Markets
16k followers
fxcm.com

Most Common Crypto Terms (A Brief Explanation for Beginners)

Welcome all newcomers (and maybe veterans) who want to learn some basic crypto-related knowledge. All the new crypto-related terms can be pretty overwhelming, so I made an alphabetical list briefly explaining the most common onces. I want to make everyone aware of this really cool post from u/groundbreakinglack78 where he took the time to create a list of very informative posts made by people from our community. If you want to learn more on one of the topics below, be sure to check his post out, for more detailed information. (DISCLAIMER: I didn`t come up with all the explanations myself, I wish I could. Some explanations I wrote myself but I took most from several sites (linked below) and editted some, for the community to have a well-ordered overview. Because I know some people get most of their information mainly from r/cryptocurrency .) References: * Site 1 * Site 2 * Site 3 ----------------------------------------------------------------------------------------------------------------------------------------------------- 51% Attack If more than half the computer power of mining hash rate on a network is run by a single person or a single group of people, then a 51% attack is in operation. Address An address is an alphanumeric string of letters and numbers that is unique to a wallet. It is what is used to route digital assets across the network to a particular destination. Different coins have unique address formats. Airdrop New tokens are sometimes given to a number of users that have assets on a particular blockchain. Essentially, when the new tokens are distributed, they are “airdropped” to the holders on the blockchain. Altcoin An Altcoin is a digital currency other (alternate) than bitcoin. At the time of writing this post there are over a 1000 altcoins listed on CoinMarketCap. ATH ATH is an abbreviation of 'all-time high'. It`s literally the highest value a cryptocurrency has ever reached. Bear/Bearish 'Bears' believe that for example a cryptocurrency will decline in value. That`s why when the price of crypto keeps declining over a longer period, it`s called a bear market. Blocks Many digital currencies make use of blocks, which contain transactions that have been confirmed and then combined together. Blockchain Blockchain is a system of recording information (blocks) in a way that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. Bull/Bullish If a trader believes that an asset will rise in value, he or she is a "bull." That`s why when the price of crypto keeps rising over a longer period, it`s called a bull market. Candlesticks A candlestick chart is a graphing technique used to show changes in price over time. Each candle provides 4 points of information opening price, closing price, high, and low, Also know as 'candles' for short. Circulating Supply The best guess of the number of coins that are cirulating in the market and in the general public`s hands. Confirmation Confirmations are necessary for a successful transaction. The number of confirmations is based on the number of times that the network has accepted the transaction. The more confirmations, the more likely the transaction is to be legitimate. If there are only a few confirmations, the likelihood of coins being double-spent increases. Consensus The network for a digital currency reaches consensus when the network's nodes agree that a transaction took place. This agreement is crucial if the varying network participants (nodes) are to have the same information. In other words, consensus is crucial to distributed ledger systems. DCA DCA or 'Dollar Cost Averaging' is an investment strategy in which an investor divides up the total amount to be invested across periodic purchases of a target asset in an effort to reduce the impact of volatility on the overall purchase. Decentralize To move power away from a specific authoritative body. Distributed Ledger A distributed ledger is a system of recording information that is simply distributed, or spread across, many different devices. The blockchain, for example, is a distributed ledger that was originally created to keep track of all bitcoin transactions. DYOR An acronym of 'Do Your Own Research'. Dusting Attack An attack that aims to uncover the identity of a wallet`s owner, information that can be used in phishing scams. ERC-20 token An ERC-20 token piggybacks off of the Ethereum network, but for an ERC-20 token to be accepted, the token must meet a certain set of rules. “ERC” itself stands for “Ethereum Request for Comments”, and it is meant to improve the Ethereum network. Faucet A cryptocurrency reward system usually on a website or app, that rewards users for completing certain tasks. It is mostly a technique used when first launching an altcoin to interest people in the coin. Fiat Fiat currencies are currencies that have value because they are minted by a central bank. Fiat means "by decree," and these currencies have value because some central authority has decreed that they have monetary value. FOMO FOMO stands for 'fear of missing out'. This mostly occurs when people start buying into crypto because they don`t want to mis out on the occuring gains. Fork A fork is a change in a digital currency's rules or protocol. Developers update a cryptocurrency's protocol from time to time. A fork can be either a hard fork or a soft fork. FUD Fear, uncertainty and doubt can be summed up using the term "FUD." The idea behind this is that market participants may spread misleading or inaccurate information in order to cause an asset's price to decline. A trader may want an asset's price to fall so they can either short it successfully or buy in at a lower price and increase their chance of generating a gain Fungible Fungible is a positive quality where two or more of the same thing have identical value. That is to say, one of a group of things can be a substitute for another and it won’t change the value. Halving An event in which the total rewards per confirmed block halves. Hard Fork A hard fork is a type of fork that creates a permanent change to a digital currency's protocol, or rules. When one of these forks takes place, it results in a whole new blockchain, which will not accept any blocks mined using the old rules. Hardware Wallet (Cold wallet) A hardware wallet is a specially designed device to lock away access to your cryptocurrency. The device is extra secure because it is disconnected from the Internet and other computers and is virtually virus-proof. ICO ICO or 'Initial Coin Offering' is a type of crowdfunding, or crowdsale using cryptocurrencies as a means of raising capital for early-stage companies. Market Cap Market cap is short for market capitalisation, which is a term for total market value. The market cap of bitcoin, for example, is the number of BTC outstanding multiplied by the digital currency's price. The term can also be used to refer to a group of digital currencies. Mining Mining is the process for creating new units of a digital currency. For example, the bitcoin network releases new bitcoins every time a block is mined. In this instance, mining involves confirming transactions and combining them in to blocks. MOONS Redditors earn MOON tokens based on the content they produce on the r/Cryptocurrency subreddit. This could be anything from original posts to commenting on other people's content. They are a cryptocurrency. Node Nodes are used to pass block data throughout the network. These nodes are able to validate transactions. Paper Wallet A paper wallet is simply a piece of paper containing the information needed to access and spend your cryptocurrency. A wallet is software that interacts with the network of recordings (blockchain) and lets users receive, store, and send their digital money. POW POW is an acronym for 'Proof of Work'. This is the original consensus algorithm in a blockchain network. The algorithm is used to confirm the transaction and creates a new block to the chain. In this algorithm, minors (a group of people) compete against each other to complete the transaction on the network, getting rewarded with for example bitcoin. POS POS is an acronym for 'Proof of Stake'. This is a type of consensus mechanism by which a cryptocurrency blockchain network achieves distributed consensus. In PoS-based cryptocurrencies the creator of the next block is chosen via various combinations of random selection and wealth or age (the stake). Private Key A private key is a piece of information, usually 12 or 14 words. This can be used to access their digital currency (wallet). Pump and Dump A "pump and dump" is a type of investment scheme where a market participant—or several—work together to inflate the price of an asset so they can sell it when its value is artificially high. This practice may be particularly pervasive when it comes to digital currencies, as traders can easily get together using Telegram groups with the goal of causing specific cryptocurrencies to rise sharply in value. ROI Short for 'Return on Investmen', the ratio between the net profit and cost of investing. Resistance The highest price level of an asset during a specific period. Shilling The act of promoting a cryptocurrency or ICO project. Smart contract A smart contract creates a certain set of conditions that a digital asset transaction must meet to be successful. Soft Fork A soft fork is a change made to cryptocurrency technology creating a temporary split in the group of recordings (blockchain). This change creates all new, valid recordings (blocks) that are slightly different from the original blocks. Software Wallet A software wallet is a computer program designed device to secure your cryptocurrency while allowing only you to access it. A wallet is software that interacts with the network of recordings (blockchain) and lets users receive, store, and send their digital money. Stablecoin A cryptocurrency with extremely low volatility, sometimes used as a means of portfolio dversification. Examples include fiat-pegged cryptocurrency. Ticker An abbreviation used to uniquely identify cryptocurrency. For example Bitcoin has (BTC). Whale Just like any other industry that has to do with fiat or crypto, the Crypto-verse has big players known as whales. A whale is known to own a large number of coins. White Paper The developers who create digital currencies usually provide white papers for these innovative assets. These documents generally offer comprehensive information on the digital token in question, as well as its underlying technology.