Cryptocurrency Dictionary

Crypto terms that you should know

Here is a list of cryptocurrency terms you should know.

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Abbreviations you will frequently see:

51% attack: A theoretical attack where if an entity gains 51% of the hashing power, they can perform double-spends and other malicious activities. Ultimately, such an attack would likely cause the end of a cryptocurrency.

APY: see Annual Percentage Yield.

ATH: All-Time High. The highest price a cryptocurrency has ever achieved.

ATL: All-Time Low. The lowest price a cryptocurrency been since it was released.

BFA: see Brute Force Attack.

DAG: see Directed Acyclic Graph.

DAO: see Decentralized Autonomous Organization.

DCA: see Dollar-Cost Averaging.

DeFi: see Decentralized Finance.

DEX: see Decentralized Exchanges

DYOR: Means "Do Your Own Research."

ICO: see Initial Coin Offering.

ERC20: see Ethereum Request for Comment 20.

FOMO: see Fear Of Missing Out.

FUD: see Fear, Uncertainty, Doubt.

HODL: A drunken misspelling of the word ‘hold’. Now people use it when they say they are going to wait and hold a cryptocurrency.

IEO: see Initial Exchange Offering.

IOTA: see Internet of Things Application.

JOMO: see Joy of Missing Out.

KYC: see Know Your Customer.

NFT: see Non-fungible Token.

ROI: see Return On Investment.

SHA-256: see SHA-256.

TLT: see Think Long Term.

TPS:  see Transactions per Second.

YOLO: see You Only Live Once.

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Common Crypto terms

Address: An identifier typically made up of alphanumeric characters that signify where cryptocurrency will be sent.

Airdrop: A giveaway of coins from founders of a particular cryptocurrency. The promotion is usually for a short period.

Annual Percentage Yield: The real rate of return earned on an investment, taking into account the effect of compounding interest, if used.

Altcoin: An ‘alternative coin’, any cryptocurrency that is not Bitcoin.

Altseason: When money flows to altcoins faster than Bitcoin, that is, when investors buy more altcoins than Bitcoin.

Arbitrage: Buying and selling the same asset on two exchanges to take advantage of small price differences in price.

Bagholder: This cryptocurrency term is for someone left with a cryptocurrency after a Pump and Dump.

Bear Market: A market where the price trend is in a downward movement.

Bearish: A tendency for prices to fall in a market; a pessimistic expectation that the value of a coin is going to drop.

Block Reward: The number of tokens a miner receives for mining a block. The reward can be increased to raise the likeliness of miners validating the transactions faster.

Brute Force Attack: An automated process that use computer-generated passwords in order to find the correct one.

Dusting Attack:  An attack that sends tiny amounts of coins to wallets and tracks the transaction activity to find a person’s identity behind a specific wallet address.

Bull Market: A market where the price trend is in an upward movement.

Bullish: A tendency of prices to rise; an optimistic expectation that a specific cryptocurrency will do well and its value is going to increase.

Buy the Dip: When the price of a cryptocurrency or the market is dropping. While some people leave because they are afraid of losing, others see an opportunity to buy a coin or token cheaply before it starts to rise again.

Block: Blocks if information make up a blockchain. Within each block are a recorded series of transactions.

Block Explorer: An interface that display all the transactions in a blockcain.

Blockchain: One of the most used cryptocurrency terms, blockchain is the underlying technology of cryptocurrency that keeps the system secure.

Byzantine Fault Tolerance: Where a blockchain can keep functioning if some of its participants (nodes) fail or are attacked.

Candlestick Chart: A graphic that represents the fluctuation of a crypto asset; usually green when price goes up, and red when price goes down.

Centralized: There is a central point in control of an asset or network. The central point holds a lot of power and can also mean it is more vulnerable to attack. The USA government is the central control of the US dollar, they control the banks, exchanges, and supply of dollars. (see Decentralized).

Circulation Supply: The total amount of a specific cryptocoin that exists on the market as a tradeable coins.

Cold Storage: This is when people store their private keys offline away from the Internet, so they won’t get stolen (see Hardware Wallet and/or Paper Wallet)

Consensus: Where there is an agreement on the blockchain as to what has taken place, for example, a transaction. If there is no consensus, this can mean an attack has taken place or the blockchain is vulnerable to attack.

Cryptography: The act of creating or solving codes. Cryptography is used to keep cryptocurrency secure.

Cryptojacking: Using someone else’s computer to mine cryptocurrencies without their knowledge (eg., there are some games that mine crypto as you play them).

Custodial Wallet: Exchanges use custodial wallets; you are not the owner of the crypto in an exchange. “Not Your Keys, Not Your Coins!”

dApps: Stands for ‘decentralized application’, these are applications that are not centralised and work on top of the blockchain.

Decentralized: There is no central point of the network, it is spread over a series of users (nodes). There is no central authority in control of it (see Centralized).

Decentralized Autonomous Organization: An organization, usually made up of developers and shareholders who vote on how the blockchain should develop.

Decentralized Exchange: A system by which financial products become available on a public, decentralized, blockchain network. Anyone can use it, without going through banks, brokerages, or exchanges, and there is no central authority in control of it.

Delegated Proof of Stake (DPoS): A variation of Proof of Stake that uses supernodes or masternodes to validate transactions.

Dip: A rapid decrease in value of a crypto-asset, but with probability that it will recover to the initial price or even higher in a short time.

Directed Acyclic Graph: Some cryptocurrencies use this algorithm instead of blockchain technology, such as IOTA (see below).

Distributed Ledger: All transactions are published and can be viewed by anyone. Malicious transactions using cryptocurrency are much more difficult.

Dollar-Cost Averaging (DCA): A strategy of investing a total sum of money in small increments over time instead of all at once. The goal is to take advantage of market downturns without risking too much capital at any given time.

Double-Spends: When someone can spend their cryptocurrency twice. In most cases, this is impossible unless someone performs a 51% attack (see 51% Attack, above).

Doxxing (or doxing): The practice of uncovering someone's sensitive personal information and publishing it online. Hackers use doxxing to harass, threaten, or get revenge on someone online.

Ethereum Request for Comment 20: A technical standard used for smart contracts on the Ethereum blockchain for implementing tokens. ERC stands for Ethereum Request for Comment, and 20 is the number that was assigned to this request. An ERC20 token is in some ways comparable to Bitcoin, Litecoin and any other cryptocurrency; these tokens are assets based on blockchain technology. They have value and you can send and receive them. ERC20 tokens are only issued on the Ethereum network.

Exchange: An exchange is where people can go to buy, sell or trade cryptocurrency — such as Binance, Kraken, Coinbase, et cetera.

Fake News: When something being reported is not real, and created by a malicious operator to spread either FOMO, FUD, (see below), or to profit from others’ gullibility.

Faucet: A cryptocurrency application or website that gives free coins.

Fear Of Missing Out: When a cryptocurrency increases in value so quickly that people are afraid that they will miss the boat to riches, causing the price per coin to be even higher.

Fear, Uncertainty, Doubt: Used to describe the rumours and misleading headlines surrounding a cryptocoin, or the Cryptocurrency market in general, regarding the volatility of the coin or crypto market.

Fiat Currencies: Government-issued currencies that are not backed by anything physical. Most modern currencies today are fiat currencies. It is only the apparent strength of the issuing government’s economy and stability that gives them value.

Fungible (or fungibility): This refers to if something can be interchanged with another. In cryptocurrency, if a coin is fungible it should have the same value everywhere.

Gas: A fee for validating a transaction.

Goxxed: When someone leaves their cryptocurrency in an exchange and they lose it all when they get hacked.

Hard Fork: A hard fork is a radical update to the blockchain that can make previously unvalidated blocks valid, or the reverse.: A hard fork can result in a new cryptocurrency being created. One well-known example is Bitcoin Cash being a Hard Fork of Bitcoin.

Hardware Wallet: A wallet that usually takes the form of a small physical device. Hardware wallets are perhaps the safest way to store your cryptocurrency.

Hash: The function of decrypting information. In cryptocurrency, miners must decrypt hashes to mine blocks. The more hashing-power a miner has, the more blocks s/he can mine, and the more block rewards s/he can receive.

Immutable: A word that is often used to describe the distributed ledger — it cannot be changed. Once information or a transaction is added, you cannot remove it.

Initial Coin Offering: A new cryptocurrency will give away some coins at a discounted rate in return for another cryptocurrency, such as Bitcoin. This is usually done to finance the project.

Initial Exchange Offering: A fundraising event for a cryptocurrency exchange, where users purchase coins that can be used on an exchange.

Internet of Things Application: A crypto technology that facilitates transactions between devices on the Internet of Things (IoT).

Joy of Missing Out: When the price drops but a person didn't take a position, so he did not lose money. The opposite of FOMO (see above).

Know Your Customer: Proof of identity banks and some Exchanges require that the customer is who they say they are. Usually, a picture of an I.D. Card, Driving Licence, Passport, and so forth.

Leverage: Trading with borrowed capital (margin) in order to increase the potential return of an investment. Can be very dangerous in a volatile market.

Liquidity: The availability of an asset to be bought and sold easily, without affecting its market price.

Liquidity Mining: Tokens that are locked in a smart contract. They facilitate efficient trading of assets while allowing investors to earn a yield on their holdings. Behind the scenes, a liquidity pool is just an automated market-maker that prevents huge price swings of an asset.

Liquidity Pools: see Liquidity Mining, above.

Market Capitalization: How much a cryptocurrency is worth in total.

Meme-Coin: A cryptocurrency usually, but not always, themed around Internet memes: jokes and images shared on social media. It usually has no inherent value, and often no utility.

Metamask: A digital wallet for Ethereum. It runs as a browser extension and can integrate with different DEXs (Decentralized Exchanges).

Mainnet: A live blockchain network. A network on which coins are traded.

Mining: The process of validating a block in return for the block reward (the “gas” fee charged to the user, see above).

Mining Rig: A mining rig is a structure that houses cryptocurrency mining equipment.

Moon: If a cryptocurrency is ‘going to the moon’, it means that people believe it will rise exponentially in price.

Node: A computer that works on the blockchain network and helps it stay decentralised.

Non-fungible Token: A token that is unique and cannot be exchanged. They live on the blockchain. Non-fungible literally means noy copiable.

Open Source: The code for an application is public and easily accessable. Anyone can understand what's happening “under the hood” and search for bugs in the code or vulnerabilities.

On-Chain Governance: How the blockchain handles changes — people can vote new changes into the blockchain to update it to overcome issues.

Paper Wallet: A form of cold storage, a paper wallet has the wallet’s public and private keys printed out on to paper. Usually stored in a safe.

Peer-to-Peer: A connection between two or more computers. In cryptocurrency, these are known as nodes. There is no middleman between transactions.

Phishing: When someone tries to get someone's else secret information. This can be done by cloning an official website to fool the user into disclosing personal information.

Privacy Coin: A cryptocurrency where transactions can be made private. Some of the most well-known privacy coins include Monero, Dash, and Zcash.

Private Keys: Allows unrestricted access a cryptocurrency wallet.

Proof of Stake (PoS): A common algorithm that requires users to stake some of their cryptocurrency to validate transactions. Some believe that this algorithm is much more efficient than Proof of Work (see below).

Proof of Work (PoW): A common cryptocurrency algorithm. It requires miners to mine blocks to validate transactions. Some believe that this algorithm is much less efficient than Proof of Stake (see above).

Protocol: The rules a network uses for transaction validation, communication between nodes, and so forth.

Public Keys: A key shared with others to receive cryptocurrency.

Pump and Dump: A scam where people — usually the creators who own a large share — encourage others to buy their cryptocurrency to artificially pump the price. Once the price reaches a high point, the scammers sell off all that they own and the price plummets.

REKT: severely damaged, utterly destroyed, or ruined. Crypto markets can get you 'REKT' in seconds.

Return On Investment: A method to calculate the efficiency of an investment: (value of investment - cost of investment) / cost of investment.

Rug Pull: A malicious manoeuvre in which crypto developers abandon a project and run away with investors’ funds.

Satoshi: A Satoshi is the smallest denomination of Bitcoin and is equivalent to 100th billionth of one Bitcoin. It was named after Bitcoin’s creator, Satoshi Nakamoto.

SHA-256: A function that encrypts data and generates a 256-bit signature of characters, typically used in Proof of Work calculations.

Shill: Promoting a project independent of the project’s actual merits, often because the person will directly benefit from the project’s success.

Shitcoin: Coin with little potential or future prospects.

Soft Fork: A backwards-compatible change in the blockchain protocol. They are less extreme than hard forks. The Banano network is a Soft Fork of the feeless Nano network.

Smart Contract: A two-way smart contract that is recorded on the blockchain, containing specific logical actions that are comparable to a "normal" contract. Once this contract has been signed, it can never be changed. A smart contract can be used to set certain benchmarks that must be met in exchange for money.

Solidity: A coding language invented by Ethereum for coding smart contracts. It is quite similar to JavaScript.

Stablecoin: A cryptocurrency that is supposedly tied to the value of something else, such as the US dollar, to make it more stable and less volatile in price swings.

Staking: Staking is the process of actively participating in transaction validation (similar to Mining, see above) on a proof-of-stake (PoS, see above) blockchain. On these blockchains, anyone with a minimum-required balance of a specific cryptocurrency can validate transactions and earn Staking rewards.

Supernode: Usually, supernodes work on DPoS blockchains and are responsible for validating transactions. They may also be called ‘masternodes’.

Testnet: A network for developing and testing features before officially releasing them (see Mainnet, above)

Think Long Term: A strategy of keeping something for a long period of time, regardless of price fluctuations.

Token: A token is the underlying digital asset of the cryptocurrency that can be used to make transactions or pay for other functions. Tokens can also be called ‘coins’.

Transactions per Second: How many transactions a cryptocurrency can handle per second.

Utility Coin: A cryptocurrency that’s can be used for other purposes aside from transactions. For example, Binance Coin can be used on the Binance exchange to get a discount when purchasing other coins.

Validator: Another word for someone who may validate transactions.

Wallet: One of the most common cryptocurrency terms, a virtual wallet where people store their cryptocurrency to keep it safe.

Whale (or crypto-whale): A whale is an entity that can move large amounts of cryptocurrency in one go. When they do this, it can have a big impact on the market.

White Paper: A white paper is a document that outlines what a cryptocurrency is created to do and how it will achieve it. The first white paper was released by Satoshi Nakamoto for Bitcoin. Since then, almost every cryptocurrency has released one. Banano calls theirs a Yellow Paper.

Yield Farming: Also known as Liquidity Mining, see above.

You Only Live Once: A slogan for when people decide to put all their money on one thing.

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P.S.

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