Cryptocurrency A-Z – Glossary of every term you need to know

51% Attack

If more than half the computer power on a network is run by a single person or a single group of people, then a 51% attack is in operation. This means this entity has full control of the network and can negatively affect a cryptocurrency by halting mining, stopping or changing transactions, and double spending coins.

Airdrop

This is a marketing campaign that refers to the free distribution of a cryptocurrency. It usually occurs when the creator of a cryptocurrency provides their coin to low-ranked traders or existing community members in order to build their use and popularity. They are usually given away for free, or in exchange for simple tasks like sharing news of the coin with friends or simply holding a different currency during a certain priod of time.

Algorithm

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

Altcoin

Any cryptocurrency other than Bitcoin.

ASIC

A piece of computer hardware – similar to a graphics card or a CPU – that has been designed specifically to mine cryptocurrency. They are built specifically to solve hashing problems more efficiently than CPU mining or other forms of mining.

ATH

Acronym for “All Time High”

ATL

Acronym for “All Time Low”

Arbitrage

Taking advantage of a difference in price of the same commodity on two different exchanges.

Bagholder

A person that is holding a coin that has dropped in value with the hope of it rising in the future.

Bear / Bull trap

This is a trick played by a group of traders aimed at manipulating the price of a cryptocurrency. The bear trap is set by this group all selling their cryptocurrency at the same time, which bluffs the market into thinking there is a drop incoming. As a result, other traders sell their assets further driving the price down. Those who set the trap then release it, buying back their assets, which are now at a lower price. The overall price then rebounds, allowing them to make a profit.

Bearish

A negative price movement of an asset.

Bitcoin

The first successful cryptocurrency created back in 2008 by Satoshi Nakamoto.

Block

Refers to a collection of data related to transactions that are bundled together with a predetermized size and are processed for transaction verification and eventually becomes part of a blockchain.

Blockchain

Blockchains are distributed ledgers, secured by cryptography. They are essentially public databases that everyone can access and read, but the data can only be updated by the data owners. Instead of the data residing on a single centralized server, the data is copied across thousands and thousands of computers worldwide.

Block Explorer

An online tool for exploring the blockchain of a cryptocurrency, where you can watch and follow live, all the transactions happening on the blockchain. Block explorers can serve as blockchain analysis and provide information such as total network hash rate, coin supply, transaction growth, etc.

Block heigh

Refers to the number of blocks connected in the blockchain. For example, Height 0, would be the very first block, which is also called the Genesis Block.

Block reward

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

Bollinger Bands

A margin around the price of a crypto that helps indicate when a coin is overbought or oversold.

BTFD

Acronym for “Buy the fucking dip”.

Bullish

A positive price movement of an asset.

Buy / Sell wall

A large limit order placed on an exchange that can prevent the price of the asset from going above it or below it.

Centrilized 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

An approximation of the number of coins or tokens that are circulating in the public market.

Cold storage

An offline storage for a cryptocurrency. This could be a paper wallet or an offline device that is not connected to anything such as a USB device.

Confirmation

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

Consensus

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

Cryptocurrency

A type of digital currency that is generally decentralized and uses cryptography (i.e. data is converted into a format that is unreadable for unauthorized users) for added security, making it difficult to counterfeit or manipulate.

DAO

Acronym for “Decentralised Autonomous Organisation”.

dApp

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

Depth chart

This graph plots the requests to buy and the requests to sell on a chart. Because you can put a limit order on your buy or sell transaction, the depth chart shows the crossover point at which the market is most likely to accept a transaction in a timely fashion. It also shows if there are any significant buy walls or sell walls in play.

Difficulity

When someone refers to difficulty in the cryptocurrency space, they are referring to the cost of mining in that moment in time. The more transactions that are trying to be confirmed at any single moment in time, divided by the total power of the nodes on the network at that time, defines the difficulty. The higher the difficulty, the greater the transaction fee – this is a fluid measurement that moves over time.

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.

Decentralized ledger

When no single entity has control of all financial records it is considered to be a decentralized ledger.

EMA / MA

EMA is a type of moving average that places a greater weight and significance on the most recent data points. The exponential moving average – EMA is also referred to as the exponentially weighted moving average. You can also call it a better Moving Average.

ERC-20

ERC-20 is a technical standard used for smart contracts on the Ethereum blockchain for implementing tokens. ERC stands for Ethereum Request for Comment, and 20 is the number that was assigned to this request.

Exchange

Websites where you can buy and sell cryptocurrencies.

FA

Acronym for “Fundamental Analysis”.

Fiat

Refers to currencies that have minimal or no intrinsic value themselves (i.e. they are not backed by commodities like gold or silver) but are defined as legal tender by the government, such as paper bills and coins.

FOMO

An acronym for “Feat 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 categorised into two categories: soft or hard.

FUD

Acronym for “Fear, Uncertainty, and Doubt”.

GAS

A measurement of how much processing is required by the ethereum network to process a transaction. Simple transactions, like sending ether to another address, typically do not require much gas. More complex transactions, like deploying a smart contract, require more gas.

GWEI

The denomination used in defining the cost of Gas. So set a Gas Price of 20000 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.

Hash

The shorthand for Cryptographic Hash Function.

Hardware wallet

A device that can securely store crypto-currency. Hardware wallets are often regarded as the most secure way to hold crypto-currency.

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.

Heiken Ashi

The Heikin-Ashi technique averages price data to create a Japanese candlestick chart that filters out market noise. Heikin-Ashi charts, developed by Munehisa Homma in the 1700s, share many characteristics with standard candlestick charts but differ because of the values used to create each bar.

Hodl

Cryptocurrency meme term used instead of “hold”.

ICO

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.

Laverge

A loan of sorts, offered by a broker on an exchange during margin trading.

Ledger Nano S / Trezor

Two of the most popular hardware wallet models.

Click here to get your Ledger

Limit order

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.

Long

Buying a position with the intention of it going up.

MACD

Moving Average Convergence Divergence. A trend indicator that shows the relationship between two moving averages of prices.

Market cap

The market value of a company, market or sector at a point in time commonly used to rank relative size. In equities, it refers to the total market value of a company’s outstanding shares. In cryptocurrency investing, it refers to either price multiplied by the circulating supply (i.e. free float market cap) or price multiplied by the total supply (i.e. fully diluted market cap).

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 does so at the price of the time the transaction order is made.

Mining

A process where transactions are verified and added to a blockchain. It is also the process where new bitcoins or certain altcoins are created. In theory, anyone with the necessary hardware and access to the internet can be a miner and earn income, but the cost of industrial hardware and electricity has limited mining for bitcoins and certain altcoins today to large-scale operations.

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 between those in the Mining Pool proportionately based on the amount of power they contributed. The idea is that being in a Mining Pool allows for more chance of successful hashing, and therefore getting enough cryptocurrency reward to have an income.

Moon

A term used to describe a huge price movement upwards.

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

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

Paper wallet

Storing your wallet code (your private key) on a physical document makes it a Paper Wallet. It’s also sometimes referred to as Cold Storage.

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 given the authority can approve. This is a far faster method.

PoS

An algorithm that rewards participants that solves difficult cryptographic puzzles to achieve distributed consensus. Unlike proof of work or PoW, a person can validate transactions and create new blocks based on their individual wealth (i.e. stake) such as the total number of coins owned. One of the key advantages that PoS has over PoW is lower energy consumption.

PoW

An algorithm that rewards the first person that solves a computational problem (i.e. mining) to achieve distributed consensus. Miners compete to solve difficult cryptographic puzzles in order to add the next block on the blockchain. It prevents spam and cyber attacks such as DDoS as it requires work (i.e. processing time) from the service requester.

Private key

A cryptographic key that can be obtained and used by anyone to encrypt messages intended for a particular recipient, such that the encrypted messages can be deciphered only by using a second key that is known only to the recipient (the private key ).

Protocols

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

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 and dump

A scheme in which the development team (or short-term traders) hypes up a project without fundamental basis in order to pump up the price of the tokens temporarily and then sells their holdings immediately after launch to earn a profit.

ROI

Acronym for “Return of Investment”

RSI

The Relative Strength Index – RSI is a momentum indicator that measures the magnitude of recent price changes to analyze overbought or oversold conditions. It is primarily used to attempt to identify overbought or oversold conditions in the trading of an asset.

Satoshi

This is the smallest unit of bitcoin, which is 0.00000001 BTC. The name sats is shorthand for satoshi.

Satoshi Nakamoto

The individual, or group of individuals – it has never been confirmed – that created Bitcoin.

SEGWIT

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

SHA – 256

The name of the Cryptographic Hash Function (the hashing algorithm) used by bitcoin. It’s been subsequently used by a number of altcoins, too.

Short

Buying a position with the intention of it going down.

Smart contract

An automated mechanism involving two or more parties where digital assets are put in and redistributed at a later date based on some preset formula and triggering event. The contract can run as programmed without any downtime, censorship, fraud or third party interference.

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 to a wallet online that is not associated with an exchange.

TA

Trend Analysis or Technical Analysis. Refers to the process of examining current charts in order to predict which way the market will move next.

Total supply

The total number of coins or tokens that are in existence, including those circulating in the public market and those that are locked or reserved.

Volatility

The fluctuation in an asset’s prices is measured by its Volatility. Cryptocurrency prices are notoriously Volatile compared to other assets as dramatic price shifts can happen quickly.

Wallet

A store of digital assets such as cryptocurrencies, analogous to a digital bank account. Crypto wallets can be divided into two categories: hosted wallets (e.g. wallets store on exchanges or third-party servers) and cold wallets (e.g. hardware wallets such as the Ledger Nano S, paper wallets and desktop wallets).

Whale

Someone that owns absurd amounts of cryptocurrency.

Whitelist

A list of registered and approved participants that are given exclusive access to contribute to an ICO or a pre-sale.

Whitepaper

An informational document that generally informs readers on the philosophy, objectives and technology of a project or initiative. Whitepapers are often provided before the launch of a new coin or token.

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