What are the must-know cryptocurrency terms?
Let’s face it: a big chunk of what’s deterring newcomers from delving deeper into the crypto world is the abundance of complex terms that surround decentralized money. The further you go the more unfamiliar words you encounter. Unfortunately, to build a particularly good career in crypto, you’ll have to know these words.
So, let’s go over the core terms one by one.
ATH (All-Time High)
An all-time high is simply the highest price a selected cryptocurrency has ever reached. This peak is important for understanding a theoretical range of what a coin is capable of, starting from its lowest cost and ending with the highest. Everything between is fair play, and it’s not unheard of for a cryptocoin to beat its own ATH.
Alternative Coins (Altcoins)
Altcoin is simply a name given to anything that isn’t a Bitcoin. The biggest altcoin is Ethereum, although this token is also sometimes excluded from the term. The purpose of this word is to clearly differentiate the giant market that is BTC (that comprises almost 50% of the entire crypto market) and everything else.
Bitcoin to the Moon
‘Bitcoin to the Moon’ is a catchphrase used enthusiastically to describe the phenomenon of Bitcoin’s unprecedented rise in value. Nowadays, it’s often used as a rallying cry or just a phrase to express the belief that BTC will eventually repeat its meteoric rise. Since there have been several instances when Bitcoin reemerged from deep stagnation, the phrase is still popular.
A block reward is the product of mining. Mining, being the chief way of obtaining new coins, implies the creation of new blocks on the blockchain. When a new block is created, either through the use of hardware or other mechanisms, the people responsible for it are awarded a certain amount of coins, called a block reward.
Blockchain is a ledger, a decentralized and unchangeable description of all past transactions. No one party has control over the blockchain, and people send money to other users in an automated, monolithic system. Anyone can verify the validity of said transactions, which are all anonymous and can’t be reversed.
The significance of blockchain is that it can be built into more than just a system to exchange money. Since crypto is a way to express data, blockchain ends up as a completely unregulated, secure, and effective way to exchange data. You can build anything on this foundation, as Ethereum did with its smart contracts.
CEX (Centralized Exchange)
The most common type of crypto exchange, a centralized exchange, is a platform with a single authority that manages the sale, purchase, and transfer of cryptocurrencies within its system. CEXs make ample use of blockchain technology, but many parts of their user experience are strictly monitored like on any other exchange.
A crypto wallet is a secure place to store your public and private keys (passwords) to access your crypto assets. A crypto wallet provides the user with the ability to send and receive cryptocurrencies. Crypto wallets come in a variety of types: mobile apps and hardware wallets, such as the Ledger, which is shaped like a USB stick.
dApps are decentralized applications, created with the use of smart contracts without any governing authority. Every process on such apps is automated, and everything is programmed on a blockchain (usually Ethereum).
DEX (Decentralized Exchange)
Decentralized exchanges are peer-to-peer solutions that typically work on the basis of smart contracts, which ensures their decentralization and autonomy. The processes of sale, purchase, and transfer of money on a DEX are carried out without any supervision. They are known for their speed, efficiency, and security.
A digital address is a number generated by a piece of software that enables it to receive and send cryptocurrencies. It works akin to an account number in traditional banking. It’s typically used by crypto wallets, but it can be found in decentralized apps, decentralized finance institutions, and exchanges.
Fiat money is standard government-issued currencies, like dollar, yen, yuan, ruble, or euro. They are used as a standard medium of exchange on most cryptocurrency exchanges.
FOMO (Fear of Missing Out)
FOMO is a psychological phenomenon found commonly among crypto traders. It’s characterized by impulsive behavior and emotional decisions made on the market out of the fear of missing out on a potential source of profit. The crypto market’s increased volatility and potential for spontaneous growth are to blame.
FUD (Fear, Uncertainty, Doubt)
FUD is all manner of negative information spread to create doubt and uncertainty. It’s not unique to the crypto, but the market is constantly influenced by such false or exaggerated rumors—sometimes by accident, sometimes on purpose.
A humorous misspelling of the word ‘hold’ indicates a long-term strategy of holding onto your cryptocurrencies rather than selling them at a good opportunity. It can be used to describe an unreasonable belief in one’s crypto positions, even in spite of the deteriorating market situation.
Halving is a process of diluting the value of block rewards, usually by half. It’s done to decrease the number of coins issued on the network at a certain time. It’s usually meant to improve the coin’s position on the market by stimulating the growth of an individual asset or to discourage mining.
ICO (Initial Coin Offering)
ICO is a fundraising method of selling new cryptocurrencies to the public before being listed on an exchange.
IEO (Initial Exchange Offering)
IEO is similar in nature to ICO, except the coins are offered through an associated exchange, which offers an additional layer of security and trust.
KYC (Know Your Customer)
KYC is the process of verifying the identity of a new user by requesting several pieces of personal information. It’s a standard procedure for centralized exchanges, which act as regular financial providers. Decentralized exchanges don’t have KYC on account of their blockchain-based nature.
Market capitalization (often market cap) is the total value of a particular cryptocurrency currently in circulation. It’s estimated by multiplying the number of coins by their market price. Market cap is an important parameter in assessing a cryptocurrency’s behavior and likely development.
Mining is the process of validating a transaction, thus adding it to a new block and receiving block rewards. Miners are people who perform mining on a regular basis, typically by using computational power. In certain blockchains, mining can be achieved by other means.
PoS is a consensus mechanism in which participants mine or validate transactions based on the number of coins they hold. They can stake these coins in order to decide who validates the operation. Most modern blockchains, including Ethereum, use this mechanism.
PoW is a consensus mechanism that requires participants to solve complex mathematical puzzles in order to validate transactions and add them to the blockchain. This typically requires large amounts of computational power. PoW was the first consensus mechanism. It’s still used by Bitcoin.
Private Key (Seed)
A private key is a cryptographic key used to access the cryptocurrencies stored in a wallet. A public key can be used to receive coins, whereas you need a private key (password) to gain full control of the savings in a particular wallet.
Pump & Dump
Pump & dump is a common manipulative technique where a group of people artificially inflate the price of the cryptocurrency and then sell it at a higher price.
Satoshi is a smaller unit of Bitcoin, where 1 BTC equals 0.00000001 Satoshi. This level of measurement allows users to operate in smaller quantities of BTC, which fit everyday sums of cash rather than the hundreds of thousands of dollars that Bitcoin usually implies. The name is derived from the pseudonym of the Bitcoin’s creator, Satoshi Nakamoto.
Shitcoin is a derogatory term used to describe a coin with little to no value. There isn’t an exact price range that defines a shitcoin, but you can usually tell that a cryptocurrency is irrelevant by the large number of zeros it displays in its exchange rate to USD.
Total Market Cap
Total market capitalization is the overall value of all cryptocurrencies currently in circulation. It can provide a quick glimpse into the size of the crypto market at any given time. About half of the total market cap is usually Bitcoin, but this number can fluctuate, and it’s also a valuable indicator.
Whale (Bitcoin Whale)
A whale is an individual or entity in possession of a large amount of crypto assets, capable of significantly affecting market movements. The term is derived from broader trading, whereas on the crypto market, these individuals are typically called Bitcoin whales or crypto whales.
A whitepaper is a document describing the purpose, technology, potential, and principles of a new crypto project. The birth of crypto is often believed to be 31st October, 2008, when Satoshi published the Bitcoin whitepaper. By researching the whitepaper, you can determine whether a project is worth investing in.