Chapter 1: Crypto Market Terminology
Episode 5(part 1): In this episode, we are going to take a look at the crypto vocabulary, so buckle up and be ready to face new words and concepts. Of course, you don’t need to read all of them thoroughly. The goal is to have a reliable reference to look at. I’m going to describe them in different posts and put the relative links for each one. Here we are going to have summaries of them.
Note: I wrote this article in summary note style
Note:
I gathered a huge pile of terms and vocabulary here. Search through if you are looking for specific words. If you weren’t able to find your desired terms please comment so I can add them to the collection.
Blockchain:
A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain.
Cypherpunk:
A cypherpunk is any individual advocating widespread use of strong Bitcoin and privacy-enhancing technologies as a route to social and political change.
Ledger:
A cryptocurrency public ledger is a record-keeping system. The ledger maintains participants’ identities anonymously, their respective cryptocurrency balances, and a record of all the genuine transactions executed between network participants.
Distributed ledger:
A distributed ledger is a database that is consensually shared and synchronized across multiple sites, institutions, or geographies, accessible by multiple people. It allows transactions to have public “witnesses.”
P2P networks:
Peer-to-peer computing or networking is a distributed application architecture that partitions tasks or workloads between peers. Peers are equally privileged, equipotent participants in the application.
Server-based networks:
A server-based network is centralized in nature. Also, the storage in this kind of network is centralized. In other words, we can say that a server-based network is based on a centralized structure and provides a way to communicate via the web. The Internet is the most widely used client-server network.
Decentralization:
Decentralization is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group.
Gossip protocol:
A gossip protocol is a procedure or process of computer peer-to-peer communication that is based on the way epidemics spread. Some distributed systems use peer-to-peer gossip to ensure that data is disseminated to all members of a group.
Consensus method:
consensus methods are another means of dealing with conflicting scientific evidence. They allow a wider range of study types to be considered than is usual in statistical reviews. The aim of consensus methods is to determine the extent to which experts or laypeople agree about a given issue.
Consensus methods are the essential part of any blockchain network by which different nodes agree on a new block to be added to the blockchain. The consensus method is what enables a blockchain network to function in a distributed fashion.
Cryptographic:
Cryptography, or cryptology, is the practice and study of techniques for secure communication in the presence of adversarial behavior.
Hashing algorithm or Hash function:
Blockchain Hash Function. A hash function takes an input string (numbers, alphabets, media files) of any length and transforms it into a fixed length. The fixed-length output is called a hash. This hash is also the cryptographic byproduct of a hash algorithm.
Genesis block:
A Genesis Block is the name given to the first block a cryptocurrency, such as Bitcoin, ever mined.
Mempool:
A mempool (a contraction of memory and pool) is a cryptocurrency node’s mechanism for storing information on unconfirmed transactions. It acts as a sort of waiting room for transactions that have not yet been included in a block.
Miner:
Miner is an actor who participates in cryptocurrency transactions, and in turn, plays a crucial role both in creating new cryptocurrencies and in verifying transactions on the blockchain. It adds new blocks to the existing chain and ensures that these additions are accurate.
Halving:
Bitcoin halving event is when the reward for mining Bitcoin transactions is cut in half. This event also cuts in half Bitcoin’s inflation rate and the rate at which new bitcoins enter circulation. Bitcoin last halved on May 11, 2020, around 3 p.m. EST, resulting in a block reward of 6.25 BTC.
Nonce:
A nonce is an abbreviation for “number only used once,” which, in the context of cryptocurrency mining, is a number added to a hashed — or encrypted — block in a blockchain that, when rehashed, meets the difficulty level restrictions. The nonce is the number that blockchain miners are solving for. When the solution is found, the blockchain miners are offered cryptocurrency in exchange.
Altcoin:
An alternative digital currency to Bitcoin.
Token VS Coin:
Tokens are the currencies of projects that don’t have their blockchain and coins are currencies of projects that own their blockchain like Ether coin which is the native currency of Ethereum blockchain.
Stable coin:
Instead of being “mined’’ by an open, distributed network of computers performing a combination of math and record-keeping, a stable coin derives its price from the value of another asset. In short, a stable coin is pegged to some other underlying asset. Like USDT or Tether
Fork:
A fork happens whenever a community makes a change to the blockchain’s protocol or basic set of rules. When this happens, the chain splits — producing a second blockchain that shares all of its history with the original, but is headed off in a new direction.
Hard fork:
A hard fork (or hardfork), is a radical change to a network’s protocol that makes previously invalid blocks and transactions valid, or vice-versa. A hard fork requires all nodes or users to upgrade to the latest version of the protocol software.
Soft fork:
In blockchain technology, a soft fork is a change to the software protocol where only previously valid transaction blocks are made invalid. Because old nodes will recognize the new blocks as valid, a soft fork is backwards-compatible.
51% attack(majority attack):
A 51% attack, also known as a majority attack, occurs when a single person or group of people gains control of over 50% of a blockchain’s hashing power. … It also allows the malicious agents to essentially rewrite parts of the blockchain and reverse their own transactions, leading to an issue known as double spending.
Double spending:
Double-spending is a potential flaw in a digital cash scheme in which the same single digital token can be spent more than once. Unlike physical cash, a digital token consists of a digital file that can be duplicated or falsified.
Algorithm:
In mathematics and computer science, an algorithm is a finite sequence of well-defined instructions, typically used to solve a class of specific problems or to perform a computation.
All time high:
All-Time High (ATH) refers to the highest price (or market cap) that an asset has reached since its listing or inception. As the price used to define the all-time high is the last done, it just refers to the highest price a trader paid for an asset, regardless of how much he bought of the asset.
All time low:
The lowest point (in price, in market capitalization) that a cryptocurrency has been in history.
Basket:
A basket, when used in the cryptocurrency space, refers to a collection of digital currencies managed as a single asset, minimizing the need for holders to monitor individual currencies continuously. A crypto basket is also used interchangeably with a crypto index fund.
Bot:
Cryptocurrency trading bots are computer programs that automatically buy and sell various cryptocurrencies at the right time with the goal of generating a profit.
Bearish market:
Bear markets are typically defined by a decline of 20% or more from recent highs(recent highest price).
Bullish market:
The term bull market refers to a positive trend in the prices of a market. It is broadly used not only in the cryptocurrency space but also in the traditional markets. In short, a bull market concerns to a strong market uptrend that presents meaningful rising prices over a relatively short period of time.
Deep:
A stock has a deep market if it consistently achieves a high volume of trades. A stock with a deep market is highly liquid, meaning there is a balance between buyers and sellers that keeps the price stable. For traders, a deep market allows large trades to be made without immediately affecting the price of the stock.
Buy the Deep:
This refers to situations where you buy a cryptocurrency at a price that is the lowest possible price and probably gives you a huge profit over a period of the bullish cycle of the market.
Cloud mining:
Cloud mining is the process of cryptocurrency mining utilizing a remote data center with shared processing power. This type of cloud mining enables users to mine bitcoins or alternative cryptocurrencies without managing the hardware.
Fiat:
Fiat money is a type of money that is not backed by any commodity such as gold or silver and is typically declared by a decree from the government to be legal tender. Throughout history, fiat money was sometimes issued by local banks and other institutions.
Dead coin:
Dead coins are digital assets of projects that have been abandoned, turned out to be scams, have low liquidity, or have insufficient funding, among many other reasons.
Dump & Pump:
Pump and dump is the practice of fraudulently boosting a company’s share price and exiting the market with a massive profit before the price declines. It is an illegal and unethical practice with the Securities and Exchange Commission (SEC) often punishing the offenders.
SEC (security and exchange commission):
The Securities and Exchange Commission is a U.S. government agency created by Congress to regulate the securities markets and protect investors.
ETF (exchange-traded fund):
An exchange-traded fund is a type of security that tracks an index, sector, commodity, or other assets, but which can be purchased or sold on a stock exchange the same way a regular stock can. An ETF can be structured to track anything from the price of an individual commodity to a large and diverse collection of securities. ETFs can even be structured to track specific investment strategies.
Block:
Blocks are files where data pertaining to the Bitcoin network are permanently recorded. A block records some or all of the most recent Bitcoin transactions that have not yet entered any prior blocks. Thus, a block is like a page of a ledger or record book.
Orphan block:
An orphan block is a block that has been solved within the blockchain network but was not accepted due to a lag within the network itself. There can be two miners who solve for a block simultaneously. The miner who has a more detailed proof-of-work sheet is the one who is awarded the block’s reward.
Phishing:
Phishing is a scam where thieves attempt to steal personal or financial account information by sending deceptive electronic messages that trick unsuspecting consumers into disclosing personal information.
Mineable:
Crypto projects whose native tokens are produced by a mining process are mineable tokens.
Stake:
Staking is a way to put your crypto to work and earn rewards on it. Staking cryptocurrencies is a process that involves committing your crypto assets to support a blockchain network and confirm transactions. It’s available with cryptocurrencies that use the proof-of-stake model to process payments.
Faucet:
A crypto faucet is an app or a website that distributes small amounts of cryptocurrencies as a reward for completing easy tasks. They’re given the name “faucets’’ because the rewards are small, just like small drops of water dripping from a leaky faucet.
TRC 20:
TRC20 is a token standard for Tron blockchain. It is a common list of rules defining interactions between tokens, including transfer between addresses and data access.
ERC 20:
An ERC20 token is a standard used for creating and issuing smart contracts on the Ethereum blockchain. Smart contracts can then be used to create smart property or tokenized assets that people can invest in. ERC stands for “Ethereum request for comment,” and the ERC20 standard was implemented in 2015.
Bep 2 and Bep20:
BEP2 represents a token standard on Binance Chain, while BEP20 represents a token standard on Binance Smart Chain.
ERC 721:
ERC-721 is an open standard that describes how to build Non-Fungible tokens on EVM (Ethereum Virtual Machine) compatible blockchains; it is a standard interface for Non-Fungible tokens; it has a set of rules which make it easy to work with NFTs. NFTs are not only of ERC-721 type; they can also be ERC-1155 tokens.
Peg (pegged currency):
A pegged cryptocurrency is an encryption-secured digital medium of exchange whose value is tied to that of some other medium of exchange, such as gold or the currency of a given nation. Cryptocurrencies can also be linked to other types of assets, such as gold and the currencies of other countries.
Fish and whale:
Fish is a new member of the market who has a small share of a currency while whales are the opposite.
Flippening:
The Flippening refers to the possible future event when Ethereum overtakes Bitcoin to become the most valuable cryptocurrency in terms of market capitalization.
Airdrop:
An airdrop is a distribution of a cryptocurrency token or coin, usually for free, to numerous wallet addresses. Airdrops are primarily implemented as a way of gaining attention and new followers, resulting in a larger user base and a wider disbursement of coins.
ICO:
An initial coin offering or initial currency offering is a type of funding using cryptocurrencies. It is often a form of crowdfunding, although a private ICO which does not seek public investment is also possible.
IPO:
An initial public offering or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also retail investors. An IPO is typically underwritten by one or more investment banks, who also arrange for the shares to be listed on one or more stock exchanges.
IEO:
Initial exchange offering is a variant of initial coin offerings, operated directly by cryptocurrency exchanges. A notable example was when the Bitfinex exchange issued an IEO apparently to shore up its reserve for Tether tokens.
STO:
A security token offering tokenized IPO is a type of public offering in which tokenized digital securities, known as security tokens, are sold in security token exchanges.
Gem:
Gem is a term for relatively unknown low-cap coins that have immense potential or are grossly undervalued. Gems are generally coins or tokens with low market capitalizations since they haven’t hit the spotlight yet. Their trading volume usually increases over time as more people discover them.
Test Net:
The testnet is an alternative blockchain to be used for testing. This allows application developers or bitcoin testers to experiment, without having to use real bitcoins or worrying about breaking the main bitcoin chain.
Main Net:
Mainnet is the term for the real Bitcoin blockchain and network and is used in contrast with testnet, signet, and regtest networks. Unlike the other networks, which are used for testing purposes, mainnet coins have monetary value.
NFT:
Non-fungible tokens or NFTs are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. Unlike cryptocurrencies, they cannot be traded or exchanged at equivalency.
DeFI:
Short for decentralized finance, DeFi is an umbrella term for peer-to-peer financial services on public blockchains, primarily Ethereum.
HODL:
HODL is short for “hold on for dear life” and it’s a popular term among crypto investors. Call it crypto slang: Words like FUD, Moon, Sats, and HODL that originated as chatroom jargon are now commonly used cryptocurrency terms that crypto investors need to know. A crypto trader who buys a coin and does not plan on selling in the foreseeable future is called a hodler of the coin.
FUD fear of uncerainty doubt:
When it comes to fear, uncertainty, and doubt, also known as “FUD”, a cryptocurrency attracts more than its fair share.
FOMO Fear of missing out:
As crypto trading is still very much driven by emotions rather than valuation, FOMO is a huge factor to consider when swing trading in crypto.
Oracles and oracle problem:
A blockchain oracle is a third-party service that connects smart contracts with the outside world, primarily to feed information in from the world, but also the reverse. Information from the world encapsulates multiple sources so that decentralised knowledge is obtained.
Roadmap:
A Roadmap is a business planning technique which lays out the short and long term goals of a particular project within a flexible estimated timeline. Examples of roadmap milestones could be the release of a testnet or the release of a mainnet.
White paper:
A document released by a crypto project that gives investors technical information about its concept, and a roadmap for how it plans to grow and succeed.
Rekt:
REKT (or rekt) is internet slang for “wrecked,” meaning severely damaged or utterly destroyed and ruined. However, depending on the context, it may mean something else. In the crypto community, rekt often refers to someone who has experienced a heavy financial loss due to a wrong trade or investment.
Meme coin(Shit coin):
In a nutshell, meme coins are cryptocurrencies inspired by memes and internet jokes. Dogecoin, for example, was inspired by the Doge meme created from a viral photo of a Shiba Inu.
Wallet:
A cryptocurrency wallet is a device, physical medium, program or a service which stores the public and/or private keys for cryptocurrency transactions. In addition to this basic function of storing the keys, a cryptocurrency wallet more often also offers the functionality of encrypting and signing information
Address:
A crypto address is a string of characters that represents a wallet that can send and receive cryptocurrency. It is akin to a real-life address, email or website. Every address is unique and denotes the location of a wallet on the blockchain.
Hash Rate:
The Blockchain hash rate is a measurement of how many times a blockchain network attempts to complete those calculations each and every second. It’s the approximate average of all the hash rates of each individual miner in the network.
Noob:
when you're playing a multiplayer first-person shooter game, someone spawns and is blown to pieces in the first 10 seconds whilst running the wrong way. This is a noob. In the cryptocurrency market, a noob is a novice in the market.
Node:
A node is a computer connected to other computers which follows rules and shares information. A ‘full node’ is a computer in a Blockchain peer-to-peer network that hosts and synchronizes a copy of the entire blockchain. Nodes are essential for keeping a cryptocurrency network running.
Private Key:
A private key is a secret number that is used in cryptography, similar to a password. In cryptocurrency, private keys are also used to sign transactions and prove ownership of a blockchain address.
public key:
A public key is a cryptographic code used to facilitate transactions between parties, allowing users to receive cryptocurrencies in their accounts. The public key is used to verify the digital signature, which proves ownership of the private key. They work somehow like a card number.
Satoshi:
The satoshi is the smallest unit of the cryptocurrency bitcoin.
Satoshi Nakamoto:
Satoshi Nakamoto is the name used by the presumed pseudonymous person or people who developed bitcoin, authored the bitcoin white paper, and created and deployed bitcoin’s original reference implementation. As part of the implementation, Nakamoto also devised the first blockchain database.
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