Don't Buy a Single Token Until You Read and Understand Each Definition
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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.
This posting, having been the 2nd Update to the original, contains 35 terms, and the list is growing and will continue to grow until every word in the crypto language has been defined in lay terms.
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.
UPDATE 03/25/2020 @ 1311
New Terms to Add
21. Blockchain - This is the technology that all cryptocurrency is built upon. As a form of a decentralized ledger, the blockchain is literally just what it says it is -- a chain of blocks. Blocks are created by a consensus mechanism, whether it be through mining, staking, or another novel approach.
22. Full Node - A computer, single-board system, or other mining system that stores the entire blockchain on his/her personal system. The person running a full node can participate in the consensus mechanism by allowing the system to verify transactions.
23. Consensus Mechanism - A method for verifying transactions on any blockchain. The most common is "Proof of work," used by Bitcoin and the majority of other alts, through which mining is the work that is processed, and in turn, is how new Bitcoins are generated.
24. Proof of Work - The most commonly used consensus mechanism for generating new cryptocurrency. Complex calculations are solved by the miners. Once a miner solves the problem, a block is generated and a reward is given to the miners.
25. Proof of Stake - The second most widely used consensus mechanism. With proof of stake, those who hold the asset in a full-node wallet are given block rewards. The more of the coin held in the wallet, the more you earn.
26. Mining - The process by which proof of work coins are generated. The "mining" occurs as computers and ASICs on the blockchain solve a problem and rewards are disbursed.
27. Gas Price - An Ethereum-specific term, gas price is the fee that must be paid by anyone sending a payment on an Ethereum blockchain. The gas price is always denominated in Ether, which is the name of the native Ethereum token. For instance, if I were sending you 40 ERC-20 tokens, I would have to pay a very small amount of Ether in order to complete the transaction. Otherwise, it will just stall and never be confirmed.
28. Bitcoin - The original cryptocurrency, built by the anonymous character "Satoshi Nakamoto." Bitcoin operates as a proof of work coin running the SHA-256 encryption algorithm. It was launched in 2009 and continues to occupy almost 70% of the entire cryptocurrency value currently in circulation.
29. Ethereum - One of the most popular cryptocurrencies, Ethereum is meant to be a platform upon which trustless "Smart Contracts" could be executed between parties. It was founded, in part, by Vitalik Buterin, and describes itself as a distributed computing platform complete with its own programming language. The Ethereum blockchain allows users to create their own token, built on the ERC-20 protocol.
30. Mass Adoption - The point at which the majority of the population begins using cryptocurrencies in their everyday lives. The largest challenge to mass adoption is scalability from the few million who use crypto now to the billions that would be using crypto if mass adoption were to occur.
31. Hard Fork - The process by which users on a blockchain split off from the original blockchain and form their own. Bitcoin Cash, Ethereum Classic, and Bitcoin SV are all examples of hard forks.
32. Soft Fork - The process by which rules and protocols are updated/changed on any given blockchain. A soft fork does not require the splitting into a completely new project, but it does require across-the-board node updates so that the new protocols can be put into effect.
33. Brave Browser - The flagship product upon which the Basic Attention Token is built. Brave Browser is important in the cryptocurrency world, as it appears to be one of the most viable projects to get to the mass adoption stage.
34. CBDC - Central Bank Digital Currency. These are digital assets that go against everything that original cryptocurrencies were built open. They are centralized by nature, issued by a nation's central bank, presumably as a replacement for cash. Venezuela was the first to attempt a national CBDC with the it's petroleum-based CBDC.
35. Decentralized - The state of not being controlled by any central authority. By spreading the generation of cryptocurrencies across the entire user base, and by not having any central figure or organization governing a blockchain project, decentralization can be achieved.
More Coming Soon!