CRYPTO DICTIONARY
Dictionary of cryptography
Every field of human endeavor, whether it be science, video games, sports, or another passion, has a specific terminology that professionals frequently employ to clarify a certain circumstance. People that share similar interests get to know one another at the same time in this way. In this regard, the crypto space is not any different. Furthermore, many phrases used in the crypto world are ambiguous to laypeople and those unfamiliar with the subject.
We will define every concept that we think is important to know in order to navigate the cryptocurrency conversation in this article.
ALTCOIN – Any cryptocurrency that isn’t bitcoin is referred to as an altcoin. “alternative bitcoin” and “altcoin” might be regarded as an acronym.
AIRDROP – is the practice of giving away brand-new bitcoin to individuals for free in an effort to increase demand. A new cryptocurrency must acquire users in order to exist. Using an airdrop is one method to achieve this. When a project releases an airdrop, its owners are hoping that new users will ignite the buzz and “advertise” the cryptocurrency, increasing demand.
AML, or anti-money laundering, is the term for a body of rules intended to stop money obtained through illicit means from being passed off as legitimate income.
An Application-Specific Integrated Circuit (ASIC) miner is a type of equipment that is specifically made to mine, or keep up the blockchain.
ASIC – An Application-Specific Integrated Circuit is a computer chip or “integrated circuit” that is built for the sole purpose of mining cryptocurrencies. In other words, it is made for a specific mining application.
ATH – All Time High – the highest price value of the instrument (in this case cryptocurrency) since its creation until now.
Whenever the price of a cryptocurrency crosses the ATH, a new perspective opens up in the market. Although many investors thought that bitcoin would reach an ATH of $10,000 by the end of 2018, it stormed past that price to reach $20,089 on December 16, 2017.
ATOMIC SWAP – is a technique that, in the event that there are two participants in the transaction, enables them to trade different cryptocurrencies immediately. As of right present, it is not possible to directly swap bitcoin for Ethereum. On the other hand, coins that support Atomic Swap can be swapped for coins that support Atomic Swap.
BAG HOLDER – investor known as a “bag holder” keeps buying cryptocurrency even when the price falls sharply.
The archaic word “bag holding” (holding the bag) denotes being taken aback by an unwelcome task or inconvenience.
BTFD – A popular meme on Reddit is “BuyTheFkingDip (BTFD)**,” which suggests purchasing cryptocurrencies when its price declines.
BULL MARKET is a trend in which the value of a particular class of asset is rising.
Also known as BULL RUN 🙂
The symbol of the bull is used, turning its big horned head towards high prices. An investor who is a “bull” wants to profit from the rise in prices of that type of asset.
BEAR – A bear market is characterized by a declining tendency in the prices of a certain kind of asset.The bear symbol is utilized, causing the prices to plummet as it swings its large paw downward. A bearish investor seeks to make money when markets decline.
BLOCK REWARD – cash received by blockchain maintainers.The blockchain needs to be maintained, which involves either risking a significant quantity of bitcoin as collateral (Proof-of-stake) or requiring processing power and electricity costs (Proof-of-work). To make money, people tend to the blockchain. Anyone who participates in this has the opportunity to profit from virtual currency and occasionally brand-new, “virgin” cryptocurrencies.
BULL TRAP – A scenario known as a “bull trap” occurs when an investor seeks to capitalize on the upward price trend. An investor attempts to profit from a bull trap when they believe that a price trend is about to begin. Then, the price trend turns around and declines once more, which results in a loss of money.
BEAR TRAP – is when an investor seeks to take advantage of a downward trend in prices. An investor seeks to take advantage of a bear trap because it gives the misleading impression that prices are declining. Then, the price trend turns around and starts to rise, which results in a loss of money.
BUBBLE – is a significant price increase in all or a portion of the economy, followed by a significant and swift decline in prices. It’s known as a “bubble pop” fall.
A bubble occurs when this situation affects the entire economy or a part of the economy. Famous historical examples of “bubbles” are the Dutch Tulip bubble of the 1630s, the Dot-Com bubble of the 1990s, the housing bubble of the 2000s, and some like to say the Bitcoin bubble of 2017.
CIRCULATING SUPPLY – the number of coins that are currently available and owned by someone. Coins that are locked, reserved or cannot be sold or generally traded are not included in the circulating supply.
Consensus – or agreement, is defined as the agreement of the majority about something.
For consensus, at least 51% of the whole agree on something. Consensus is a very important part of crypto technology.
Decisions on how to fix or upgrade cryptocurrency technology can be made by consensus without relying on a single person or entity
CORRECTON – a change in the price of an asset (stock, cryptocurrency, etc.) by 10% or more.
Corrections usually break positive trends with a negative decline of 10% from the recent high price. The correction is NOT a bear market (20% decrease on average) and is shorter than a recession (6-18 months on average).
COLD STORAGE – a type of storage for digital data. Cold storage takes a long time to access and is often not connected to the Internet. Also known as “cold wallet”.
Unlike hot storage, cold storage is usually not connected to a computer, network or the Internet.
CHAIN SPLIT – in the case of blockchain, only one record (block) needs to be made at a time. However, if the network of users maintaining the blockchain disagrees about how the blocks should be made, they can split, each forming its own chain of records. This happened with Ethereum in 2016 and now we have Ethereum and Ethereum Classic.
DAG – Directed Acyclic Graph – a structure that is built in a single direction and in such a way that it never repeats itself
An example of a DAG is a family tree. Your grandparents had your mom and her brother. Mother met father and had you. Mother’s brother met his wife and had children. In no way can a grandparent be born behind you.
DApp – Decentralized Applications – A software application that runs its technology publicly on a network of computers. With a DApp, the technology is maintained by many individuals instead of a single organization. This way of working gives the technology security. A hacker cannot modify an application’s data unless they have managed to gain access to almost all computers on the network and customize it there.
DISTRIBUTED LEDGER – a system of independent computers that simultaneously record data. Using distributed ledger technology, each computer keeps identical copies of records.
We can define a blockchain distributed system as one in which all computers work independently towards the same goal as one large system. A ledger can be defined as a book used to record transactions. However, distributed ledger technology has evolved beyond recording transactions to be able to record all data.
In distributed ledger technology, there is no central authority to maintain the system.
DYOR – “Do Your Own Research” – the process of researching before investing.
There are many manipulative people who persuade others to buy cryptocurrencies. So if the price will go up, they can use it to make money. Before you invest, DYOR advises you to research websites, reddit, forums and more.
DAO – Decentralized Autonomous Organization – A DAO describes a leaderless organization maintained by a network of computers. To be decentralized, it does not have to have a central location because it is run over a network of computers. Because there is no single leader, it is autonomous and self-governing.
DiP – Drop in price (DiP or simply “dip”) – price drop in the cryptocurrency market
DOUBLE SPEND – a form of deception using digital money where the same money is promised to two parties, but delivered to only one. If successfully executed, one of the two recipients will not be paid.
Bitcoin was the first digital money to provide a good solution to prevent double spending, the blockchain.
DEX – Decentralized Exchange – A decentralized crypto exchange is a place where cryptocurrencies are traded directly from person to person (Peer2Peer), without the company holding the money or cryptocurrency for them.
EEA – Enterprise Ethereum Alliance – an organization that works together to share knowledge and find better ways to grow and build the cryptocurrency known as ethereum.
ERC-20 – a proposed set of rules and standards for the creation of new cryptocurrencies using the Ethereum platform as a foundation. ERC-20 describes cryptocurrencies built with Ethereum technology that follow these rules and standards.
ERC-20 is not yet technically approved by the majority of the Ethereum network. In other words, we are working on developing better standards. Fork – only one new record (block) should be created on the blockchain at the same time. However, sometimes two computers create two records at once, both valid. Since all records are shared between networks of computers, one block will reach one group of computers first, while the other block will reach another group of computers. This creates a split in the blockchain record, known as a fork. Bitcoin has had several forks, the most famous being Bitcoin Cash, which occurred on August 1, 2017.
FULL NODE – a computer in the blockchain network that has a complete, current copy of the block ledger
FUD (Fear, Uncertainty, Doubt) – all information presented with the aim of creating feelings of fear, uncertainty, doubt and other negative emotions in the market.
FOMO (Fear Of Missing Out) – the feeling when you see a coin whose value is starting to rise and you don’t own it yet. If you are affected by FOMO, the probability is that you will buy that coin regardless of the fact that its price has already increased, and the higher the price, the more risky the purchase.
GAS PRICE – a very small amount of ethereum that is multiplied by an amount known as a gas limit to pay people to record transactions and perform other software actions. If the amount of “fuel” is insufficient to complete the transaction, it will not be executed. On the other hand, you can pay a little more “fuel” for faster execution of the transaction.
GENESIS BLOCK – the first block of the blockchain
HASH RATE – the speed at which a computer can take any set of information and convert it into letters and numbers of a certain length, known as a “hash”. Hash rate is also the combined hash rate of every computer in the network. Hash rate is calculated as the number of hashes per second (h / s). Hash rate is the most important for computers that are engaged in cryptocurrency mining.
HALVING – halving comes from an Old English word meaning “half”. In cryptocurrencies, mining is the computer process of recording and verifying data on a digital record known as the blockchain. In bitcoin and other currencies, mining also requires computers to compete against each other to solve a complicated mathematical problem. Once the problem is solved, a new block is created on which the blockchain continues, and the reward of a brand new bitcoin is awarded to the computer that solved the math problem first. Halving is the halving of the bitcoin mining reward.
HARD CAP – the maximum amount of money that a crypto project can collect from investors in an Initial Coin Offering (ICO), Security Token Offering (STO) or some other fundraising process.
HODL (Hold On for Dear Life) – after buying cryptocurrencies, the person who HODLs intends to keep it even if the prices drop drastically. Originally misspelled as “hold”, HODL has become a popular term among those who buy cryptocurrencies.
ICO – Initial Coin Offering- a time-limited process when a new cryptocurrency or token typically becomes available to the public for investment. Also called “Initial Token Offering” or “ITO” and “Token Generation Event” or “TGE”. An ICO can be launched for cryptocurrencies that are still in the idea stage or are already built and ready for distribution. People invest their money in an ICO in the hope that it will later be worth much more than what they paid for.
IPO -Initial Public Offering – a process in which a company raises money by first offering its shares for PUBLIC purchase (via the stock exchange).
KYC – Know Your Customer – customer identification procedure that is mandatory by law for financial organizations.
KYC requires all customers to provide identification and sometimes answer personal questions before they can invest their money in banks, stock exchanges and other financial organizations.
LIGHTNING NETWORK – The Lightning Network is a technology that enables near-instant and low-fee cryptocurrency transactions using Bitcoin technology. With cryptocurrencies like bitcoin, it can take an average of 10 minutes for a transaction to be registered on the blockchain. The Lightning Network will complete these transactions instantly.
LIMIT ORDER – a request to buy or sell assets (shares, cryptocurrency, etc.) at a precisely determined price. The priority of the limited order is the price. A limit order is used to buy or sell cryptocurrencies at a price that will provide you with the best price and increase your earnings. It is best used when your priority is profit, not speed.
LEVERAGE – increased investment power through margin. Margin is a borrowed asset (cryptocurrency), usually from the financial services company you trade with, that allows you to invest more in the hope of making more money. Leverage allows the investor to control much more assets than he actually owns, giving him the opportunity to make and lose more money.
MASTERNODE – control center in certain blockchains. To get a masternode, an initial coin pledge (or “Stake”) is required. A masternode is more than just a node. It has a management role and special tasks that ordinary nodes do not have.
The management role of the masternode is to vote on proposals to improve a particular system. Each masternode gets one vote. Masternodes’ specific jobs in the Dash ecosystem include creating instant transactions, known as “InstantSend”, and private transactions that hide the fact that you’ve sent money, known as “PrivateSend”.
MINING – better known here as mining, is defined as the process of using computing power to solve complex mathematical problems, review and verify data and create a new record that will be added to the blockchain.
MINING POOL – a group of people who combine their computing power to solve a complex mathematical problem on the blockchain for a reward. People join a mining pool to increase their chances of solving problems to earn reward for transactions and new coins. Once the prize is won, it is shared among all members of the group. In pool, you often get a prize, but since it is split, the payout is smaller.
MARKET CAP – Market Capitalization – a way of ranking the value and size of cryptocurrencies. It is calculated by multiplying the total number of coins with the current price.
MARKET ORDER – a request to buy or sell cryptocurrencies at the currently available exchange price. The priority of the market order is speed. A market order is used for the immediate purchase or sale of cryptocurrencies. It is best used when speed is your priority, not in hopes of getting the best price and maximizing profits.
MINING DIFFICULTY – mining difficulty is a measure of how difficult it is to maintain and add new blocks to the blockchain. The more computers compete to solve the math problem, the faster the blocks will be created. In order to create blocks at a fixed rate, every 2,016 blocks (every 2 weeks), the mining difficulty is adjusted.
NODE – any computing device (computer, phone, etc.) that participates in the maintenance of the blockchain network by receiving and sending data (by mining).
OTC – Over The Counter trading – a crypto transaction that did not take place through a crypto exchange. Large transactions take place through the OTC, which, if they were carried out on the stock exchange, would significantly increase the price. The advantage of OTC purchases is that they are not visible like those on the stock exchange and will not change the price at all.
P2P (Peer to Peer) – a connection between two or more computers that allows them to directly exchange cryptocurrencies
PoB – Proof of Burn – a way of investing in completely new cryptocurrencies where, to get 1 new currency, you have to burn (burn) another currency. This would, in theory, make any new cryptocurrency the value of the destroyed coin. Since digital coins cannot actually be destroyed, this type of consensus requires you to send the cryptocurrency you want to mine to a place where it can never be spent, thus reducing the total supply of that cryptocurrency.
PRIVATE KEY – a series of letters and numbers known only by the owner that allows them to use their cryptocurrency. NEVER SHARE your private key unless you want someone else to be able to take all your money!
A private key is very similar to a password for accessing cryptocurrencies.
PUBLIC ADDRESS – a series of letters and numbers that identify a crypto wallet. It is used as a way to securely receive cryptocurrencies. Public Address is generated from Public Key.
PoS (Proof Of Stake) – a process for achieving consensus and records on the blockchain. Using PoS, users deposit collateral tokens (or “stakes”) and use a procedure that is more energy efficient than previous solutions (Proof of Work).
PUMP (PUMPING) – promoting investment in order to increase the price of cryptocurrency, usually so that it can be sold at a profit (Pump and dump).
PORTFOLIO – a group of different investments (cryptocurrency in this case). A portfolio can include any type of investment, including stocks, cryptocurrencies, art and real estate. Portfolios are often designed with intent. For example, a portfolio with the intention of long-term investment.
PoW – Proof of Work – a process for achieving consensus and records on the blockchain. Using PoW, users compete with each other via computer to solve the “puzzle” and earn a “mining reward”.
PUBLIC KEY – a string of letters and numbers that enables the receipt of cryptocurrencies. However, public keys are not considered secure for use as public addresses.
PRE-SALE – a short time in which investors can finance a crypto project before it becomes publicly available; often for a reduced purchase price.
PRIVACY COIN – a cryptocurrency that hides data about its users. A cryptocurrency must at least hide the user’s identity to be considered a privacy coin. They also often hide the amount of cryptocurrency traded and held in crypto wallets.
Bitcoin is not a real privacy coin. Bitcoin users are identified by their public address, and there are computer programs that can eventually link those addresses to real identities. Transactions and Bitcoin wallets are also publicly visible data.
However, there are a few privacy coins. Zcash and Monero are the 2 most popular options, but there are dozens of others.
RESISTANCE AND SUPPORT LEVELS – cryptocurrency price ranges that serve as upper and lower price barriers. These ranges are determined by historical prices and can be long-term or short-term, depending on market volatility. They are also one of the most common tools used for technical analysis of price movements.
A resistance level is a value against which you can expect the price to stay above. The support level is the value against which you can expect the cryptocurrency to remain below.
RECT – in the crypto world this term is used for complete financial loss (90%+).
ROI – Return on Investment – a percentage used to measure the profitability of an investment. ROI measures the return on investment relative to the amount invested.
ROADMAP – a plan with estimated completion dates for project phases. It shows what the organization wants to achieve in the long term.
SATOSHI – The smallest possible amount of bitcoin (0.00000001 BTC).
SHA – Secure Hash Algorithm 256 [SHA 256] – one of the most secure ways of protecting digital data. SHA 256 is a mathematical process that generates a 256-bit (64 characters long) random string of letters and numbers (hash) from any input.
SEGREGATED WITNESS – technology that moves certain data recorded in the blockchain to a separate record. When someone sends a bitcoin, the technology must verify that the sender has enough bitcoins in their account. After the technology confirms this, it “signs” the record (block) as a witness. Each bitcoin block is limited to 1 megabyte (MB), and a new block is created every 10 minutes. Since the signature takes up a lot of space in the block, moving it to another block, also known as segregation, will allow the number of transactions to increase.
SHORTING – the process of borrowing cryptocurrency and selling it, in the hope that it will be returned later at a lower cost and keep the difference in money as profit. Shorting is only possible with the futures financial instrument.
STAKE – the amount of cryptocurrency that the user pledges. For some cryptocurrencies, it is a condition that they acquire the right to record and verify the correctness of transactions. Their incentive is to earn fees paid by each user, for each transaction.
SEC – Securities and Exchange Commission – US government organization responsible for protecting investors and maintaining fair and orderly investment markets.
The SEC requires most investment opportunity organizations to register and provide information about their business and customers. They also create laws and requirements that organizations and investors must comply with.
SHILLING – a way of using propaganda to promote cryptocurrency in order to achieve financial gain. In the sphere of cryptocurrencies, “shillers” have a tendency to promote cryptocurrencies, due to which interest in it grows, people buy it and the price increases.
SMART CONTRACT – a contract on the exchange of goods, services or money that will be executed automatically, without the supervision of a third party, as long as the established criteria are met.
SECURITY TOKEN – a digital tool that represents physical wealth in the real world.
SOFT CAP – the minimum amount of money that a crypto project can receive from its investors through crowdfunding, and is allowed to keep the money.
TOKENIZE – the process of converting physical assets into tokens. A token is a digital representation of an asset that exists on the blockchain.
TX Fee -Transaction Fee – payment made to people who work to maintain an accurate and updated blockchain ledger, by verifying the correctness of transactions.
TANGLE – technology created by IOTA. That technology records its transactions instead of the blockchain. The Tangle is created using a Directed Acyclic Graph or DAG.
TOTAL SUPPLY – the entire amount of a certain cryptocurrency that is currently available, not including all burned (burned) coins.
Transaction ID – a string of letters and numbers used to identify a cryptocurrency exchange between two parties. Each transaction has a unique ID.
TOKEN – is defined as something that represents a certain value, service or product.
There are three main types of tokens built using blockchain technology: ● A utility token that provides access to a product or service, including software, digital content, etc. ● A security token that is backed by a physical asset, representing it. ● Equity token representing partial ownership in the company.
TRUSTLESS – an environment in which trust between two parties making a direct transaction (P2P) is not necessary for the successful execution of the transaction.
UNBANKED – a collective term for people who do not or cannot use banking services and therefore have little or no access to financial services.
VENTURE CAPITAL – money provided to new companies that have long-term growth prospects. In exchange for money, companies give a share of ownership.
VOLATILITY – a measure of how much the price (in this case) of a cryptocurrency changes over a certain period of time. Stocks of established companies like Apple and Google have much lower volatility than cryptocurrencies, which can be very volatile in a short period of time.
Virgin Bitcoin – the amount of brand new bitcoin awarded to a computer (miner) that has solved a mathematical problem.
VOLUME – the amount of cryptocurrency that is bought and sold during a certain period of time. Volume can be separated into “purchase volume” (also known as “buy volume”) and “bid volume” (also known as “sell volume”).
WALLET – crypto wallet is defined as software that communicates with the blockchain and allows users to receive and send their cryptocurrencies.
WHALES – people or organizations that have a lot of money to buy and sell huge amounts of cryptocurrencies. Their ability to buy/sell large quantities gives them the potential for price manipulation.
Because “whales” have so much money, when they buy or sell assets, they directly and/or indirectly affect the price. White Paper – a collection of technical and marketing documents designed to explain a crypto project, its complex product or service, and persuade investors to believe in its benefits.
WHITELIST – list of approved or permitted participants. It is most often used in initial offers of a crypto project. In order to participate in this project, you have to perform certain processes, after which you can be whitelisted.
WEAK HANDS – an investor whose emotions influence trading decisions, which jeopardizes part or the entire crypto portfolio. Weak hands are often identified as people who sell as soon as the value of the investment falls.
THAT’S ALL PEOPLE 😀