Interested in cryptocurrency? If you want to make sense of what digital currencies are all about, it’s easy to drown in a sea of newfangled terms. Here’s our ABC to help you on your way.
A is for Altcoin
Altcoin is a term used to any digital currency that is not the more popular bitcoin. Bitcoin’s growing success has spurred entrepreneurs to launch alternative cryptocoins in the hopes of supplying the cryptocurrency demand. Some of the more popular altcoins are the JP Morgan Chase and Microsoft-backed Ethereum, Google-supported Ripple, to the more anonymous Monero.
B is for Bitillionaire
Let it rain! A bitillionaire is someone who has made a fortune in Bitcoins. Someone who is holding a lot of BTC is referred to as a bitcoin whale. Their large positions pose a huge threat to latecomers in the cryptocurrency market since they have the ability to move the market to a desired price point.
C is for Chain or Blockchain
When you trade cryptocurrency, your transaction is recorded in an “incorruptible digital ledger” or blockchain. Think of it as a way for a network of computers to record and authenticate transactions without relying on a central authority.
D is for Decentralization
Cryptocurrencies in theory have no central control, information database, or even management. Unlike banks, cryptocurrency affords certain freedoms like the ability to create digital money (altcoins), trade anonymously, and move investor money without being watched. While supporters see decentralization as a positive thing for finance, countries like Australia, China and Japan are attempting to gain a form of control to discourage unscrupulous individuals or groups who are taking advantage.
E for Exchange
An exchange is a platform or website where people trade (buy, sell, or exchange) cryptocurrency for other cryptocurrency form or traditional money. Cryptocurrency investors can trade on an exchange by opening an account and verifying a unique ID. In some exchanges, investors are not required to open an account. Some of the popular exchanges are Coinbase, Kraken, and Cex.io.
F is for The Flippening
It’s the term market observers gave for a point at which a competing blockchain network like Ethereum could replace bitcoin as the largest blockchain. This development came about when more alternative cryptocurrencies were introduced in the market to challenge bitcoin’s dominance. A few months back, for example, Ethereum nearly ousted bitcoin from its throne and the cryptosphere buzzed about “the Flippening.”
G is for Gold
Before the hypervaluation of bitcoin, gold traditionally was the main haven for investors who wish to safely gain from their hard-earned money. Sure, gold is a physical asset, but it is also prone to devaluation. In August alone, gold dropped by $31 because of the US-North Korea tensions. Investors who wanted to hedge the risks saw themselves betting on Bitcoin that period, which enjoyed trading at around $3,000+.
H is for Hodl
This a crypto slang which means “Hold On for Dear Life.” This term is used mostly by Bitcoin enthusiasts who decide on holding on to their coins instead of trading. Originally, this was a simple misspelling by a fan who decided to trade his bitcoins early. The fan ended up regretting it later as bitcoin valuation shot up in the thousands, which could have been more profit if he had waited. Nowadays, “hodl” means to stay or invest in Bitcoin and not speculate when the price plunges.
I is for ICOs
Initial coin offerings or ICOs are fundraising tools involving cryptocurrency. Similar to an initial public offering, you get a newly launched, unregulated cryptocurrency instead of stocks in exchange for your bitcoin or other highly-valued altcoin. The risks are high, but will pay off greatly if the stars allign.
J is for Jamie Dimon
Bitcoin hasn’t usually been on the receiving end of kind words from power players in the financial world. But there is no denying the fact that it’s slowly convincing the naysayers to take a chance. Dimon, who is a chief executive at JP Morgan, was accused by a Bitcoin enthusiast of market abuse. According to managing partner Florian Schweitzer of the London-based Blockswater, a Bitcoin market-maker, Dimon badmouthed the cryptocurrency, causing the price to fall, while JPMorgan was found to have invested in bitcoin a few days later. Sweden is currently investigating the allegation, while JPMorgan has categorically denied the accusation
K is for Key
A private key is a tool for any party to access his cryptocurrency. It is a security feature to protect your digital money from thieves or even regulators.
L is for Leverage
Trading with leverage allows investors to trade large amounts, even with limited capital. This very common phenomenon in forex has made its way to the cryptocurrency world as well. Leverage can yield high returns. But that knife cuts both ways: if you lose, you’ll lose big. Think before you amplify.
M is for Mining
Mining went full cirlce: it started out as a lucrative hobby for the first movers, who were able to make some extra pocket money using their mom’s computer running Windows Vista in the basement. Then it become the playing field for organised syndicates with mining farms in rural China and east-Russia. And just this week mining came back within reach to the average individual. The Comino — the world’s first liquid cooled GPU miner — has enough power to turn a profit, looks good in your house and is available to everyone for a decent price.
N is for Nakamoto Satoshi
Mr Satoshi is regarded as creator of Bitcoin. This year, the NSA supposedly identified the very elusive programmer, and a writer hinted that Satoshi could be more than one person.
O is for Obsessive Cryptocurrency Disorder or OCD
Constantly checking your smartphone for the latest Bitcoin updates? You’re not alone. If you find yourself looking at trading charts to the point of obsession, you have OCD according to one write-up. With the skyrocketing valuation and the rise of altcoins, it is quite understandable to be hyped on cryptocurrency. Just don’t lose sleep over it though, as there’s always an opportunity to earn like what this Bitcoin Sign Guy did.
P is for Phunk
This is urban lingo for an activist or an advocate of cryptocurrency. Most phunks prefer Bitcoin or Ethereum Classic, an altcoin that’s also doing well in terms of valuation. They rarely consider investing or supporting newer altcoins, believing that the latest ones do not have the mechanism and structure to build valuation over time.
Q is for Quantitative analysis
Some investors who have money on more than one cryptocurrency use quantitative analysis to determine the right time to invest or divest. A Beijing-based exchange called Huobi offers a model based on quantitative analysis wherein each cryptocurrency type is assigned a score. The score is determined on a cryptocurrencies’ credibility, real-life application, its hype, the trading volume, and risk for inflation.
R is for Regulation
The decentralized nature of cryptocurrency has spurred some governments and regulators to implement harsh sanctions against it. The anonymity offered by cryptocurrency has also attracted people to commit illegal acts ranging from money laundering, tax fraud, to drug trading. The disaster surrounding the DAO ICO in 2016, wherein $50 million worth of ether was stolen, has prompted U.S. Securities and Exchange Commission (SEC) to take action. Unlike China and South Korea, the US has been noticeably quiet about cryptocurrencies until recently.
S is for Smart contract
Ethereum is famous for its smart contracts, which are programs that enforce an agreement between two parties. They do away with a middleman as the programs used in smart contracts execute the terms exactly as both parties have set it up.
T is “To the moon”
Isn’t that a line from a famous 90s pop song? Come to think of it, the analogy is the same for Bitcoin’s phenomenal rise. This phrase is based on the expression “to the moon and back,” which refers to more than anything or a measure for something immeasurable (e.g. “I love you to the moon and back”). The phrase “to the moon” is definitely referring to Bitcoin’s current narrative.
U is for Unicorn
Some early movers in the cryptocurrency business, like Coinbase, have become unicorns, or companies whose valuation has increased in millions to billions of dollars. However, many industry watchers are wary of an impending bubble ahead that can cause these unicorns to lose their valuation.
V is for Verification
Cryptocurrency transactions still require some form of verification. Miners play a huge role in verifying transactions. There are several exchanges that do not require verification like LocalBitcoins, Wall of Coins, Bitquick and Bitsquare.
W is for Wallet
Trading cryptocurrency on an exchange comes with an online wallet. An online wallet is a software program where you store your private and public keys to send and receive cryptocurrency. You can also store actual coins and even legal tender money in your online wallet.
X is for XRP
XRP is the native digital currency on Ripple, a payment protocol network. Ripple actually complements Bitcoin, and is used to transfer any form of legal currency, including bitcoin, from one payment system to another.
Y is for Yo-yo effect
Cryptocurrency is a volatile market, and can make even the most experienced investor nervous. As Bitcoin attempts to break the $4,000 price, there is worry about the cryptocurrency taking a sharp dip again. But if your business acumen is greater than Trump’s, dabbling in a yo-yoing cryptocurrency market can be a lucrative endeavor.
Z is for Zcash
Zcash is a type of cryptocurrency born out of the Zerocoin project. Through Zcash, transactions on Zerocoin aim to provide “true cryptographic anonymity to Bitcoin transactions.” Famous whistleblower Edward Snowden himself endorsed Zcash and said it was the best cryptocurrency to solve surveillance risks of Bitcoin transactions.
