Blockchain buzzwords: impress others with your knowledge!

Jargon! This is an issue for newcomers regardless of the industry. Unknown terms and acronyms make complex subjects even more complicated. So, being new to the cryptocurrency market means asking Google a lot of questions. The good thing is that it has all the answers. The bad thing is that many of them contain even more jargon.

We’ve therefore compiled a list of 20 of the most popular terms in the world of crypto. These simple definitions explain what makes a wallet hot or cold, what makes a token fungible, and what makes a contract smart. Pretty soon, you’ll be confident enough to use a public key to take a long position on a coin that shows a promising market cap.

• Satoshi

Satoshi is on the lips of all cryptocurrency enthusiasts. Satoshi Nakamoto is the anonymous creator of Bitcoin. His identity remains a mystery to this day! No one knows if Satoshi is a single individual or a collective of like-minded people.

Satoshi is also the smallest unit of Bitcoin. 1 Bitcoin = 100,000,000 Satoshi

• Cryptography

Cryptography is a method of securing information by using code and encryption. When it comes to cryptocurrencies, it helps to secure the blockchain network and increase the overall safety of every transaction.

• Genesis block

The genesis block, also known as block zero, is the first block of a particular blockchain. Every new independent blockchain begins with a genesis block. It is the only block that does not contain the information recorded on a preceding block because there is none.

• Miner

In the world of crypto, the word “miner” refers to special computing equipment used in the mining process. Miners are used to maintaining a blockchain, process transactions, and secure the network. There are different types of miners, including application-specific integrated circuit miners (ASIC) and graphic processing unit miners (GPU).

The people who use these special mining machines are also commonly called miners.

• Hash power

Hash power is the computational capacity of a specific mining machine. The higher the hash power of the miner, the greater the chance of success when mining cryptocurrencies.

• Block reward

Miners receive a block reward for participating in the mining process, which requires huge amounts of electricity and spending resources on expensive hardware. It is a kind of incentive.

Bitcoin block rewards, also known as mining rewards, contain newly created coins (currently 6.25 BTC) and transaction fees.

• Halving

This term refers to a method of reward distribution in the Bitcoin network. Every 210,000 blocks, so approximately every four years, the number of newly created coins in block rewards is halved. The initial reward for mining Bitcoin was 50 BTC per block. Today, after three halving events, it is 6.25 BTC.

• Coin

A coin is a term that describes a cryptocurrency that operates on its own independent blockchain. Both the coin and the blockchain are created at the same time. Two examples of such coins are Electric Cash and Bitcoin.

• Token

Unlike coins, tokens are cryptocurrencies that don’t have their own blockchain. They use networks created for other coins. Aave, Uniswap, and Chainlink are all examples of tokens, and Ethereum is one of the most popular platforms that accept tokens.

• Smart Contract

A smart contract is an agreement between two parties with pre-set conditions recorded on the blockchain in the form of a programming code. It is self-executing, which means it comes into effect automatically when the conditions are met.

The smart contract is one of the most significant revolutions in cryptocurrency since it enables users to create an agreement without the need to establish trust. It also doesn’t require an intermediary.

• Decentralized Finance

Decentralized Finance (DeFi) is one of the biggest trends in the history of cryptocurrencies. It offers blockchain-based financial services and products that were previously only available through banks. This solution removes the need for intermediaries.

DeFi offers a wide range of products, including lending and borrowing platforms, decentralized exchanges, derivatives, synthetic assets, and more.

• Non-fungible Token

Non-fungible tokens (NFTs) represent unique digital items that can’t be replaced and have only one proven owner. Unlike most cryptocurrencies, such as Bitcoin and Electric Cash, NFTs cannot be freely exchanged in a one-to-one ratio. This is because they represent something that is one of a kind. So, you can trade 1 BTC for 1 ETH, but you can’t trade Mona Lisa for Starry Night because then you’d have something completely different.

Each NFT has its own value based on various factors, including rarity, uniqueness, and desirability.

• Bullish & bearish

Bullish and bearish are two popular terms on the crypto market. They are antonyms in fact.

Bullish is a positive term, referring to the uptrends of market activity. Economists often call this period of positive market sentiment a bull market.

Terms like bearish and bear market mean the opposite of this. These terms are used when markets experience a downtrend dominated by negative interest.

• Long & short

Long and short are two terms associated with trading cryptocurrencies.

When users take a long position, they purchase a certain asset that they expect to increase in value. It gives them the option to sell for a profit in the future.

The opposite is a short position. This is when users sell certain assets to repurchase them later for a lower price and gain a profit.

Long and short can also refer to the length of time that crypto is held.

Long positions last for months or even years, while short positions are often only for hours or days.

• Market Cap

Market capitalization is used to indicate and compare the total value of crypto assets.

It is calculated by multiplying the number of coins in circulation by their current price.

Unlike simple price comparisons, market cap evaluations give users a wider perspective, providing them with more insight into the actual value of the project.

• Hot and cold wallet

A crypto wallet is a tool used for storing and transferring crypto assets by interacting with the blockchain through a user-friendly interface.

There are two basic types of crypto wallets — hot and cold.

Hot wallets are almost always connected to the internet. They can be mobile devices, desktop computers, and web applications. In general, they are easier to use than cold wallets, but they operate with a lower level of security.

Cold wallets, on the other hand, are only connected to the internet when a transaction is being made. Hardware wallets are one example, which often looks like a well-known USB flash drive. They are more complicated to use but are more secure.

• Private key

A private key is a long alphanumeric code that works as a cryptocurrency PIN. It gives users complete control over their assets. As the name implies, a powerful key like this should be stored somewhere safe, so no one apart from the owner uses it.

A private key is generated when a user creates a crypto wallet. A public key is also created during this process.

• Public key

Like a private key, a public key is a long alphanumeric code. But this one is used to generate a public address which users need to share with others to receive cryptocurrency. It’s like a bank account number.

Users who create a crypto wallet will receive a public key together with their private key. The keys are paired to enable more secure transactions.

• Public address

A public address is a cryptocurrency account number used to receive and deposit digital assets. This address can be shared with other crypto users, as you might do with a traditional bank account number.

• Seed phrase

A seed phrase, also known as a recovery phrase or a backup phrase, lists 12 or 24 English words generated together with the crypto wallet. It can be used to recover a wallet, giving full access to all assets that were on it.

It is important to write that phrase down on a piece of paper in the exact same order it appeared on the screen and store it somewhere safe.