50 Terminologies in the Crypto Industry and their Meaning.
Today, it is quite difficult for most people to understand the cryptocurrency world, which is a serious concern. There are thousands of terms that are employed to define a new reality, so it is not just a matter of complex and objectively difficult concepts for non-professionals to understand. Because of this, we have put together 50 terminologies and their meanings to help readers who are unfamiliar with the crypto terms understand the world of cryptocurrency. Without further ado, let’s get right into it.
1. Alt-coin: Alt-coin which can also be called alternative coins is any cryptocurrency that is not Bitcoin. Alternate currencies range from very well-known and established coins like Ethereum to “joke” coins like Dogecoin.
2. Automated Market Maker: A type of decentralized exchange protocol that relies on a mathematical formula to price assets. They trade using smart contracts, which are available twenty-four hours a day, seven days a week.
3. Binance: Binance is one of the major cryptocurrency trading platforms. The exchange raised capital through an initial coin offering (ICO) in 2017 using the Binance Coin (BNB) token, and it soon rose to the top of the market in terms of volume and security.
4. Bitcoin: On January 3, 2009, the first and most valuable cryptocurrency was introduced; Bitcoin. A cryptocurrency that helped establish a whole sector. It was developed as a “peer-to-peer electronic money system” by Satoshi Nakamoto. Since then, it has grown to be the most well-known cryptocurrency worldwide. Other numerous additional cryptocurrencies have been developed as a result of their popularity.
5. Binance coin: During the Binance ICO, BNB was the cryptocurrency that was sold. On the exchange platform, it is used to pay transaction fees. Transaction fees are reduced by 50% when using BNB as payment. The only place to purchase Binance Coin (BNB) is on the Binance Marketplace.
6. Blockchain: Blockchain is a kind of distributed ledger technology ( DLT). It appears to be a big database consisting of information-containing blocks that are cryptographically linked to one another (transactions, lines of code, etc.). These blocks are added following a transparent, extremely strict methodology. The unique feature of the blockchain is that, despite its very strict requirements set forth by a consensus protocol, anyone can contribute to it by creating blocks that are added to it. This makes the blockchain inherently decentralized. The first successful application of blockchain technology is cryptocurrencies. The decentralized web might come next. A distinction is also drawn between public and private blockchains: although everyone can contribute to the first, the latter requires the blockchain developer to select the members based on a set of criteria.
7. Coin burning: As the name implies, is the burning of a cryptocurrency. This procedure is used when you wish to lower a cryptocurrency’s offer to preserve its value.
8. Cold storage: Cold storage refers to holding and keeping one’s private keys on a medium that is not linked to the Internet. You have the option of using electronic wallets like the Ledger Wallet or the Cool Wallet or keeping your private keys on a plain piece of paper in a paper wallet. Many cold storage wallets are expensive and only accept a limited number of cryptocurrencies. As a result, many traders prefer using a hot wallet.
9. Crypto Exchange: This is an online marketplace for cryptocurrency. Exchanges give you access to a wallet that enables you to store, move, and receive coins from other users in addition to the possibility of buying and selling cryptocurrencies and maybe fiat currencies. Keep in mind that in this scenario, the exchange, not you, is in control of the wallet’s private key. Currently, there are over 10,000 cryptocurrency exchange platforms, most of which are large, secure, and focused on particular currencies. Except for the storage of currency, which is free, each platform is compensated by levying fees on each operation. These fees are typically low (almost always below 1%).
10. Commodity Futures Trading Commission (CFTC): is the major US derivatives regulator. According to the agency, virtual currencies like Bitcoin are considered commodities under the law. This indicates that it has the authority to supervise derivatives containing digital currency as their underlying asset and perhaps levy fines for fraud or manipulation of these derivatives.
11. DApp: DApp is an acronym for decentralized application. A decentralized program operates on a network of machines sometimes referred to as a virtual machine, like the Ethereum virtual machine, which permits it to be “indestructible” because it is distributed on numerous computers rather than on an Amazon, Google, or Microsoft server. The hosting of these DApps is the only focus of networks like Ethereum, Stratis, or EOS.
12. DAO (Decentralized Autonomous Organization): Alternatively, an autonomous decentralized organization is one whose rules of governance are fully automated and do not, in principle, require any kind of human involvement. As a result, the DAO is founded on a trustless principle, which does away with the need to place one’s trust in a third party. In a DAO, “code is law,” which means that the code creates the law. Because they are recorded in a blockchain, a DAO’s operating guidelines are transparent and immutable.
13. Decentralized Exchange: Decentralized exchange platforms, often known as DEXs for Decentralized Exchanges, provide users with an alternative to major centralized exchange platforms like Binance, Bittrex, or Kraken by enabling them to trade their cryptocurrencies on peer-to-peer markets that are directly on the blockchain. As a result, traders maintain custody of their money and reduce their vulnerability to hacking that might happen on centralized exchange platforms. Thus, DEXs enable users to completely do without trusted third parties to fully benefit from blockchain advantages. However, using these platforms is difficult and not all that simple.
14. Dips: A dip is a sharp but brief decline in a cryptocurrency’s price. A cryptocurrency swiftly recovers its value after a dip. A dip can be caused by a variety of market dynamics, but it frequently happens when a heavyweight (also known as a “whale” or “whale” in the crypto market) sells something. To get a nice return on capital, it is optimal to be able to purchase a cryptocurrency when its price drops.
15. Day-trading: Day trading involves taking relatively short positions in the market, typically lasting only a few hours to a few days. To check positions daily and take advantage of price spikes or reductions, day traders must be very available. Day trading is different from scalping and swing trading (longer time frame) (shorter time frame).
16. Decentralized Finance (DeFi): a word used to describe any cryptocurrency projects that attempt to provide financial services decentralized, without the use of a centralized intermediary like a bank or exchange. DApps are used by them to carry out routine tasks like cryptocurrency trading, lending, and savings accounts.
17. Double-spending: This is specifically one of the Bitcoin inventions that Satoshi Nakamoto put forth at the end of 2008. Double spending refers to the act of using the same token more than once. Digital assets, which are simply computer code by definition, have this major issue. In the music business, computer file duplication in particular was a major issue. As a result, it is now possible to share files over the Internet without permission. Bitcoin’s decentralized blockchain’s cryptographic architecture helps to tackle the issue. When two transactions using the same amount of bitcoin are received by miners, they only accept the first transaction and reject the second.
18. DYOR: This is an acronym for “Do Your Research”. This is a financial aphorism that is frequently told to beginners. Before making any investment, always do your research. Same for Crypto investors.
19. Entry and exit point: The price at which you enter (purchase into) a cryptocurrency is known as the entry-level (or another commodity). While the price at which you sell out of an investment is known as the exit level.
20. Flippening: This is a term that refers to the possibility that the market capitalization of a particular cryptocurrency will one day exceed that of Bitcoin.
21. FOMO: is an abbreviation for “Fear of Missing Out.” It is a word used when investors purchase a certain cryptocurrency in huge quantities out of concern that they will lose the opportunity to profit from price increases. FOMO, which is frequently experienced by investors or traders in the cryptocurrency market who are unfamiliar with market movements, is closely associated with crowd psychology.
22. Fiat: Fiat refers to a currency that is legal tender and is taxed by the issuer, which may be a state or a group of states (in the case of the euro), and includes the euro, yen, and US dollar.
23. Fork: This is the update of the software controlling a blockchain. We speak of a soft fork if this update affects the consensus rules yet the new rules are still compatible with the old ones. By using a software example, a soft fork is comparable to a security update for Windows. A hard fork occurs when the prior consensus rules are rendered incompatible by the new ones, which results in the creation of a new version of the blockchain. In this scenario, one of the two blockchains will use the new rules, while the other will keep using the old ones.
24. FUD: Fear, Uncertainty, and Doubt. FUD is the practice of trying to sway potential buyers or traders of cryptocurrencies by spreading unfavorable information that is vague enough to trigger doubts. For instance, FUD might involve criticizing a project or a coin.
25. Futures: These are products created from underlying assets in the form of contracts that have been properly approved by regulatory bodies. Any underlying, including commodities, gold, and, more recently, cryptocurrencies, can be the basis of a future. For instance, by visiting BitMEX, you can trade Bitcoin in futures. Hodlers are the group most likely to be interested in using futures contracts rather than just buying cryptocurrencies outright. They can keep their digital currencies in their hardware wallets in the case of a bear market and take a short position on futures, betting against the decline. By doing this, they can safeguard themselves from a drop in the value of their assets.
26. Gas: Some blockchains with smart contracts, like Neo or Ethereum, use a variety of tokens, including gas. On these blockchains, gas is utilized to carry out various tasks specified by a smart contract or pay transaction fees. Gas is consequently necessary to use the Ethereum or Neo blockchain. In the case of Neo, you can mine Gas right out of your wallet.
27. Governance tokens: These are tokens that grant voting rights on blockchain technology to cryptocurrency owners. They are mostly used in DeFi initiatives so that systems can continue to be decentralized and that neither party determines the project’s future course.
28. HODL: On crypto forums, the term HODL is widely used. This word’s root is the English word “hold,” which means to retain or preserve. The term HODL is said to have originated from a message that an inebriated person put on BitcoinTalk several years ago urging investors not to panic and not to sell despite the price drop: this message would have written HODL instead of “hold.” Since then, the phrase has persisted and is still used with every bitcoin dump to calm down diverse investors.
29. Hot Wallet: It is a digital wallet that enables token holding and exchange for cryptocurrency investors. Being online offers the benefit of making it easier to access and allowing for quicker trading. Some people choose to put their cryptocurrency assets in cold storage because, on the other hand, it is more vulnerable to breach.
30. ICO: An initial coin offering, or ICO, is a cryptocurrency fundraiser. A new cryptocurrency is formed during an ICO, and the public is asked to participate in it using ETH, though it is also possible to use bitcoins or other “secure” currencies. As a result, the investor assumes the risk of selling reference currencies in exchange for an uncertain future currency. However, there are a lot of ICO scams.
31. Limit Order: A limit order is a kind of stock market order that is also used in cryptocurrency exchanges, and it entails agreeing to purchase or sell an asset when its price reaches a predetermined level. When the asset reaches the price you specify on the downside, the exchange will place your order if you want to buy (so the price of the asset was higher when you placed the limit order). When the asset hits the price you stated on the upside, if you want to sell, it will do so (so the asset price was lower when you placed the limit order).
32. Market: A cryptocurrency market identifies a pair on an exchange, such as ETH/EUR on Kraken, which refers to all transactions involving ethers and euros on this exchange. As a result, an exchange provides as many markets as there are pairs, which can consist of two cryptocurrencies (such as ZEC/BTC) or a cryptocurrency and a fiat currency (such as BTC/JPY).
33. Mooning: This is when a cryptocurrency’s price and trade volume are both rapidly increasing.
34. Market Capitalisation: It is the value that a specific cryptocurrency represents, usually stated in USD by default. By dividing the total number of tokens in circulation by the currency’s price, market capitalization is determined. It is determined by the Coin Market Cap website using the weighted average price of the exchanges where the cryptocurrencies are listed.
35. Mining: The process of resolving a mathematical puzzle or computational challenge provided by a blockchain’s Proof-of-Work (PoW) consensus is referred to as mining. The amount of computational power needed for mining varies depending on the blockchain algorithm and mining complexity. While preserving network security and synchronization, this activity processes and validates transactions. New tokens are created and/or distributed as compensation for the work of miners.
36. Node: A node is a computer in a blockchain network, such as the one used by Bitcoin, that sends user requests to miners and records the whole ledger (all transactions that have occurred since the establishment of the cryptocurrency). A decentralized network’s performance and dependability are significantly influenced by the quantity and accessibility of its nodes.
37. PIP: The pip is a measurement unit that’s used in the forex market but can also be applied to cryptocurrencies, particularly for CFDs. The smallest movement a currency may make is defined by a pip, which is the difference in value between two currencies. In trading or investing, the pip is used to set a stop loss or take a profit order, as well as to determine the spread (the difference) between a currency pair’s buying and selling prices.
38. Private Key: this is a strong password that is needed to access a wallet for virtual currency.
39. Pump: A pump is a rapid and prolonged increase in an asset’s price. The dump is the opposite of the pump. A pump is still a somewhat jarring market activity that frequently starts other mechanisms by snowballing.
40. Proof-of-stake: this is among the most popular blockchain consensus methods. The goal behind this algorithm is to give masternodes, or nodes that control a particular quantity of the blockchain’s currencies, the responsibility of adding blocks to the blockchain and determining consensus. The cryptocurrency’s issuer consistently and plainly states this amount.
41. Proof-of-work: The primary consensus algorithm used in mining is based on resolving exceptionally challenging mathematical puzzles; hence, “proof of work.” It has a lot of ties to the Bitcoin blockchain but has drawn criticism for being slow and using a lot of energy. Proof-of-stake mining is being considered by developers as an affordable, quick, and ecologically friendly substitute.
42. Rekt: This term describes a person who lost money as a result of making a poor cryptocurrency investment in the field of cryptography.
43. ROI: is abbreviated for “Return On Investment”. The ROI is a critical indicator of how profitable a trade or investment is. It is computed by dividing the money invested by the profit realized. A 100% return on investment, for instance, means doing doubling your initial wager.
44. Rugpull: This is a common method for defrauding investors. Scammers would set up a new coin that promises to be the next big money-making opportunity. After luring investors usually via chat rooms or other social media channels and convincing enough of them to put money into projects, the coin’s developers (scammers) would vanish into thin air.
45. Resistance: Resistance and Support levels are fundamental to technical analysis in trading. Resistance is a level below which downward movements inhibit price growth; as a result, we notice a particular level that the price of a cryptocurrency never seems to reach or hardly ever does. This level may represent an intriguing sell signal. Thus, once achieved, it frequently triggers a bearish correction. However, it is still challenging to accurately determine a level of resistance.
46. Shitcoin: A shitcoin is a cryptocurrency that lacks a viable project, a solid technical foundation, and as a result, intrinsic value. This kind of coin is frequently utilized in speculative trading to profit from market volatility. Some shitcoin ventures, on the other hand, are cleverly camouflaged frauds that can easily dupe unsuspecting investors. Therefore, before purchasing tokens, it is crucial to learn all there is to know about each project.
47. Security Token: A security token grants the owner of the token a reward right that entitles him to compensation based on the company’s wealth creation. The security is distinct from the equity token, which grants a right of ownership of a title and hence equates to an investment in the company’s capital. We can in some way make security tokens more comparable to mutual funds or ETFs. Overall though, this kind of asset is still highly blockchain-specific.
48. Take profits: A take profit is a stock market activity that involves selling an item to exit a market because it is believed that the listed asset has achieved sufficient value and that its price will shortly decline. This does not imply that the investor won’t return to this market; rather, he will likely do so once the asset’s price has sufficiently declined or if, on the contrary, it begins to rise significantly once more.
49. Whale: is an investor who holds a sizable amount of market capitalization. Whales are typically those that bought bitcoin early and have amassed a sufficient amount of the digital currency to be able to affect prices through transacting.
50. Whitepaper: Cryptocurrency whitepaper specifies its technological underpinnings, discusses its consensus process (algorithm, rewards), and, if the cryptocurrency is a token, may give a business model and business plan. Before investing, you can gain more knowledge about each project and its team by reading the whitepaper. You can also form your judgment about the project’s viability. This is the best informational resource available for finding out about a cryptocurrency project. The most famous whitepaper was written by Satoshi Nakamoto.
Having a better understanding of Cryptocurrency terminologies not only helps you understand crypto better but also helps you make better investment decisions, have a better understanding of how cryptocurrencies work, how to use them in your day-to-day life, and also learn how to protect yourself from cryptocurrency scams, hacks and other threats like phishing attacks or malware downloads.
With these 50 terminologies, you’re good to go!