Different industries have their terminologies and phrases, that’s also the case with cryptocurrency and blockchain technology space. Without much talk, I’ll be unleashing all the popular cryptocurrency terms and their meaning.
In digital currency, an address is basically a destination where a user sends and receives digital currency. It is similar to bank account details. These addresses usually include a long series of letters and numbers.
An altcoin is an alternative digital currency other than bitcoin. There are more than 11,000 altcoins listed on the data source CoinMarketCap at the time of this writing this post.
In crypto, arbitrage refers to taking advantage of the price difference between two different exchanges. For example, if bitcoin is selling for $40,000 on one exchange and $40,500 on another exchange, arbitrage traders can buy the digital currency on the first exchange and resell it on the second for a decent profit.
“ATH” stands for “all-time high.” All-time highs are quite helpful to note in the cryptocurrency markets. Cryptocurrency assets are so volatile, so keeping their ATH in mind can be very helpful. A digital currency could potentially hit several lower highs before hitting a new all-time high.
“Bears” is a term used when we believe a certain digital asset or crypto market will decline in value. That is, if a trader thinks a cryptocurrency will depreciate, their sentiment surrounding the digital asset is “bearish.” In many situations, traders will make use of this speculation by taking a short position on an asset, meaning that they will run a futures trade that will pay off if the asset in question falls in value.
Most cryptocurrencies make use of blocks, which contain transactions that have been approved and then joined together.
The blockchain, which is a shared ledger system, consists of a set of blocks. These blocks contain confirmed transactions. The blockchain was designed to be not only decentralised but also permanent, meaning that entries could not be deleted once placed on this distributed ledger. The idea of the blockchain was originally introduced when the bitcoin white paper was released in late 2008.
when a trader believes that a crypto asset will rise in value, he or she is a “bull.” When an investor has this optimistic expectation of an asset’s future bull, this stage of mind is described as “bullish.”
The network for a digital currency reaches a consensus when the network’s nodes accept that a transaction took place. This agreement is important if the different network participants (nodes) are to have similar information. In other words, consensus is important to distributed ledger systems.
A cryptocurrency is a digital form of money that allows anyone to send and receives money without involving a third party. Bitcoin, for instance, leverages cryptography in order to validate transactions.
Cryptography is basically the process of encoding and decoding information so that people will be unable to understand the information being sent.
DCA (Dollar Cost Average)
DCA is an acronym that stands for Dollar-Cost average, it’s the act of setting aside money to invest in an asset regardless of the price at the moment. For example, a trader wants to invest $10000 in a certain asset that cost $10 each, so instead of using the $10,000 all at once, he split the capital and be buying over a period of time in different intervals. By so doing, he might end up buying at an average price of $8 each, since cryptocurrency assets are volatile.
A distributed denial of service (DDoS) attack takes place when various parties work together to overwhelm a system by overwhelming it with either request for information or malicious data. Basically, the wicked parties involved in such an attack want to prevent a resource, such as a server, from being able to carry out some specific service, such as serving a web page.
Some digital currency exchanges have suffered DDoS attacks from wicked individuals looking to cripple these marketplaces and hopefully take advantage of this vulnerability to steal cryptocurrency. While efforts to steal digital assets may not work, an exchange’s users could become unhappy simply because they cannot perform trades in the marketplace.
A distributed ledger is a system of recording information that is simply distributed, or spread across, many different devices. The blockchain, for instance, is a distributed ledger that was first created to keep a record of all bitcoin transactions.
Escrow refers to a third-party holding financial resources on the behalf of other people. A third party would hold funds in escrow when the other entities involved in a transaction may not trust each other. it can simply be known as a middleman.
Fiat currencies are currencies that have value because they are created by a central bank. Fiat means “by decree,” and these currencies have value because some central authority has decreed that they have a monetary value. Examples of fiat currencies include the British pound, Dollar, Naira etc.
Exchanges are basically just marketplaces where traders can make digital currency transactions. Buying and selling take place in exchange. one of the most popular exchanges is Binance.
The term “FOMO” stands for the slogan “fear of missing out.” This happens when investors start buying up a particular asset when it experiences sharp gains.
Getting caught up in FOMO can be bad. More specifically, buying up an asset because it has recently experienced some notable rise in price can cause one to fall victim to market manipulation.
A fork is when developers update a cryptocurrency’s protocol, this happens from time to time, they make some changes to cryptocurrency rules and commands. It can be either a hard fork or a soft fork. A hard fork is a change to a digital currency’s protocol that causes blocks created using the old protocol incompatible with the new chain.
FUD is an acronym that stands for Fear, uncertainty and doubt. The idea behind this is that market participants may spread misleading or inaccurate news 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 profit.
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 happens, it results in a whole new blockchain, which will not accept any blocks mined using the old rules.
The old chain can survive, however, leading to a scenario where both the old and the new blockchains can continue.
Cryptocurrency investors developed the term “HODL,” which stands for “hold on for dear life.” The acronym originally came from a misspelling of the word “hold.” Digital currencies can be highly volatile, so when they start experiencing significant price fluctuations, some market associates affirm that they should simply “HODL.”
Initial Coin Offering (ICO)
An initial coin offering (ICO) refers to the first time that an organisation offers digital tokens to the public in an effort to raise money. Companies frequently hold these offerings so they can finance projects.
These digital token sales have often been compared to initial public offerings (IPOs), where businesses sell assets such as stocks and bonds in order to raise money.
KYC is a phrase that stands for “know your customer.” Many authorities have KYC regulations, which have come to affect startups holding ICOs. These regulations require companies holding these digital token sales to verify the identity of their investors.
Long in cryptocurrency space means initiating a trade that a particular asset will rise in value. If a trader purchases a digital currency like bitcoin, for example, they are making a bet that the cryptocurrency will appreciate.
This term is likely used in Futures and options trading.
Market cap is a short form for market capitalisation, which is a term for a total asset value. The market cap of bitcoin, for example, is the number of BTC multiplied by the digital currency’s current price.
Mining is the process of 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 into blocks.
This verification requires hardware and electricity, and miners are being compensated with digital tokens for contributing these needed resources.
The mining incentive is a reward that miners get for validating transactions and mining them into blocks. Verifying the transactions of the bitcoin network, for example, requires specialised hardware and strong electricity, so miners are rewarded with a mining incentive.
Initially, bitcoin’s mining incentive was 50 BTC, but at the time of the report, the reward had dropped to 12.5 BTC.
When a digital currency moons, that simply means it rises sharply in value. For example, a crypto trader could talk about how an altcoin is going “to the moon!”
Newcomers are frequently described as “noobs” by industry experts. If you are this person, you may want to sit back and watch before “jumping in with both feet.” Digital currencies are highly volatile, so those who are newer to these assets should keep their risky nature in mind.
POW stands for “proof of work,” which is a system of proving that a digital currency’s transactions have been verified. Many digital currencies, including bitcoin, use POW. Under such a system, miners must do “work” that is difficult for them to contribute, but easy for the broader network to verify.
Miners are usually rewarded for verifying transactions by receiving units of a digital currency.
POS is an acronym that stands for “proof of stake,” which is another method of confirming transactions. The digital currencies that use this method of verification frequently provide all their digital tokens upfront, and miners are selected based on how many units they have (their stake). In these cases, users who confirm transactions, sometimes referred to as “forgers,” receive transaction fees for their contributions.
A private key is a piece of information—presented as a string of numbers and letters—that an investor can use to access or regain access to their digital currency.
A public key is an address where an investor can receive digital currencies. This public key, like the private key, is a combination of numbers and letters. It can also be referred to as a wallet address.
Pump and Dump
A “pump and dump” is a type of investment scheme where a group of people work together to inflate the price of an asset so they can sell it when its value is artificially high. This practice is unlawful. Traders easily get together using Telegram groups with the goal of causing specific cryptocurrencies to rise sharply in value.
The term “rekt” is crypto trader slang for “wrecked.” Basically, it means that a trader lost substantial amounts of money.
ROI is an acronym for “return on investment.” Basically, if an investor puts their money into a digital currency, they are doing so with the hope that they will receive a compelling interest.
Satoshi Nakamoto is believed to be the creator of Bitcoin, and this mystery man hasn’t been identified up till now.
Shorting an asset, also known as taking a short position is the opposite of Long or Longing, which means making a trade that the asset will fall in value. There are various ways that traders can use to short digital currencies, including futures, options and margin trading.
Investors using this method should note that it involves a lot of risks, especially with cryptocurrencies because of their volatile nature.
A token is a form of digital currency that is built on other blockchains. There are usually used to carry out transactions in a certain ecosystem and are frequently referred to as governance tokens.
The term “whale” is used to describe a trader who has a large number of crypto assets. Traders with large quantities can easily influence the market price by selling his or her crypto holdings thereby dropping the price of the crypto asset, similar to “making waves in the ocean.”
The developers who create digital currencies usually provide white papers. These documents generally offer comprehensive information on the digital token in question, as well as what it will be used for and the problems it will solve.
For example, the Bitcoin white paper gave information on a “peer-to-peer electronic cash system.” Investors who are contemplating taking part in ICOs can benefit greatly from examining white papers of the crypto projects before buying or investing their hard-earned money.
Here you have it, popular cryptocurrency terms, phrases and acronyms you should know. Let the list continue, you can add yours in the comment box below.