apps.

Exchange

A website that enables you to exchange cryptocurrency for fiat currencies like dollars or euros, exchange fiat currency for cryptocurrency, or trade one cryptocurrency for another.

Faucet

A reward system on a website or app that offers free cryptocurrency for signing up or completing certain tasks.

Fiat

Currency that is created by a government and circulated via banks. In contrast, cryptocurrencies are invented within computers and are circulated via a peer-to-peer network, i.e., a blockchain.

Fungible

This refers to if something can be interchanged with another. In cryptocurrency, if a coin is fungible it should have the same value everywhere.

Flippening

A potential event when Ethereum overtakes Bitcoin in terms of market capitalization. Can also be used to describe when any other cryptocurrency overtakes another in the same way.

FOMO

Fear Of Missing Out: Refers to the feeling of fear and anxiety that you might be missing out on a potentially lucrative investment or trading opportunity. Investors often buy when the price is rising and at highs because of this.

FUD

Fear, Uncertainty and Doubt; News, opinions and events that cause these feelings, which negatively affect specific cryptos or the entire market.

Gas

The fee a miner earns for verifying and submitting transactions on the Ethereum network. Requiring Gas for every transaction prevents hackers from clogging Ethereum with invalid transactions.

Genesis Block

The first block of a blockchain which contains unspendable coins. Bitcoin’s genesis block was created on Jan 3 2009 with 50 Bitcoins.

Gwei

The smallest unit of an Ether. 1 gwei is equal to 0.000000001 ETH (10-9 ETH). Accordingly, 1 ETH is equivalent to 1 billion gwei.

Hard Fork

A permanent update to the blockchain. Computers running the previous version of the blockchain are kicked out of the updated blockchain.

Hash

A string of letters and numbers that represents a verified and submitted transaction. It is usually called Hash or TxID.

Hash Rate

The speed at which a computer verifies and submits a transaction, thereby generating a new Hash. It is literally the average speed at which a blockchain creates new Hashes, and is calculated in units of hash/second.

HODL

Slang for “Hold”, the terms is widely used to describe holding a crypto for a very long period of time.

Hot Wallet

Your wallet’s public and private keys are stored on an app that’s connected to the internet and is used to access your wallet. Your keys can be stolen if your computer or phone is hacked.

ICO

Initial Coin Offering: The offering of a new cryptocurrency to people in return for fiat currency, bitcoins, or altcoins. Participants of the ICO hope that the new crypto they have acquired will become widely used and raise its value.

Immutable

This is a word that is often used to describe the distributed ledger. It means that it cannot be changed. Once information or a transaction is added, you cannot remove it.

KYC

Know Your Customer: The procedures used to verify the identity of a cryptocurrency exchange and lending user, similar to registering a new bank account.

Market Capitalization

The total value of a cryptocurrency is calculated by multiplying the number of coins in circulation by the current market price of a single coin. This number can run into the hundreds of billion or trillions of dollars.

Memecoin

A cryptocurrency based on a joke. Memecoins have no real-world utility and have value only because they are considered funny by many who buy them for this reason. The best known is Dogecoin.

Mempool

A collection of verified and submitted transactions that are waiting to be confirmed by all computers in the Bitcoin network; a “waiting area” for valid blocks. A high mempool size indicates congestion; a traffic jam of blocks waiting to be added to the blockchain.

Mining

The process by which transactions are verified by a computer or a group of computers. When all the computers on the network accept the transaction, two things happen: a new block is added to the chain and new coins are created / minted and added to the new block.

Mooning

When a cryptocurrency whose price is skyrocketing—going to the “moon” due to sudden and fast bull market run.

NFT

Non-Fungible Token: A file that is stored within a block and which cannot be copied or replaced, meaning each NFT is as unique as a fingerprint. This is why NFTs are attached to digital assets, such as a JPEG picture or a digital painting, to prove ownership of the asset or provide access to the asset.

Node

A computer that is part of a blockchain. A blockchain is therefore a network of nodes.

Nonce

A random number that is generated and used only once to verify new blocks. When a block is submitted, a nonce is attached to it to confirm that it is indeed a new block and not an old block being re-submitted to the chain.

Rekt

Crypto slang for suffering devastating losses.

Peer-to-Peer

The direct networking of two or more computers with each other without a centralized third-party acting as an intermediary. Blockchains run on Peer-to-Peer networks, i.e., decentralized networks.

Privacy Coins

A cryptocurrency where transactions are private to completely anonymous and untraceable. Most notably Monero XMR.

Private Key

A string of letters and numbers which unlocks your cryptocurrencies. This is personal information and must never be shared, just like your password or PIN.

PoS

Proof of Stake: An algorithm that allows a computer to mine blocks in proportion to how many coins it holds. For instance, a computer that owns 2 percent of the coins available can mine a maximum of 2 percent of all blocks.

PoW

Proof of Work: An algorithm that enables multiple computers in a blockchain to compete to mine blocks. The first computer to mine a block must prove that it has used a certain amount of energy to do so before the new block is accepted by all the other computers in the blockchain.

Protocol

The software that links the blocks together and provides the rules under which new blocks are added to the decentralized network.

Public Key

A string of letters and numbers which identifies the address of your wallet in the Blockchain. This information is shareable with others in order to receive cryptocurrency, just like your email address or bank account number.

Satoshi Nakamoto

The pseudonym of the individual, or group of individuals, credited with founding the world’s first cryptocurrency, Bitcoin. The actual identity of the founder of Bitcoin remains completely anonymous.

SATS

The smallest unit of Bitcoin, equivalent to 0.00000001 BTC. SATS, also known as Satoshi’s, refer to Satoshi Nakamoto, the creator of Bitcoin.

Seed Phrase

A 12, 18, or 24-word phrase that you and only you have access to and which acts as a backup to your private keys. If you forget or lose your private key, a seed phrase will help you recover it.

Shill

Someone who promotes an altcoin so that they can personally benefit when it rises in value or someone that is paid to promote it.

Smart Contracts

A protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties.

Stablecoin

A cryptocurrency whose value is attached to the value of a fiat currency, a commodity like Gold or whose supply is controlled by an algorithm, thus ensuring the value of the currency remains stable. Such as USDC, DAI, GUSD and Tether, the value of which is equivalent to approximately 1 US dollar.

Token

A type of cryptocurrency that does not have its own blockchain but instead exists “under” an existing blockchain. Such as ETH is a coin of the Ethereum blockchain and Chainlink is a token of the Ethereum blockchain.

Utility Coin

A cryptocurrency that’s can be used for other purposes aside from transactions. For example, NEXO and Celsius each have their own coins that are used for their respective lending platform.

UTXO

Unspent Transaction Output Model: A payment system where a transaction involves two separate actions; the first action sends the required number of coins to the recipient and the second action sends the remaining coins, known as unspent balance, to a different address in the sender’s wallet. The total number of coins in the wallet is calculated by adding up all the unspent balances in the wallet.

Whale

People or entities that hold a massive number of coins of a particular cryptocurrency. For example, an individual who owns 300 or more Bitcoins or over 5000 ETH and so on.

White Paper

A document that explains to potential users of a blockchain the various aspects of the blockchain and how it will work, its purpose and goals. A white paper precedes the launch of a blockchain.

51 Percent Attack

This refers to a computer or group of computers having the ability to verify more than 50 percent of all transactions in a network. This enables them to reverse transactions, spend coins more than once, and manipulate which blocks are added and which are not.

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[OPTICS : Crypto Terms and Slang]

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Published 3 years ago