Cryptocurrency and blockchain technology exploded onto the scene in 2017, and this growth looks to continue in 2018 and beyond. While the technology and its potential are exciting, the industry is also full of confusing and hard-to-follow terms. In an effort to help you understand more about the world of cryptocurrency, we have decided to come up with a guide to cryptocurrency terminology.
Your cryptocurrency address is a code generated when a new wallet is created that is used to send and receive coins. It is generally a long string of numbers and letters and is necessary to provide during transactions.
No, you don’t need to watch your head with this airdrop, but you should watch your crypto wallets. An airdrop is basically free coins for certain individuals. Airdrops are commonly done by startups, but established companies or platforms can do them as well. They are often done to either reward certain coin holders for loyalty, or to gain notoriety for a new coin.
The term altcoin is generally the accepted term for any other cryptocurrency or coin that isn’t Bitcoin. This is because Bitcoin is the most popular cryptocurrency by a wide margin.
No, we are not talking about the shoe brand, although an ASIC does make things go faster. ASIC (Application Specific Integrated Circuit) is a special kind of mining that lets people mine coins much faster than a standard computer can. It is a chip that is created to do only one task, such as mining cryptocurrency. Some currencies have made ASICs impossible to mine as to encourage a more fair and equal mining process.
No, we are not talking about the grizzly or polar variety. Being “bearish” means that you have an expectation that the price of a coin will decrease.
If a blockchain is the ledger, a block is a page of that ledger. Blocks are the files in which data is permanently stored on the network. Each block is connected to the next, thus creating a chain. Think of it as a child putting together building blocks.
The blockchain is a data system that enables the creation of a ledger of transactions on a decentralized network which is secured by cryptography. They are public databases that display and record transactions. They are also distributed and decentralized, which means they exist over a series of computers (or nodes), not just a single centralized authority.
Contrary to the kind people run with in Spain, being “bullish” in the cryptocurrency space means that you expect the price of a certain coin or token to rise in the future.
This stands for “do your own research”. While there are many places out there that give advice in the crypto space, it is important for you to do your own research. In the end, no one really knows what the future holds, so trust your own judgment.
Money, not the European car. Fiat currency is any government-issued currency such as the USD or Euro.
FOMO stands for “fear of missing out”. This is a common feeling among crypto enthusiasts whenever they see a coin’s value increasing rapidly. This can be an overwhelming feeling and one that makes you want to jump in and invest in a coin when you see it growing.
A fork is when a blockchain separates into two separate chains. This is normally due to either software/algorithm changes or differences in opinion about the future of a coin or blockchain. There are both hard forks (a software upgrade that isn’t compatible with old versions) and soft forks (which are backwards compatible).
This stands for fear, uncertainty and doubt. Unless you’re Scottish, in which case FUD means something slightly different. Basically, they are scare tactics that are used to try and make people sell their coin/tokens. Nearly every cryptocurrency (even large ones like Bitcoin and Ethereum) has faced FUD at some point.
This isn’t the gas you can get at the station, but you better fuel up. Gas is a measurement of how much running a transaction costs in Ethereum. Simple transactions won’t cost a lot of gas, while a complex transaction will require more.
The hashrate is basically how fast a block can be discovered and how quickly its algorithm is solved. Some currencies will have a slower hashrate than others; however, there are ways to change the hashrate, such as the ASIC mining that we mentioned earlier.
HODL stands for “hold on for dear life”. Some cryptocurrencies are known for their extreme volatility. HODL refers to the continuous holding of an asset, even when its value is falling.
Initial Coin Offering, is very similar to an IPO in the traditional investment sense. An ICO is a way for a crypto start-up to fundraise and get the word out about their platform or currency.
Lambo is short for Lamborghini’s, which are some of the most expensive cars in the world. Crypto millionaires have been causing spikes in the sales of these supercars as a result of their coins skyrocketing in price. People will often buy these cars as a status symbol to show off their new wealth.
This is the process in which new cryptocurrency is created or attained. Mining involves trying to “solve” the next block, which requires computing power to solve the algorithm. Once the block or algorithm is solved, the miner is rewarded. Mining also helps to lengthen the blockchain. But don’t worry; you can leave the shovel and hard hat at home for this kind of mining.
PoS stands for “Proof of Stake”, and is known as the more efficient and “green” consensus algorithm when compared to PoW (Proof of Work). People that can show ownership a certain currency will be able to vote and generate network consensus, and be rewarded for their effort.
PoW stands for “Proof of Work”, and is the consensus mechanism used within the Bitcoin blockchain. It is fairly costly to produce, but quite easy to verify. The computers that are mining need to be on and running, which makes it more energy intensive than PoS.
Satoshi is the first name of Satoshi Nakamoto, the mysterious figure who created Bitcoin. Their true identity has not been (and might never be) revealed. Every crypto enthusiast has their own idea or belief about who he/she really is, but there’s a good chance none of us will ever find out.
Sharding is a type of scaling solution for blockchains. It allows nodes to have partial copies of a complete blockchain, which will have a positive impact on the speeds and performance of the network.
To The Moon
When a cryptocurrency is experiencing a slight rise, its supporters might be boasting that their coin is heading to the moon. This means they expect the rise to continue and the value of their token to keep climbing. #ToTheMoon
Token generally refers to the currency within various projects or platforms that have been built on the Ethereum ERC-20 platform. A project or ecosystem will usually have a utility token to use for the services that they offer. Token is also used by some as a general term for any digital asset, so it can be a wide-reaching term for some people.
With most fiat currencies and traditional digital assets, people have to trust a third-party to keep track of how much each person owns. However, with most cryptocurrencies using a public and secure ledger, we don’t need to trust these cryptocurrencies. As a result, they are trustless. No one needs to trust anyone else for the system to work correctly.
The wallet, like a standard wallet, is the location where you will securely hold your cryptocurrency. It can also be used to send and receive coins. There are software wallets, which store your coins digitally, but also hardware wallets (such as the Trezor or Ledger Nano S) that are an actual physical device that you can store currency on.
A whale is a term to describe anyone who owns an extremely large amount of cryptocurrency. These people often own so much that they can manipulate or change the price of an asset if they so choose.
A whitepaper is a document that is released by a cryptocurrency or blockchain start-up. This document will talk about the goals, technology, mission, and outlook of the company. It is a great place to look if you are considering investments in a particular company or currency.