Tech

30 Cryptocurrency Terms You Should Know

5 Mins read

A journey of a thousand miles begins with a single step,” says a Chinese proverb. Having a basic understanding of cryptocurrency is that single step you need to take to know how digital currencies work.

But a basic idea wouldn’t be enough. Just like learning a language, be it programming, or a dialect, you can’t grasp it if all you do is learn about its history. You also need to know its syntax, lexicon or terminologies.

Here, we’d look at 30 cryptocurrency terms you should know to gain a broader understanding of the field.

Earlier on, I explained that cryptocurrency is a digital asset (content that is digitally stored) designed to work as a means of exchange, protected and made secure by cryptography. In case you haven’t read through, I recommend you do so by reading this article.

30 Cryptocurrency Terms You Should Know

1. Cryptography

Cryptography is a key part of cryptocurrency and has to do with the conversion of ordinary plain text to text that can’t be understood. It is used to secure transactions.

2. Altcoin

Altcoins are ‘alternative coins’ and are the other types of cryptocurrencies launched due to the success of Bitcoin. Majority of them claim to be better than Bitcoin in certain areas. A good example is Litecoin, which claims to have a transaction validation speed that’s higher than Bitcoin.

3. ICO

ICO stands for ‘Initial Coin Offering’ and is a method a cryptocurrency project uses to raise funds. In an ICO, a certain amount of cryptocurrency is offered by the project’s team to investors in exchange for money or another cryptocurrency. The offered cryptocurrency units are promised as future coins to be used when the project successfully launches.

4. HODL

HODL is a misspelling of ‘hold’ made by a forum member in late 2013. It has since become a well-known slang and is a trading technique where cryptocurrency owners do not sell their coins in a certain economic situation.

5. Hash Rate

Hash rate is the way of measuring the computing power of a cryptocurrency network. In other words, it is the measuring unit of the computing power every miner contributes to verify transactions.

An increase of miners in a given cryptocurrency network increases the network’s hash rate.

6. Bear Market

The bear market is a situation where a certain cryptocurrency’s price begins to drop rapidly and consistently. Such situations are filled with caution and scepticism as investors or owners are more likely to sell their coins.

7. Bull Market

The bull market is the opposite of the bear market. As you can tell, it is a situation where the price of a certain cryptocurrency increases rapidly and consistently. Such situations are met with optimism and hope that the upward move would continue.

8. ATH

ATH stands for ‘All-Time High’ and is the highest price a certain cryptocurrency has attained since its inception.

9. Wallet

In cryptocurrency, wallets serve like real-life wallets. They’re made up of the owner’s public and private keys and are used to facilitate transactions.

10. Cold Storage

Cold storage is a method of storing cryptocurrencies offline. It is the most secure way of securing cryptocurrencies as hackers wouldn’t be able to gain access to it. Forms of cold storage include:

  • Hardware wallets
  • Paper wallets
  • USB Drives
  • Desktop wallets

11. FOMO

FOMO stands for ‘Fear of Missing Out.’ It is a situation where potential investors are anxious about a certain cryptocurrency due to its bullish form (rapid increase in price/value) and would want to buy them so they don’t miss out on profits.

12. Fork

A fork is a slight change in a cryptocurrency’s protocol. These protocols are the rules guiding the operation of a cryptocurrency’s network. The two types of forks are hard fork and soft fork.

13. Fiat Currency

Fiat currency is a type of currency issued and controlled by a government. The value of a fiat currency depends on its supply and demand, and the strength or stability of the issuing government. Examples of fiat currency are the Great British Pounds (GBP) and the United States Dollar (USD).

14. Mining

Mining is a process which handles the verification of transactions made on the blockchain, and also the creation of new coins. People who perform these tasks are miners and are given a fractional amount of cryptocurrency as a reward for successful verification. Hardware used in the mining process usually consists of high-end components, as the verification consumes a large amount of computing power.

15. Node

A node is a computer connected to a blockchain network. They serve as a major component as they keep it running and help broadcast transactions amongst other nodes.

16. Smart Contract

Smart contracts are computer programs designed to automatically execute, document, and verify the performance of a contract/agreement. They help ensure credible transactions without the need for a third party (like a lawyer).

17. Whale

Whales are individuals or groups that have a large amount of cryptocurrency in their wallets. Large crypto holders are called whales because their transactions in the blockchain can either move the market negatively or positively.

18. Cryptocurrency Exchange

A cryptocurrency exchange is a platform that facilitates the trading of cryptocurrencies by acting as an intermediary between buyers and sellers. On an exchange, buyers can purchase cryptocurrencies with either fiat or another cryptocurrency. For example, through a crypto exchange, Mr A can purchase a certain amount of Bitcoin from Mr B using the dollar, or Ethereum.

19. PoW

PoW, or Proof of Work, is a consensus algorithm (agreement among other nodes) in the Blockchain network which requires miners to solve mathematical puzzles to validate a transaction. These puzzles demand a high amount of computing power.

20. GPU

GPU stands for ‘Graphics Processing Unit‘ and is responsible for rendering graphics (images, videos) on a computer. GPUs are better than CPUs in the mining process because of their speed and efficiency in performing repetitive tasks.

21. DYOR

DYOR stands for “Do Your Own Research” and is a common phrase not just among cryptocurrency enthusiasts, but the internet in general. In the world of cryptocurrency, it is used to encourage new investors to make personal accurate findings before buying a currency or supporting a project.

22. Blockchain

The blockchain is “a chain of blocks” (a ledger of records) that is managed by several computers/nodes without the presence of an intermediary. It is decentralised, meaning that there’s no middleman governing its operations. It helps ensure the integrity of transactions made.

23. dApps

dApps is an acronym for “decentralised applications”. They behave like regular apps but are run on a blockchain network. These type of apps store data on a decentralised database and rely on decentralised computing resources to function. Key features of dApps are:

  1. Built-in payments
  2. No downtime
  3. Backed by cryptography

24. Address

An address is a component of a crypto wallet. It is made up of alphanumeric characters and indicates the source or destination of a cryptocurrency transaction. It is a short representation of a public key.

25. Public key

A public key is a component of a crypto wallet that handles the generation of wallet addresses. As you already have guessed, it facilitates cryptocurrency transactions.

26. Private key

A private key, on the other hand, grants a user ownership of a wallet.

27. Token

In cryptocurrency, a token is a cryptographic string of alphanumeric characters that contain no important data but instead serves as a “fill-in” for the real data.

28. Airdrop

An airdrop is an awareness campaign strategy for new cryptocurrency projects. It involves distributing cryptocurrency tokens or coins to multiple addresses for free.

29. Block

Blocks are a basic component of the blockchain network. They are files which permanently record all transactions made on the blockchain network. Hence, they can’t be removed or changed.

30. DeFi

DeFi stands for “decentralised finance.” It is a new form of finance management and runs on a blockchain network, allowing users to hold a copy of their transaction history.

Key Things to Note

Congratulations. You now have a wider and deeper knowledge of cryptocurrency 🎉.

Note that most terms we’ve looked at aren’t strictly cryptocurrency terminologies. Some of them are words used in the stock market or general trading.

What new terms did you learn? Have any interesting one we’ve missed? Please share.

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What is Cryptocurrency? — An Easy Guide for Dummies