June 26, 2018

Top 75 Crypto Terms For Newbies

You’ve begun to invest in cryptocurrencies. As any smart investor should, you’re probably spinning up your research on just what a bitcoin is and how, why, and where to buy one. We’re certainly not going to stop you.

In fact, we probably can help.

The first thing you’ll notice as you start your crypto-research is just how much lingo gets thrown around. Articles claiming to explain this stuff will use terms like “nodes,” “public ledger,” and “private key” as though you naturally understand exactly what they mean. It’s not your fault, there are just a lot of assumptions wrapped up in this industry.

Clearing that up will help you understand this new marketplace. Some of the terms are about technology. Some are about investment and trading. Some are simple slang. All of them will be helpful.

Address – The digital location that you’ll use to send and receive coins. This is a long, encrypted alphanumeric key which you send to another party so they’ll know where to send a coin you purchased. It is also known as the public key. 

Altcoin – In common usage, any cryptocurrency other than bitcoin. Sometimes used to mean any cryptocurrency other than Ethereum.

Arbitrage – When you buy and sell a single asset on two different marketplaces to take advantage of a price difference between them. (For example: If you purchase a coin for $10 on one marketplace, and immediately sell it on a different marketplace where the price is $11.)

ASIC – Stands for Application Specific Integrated Circuit. This is a hardware chipset designed for one specific software task. Typically found in graphics cards, which are designed specifically to render graphics, it can also be used for cryptocurrency mining.

ASIC Miner – Someone who uses an ASIC chip to do cryptocurrency mining, so that he or she can produce new coins faster than a normal computer could.

Bearish – Believing that prices will decrease. 

Block – The segment of a blockchain which records and encrypts previous events (such as transactions) on the chain.

Blockchain – The technology behind all cryptocurrencies.

Bitcoin – The invention which launched both cryptocurrencies and blockchain into public consciousness. The most highly valued cryptocurrency at time of writing.

Bollinger Band – A margin of error which measures how over- or under-valued an asset is. Used to decide whether to sell (if the asset is overvalued) or to buy (if the asset is undervalued).

Bullish – Believing that prices will increase.

Chain – The collection of blocks which make up a blockchain.

Cold Storage – Keeping the private keys for your cryptocurrency in an offline form, such as hardware. Typically, but not always, this term specifically refers to keeping it in a completely disconnected format such as USB or physical writing. 

Cold Wallet – A device dedicated to storing your cryptocurrency keys in an offline format. Often, but not always, this refers to storing this key in a physical format such as a written form.

Crypto – Slang for cryptocurrency.

Cryptocurrency – Digital currency built on blockchain technology. While often used interchangeably for most blockchain products, this properly refers to currencies intended entirely for use as a medium of exchange. (In casual terms, a digital replacement for dollars.)

Cryptography – Encryption technology. Blockchain technology relies on encryption to keep both the public and private keys secret.

Dapp – Distributed Application. This refers to applications designed to store and access data from a blockchain in the same way that traditional applications store and access data on a hard drive.

Dead Cat Bounce – A small rise in prices on an asset which is otherwise worthless or otherwise steadily losing value.

Deflation – When a currency becomes more valuable relative to other currencies.

Dump – Suddenly unloading large amounts of an asset.

Ecosystem – A network of users who receive cryptocurrency tokens in exchange for creating value. For example, a cryptocurrency social media company might create an ecosystem in which participants receive tokens in exchange for creating insightful or otherwise valuable content.

Ethereum – The second largest cryptocurrency currently on the market. Ethereum is not a dedicated currency like Bitcoin, but primarily a contract system designed to create verifiable transactions.

Exchange – A marketplace in which participants trade regulated securities. Subject to oversight by the SEC.

Faucet – A system by which a company or website will steadily issue cryptocurrency rewards.

Fiat Currency – Traditional money printed by governments, such as the dollar or the euro. The most stable form of currency known to date, although highly criticized by many in the cryptocurrency community.

Fork – When a blockchain project is permanently split into a new or alternative version. This often happens due to security issues or when the project issues what it considers to be substantial improvements. Although the previous version of the blockchain does not have to be discontinued, typically one aspect of the fork proves dominant and successful.

Gas – The measurement of how much processing power and electricity is required for an Ethereum network to process any given transaction. Typically this is discussed in terms of raw cost, how much money the gas costs to generate in terms of electrical usage and other utilities. 

Genesis Block – The first block on any given blockchain.

Halving – When a project that uses mining rewards splits the amount of those rewards in half. Typically done by projects, such as bitcoin, which intend to have a hard cap on the number of tokens in circulation.

Hard Fork – A fork in which the previous version of the blockchain is rendered invalid. Typically done in response to security or fundamental operational concerns.

Hash – An algorithm which turns a data input of any given length into a data output of a fixed, defined length. This is a fundamental concept to the mining on which bitcoin and related blockchains rely. (For example: An 8-bit hash could turn the word “Hi” into “12345678”.)

Hashrate – The speed at which a miner can complete a single hash.

Hard Wallet – A device for storing cryptocurrency keys in an offline format, such as USB or a portable hard drive.

HODL – A catchy acronym for 'Hold On for Dear Life' that expresses what most of us feel as we 'HOLD' crypto during these wild swings in the price of digital assets that have taken place over the past year.

Holding the Bag – Slang for when investors are left holding worthless tokens after a scam ICO collapses.

ICO/Initial Coin Offering – When a startup company based on blockchain sells coins or tokens to fund its startup costs.

Inflation – When a currency loses value relative to other currencies.

IPO/Initial Public Offering – When a startup company offers shares of ownership in the company to fund its startup costs.

Leveraged – When someone purchases an investment, such as a cryptocurrency, with borrowed money. Typically they intend to repay this debt with the profits from their investment. This is extremely risky.

Limit Order – An automated order to either buy or sell an asset when it hits a certain value. Often used by high-volume traders who want to take advantage of short-term changes. 

Long Position – An investment made with the intention that the asset will increase in value. Typically this is made intending to sell the asset later for a profit.

Marketplace – A website where traders can buy and sell cryptocurrencies.

Market Capitalization/Market Cap – The total value of an asset, determined by multiplying the price of each asset (such as an individual coin) by the total number of assets in circulation.

Maximalist – Slang. Depending on the speaker, it can mean either someone who is skeptical of all altcoins or someone who is overly enthusiastic about blockchain.

Mining – When nodes on a blockchain network process high-complexity algorithms known as hashes. This process is used by proof-of-work networks to verify transactions, at which point the individual computer receives a set number of coins.

Mining Rig/Rig – The computer used for mining.

Nodes – The computers which make up a blockchain network. Each individual computer is known as a node.

Margins- This is the loan extended for a trader to buy an investment with debt. Can be used to refer to buying cryptocurrency with a credit card.

Orphan – A block which will not have additional blocks added to it. Typically this is found in a blockchain abandoned after a fork.

Peer to Peer – A network made of computers which all play a role as participants and data centers. There is no central server.

Priming/Pumping – When someone will artificially inflate the price of an asset in anticipation of dumping it. Typically used in securities fraud.

Public Key – The encrypted alphanumeric string which you send to another trader when buying a cryptocurrency. See also Address.

Pump and Dump – A form of securities fraud in which someone will artificially inflate the price of an asset, only to then sell it off completely, leaving other investors holding a worthless asset.

Private Key – An encrypted alphanumeric string which connotes ownership of a cryptocurrency string. This is used to verify transactions on the network, meaning whoever has the private key for a given token can exert full ownership rights over it.

Proof Of Work – A piece of data which is easy to verify but very difficult to produce. A hash is an example of this. The outcome of a hash can be verified easily after it has been calculated, but performing that calculation can be a very labor-intensive process. This is used by bitcoin and similar cryptocurrencies to verify participants on a network. Individual nodes must demonstrate proof of work by completing a hash calculation before they are allowed to access and verify transactions on the blockchain.

Proof of Stake – An amount of assets which a network participant has to show in order to verify participation on the network. Proof of Stake networks require that individual nodes show ownership of a certain number of tokens to access and verify transactions on the blockchain. This is used as an increasingly popular alternative to Proof of Work, as it requires far less processing power; however, it also slants the network in favor of existing stakeholders and against new entrants.

Reward – The number of tokens which a node receives in exchange for completing a hash and verifying a transaction.

Satoshi Nakamoto – The inventor of bitcoin. This name is likely a pseudonym, and the true identity of this individual remains in doubt.

SEC – The Securities and Exchange Commission. A United States regulatory authority which likely will exert increasing influence over the trade of cryptocurrency tokens in the years to come.

Security – A regulated financial asset.

Security Token – A token which qualifies as a security, such as one issued during an ICO.

Sharding – When each individual node on a blockchain network stores only a partial copy of the blockchain instead of the complete copy. This is typically done to improve network performance. 

Shilling – When someone makes wild, unproven, or untrue claims about a given cryptocurrency. Typically, this is done to artificially increase the asset’s price. See also Pumping.

Short Position – When an investor intends to make money by an asset losing value. This is typically done in a short sale.

Smart Contract – An underlying concept behind Ethereum. This is a contract which is monitored by software. When the terms of the contract are met, payment occurs automatically in the form of cryptocurrency coins or tokens.

SoftFork – When a fork does not necessarily invalidate the previous blockchain.

Soft Wallet – A wallet which keeps cryptocurrency private keys in an online storage format, such as with a website. Generally considered to be far less secure than a hard or a cold wallet.

Speculation – Investing based on changes to an asset’s price which have little or no relationship to the asset’s actual value. This process typically results in wild and often unpredictable price changes. Many market analysts have argued that bitcoin has entered a period of speculation. 

Token – A single unit of a specific cryptocurrency.

Trustless – A secured process such that it requires no third-party oversight, nor does it require either party to risk an unconfirmed transfer of assets. (This is by contrast with a trust-based system, which requires one party to transfer assets based only on assurances that they will receive payment.)

Utility Token – A token which is designed as neither an investment product nor as a currency, but rather as a token for trade within a dedicated network. This is typically the case when a token is not intended as an investment product, but rather its value is that it gives access to certain resources. For example, a cryptocurrency Dapp company might create a token which users trade in exchange for the right to store and access data on its blockchain. 

Vaporware – Software which keeps being promised and promised but never appears.

Wallet – The location, whether digital or physical, where you store your private key. 

Whitepaper – The document which lays out a cryptocurrency project’s ideas in specific detail. This typically will include the project’s business plan, an outline of its technology, and how it believes that blockchain is the appropriate model for its specific innovation.

Now that you're all caught up the lingo, are you ready to dive into the world of cryptocurrency? It's easy. You can simply sign up for free today and make your first purchase!

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