Terms

Addresses

A unique address that identifies where the digital assets associated with the address are on the blockchain. This address is where the assets ownership data is stored and where transactions for the address are recorded.

Airdrop

An airdrop refers to the distribution of new tokens or coins, to wallet addresses usually for free. It's a marketing strategy used by blockchain projects to promote a new cryptocurrency. They could do this to increase the circulation, encourage trading, promotion. Participants may receive these tokens by simply holding a certain amount of existing cryptocurrency, performing tasks given by projects, or just by signing up for the airdrop.

Algorithm

Mathematic instructions coded into and implemented by computer software to produce a desired outcome.

All-time high

Highest price ever achieved by a cryptocurrency. Abbreviated to ATH.

All-time low

Lowest price ever achieved by a cryptocurrency. Abbreviated to ATL.

Altcoins

A category that includes all coins other than Bitcoin.

Bag

A large quantity of ownership in a certain cryptocurrency.

Bear, bearish

If the price of a cryptocurrency has a negative price movement.

Bitcoin

The very first cryptocurrency. It was created in 2008 by an individual or group of individuals operating under the name Satoshi Nakamoto. It was intended to be a peer-to-peer, decentralized electronic cash system.

Block

Blocks are data structures within the blockchain database, where transaction data in a cryptocurrency blockchain are permanently recorded..

Block Reward

A reward for the miner who successfully calculates the hash (verification) in a block. Verification of transactions on a blockchain generates new coins in the process, and the miner is rewarded with a portion of those coins.

Blockchain

The blockchain is a digital ledger of all the transactions ever made in a particular cryptocurrency. It’s comprised of individual blocks that are chained to each other through a cryptographic signature. Each time a block’s capacity is reached, a new block is added to the chain. The blockchain is repeatedly copied and saved onto thousands of computers all around the world.

Central Ledger

When a single entity has control of all financial records, it is considered to be a central ledger. This is how banks operate.

Circulating Supply

The total number of coins in a cryptocurrency that are in the publicly tradable space is considered the circulating supply. 

Confirmed

When a transaction has been confirmed, it means it has been approved by the network and permanently recorded on the blockchain.

Consensus

When someone creates a transaction, all nodes on the network verify that it is valid  on the blockchain, and if so, they have a consensus.

Consensus Process 

Refers to those nodes that are responsible for maintaining the blockchain ledger so that a consensus can be reached when a transaction is made.

Cryptocurrency

A form of money that exists as encrypted, digital information. Operating independently of any banks, a cryptocurrency uses sophisticated mathematics to regulate the creation and transfer of funds between entities.

Cryptographic Hash Function

This process happens on a node and involves converting an input – such as a transaction – into a fixed, encrypted alphanumeric string that registers its place in the blockchain. This conversion is controlled by a hashing algorithm, which is different for each cryptocurrency.

Cryptography

The process of encrypting and decrypting information.

DAO

Acronym for “decentralized autonomous organization”

dApp

Shorthand for “decentralized application”

Decentralized Application

A computer program that utilizes a blockchain for data storage, runs autonomously, is not controlled or operated from a single entity, is open source and has its use incentivized by the reward of fees or tokens.

Decentralized Autonomous Organization

Refers to organizations that are run by an application (computer program) rather than direct human input. Control of this application is granted to everyone rather than a single central entity.

Decryption

Turning encrypted cipher text back into plain text.

Deflation

When the demand for a particular cryptocurrency decreases, bringing down the price of its economy.

Digital Currency

Another term for digital commodity

Digital Signature

Used to confirm that a document being transmitted electronically is authentic. They generally appear as a code generated by a public key encryption.

Distributed Ledger

A ledger that is stored in multiple locations so that any entries can be accessed and checked by multiple parties. In cryptocurrency, this refers to the blockchain being held on multiple nodes on the network, all of which are checked simultaneously.

Dump

The term used to describe selling all (or a lot) of your cryptocurrency.

Dumping

When a lot of people dump at once, causing a sharp downward movement in a cryptocurrency’s price.

DYOR

Acronym for “do your own research”.

Encryption

Converting plain text into unintelligible text with the use of a cipher.

ERC

Stands for “Ethereum request for comments” and is a summation of proposed improvements to the Ethereum system.

ERC-20

The standard to which each Ethereum token complies. It defines the way that each token behaves so that transactions are predictable. Other cryptocurrencies also use the ERC-20 standard, piggybacking on the Ethereum network in the process.

Escrow

When an intermediary is used to hold funds during a transaction, those funds are being held in escrow. This is usually a third party between the entity sending and the one receiving.

Ethereum

One of the top three cryptocurrencies in the world based on its market capitalization. Despite being open source and based on blockchain technology, it differs from bitcoin in two key ways: it allows developers to create dApps and also write smart contracts.

Exchange

The platform through which cryptocurrencies are exchanged with each other, with fiat currencies and between entities. Exchanges can vary widely in the currency conversions they enable and their fee structures.

Faucet

If you find a website that offers to give you free cryptocurrency for connecting with them, it is termed a faucet. The majority of these are scams.

Fiat

Refers to money recognized as legal tender by governments, such as the US dollar, British pound, Euro and Australian dollar.

FOMO

An acronym for “fear of missing out”.

Fork

When a new version of a blockchain is created, resulting in two versions of the blockchain running side-by-side, it is termed a fork. As a single blockchain forks into two, they will both run on the same network. Forks are categorized into two categories: soft or hard.

FUD

Acronym for “fear, uncertainty and doubt”.

Full Node

Some nodes download a blockchain’s entire history in order to enforce its rules completely. As they fully enforce the rules, they are considered a full node.

Fundamental Analysis

A method through which you can attach value to a coin by looking at similar economic and financial factors and researching the underlying motives of the creators and market opinion.

Futures Contract

This is a pre-approved contract between two entities to fulfill a transaction when the value of cryptocurrency hits a certain price. It’s different than a limit order in that the buyer and seller are already nominated and bound. A future contract becomes relevant when a buyer wants to go short and a seller wants to go long on the asset.

Gas

Gas a is measurement given to an operation in the Ethereum network that relates to the computational power required to complete it. That measurement relates to the fee offered to miners who process that transaction. Other operations have a small cost of 3 to 10 gas, but a full transaction costs 21,000 gas.

Gas Limit

When users make a transaction on the Ethereum network, they set their gas limit, which is the most they are willing to pay as a fee for that transaction. If the transaction is going to cost more gas than what is offered, the transaction will not go through. If it costs less, the difference will be refunded.

Gas Price

The amount you are willing to pay for a transaction on the Ethereum network. If you want miners to process your transaction fast, then you should offer a higher price. Gas prices are usually denominated in Gwei.

Genesis Block

The first or first few blocks of a blockchain.

Group Mining

Another term used to describe a mining pool (see below).

Gwei

The denomination used in defining the cost of gas. Set a gas price of 20,000 Gwei, for example.

Halving

Every time miners approve transactions on the bitcoin blockchain, they earn bitcoin. As each block on the blockchain fills up with transactions, a certain amount of bitcoin enter the marketplace. However, the number of bitcoin that will ever be created is finite, locked at 21 million. In order to ensure this cap is kept, the amount of bitcoin earned by miners for filling one block is halved at the completion of that block. This is called halving. For the record, by the year 2140, all 21 million bitcoin will be in circulation.

Hard Fork

A fork in the blockchain that converts transactions previously labeled invalid to valid, and vice versa. For this fork to work, all nodes on the network must upgrade to the newest protocol.

Hardware Wallet

A physical device, similar to a USB stick, that stores cryptocurrency in its encrypted form. It’s considered the most secure way to hold cryptocurrency.

Hash

The shorthand for cryptographic hash function (see description above).

Hash Rate

Measurement of performance that reveals how many hashes per second your computer is capable of producing. Each hash is an attempt to find a block by creating a unique block candidate and testing it against the network.

Hashing Power

The hash rate of a computer, measured in kH/s, MH/s, GH/s, TH/s, PH/s or EH/s depending on the hashes per second being produced. 1,000 kH/s = 1 MH/s, 1,000 MH/s = 1 GH/s and so forth.

HODL

Acronym for “hold on for dear life”.

ICO

Acronym for “initial coin offering”.

Initial Coin Offering

In order to raise funds, the creator of a cryptocurrency will put an initial batch of its coins up for purchase. This is an initial coin offering.

JOMO

Acronym for “joy of missing out”.

KYC

Acronym for “know your customer”, which refers to a financial institution’s obligation to verify the identity of a customer in line with AML laws.

Ledger

A record of financial transactions. A ledger cannot be changed, it can only be appended with new transactions.

Leverage

A loan of sorts offered by a broker on an exchange during margin trading (see below).

Limit Order/Limit Buy/Limit Sell

If you set a rule whereby a cryptocurrency is sold or bought when at a certain price, you are setting a limit order. When traders place an order for a buy or sell, the system looks for these limit orders.

Liquidity

The liquidity of a cryptocurrency is defined by how easily it can be bought and sold without impacting the overall market price.

Locktime

If a transaction request comes with a rule delaying when it can be processed to a certain time or certain block on the blockchain, that is referred to as the locktime.

Market Capitalization

This is defined as the total number of coins in supply multiplied by the price. Cap = supply x price.

Margin Trading

A risky strategy used by experienced traders where they risk their existing coins to magnify the intensity of their trades. This allows them to buy more than they can afford using leverage provided by an exchange.

Market Order

As opposed to a limit order, a market order does not wait until a certain price to buy or sell; it trades wherever the price is at the time the transaction order is made.

MCAP

Acronym for “market capitalization”.

Mining

The term, somewhat confusingly, given to the process of verifying transactions on a blockchain. In the process of solving the encryption challenges, the person donating the computer power is granted new fractions of the cryptocurrency.

Mining Contract

An investment in mining hardware whereby you rent out the hashing power of mining hardware for a certain amount of time. The renter does not pay for the hardware or the maintenance and electricity required to run it.

Mining Pool

If a number of miners combine their computing power together to try and help complete the transactions required to start a new block in the blockchain, they are in a mining pool. The rewards are spread proportionately between those in the mining pool based on the amount of power they contributed. The idea is that being in a mining pool allows for better chances of successful hashing and therefore getting enough cryptocurrency reward to produce an income.

Money Services Business

A legal term used to represent an entity that transfers or converts money.

Moon

A term used to describe a major price movement upwards. For example, Ripple is mooning.

Multipool Mining

If a miner moves from one cryptocurrency blockchain to another depending on the profitability provided by the network at that moment in time, they are engaging in multipool mining.

Multi-Signature (Multi-Sig) Wallets

If, in order for a transaction to go through, more than one user needs to provide their unique code, then it is multi-signature. This system is set up at the creation of the account and is considered less susceptible to theft.

Network

A network refers to all the nodes committed to helping the operation of a blockchain at any given moment in time.

Node

Any computer that is connected to a blockchain’s network is referred to as a node.

Overbought

If a large number of purchases have been made on a cryptocurrency, its price will increase for an extended period of time. At this juncture, it is considered overbought and a period of selling is expected.

Oversold

If a cryptocurrency has spent significant time being sold without an upward movement, it is considered oversold. In this condition, there would be concerns about whether it will bounce back.

P2P

Acronym for “peer to peer”.

Peer to Peer

In a peer-to-peer connection, two or more computers network with each other without a centralized third party being used as an intermediary.

PND

Acronym for “pump and dump”.

Pre-Sale

A period before an ICO goes public when private investors or community members are able to buy the cryptocurrency.

Private Key

A string of numbers and letters that are used to access your wallet. While your wallet is represented by a public key, the private key is the password you should protect (with your life). You need your private key when selling or withdrawing cryptocurrencies, as it acts as your digital signature.

Proof of Authority (PoA)

A private key that gives the holder the right to create the blocks in a private blockchain. It can be held by a single entity or a set number of entities. This is an alternative to the proof-of-work model, as instead of getting multiple random nodes to approve a transaction, a group of specific nodes are given the authority to approve. This is a far faster method.

Proof of Stake (PoS)

Another alternative to proof of work, this caps the reward given to miners for providing their computational power to the network at that miner’s investment in the cryptocurrency. So if a miner holds three coins, they can only earn three coins. The system encourages miners to stick with a certain blockchain rather than converting their rewards to an alternate cryptocurrency.

Proof of Work (PoW)

In order to receive a reward for mining a cryptocurrency, miners must show that their computers contributed effort to approve a transaction. A variable is added to the process of hashing a transaction that demands that effort before a block can be successfully hashed. Having a hashed block proves the miner did work and deserves a reward – hence proof of work.

Protocols

The set of rules that defines how data is exchanged across a network.

Public blockchain

A blockchain that can be accessed by anyone through a full node on their computer.

Public Key

This is your unique wallet address, which appears as a long string of numbers and letters. It is used to receive cryptocurrencies.

Pump

This is a term used to refer to an upward price movement, usually driven by whales investing large sums of money in a cryptocurrency.

Pump and Dump

The frowned-upon practice of buying a lot of one cryptocurrency to drive up its price and encourage others to invest, then selling the lot when there is a suitable margin.

Satoshi Nakamoto

The individual, or group of individuals – it has never been confirmed – who created bitcoin.

Scrypt

An algorithm that encrypts a key in such a fashion that it takes a serious amount of RAM to hash it. The system makes it challenging to attack for hackers. Despite its spelling, Scrypt is pronounced “ess-crypt”.

Seed

The origin point from which you created your wallet ID. Usually, a seed is a phrase or a series of words that can be used to log back into your wallet ID if you lose it. Something to keep very secret and in a safe place.

Segregated Witness

The processes of separating digital signature data from transaction data. This lets more transactions fit onto one block in the blockchain, improving transaction speeds.

Sh*t Coin

No points for guessing this one. It’s a term used to describe a cryptocurrency not expected to have a positive future.

Short

Also known as short selling, this is a concept whereby traders sell an asset they don’t have. The hope is that they can then buy the asset at a lower price than which they sold it to complete the deal. Thereby they earn a margin in the interim.

Smart Contracts

When a contract is written in computer code, as opposed to traditional legal language, it is deemed a smart contract. This programmed contract is set up to execute and carry itself out automatically under specified conditions. When a smart contract is on the blockchain, both parties can check its programming before agreeing to it, and then let it do its thing, confident that it cannot be tampered with or changed. It lets two parties agree to complex terms without needing to trust each other and without needing to involve any third parties. This functionality is the defining feature of the Ethereum blockchain.

Soft Fork

A fork in a blockchain protocol where previously valid transactions become invalid. A soft fork is backwards-compatible, as the old nodes running the old protocol will still consider new transactions valid, rather than disregarding them. For a soft fork to work, a majority of the miners powering the network will need to upgrade to the new protocol.

Software Wallet

A common form of wallet where the private key for an individual is stored within software files on a computer. This is the system you are likely to use if you sign up for a wallet online that is not associated with an exchange.

Solidity

A programming language similar to JavaScript but focused on developing smart contracts. It’s exported as bytecode, which is used by the Ethereum Virtual Machine that runs the Ethereum network.

TA

Acronym for “technical analysis”.

Technical Analysis

Using a trading tool to look at historical data on a cryptocurrency in the hope of forecasting its future.

Test Net

When a cryptocurrency creator is testing out a new version of a blockchain, it does so on a test net. This runs like a second version of the blockchain for testing code, new dapps and other technical tests but doesn’t impact the value associated with the primary, active blockchain.

Timestamp

The moment in time when a transaction was encrypted and regarded as proof that the data compiled in that transaction existed.

Token

The “coin” of a cryptocurrency is a token. Effectively, it’s the digital code defining each fraction, which can be owned, bought and sold.

Transaction

The value of cryptocurrency moved from one entity to another on a blockchain network.

Transaction Fee

Usually, a small fee involved in successfully approving a transaction on the blockchain given to the miners. This fee can vary depending on the difficulty involved in a transaction and overall network capabilities at that moment during the transaction time. If an exchange is involved in the transaction, it could also take a cut of the overall transaction fee.

Unconfirmed

When a transaction is created, it is unconfirmed until the network has examined the blockchain to ensure that the transaction pending is valid, and the addresses involved have the assets to support the transaction before its confirmed.

Volatility

The fluctuation in an asset’s price is measured by its volatility. Cryptocurrency prices can be very volatile compared to other assets, as dramatic price shifts can happen quickly.

Wallet

A wallet is defined by a unique code that represents its “address” on the blockchain. The wallet address is public, but within it is a number of private keys determining ownership of the address and the assets associated with the address.

Whale

A term used to describe extremely wealthy investors or traders who have enough funds to manipulate the market.

Whitelist

Prior to an ICO, interested parties can sign up/register their involvement and intent to purchase or even purchase under pre-sale conditions. The list of these parties is referred to as the whitelist.

White Paper

A detailed explanation of a cryptocurrency, designed to offer technical information, explain the purpose of the coin and set out a roadmap for how it plans to succeed.