Dictionary of cryptocurrency terms

  The cryptocurrency world is still quite young, but it has already developed its own terms and vocabulary. Not all words are unfamiliar, they often have meanings in related fields, but in the world of digital assets, the terminology changes somewhat with adjustments to the specifics of the industry. In order to understand information and […]

CRYPTO-DICTIONARY

 

The cryptocurrency world is still quite young, but it has already developed its own terms and vocabulary. Not all words are unfamiliar, they often have meanings in related fields, but in the world of digital assets, the terminology changes somewhat with adjustments to the specifics of the industry.

In order to understand information and use sources effectively, it is not unreasonable to know and understand, at least approximately, what a particular word means. You don’t have to learn everything by heart, it is enough to read a brief explanation, and if you have questions, go deeper and read a more detailed explanation.

Autonomous Agent – software solutions which make independent decisions and do not require the operator’s intervention. One example is oracles on Ethereum’s distributed ledger, where users send coins to a contract and make a bet, however the decision of the winning side is made by the system itself, without the direct participation of the user.

Address – an address is what makes all transactions in the network happen. There are several types of addresses: a line of letters and numbers and QR codes. The address also serves as a public key when the transaction is signed.

AirDrop – is a program for giving out free coins to attract potential investors and expand the development team and support a new coin. This implies that in the future, the issued cryptocurrency will have some value.

Altcoin – any cryptocurrency other than bitcoin. This can include Ethereum, Tether, Litecoin and thousands of others.

51% attack – a situation where the majority of computing power is controlled by a single user. More than half of the network’s hash rate or coins at stacking allows to stop transactions, spend coins several times and limit writing to the distributed registry by other participants.

ATH – All Time High – the historical maximum of cryptocurrency value on the exchange.

Arbitrage trades – the principle of making trades that came from the stock market. During arbitrage trading at the same time, the same asset is traded on different exchanges, in different directions.

Atomic swap – a direct exchange of cryptocurrencies without the involvement of a third party. Not all digital assets are supported. Atomic swap is provided in bitcoin and some altcoins.

ASIC (ASIC) – is specialized equipment designed for cryptocurrency mining. Cryptocurrency ASICs cannot be used in other areas because of their design features.

Bounty – a program for rewarding network users for performing certain actions. As a rule, the bounty is launched at the very beginning of the new cryptocurrency’s release on the market.

Bitcoin – the first cryptocurrency proposed by Satoshi Nakamoto as an implementation of the distributed ledger technology in the world of digital finance. In the cryptocurrency environment has developed a special slang, where the first cryptocurrency can be called, for example, Bitcoin.

Bitcoins per Block (Bitcoins per Block or Block Reward) is a miner’s reward for adding a new block to the distributed ledger. At the moment it is made up of new bitcoins and transfer fees, but in the future, when all coins are issued, the reward for new blocks will consist only of fees.

Block – A block is a unit of a distributed ledger that stores information about transactions made during its formation, as well as the previous block.

Blockchain – literally translated, a chain of blocks. A registry in which information is recorded in separate blocks connected between each other. A distinction is made between centralized and distributed blockchain.

Bitcoin Price Index (BPI) – Bitcoin price index, reflecting the average value on the largest exchanges around the world.

White Paper – In the English-speaking world, this is the name of a written official statement. In the cryptocurrency world, a white paper is a technical description of a coin.

Cryptocurrency Exchange – a place to exchange cryptocurrencies for each other and for fiat money. It is currently the main place for most people to get cryptocurrency.

Bitcoin-ETF is an exchange-traded fund, analogous to a mutual fund, where the underlying asset is the first cryptocurrency. By purchasing the fund’s securities, investors can profit from the growth of digital gold without direct interaction with the blockchain. For a number of states, ETFs are the only way to invest in cryptocurrencies due to the peculiarities of local legislation.

Genesis – is the first block generated when a cryptocurrency is created. For example, to Ethereum genesis some experts have a number of questions about the distribution of coins.

Gas – commission for Ethereum transfer and token creation.

Two-factor authentication (2FA) – additional account security measure, when besides standard login and password, you have to enter variable access code, received via different communication channels. On Cryptex Telegram, Jabber or Google Authenticator are available for it.

Developer is an anglicism, translated as programmer. Developers are commonly referred to as creators and developers of cryptocurrencies. Although outside of digital assets the word is used in the same sense, for example, one of the authors of our blog is a software developer.

Deflation – implies a rise in the value of cryptocurrencies over time. Most cryptocurrencies assume deflationary changes by reducing the reward per block and limited issuance. This is most evident in the example of bitcoin.

Decentralization – involves the distribution of power among various members of the community. In the world of cryptocurrencies, most coins are decentralized, and each member of the network can propose changes and improvements and monitor the stability of the network.

Double spending – is an attempt to conduct a second transaction using the same funds. Double spending is made possible by the peculiarities of the blockchain, when a transaction is considered completed after a certain number of confirmations in blocks. All cryptocurrencies have a security mechanism that cancels a second transfer after the first one is fully confirmed.

Instamain – also called pre-mining, the process of mining cryptocurrencies before launching and beginning to distribute on the network. In the beginning, the low complexity allows you to get a large number of coins while there are no competing miners.

Inflation – is the decline in the value of cryptocurrencies. It is worth understanding that when applied to the cryptocurrency sphere, fiat money is considered as a commodity, so in the usual sense it may seem that inflation and deflation have the opposite meaning from the classical one.

An institutional investor – is a large investor who owns a variety of assets and whose capital management activity is the primary one. Usually has registration as an asset manager, investment company or mutual fund.

Whale – a large player on the market. As a rule, whales are traders capable to exert considerable influence on the market. Also, companies, for which cryptocurrency is a means to diversify free liquidity storage, without the purpose of primary capital investment, are often referred to as whales.

Keys – in cryptography, which is one of the foundations of cryptocurrency, the keys usually mean a set of special characters used for encryption and decryption, as well as the signature of transmitted information. There are two types of keys: symmetric and asymmetric. In the first case, the same set is used for encryption and decryption; in the second case, a distinction is made between public and private keys. The latter case is used in the cryptocurrency world as the most secure and allows to meet the requirements of the technology.

Ring signature – a digital signature, which gives a right to one user, usually anonymous, to sign a document on behalf of a group.

Wallet – software that allows you to make transactions and manage cryptocurrency on each specific address, from which there is a private key.

Crowdsale – attracting investors before the ICO period, at which time, as a rule, participants have the opportunity to buy new coins at an undervalued rate. The funds raised in this round of investment are used to develop and promote the new cryptocurrency.

Cryptography – is an entire branch of mathematics and related computer science concerned with the development of data privacy and integrity. It is this science that underlies the technology of absolutely all cryptocurrencies.

Liquidity – essentially determines the demand for cryptocurrencies. That is, how quickly available coins can be sold at market value without much impact on the market.

Long – Anglicized from long. It means buying cryptocurrencies, more often for a long time, but in the world of short-term trading it has a similar meaning.

Miner – so it is customary to call people or companies who are engaged in mining cryptocurrencies and maintaining the performance of the distributed ledger network. Also, miners are specialized devices designed only for mining cryptocurrencies, for example, ASIC.

Mining – the process of mining cryptocurrencies. It is mining that allows new blocks to be added to the blockchain and makes all the cryptocurrencies work.

Money hold – an exchange restriction on the deposit or withdrawal of funds for a certain period of time. As a rule, a money hold is announced during the period of sharp, unsubstantiated exchange rate surges, as well as for the time of technical works on the exchange floor.

Margin – also an economic term showing the difference between the purchase price and the profit made.

Masternode – a special node in the cryptocurrency network, which allows mixing transactions of different users to increase anonymity.

Token migration (coin swap) – the transition of a coin between blockchains. This phenomenon can take place at the launch of the main network or a total hardfork of a cryptocurrency. Using the upcoming Ethereum 2.0 launch as an example, the migration can be examined in more detail.

Non-fungible tokens – a standard of tokens, usually based on the ERC-721 protocol, which allows the issuance of unique entities on the blockchain of different coins. Nowadays, this type of tokens usually confirms the ownership of copyright on a digital object. The latter can be an image, text, document, piece of music and other digital entities.

Invisible tax (Miner Extractable Value) – the use by miners in Ethereum similar distributed registries of the possibility of ordering transactions in the second level solutions, for example, on decentralized exchanges. When implementing this algorithm, miners using the privilege of queuing transactions can know in advance the quotes of cryptocurrencies, arranging price slippage.

Nodes – are a separate network node that stores a complete version of a distributed ledger. It is the nodes that allow, together with miners, to ensure the reliability and operability of the network.

Nonce – randomly generated code that allows to increase the reliability of passwords at the moment of authorization, also nonce can be used for two-factor authentication.

Cloud mining – rental of preconfigured and deployed equipment from some organization, allowing no need to purchase a mining device or worry about its uptime. Essentially, for some fixed fee in fiat currency, it is possible to use the computing power of a specialized company to mine cryptocurrencies.

Order – an offer on an exchange to buy or sell cryptocurrencies. Essentially, every transaction on an exchange occurs by creating counter orders. You can read about the types of orders here.

Pump – pre-planned buying of cryptocurrencies in the market to artificially increase the value at a certain point in time.

Pending – transaction status until the moment of transfer confirmation. Different cryptocurrencies require different number of confirmations for a transaction to be considered completed.

Private key – a set of symbols necessary to access a cryptocurrency wallet. It is it that allows you to manage the available cryptocurrencies. The private key is the only way to manage and confirm the possession of coins. It is necessary to strictly monitor the safety of the private key, there are many stories when the loss of the key led to the irretrievable loss of all available funds, sometimes for millions of dollars.

A public key – is the address of a cryptocurrency wallet. At the same time, one private key can have multiple public keys.

Trend – the main direction of quotations on the cryptocurrency exchange. A distinction is made between bearish, bullish and sideways trends. Often used in forecasts.

To the moon – to the moon. The term appeared in 2017 and implies a high degree of investor confidence in a particular cryptocurrency. At that time it was said: “One day the quotations of this coin will fly to the moon”.

Smart Contracts – a contract based on distributed ledger technology with certain execution conditions. Typically, the contract is closed automatically. A number of tokens can also be issued as a smart contract.

A farm – is an amalgamation of cryptocurrency mining equipment in one area. A farm can also be a set of video cards connected to a single computer and combined into a single enclosure.

Fiat – traditional national currencies, which circulate in the world and are issued by national regulators of different countries. They include, in particular, rubles and U.S. dollars.

Folo (FOLO) –¬† is another Anglicism which means lost profit syndrome. It occurs at moments of price fall from the historical maximums in traders who failed to sell assets at the highest possible price.

A fork – is the separation of a group of developers and users from the main branch of the existing cryptocurrency network to create a new coin. The Ethereum – Ethereum Classic pair can serve as a striking representative.

Halving – reducing the reward to miners for finding a block over time. It is necessary to maintain the value of the cryptocurrency. For example, bitcoin has a halving of the reward for every 210,000 blocks added, and the last new coin will be released by the first blockchain around 2140.

A hardfork – is a significant update to an existing cryptocurrency without creating a new one. At this time, a significant change can be made, such as the calculation of miners’ fees or the size of the block and the time it takes to find it.

Hedging – reducing investment risks by investing in assets of different nature, for example, you can choose several coins with different purposes in the cryptocurrency market, or use part of your available funds to buy common stocks and physical gold. Read more about how to compose a crypto portfolio competently.

Holding Рis exactly the approach promoted by Elon Musk. The essence of holding is the long-term, more than three years, holding of a digital asset. Holdings believe that in the future, digital assets will grow in value by leaps and bounds.

Cold storage – is the storage of cryptocurrencies on one’s own wallet. In this case, the device on which the private key is stored has no physical connection to the Internet. Even an ordinary paper with a Seed phrase written on it can serve as a medium.

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *