20 of the Most Commonly Used Terms in the Cryptocurrency World
W. Paul Alexander
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This post aims to define some basic crypto/blockchain terms for those new to the wonderful world of Magic Internet Money!
We will start with 20 terms and expand based upon the evolution of new terms and feedback from readers. Feel free to add more terms that you want us to define in the comments below, and they will appear in our next posting.
So, here we go...
1. DYOR - An acronym that stands for "do your own research." While this is not exclusive to the crypto world, you will definitely hear the term quite a bit around these forums. You should always do your own research before you invest in any project.
2. Bitcoin Dominance - The percentage of the entire cryptocurrency market capitalization that belongs to Bitcoin. For example, if the entire value of all cryptocurrency markets was 100 billion with Bitcoin accounting for 65 billion; then the Bitcoin dominance is 65%. Right now, it's somewhere around 66%. This is a very important value, as it gives you a good idea of the health of the number one cryptocurrency.
3. FUD - Another commonly used acronym that stands for Fear, Uncertainty, and Doubt. For some reason, people like to spread negativity about cryptocurrencies without knowing the actual details of what they are criticizing. Spreading FUD about certain projects is how some unscrupulous traders are able to manipulate the market.
4. Pump and Dump - This is a term borrowed from the stock market world, but it refers to artificial manipulation of the market by initially beefing up a worthless asset in order to increase it's value. Once the value is increased, the pump and dump schemers immediately sell off (dump) the asset, causing everyone else to sell off, and the value decreased back to what it originally way before the artificial pump.
5. Purse - The amount of crypto you hold in all of your accounts, usually expressed as in fiat currency values (USD, for instance).
6. Fiat - A currency backed by nothing, as opposed to the former gold standard and silver standard, which were backed by gold and silver respectively. All current central-bank issued currencies are fiat.
7. Whale - A person or a corporate entity that holds a huge purse of one or many different cryptocurrencies.
8. BTC - The market identifier for bitcoin. Each cryptocurrency has one of these abbreviated identifiers, and on exchanges, they serve the same purpose as company ticker symbols on the regular stock exchanges.
9. Exchange - A website that provides users with the opportunity to trade cryptocurrencies.
10. HODL - A misspelling of "hold," as in "You should hold your bitcoin instead of selling it." It came about because common typing errors initially entered in crypto chat rooms and message boards, and HODL became a part of major crypto-related memes ever since. People who HODL their crypto and altcoins are known as HODLers.
11. Altcoin - A cryptocurrency other than bitcoin, also known as "alts." Coins like Litecoin, Ethereum, Ripple, and all other assets besides bitcoin are known as alts.
12. Token - A specialized cryptocurrency built on a majority of different blockchains, the most common of which is Ethereum. For example, the Basic Attention Token (BAT) is an Ethereum-based token, specifically an "ERC-20" token.
13. Dapp - An application built on the blockchain. A Dapp can be anything, from a blockchain-based game to a decentralized exchange. What constitutes a Dapp is often disputes, with some people claiming that certain Dapps are not "full Dapps." Some may consider Publish0x a Dapp. Other examples of Dapps include Nexo and Sapien.
14. Public Address - One of two cryptographic addresses used to verify transactions on the blockchain. In order for a transaction to be validated, the Public Wallet Address must match up with the user's Private Keys. The public address is the same things as your Wallet Address.
15. Private Key - A string of encrypted characters that it used to verify that a transaction from a wallet is being performed by the wallet holder. In order to be validated, the transaction must correctly include both the public wallet address and your private key. You should always keep your private keys in a safe location that no one else knows about. People on the other side of the transaction never see the user's private key.
16. DEX - A Decentralized Exchange. A type of cryptocurrency exchange where the ownership and control is not in the hands of a single entity, and is instead, decentralized.
17. CEX - A Centralized Exchange. A type of cryptocurrency exchange that is owned/operated/controlled by a single entity, be it a person or a corporation.
18. Noncustodial Exchange - A type of exchange that does not have control over the assets of its users. These exchanges generally allow a user to control his/her own private key. However, many users like noncustodial exchanges because such a setup does not allow the exchange to use the user's funds for voting, like with what happened in the Justin Sun takeover of Steem.
19. Custodial Exchange - A type of exchange where user funds are stored in wallets controlled by the exchange. These types of exchanges have full control over the user's funds, and many unscrupulous custodial exchanges have disappeared with user funds many times over the course of cryptocurrency history.
20. Noncustodial Exchange - A type of exchange where users' funds are held in users' own wallets and are only in the possession of the exchange for a brief couple of seconds during the transaction itself. Generally speaking, these exchanges are not in control of user's funds, hence the term "noncustodial," meaning that the exchange does not have custody of your funds.
Well, that's all for now.
Depending on reception of this glossary, I will do more episodes down the line with other terms and definitions you will find on your own crypto journey.