/ The Crypto Dictionary - Cryptocurrency Terms To Know

February 23, 2018

cryptocurrency market terms and lingo

Wall Street has its own language, which was made to confuse the people and make it seem like they are the only ones who can do what they do.

How many times have you read crypto news or scrolled through Reddit and had a problem understanding what people were saying? To me, it happened a lot, especially when I was starting. In fact, behind those terms, there is usually a very simple and logical explanation. 

If you are new to crypto, or simply want to expand your business vocabulary, I have put together a short crypto dictionary to help you easily navigate through the sea of information in the cryptocurrency world. 


/ BASICS


Blockchain is the classification of technology that Ethereum falls into. Blockchains are distributed ledgers, secured by cryptography. They are public databases that everyone can access and read, but the data can only be modified by the data owners. 

Instead of the data residing on a single centralized server, the data is copied across thousands and thousands computers worldwide. A computer that possesses a copy of the blockchain and is working to maintain it, is called node

Bitcoin is the first and founding cryptocurrency, with contenders such as Ethereum, Litecoin, Monero, and Ripple etc. Any other cryptocurrency is called altcoin.

For safekeeping, we can use different kinds of wallets. Software wallet is a storage for cryptocurrency that exists purely as a software file on a computer. Software wallets can be generated for free from a variety of sources. The most popular software wallet is MyEtherWallet - called MEW

A device that can securely store cryptocurrency is called a hardware wallet, and they are the safest way to hold cryptocurrency. Two of the most popular models are Ledger Nano S and Trezor. The process of moving crypto ‘offline’, to a hard copy, is called cold storage. 


/ CRYPTO TOKENS 


With more than 1500 cryptocurrencies available, unfortunately, I won’t be listing them all. 

The most popular are Ethereum (ETH), Bitcoin (BTC), Bitcoin Cash (BCH), Litecoin (LTC), Monero (XMR), Ripple (XRP), NEO (NEO), VeChain (VET), Dash (DASH), Zcash (ZEC), Ethereum Cash (ETC), Stellar Lumens (XLM), Eos (EOS), OmiseGo (OMG). 

You can find all the cryptocurrencies here.


/ TRADING 


When it comes to trading terms and language, it gets a little bit easier. Every trade happens on an exchange, which is a marketplace for buying and selling cryptocurrency, where you use government-issued currency, called fiat (ex. USD), to buy crypto. 

There are two ways of placing orders - limit or market. 

Limit order/limit buy/limit sell are orders placed by traders to buy or sell a cryptocurrency when the price meets a certain amount. 

Market order/market buy/market sell are simple purchases or sales on an exchange at the current price. Market buys purchase at the cheapest ETH available on the order book, and market sells fill the most expensive buy order on the books. 

ROI is return on investment. 

Arbitrage means taking advantage of a price difference of the same currency, on two different exchanges. This is often mentioned when comparing the prices on Korean exchanges against US exchanges. 

Market cap is the total value help in a cryptocurrency. It is calculated by multiplying the total supply of coins with the current price of an unit. The most popular choice is CoinMarketCap.

TA is short for Technical Analysis, the process of examining current charts and trends in order to predict which way the market will move next. 

Using a depth chart, traders can see the current limit buy and sell points, which are called sell walls or buy walls. Usually you will hear the word ‘whale’ partnered with those terms, and that is someone who owns absurd amounts of cryptocurrency. 

Bullish charts means that the price is expected to increase, and bearish is used when the prices are expected to decrease. ATH, an All-Time-High, is something we’ve gotten a lot for the past few months. 

Margin trading is the act of ‘magnifying’ the intensity of your trades by risking your existing coins. Going long is a margin trade that profits if the price increases, while going short is a margin trade that profits if the price decreases.

This is a very risky technique recommended only for experienced traders, but if you have more interest, you can learn more about in our article on how to short-sell Bitcoin

FOMO is Fear of Missing Out - the overwhelming sensation that you need to invest when the price of something starts to skyrocket. On the other hand, FUD stands for Fear, Uncertainty and Doubt, which is a baseless negativity spread intentionally by someone who wants the price to drop. Good example of this is Jamie Dimon, CEO of JPMorgan, calling Bitcoin a fraud, and then buying it after the price drop.

P&D, or Pump-and-Dump scheme is basically an altcoin getting a ton of attention, leading to fast price increase, and then followed by a huge crash. Repeat it regularly. 
It actually did make a lot of people lots of money, before crypto went mainstream and it was more volatile. 


/ BLOCKCHAIN 


Smart Contract is a computer protocol intented to facilitate, verify or enforce the negotiation or performance of a contract. They allow you to send money from point A to point B, on terms that condition C happens. Solidity is the most popular language that smart contracts are written in. 

The process of trying to ‘solve’ the next block is called cryptocurrency mining, and it requires obscene amounts of computer processing power to work effectively, but is rewarded with ether. A computer specifically designed for processing PoW blockchains, like Ethereum, is called mining rig. They consist of high-end graphic processors (GPU) to maximize their processing power. 

Proof-of-Work (PoW), is the current consensus algorithm used by Ethereum. Proof-of-Stake (PoS) is the proposed future consensus algorithm to be used by Ethereum. Instead of mining in its current form, people that own ETH will be able to lock up their ether for a short amount of time in order to vote and generate network consensus. Stakeholders will be rewarded with ETH for doing so. 

Sharding is a scaling solution for blockchains. It is a method that allows nodes to have partial copies of the complete blockchain in order to increase overall network performance and consensus speed. 

ICO, or Initial Coin Offering, is similar to the stocks IPO. This is basically crowdfunding on the ethereum platform. You can read our article on how to analyze ICOs to learn more about them and what to look for. 

Airdrop is distribution of the token to the community for free, or in return for a small task. It is usually used to build a community and as a marketing strategy during the ICO phase. 

Gas is a measurement of how much processing is required by the ethereum network to process a transaction. Simple transactions, like sending ETH to another address, typically do not require much gas, while complex transactions, such as deploying smart contracts, require heftier amounts. Gas price is the amount of ether to be spent for each gas unit on a transaction, while transactions with higher gas prices are prioritized by the network. 

Wei is the smallest denomination of ether, while Gwei being the most popular one. 1 Ether is 1000000000000000000 Wei or 1000000000 Gwei.

Fork is a situation where a blockchain splits into two separate chains. Forks generally happen in the crypto world when new ‘governance rules’ are built into the blockchain’s code. To read more about hard forks click here.


/ RANDOM 


When Lambo? When moon? Those are questions regarding when the price is going to skyrocket. There are lots of so-called ‘fanboy terms’, like HODL, which means to hold a cryptocurrency long-term. Shilling, or pumping, is advertising a cryptocurrency in a bullish and non-realistic, non-ethical way. 

Decentralized Autonomous Organization, called DAO, is an investor-directed venture capital fund built on the Ethereum network that was hacked in June 2016. The hack stole about a third of the DAO’s funds and led to Ethereum being hard-forked the following month. The DAO is often cited as one of Ethereum’s biggest stumbles so far. Mt. Gox was handling over 70% of Bitcoin transactions in 2013 and 2014, before it was hacked and all the customers lost their money. This is a hard lesson learned to never keep your crypto on an exchange, always in a secure wallet, preferably hardware. 

Lightning Network builds on networks like Bitcoin and Litecoin to allow off-chain settlements. The first block ever mined is called the genesis block

The biggest names of the industry are Satoshi Nakamoto (founder of Bitcoin, real identity unknown), Vitalik Buterin (founder of Ethereum) and Charlie Lee (founder of Litecoin). 


For more information, read our introduction to cryptocurrency article and learn more about the blockchain, Bitcoin, cryptocurrency mining and ICOs. 

1 comment

| theBlockBay © 2018 |