Top Cryptocurrency Terms to Know

Top Cryptocurrency Terms to Know

Cryptocurrency industry is actively developing and as a result it has brought a number of its own terms and definitions. In order to be able to keep conversations on the crypto topics, in this article we have compiled a small dictionary of the most important terms and expressions.

ATH (All-time high)

It is the highest price value for the entire crypto coin existence. In front of ATH you can often see percentages showing how much a coin fell from its fixed historical maximum.

Alternative Coins (Altcoins)

Altcoin or alt-coin means every cryptocurrency except for Bitcoin. In fact, most alternative cryptocurrencies are ordinary Bitcoin clones that have slightly changed some features of Bitcoin, such as transaction speed, hashing algorithms and other. Many Bitcoin lovers claim that Altcoins makes no sense, because they cannot compete with the infrastructure that Bitcoin can boast. However, Altcoins play an important role.

Bitcoin Maximalist

Bitcoin Maximalist is the one who values ​​Bitcoin first. Bitcoin maximalists are usually not particularly concerned about new and more advanced alternative cryptocurrency technologies. They are simply sure that any third-party cryptocurrency projects take away valuable resources from Bitcoin like nodes, service providers, innovations, and so on.

Bitcoin to the moon

The expression “To the moon” became very popular during the 2017 cryptocurrency fever. Since then, it is common to say about promising crypto currencies that someday its value will fly up to the moon. If the person puts the cryptocurrency name with the prefix moon such as moon Bitcoin, moon Dashcoin, moon BTC Cash, etc., it means that he faithfully believes in the coin future.

Block reward

It is the reward that a miner gets for successfully finding a new block of transactions. It is an only way to create new Bitcoins in the network. It acts as an incentive mechanism, as well as an inflationary one. Initially, block reward in Bitcoin network was 50 BTC. Block reward structure in Bitcoin is designed in such a way that it is reduced in half every 210,000 blocks. Since the blocking time of Bitcoin is 10 minutes, approximately every 4 years halving is taking place.

Blockchain

When considering blockchain issue, it is worth paying attention to such a feature that system does not have a single server, blockchain chains are distributed between users. Use of modern encryption algorithms allows to protect individual records from copying / editing by other users of the system. The concept of blockchain technology was offered by Satoshi Nakamoto in 2008, and due to its origin, it is referred to cryptocurrency transactions, but technology scope is noticeably wider.

CEX – Centralized Crypto Exchange

Centralized cryptocurrency exchange is an online platform and the most common way to trade cryptocurrencies. All exchanges have crypto / crypto pairs, but not all of them work with fiat currencies. They can be considered as online markets for the entire cryptocurrency ecosystem. Centralization in this case means that users trust their money to a third party.

DAO

Decentralized autonomous organization is a complex form of a smart-contract in which the rules of a decentralized organization are put in the code of the contract, and management is made through tokens. Bitcoin network is considered the first truly autonomous corporation which work is coordinated exclusively through distributed consensus, in which anyone can participate. DAOs work independently; management does not need centralization and a third party.

dApp

dApp is a backend-free application in a decentralized computer system, for example, using blockchain. Therefore, dApp uses the main advantages of the blockchain such as transparency, reliability and data immutability. Decentralized applications are developed through smart contracts, which code is written in special programming languages.

DEX

DEX is an exchange that operates on the basis of a distributed ledger, does not store user funds and personal data on its servers, and acts only as a platform on searching for matches in applications for the purchase or sale of user assets. Trading on such platforms is conducted on a peer-to-peer basis without any financial intermediaries. Decentralized cryptocurrency exchanges are widely known for their high level of protection.

DeFi

DeFi means that crypto owners can recreate traditional financial instruments in a decentralized architecture beyond the control of companies and governments. DeFi can be defined as a set of new financial instruments based on decentralized systems and networks. It can be introduced as an excellent platform, which currently uses the Ethereum blockchain and smart contracts.

Digital address 

Digital address is the point of tokens location in the Blockchain, which is necessary for storing digital assets with the subsequent implementation of any financial transactions. Visually, the indicator of electronic storage is a set of randomly generated numbers and letters of the Latin alphabet of lower and upper case. The number of generated characters depends directly on the cryptocurrency. 

Digital wallet

It is a space where your digital funds are stored. Wallets exist as programs and online applications recording transaction history.

Any cryptocurrency wallet consists of two distinguished components as follows:

  • Public key, i.e. so-called visible wallet address. 
  • Private key i.e. something like a password giving access to your savings.

Fiat

Fiat money is a means of payment recognized by the government of a particular country including paper banknotes, metal coins and non-cash money that people daily use. The government is engaged in the emission of fiat, determines its value, and uses it as a punitive measure (freezing or confiscating a citizen`s funds). 

FUD

Fear, Uncertainty, and Doubt is a common tactic of psychological manipulation that is widely used in marketing and propaganda, for example, notifications from an antivirus program about the need to install updates. With its help, you can force to sell or vice versa buy some kind of asset in the cryptocurrency market.

FOMO

FOMO means the fear of missing out on something that others are enjoying and it may come out as the result of FUD. In the cryptocurrency market, FOMO is an important factor for parabolic growth and for a coin going to the moon. It seems to a trader / investor that literally everyone is gaining a profit now and therefore he buys despite the current price, often ignoring technical analysis data, important news and just a common sense.

Hodl

The word hodl has become synonymous to buy and hold strategy. In the crypto community, long-term investors are called hodlers, and investment itself is called as hodling. When someone claims to be hodling (holding) or offering to hodl (hold), this means that he believes in his cryptocurrency and hopes to make money on it sooner or later.

Halving

Every four years in Bitcoin network the reward for miners for each mined block is reduced by 50%. This principle was indicted in the draft white paper by Satoshi Nakomoto. Such an algorithm allows you to control the inflationary Bitcoin model.

ICO

Initial Coin Offering means releasing coupons or tokens by a project that intends to pay for future site services with cryptocurrencies. In fact, ICO is another implementation of crowdfunding model, when participants finance the development of the company now in order to get some benefits from it in future. With an ICO, listing of tokens on the exchange may not be carried out immediately, but several months after the completion of the token sale.

IEO

Initial Exchange Offerings are another way to attract investment in your project, which appeared relatively recently. Unlike ICO, this method collects money under guidance of exchanges that independently select projects that will be put up for fundraising. Tokens are sold on exchange platform and they are available after IEO completion. 

KYC

Know Your Customer is a set of identification operations for combating money laundering in terms of criminally obtained financial means. Passing KYC means to provide reasonably complete personal information by counterparties, i.e. legal entities in which favor a financial transaction is conducted. 

Market Capitalization

It is the total market value of all outstanding shares of the company. Cryptocurrency market capitalization is cumulative value of all virtual coins which are available to users. The capitalization of digital currency can be calculated by multiplying the number of issue coins by an exchange rate. Thus, capitalization depends on the price and number of coins.

Mining and miners

Mining is the extraction of cryptocurrencies. To mine some coins, you need specialized video cards for mining. For Bitcoin and a number of cryptocurrencies, processors are called asics. ASIC-miner is a specialized computer for mining Bitcoins and other cryptocurrencies, exceeding the power of conventional computers by a thousand times. Mining on video cards attracts, first of all, beginners as the mining farm on video cards can be expanded and modernized over time.

Proof-of-Work

It is an algorithm for protecting distributed systems from misusing (DoS attacks, spam mailings, etc.), the essence of which boils down to two main points:

  1. The need to perform a certain rather complex and lengthy task;
  2. The ability to quickly and easily check the result.

Proof-of-Stake

It is an alternative consensus mechanism. The idea is to use a “stake” as a resource that determines which particular node gets the right to mine the next block. In the Proof-of-Stake approach, the nodes also try to hash data in search of a result less than a certain value, but the complexity in this case is distributed proportionally and in accordance with the balance of this node.

Private key

Private key is a secret, alphanumeric password / number that is used to send cryptocurrency to another address. This is a 256-bit long number that is randomly selected as soon as you create a wallet. Also, the private key can be represented as a seed phrase, which is a random set of words arranged in a certain order. Seed can also act as a guarantor of the funds safety. Knowing the seed, you can access your balance at any time.

Pump and Dump

Pump and Dump is a manipulative scheme for increasing the cryptocurrency exchange rate followed by a price collapse. Large owners of assets artificially increase (“pump”) their value in order to subsequently sell (“dump”) with the most expensive price for small traders. As a result, the value of the asset is reduced, and investors lose money.

Satoshi

It is a fractional or integral part of Bitcoin, named after Satoshi Nakamoto, who invented this cryptocurrency (according to other sources, this is the pseudonym of the group of creators). Satoshi is the minimum part of the cryptocurrency that can be sent to another user of the system as part of the transaction and it is equal to 0.00000001 Bitcoin.

ShitCoins

These are coins which have low capitalization and completely unclear prospects. Despite the absence of any real technological innovations, shitcoins appear almost every day. If to consider their goals from the side of their creators, it is obvious that people create their coins simply as an experiment, which, in the best-case scenario, can also bring them income.

Total Market Capitalization

It is the combined market capitalization of all crypto coins.

Bitcoin whales

Bitcoin whales are people or groups that have a large number of Bitcoins. Their larger stocks can be used at big schools of small merchants with the help of some successful shopping methods. In addition, the less market and liquidity is, moreover, it is easier for whales to empty the small markets of altcoins, as opposed to Bitcoins.

White paper

White paper is a powerful B2B marketing tool. It is a kind of hybrid of a journal article and a brochure. It takes an objective educational approach from articles and weaves in convincing corporate messages typical to brochures. White paper is a part of the company’s content strategy. Its purpose is to provide useful information on solving a particular problem.

Check also Godex.io Crypto Dictionary for more terms and meanings.

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