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When you’re first learning about cryptocurrency, there are a lot of terms that can be confusing. I still encounter them. Although many of these terms merit their own article, this will be the thimble-sized version of definitions.
Address: Usually refers to a wallet. Cryptocurrency is kept in wallets and each currency has its own address in the wallet. Currencies are sent and received through the addresses, which are usually long.
Altcoin: Any cryptocurrency besides Bitcoin. So named because they were issued as alternatives for Bitcoin. None of them have achieved the success or record of value held by Bitcoin.
Autotraders/Robots: Programs or applications that buy and sell cryptocurrencies automatically based on parameters that you enter. Used to prevent emotional trades based on undue panic or excitement, usually for beginners.
Bear Market: Cryptocurrencies are losing value.
Binance Exchange: A cryptocurrency exchange platform that is highly used and valued by serious investors. Primarily available in Europe.
Bitcoin: The first cryptocurrency and blockchain. Currently the most popular and expensive cryptocurrency.
Block: Data on the blockchain is stored in blocks, which hold unalterable data.
Blockchain: A form of transport for digital information originally and used by the developers of Bitcoin. Currently being adopted by many organizations that use digital information.
Bull Market: Cryptocurrencies are gaining in value.
Coinbase: A cryptocurrency exchange platform that is frequently used by beginners.
Crypto: Anything involving the cryptocurrency field of interest.
Crypto Assets: Anything you own in the field of cryptocurrency, especially digital money. Also refers to wallets and mining equipment.
Cryptocurrency: Money that only exists online. Digital money that cannot be carried in cash wallets. Digital coins such as Bitcoin and Litecoin.
Digital Coins/Coins: one unit of cryptocurrency such as a Bitcoin. Some can be purchased and held in percentages. Not physical coins.
Ethereum: One of the most widely used blockchains in the world. Uses its own cryptocurrency called Ether (ETH).
Exchange Platform: A website where you can buy and sell cryptocurrencies. Different platforms will work with different currencies; some work with very few.
Fiat: the term used to refer to government-backed currencies such as dollars and Euros.
Halving: When the amount of currency per mined block is lowered by half of its value. This results in raising the value of the coin due to its decreased availability and the greater effort put forth to make the currency.
Holding: Hanging on to the cryptocurrencies you currently own. Neither buying nor selling the currency you are holding.
Interest Bearing Account: A form of bank for cryptocurrencies that will pay interest on the cryptocurrencies you keep in them.
Market Cap: The current value of a crypto’s coin multiplied by the circulating supply.
Miners Fee: The fee paid to a miner for validating cryptographic transactions on the blockchain.
Mining: The process of making new digital coins. Numerous methods are used.
Network: A peer-to-peer payment system involving compatible wallets. Miners move the currency using math equations to validate the exchange.
Paper Trading: Having a set amount of pretend money that you can use to practice trading. Does not use – gain or lose – real fiat or cryptocurrency.
Stablecoin: A type of cryptocurrency with a non-volatile value. It will strive to stay even with certain fiat currency (usually) – often the USD.
Token: usually a digital coin. Frequently used by new cryptocurrencies.
Trading: The process of exchanging one cryptocurrency for another or for exchanging fiat for cryptocurrency or cryptocurrency for fiat; not to be confused with Forex.
Vault: An online address for storing all types of digital information, including cryptocurrencies.
Volatile: The state of most cryptocurrencies which causes their values to rise and fall without warning.
Wallet: a secure digital storage address that holds cryptocurrency. Online wallets may even hold fiat money. Hardware wallets are physical devices you can carry that are about the size of keychains; they are highly secure. Paper wallets can be made personally.
Not So Common Terms
ASIC: a hardware platform that varies in size and power usage that is designed to perform one action only. Necessary for many PoW coins such as Bitcoin and Litecoin.
Baking: A form of mining resembling PoS that is used by Tezos.
Circulating Supply: The number of a currency’s coins that are currently in circulation and liquid.
Daytrading: A method of investing that involves being frequently at your computer buying and selling cryptocurrencies as you watch the values change and make guesses as to the direction of the fluctuating values. Often involving small amounts of currency being traded frequently.
Decentralized: Not operated by a single entity. All investors and/or miners or stakeholders vote to make decisions on the blockchain regarding all decisions about the particular cryptocurrency.
Distributed Ledger: a worldwide database that stores data in a network of computers and servers.
Faucet: A website or application that gives away cryptocurrencies for minor actions. Usually rewarding one Satoshi, which is 0.00000001% of a Bitcoin.
Forks: Divisions in a formerly united blockchain that often result in a separate currency.
Genesis Block: The first block in any blockchain. Bitcoin’s Genesis Block was the first-ever bitcoin block.
Hash Rate: measuring unit for the processing speed of a cryptocurrency network. Higher rates equal to faster transactions.
Initial Coin Offering (ICO): Selling a newly created cryptocurrency to raise money. Sellers and buyers hope this movement will eventually result in a rise in the currency’s value.
Market Cap(italization): The total fiat value of all crypto coins on the market. Each currency has its own market cap.
Mining Pools: Groups of people who combine their resources in order to save money and time while engaging in Proof Of Work (PoW) mining.
Node: a computer on the cryptocurrency network or blockchain
Proof of Stake (PoS): A form of mining that is far less expensive than most PoW methods. It involves using a specified means of choosing the maker of the next block based on that person’s stake. There are no block rewards, so miners get transaction fees.
Proof of Work (PoW): A form of mining that involves investing in equipment (usually expensive) that solves complex algorithms using advanced computing power and electricity. Very few PoW mining techniques use inexpensive methods, such as Pi.
Satoshi Nakamoto: The pseudonym for the individual(s) who created Bitcoin. The true identity of this person has never been publicly revealed. UPDATE: Satoshi revealed himself. He isn’t Japanese. 😉
Smart Contract: A contract written in computer code rather than words. Quicker than a standard contract and negates the need for lawyers.
Whale: An individual with a huge amount of tradeable assets. Whale traders can make such large trades than a small group or a particularly wealthy individual can sway the market.