Cryptocurrency Terms You Should Know

 

Most people enter the cryptocurrency space through Bitcoin. Then boom, they get exposed to the hundreds of other currencies that also exist. And on top of that, it can seem overwhelming with a ton of new terms everyone is using. We wanted to help speed up the learning curve and list out the most important cryptocurrency terms you should know.

Here they are:

Address: The code used to store/send/receive Cryptocurrency and the key that users use to digitally sign transactions.

Altcoin: Any Cryptocurrency that isn’t Bitcoin

ATH: All-time high or the peak in either BTC or USD that the coin has ever gotten too.

ASIC: Application Specific Integrated Circuit: Specialized silicon chips that help mine Bitcoin and other Cryptocurrencies.

Bagholder: Someone holding a large amount of Cryptocurrency

BIP: Bitcoin improvement protocols. Proposals members of the bitcoin community submit to improve bitcoin.

Bitcoin (BTC): The first Cryptocurrency created by Satoshi Nakamoto and what is considered the main Cryptocurrency.

Bitpay: A processing company that allows businesses to accept Bitcoin as a payment method.

Bittrex: A popular U.S. exchange for trading Cryptocurrencies.

Block: A group of transactions, marked with a timestamp, and a fingerprint of the previous block. This is what is used in proof-of-work and subsequently validates transactions. After a block is valid it is added to the main blockchain.

Blockchain: A distributed peer-to-peer digital ledger, containing a list of the blocks mined since the creation of a coin or blockchain network.

Block Reward: The reward a miner gets after successfully hashing a block.

Coinbase: A field used as the sole input for coinbase transactions. A coinbase is what miners claim the block reward from and provides up to 100 bytes of arbitrary data.

Coinbase (Exchange): One of the most popular places to buy cryptocurrency and store it.

Coinbase Transaction: The first transaction in a block, created by a miner including a single coinbase.

Cold Storage: A secure way of keeping Cryptocurrencies off the web.

Confirmations: A confirmation helps to make sure a transaction cannot be reversed. Once it is entered into a block there is one confirmation, and then after each block added subsequent confirmations are added.

Consensus: When almost all nodes on the network have the same blocks in their locally-validated blockchains.

Consensus Rules: The rules for validation of a block that full nodes have to stay in consensus in order to get their reward.

Cryptocurrency: A cryptographically secured currency, i.e. Bitcoin and Ethereum.

DAO: A Digital Autonomous Organization, which the DAO itself set the largest crowdfunding in history. A way to vote on what gets created on a network.

DDOS: A distributed denial of service attack which uses a large number of computers to control and drain the resources of the target.

Difficulty: A network-wide setting controlling how much computation is required to produce POW. Difficulty can change over time (i.e. Bitcoin changing to finish a block every 10 minutes.)

Double Spending: This is a problem solved by Bitcoin and Satoshi Nakamoto’s whitepaper. It is the ability to spend the same currency two times, which with paper money or gold is impossible. Bitcoin helped to fix and address this issue.

Dust Transaction: A transaction for an extremely small amount of Bitcoins.

Escro: Holding funds or assets in a third-party account to protect them during an asynchronous transaction.

Elliptic Curve Digital Signature Algorithm: A Cryptographic algorithm used by bitcoin that makes sure only the owners of coins can spend their funds.

Ethereum (ETH): A decentralized platform that runs smart contracts, allows for Dapps, creates DAOs and was founded by Vitalik Buterin.

Exchange: Where fiat money and Cryptocurrency can be exchanged for Cryptocurrency.

Fiat: Any form of physical paper money either decentralized or regulated.

Fomo: Fear of missing out, which can drive people to buy during highs and sell during lows.

Fork: An event that happens when two or more blocks have the same height. This can happen on accident or as a part of an attack.

FUD: Fear Uncertainty Doubt. A huge market manipulator which can have an interplay with a stock crashing based on the false news which scares people.

Genesis Block: The first block in a blockchain, used to start the blockchain of a cryptocurrency.

Hardfork: An alteration to the block structure of a coin which sometimes results in the split of it.

Hardware Wallet: A device, like the nano ledger S, which allows for cold storage of a coin for more protection.

Hash: A mathematical process that takes a variable amount of data and produces a shorter, fixed-length output.

HODL: Another term for long-term holding. Often said that a trader got drunk and said hodl instead of “hold” resulting in the community using the phrase.

ICO: Initial coin offering, the parallel to an initial public offering for traditional stocks and companies.

Lightning Network: An implementation to the blockchain that has bi-directional payment channels. These allow payments to be securely routed through peer-to-peer payment channels. This allows peers to pay each other even if they don’t have a direct channel.

Mempool: A collection of all transaction data in a block that has been verified by bitcoin nodes, but isn’t yet confirmed

Mining: The process used to verify transactions and proof of work resulting in the creation of coins.

Moon: Often the mooning of a coin in the community indicates a coin that is skyrocketing in value, hence mooning.

Nick Szabo: The original creator of Bitgold, and what laid the way for Satoshi Nakamoto to create Bitcoin.

Nonce: A 32-bit (on bitcoin) field whose value is set so that the hash of the block will contain a run of leading zeros.

Paper Wallet: Cold storage which contains public and private keys held on a piece of paper, often they even look like branded bank notes.

Pump and Dump: A market activity of driving up a price to astronomical highs by any means. Followed by a massive dump which often results in less qualified traders losing money.

Poloniex: Another huge exchange in the United States, although a bit clunkier than Bittrex or Coinbase.

Proof of Work: A system that ties mining and computational power together, if a ledger actively went through

Proof of Stake: An alternative to proof of work, in which your existing stake in a currency is used to calculate the amount of that currency that you can mine.

Private Key: A secret number that is connected to a wallet address.

Public Key: A public facing key that allows for the transferring and receiving of a Cryptocurrency.

Qr Code: A 2-d graphical block containing a monochromatic pattern representing a sequence of data.

Segregated Witness: One of Bitcoins proposed scaling solutions which may involve a soft fork and may go through on the 16th of November 2017.

Shorting: Selling a Cryptocurrency at perceived highs, in order to buy again after it loses value.

Smart Contract: A contract or application running without external influence for a specific purpose.

Soft Fork: New software that is backwards compatible so the blockchain doesn’t split.

Satoshi: 1 hundred trillionth of a Bitcoin or the smallest denomination of a Bitcoin that can be traded.

Vitalik Buterin: The creator of Ethereum and lover of Unicorns

Volatility: The measurement of price movements over time for a traded financial asset.

Wallet: The software that allows the spending, receiving, and storing of Cryptocurrency both on the web and off the web.

Whale: A person possessing a majority or large percentage of a Cryptocurrency.

White Paper: A documentation describing a Cryptocurrencies protocol in detail.

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