Before you can invest in any cryptocurrency, you need to know how to think and speak like a pro. In the list below, we’ve outlined the main words, phrases and acronyms you need to know before you start trading cryptos.
|Altcoins||Bitcoin was the original cryptocurrency and, therefore, seen as the “main” one. Because of this, any other digital coin is known as an altcoin.
The most popular altcoins include Ethereum (ETH), Ripple (XRP), Stellar (XLM) and Litecoin (LTC).
|Apps||The abbreviation for decentralized apps, dApps are programs built on a decentralized network like Ethereum.
The benefit of creating a dApp is that it can process transactions/data in real-time and there is no single point of control. This makes them safer, transparent and reliable because there isn’t a single point of failure.
|Bear/Bearish||When a market is trending in a negative direction, it’s said to be bearish. In other words, if the price of a token is falling, it’s said to be bearish.|
|Broker||A broker is a third-party in between you (the investor) and the financial markets (where you buy assets/commodities).|
|Blockchain||A blockchain is a way to store all kinds of data without using centralised computer servers, like those owned by Google and Facebook. Instead, the data is mutually stored by computers all around the world. Most blockchains also use economic incentive models through digital coins and tokens, which can act as money or perform all sorts of digital utility tasks. We’ve also prepared a guide to blockchains for those of you looking for more information.|
|Cryptocurrency Investing||The crypto world is full of clever ideas and innovations. With these ideas and innovations comes a myriad of new words and phrases. To help you get a handle on the taxonomy of cryptocurrencies, we’ve compiled a complete cryptocurrency guide detailing what you need to know.
There are many ways to invest in bitcoin and other cryptocurrencies, and you’ll find all the details, instructions and tips in our crypto investment guide.
|Cold Storage||When you own any cryptocurrency, you need a place to store it. These places are technically known as crypto wallets and can be hot or cold. A hot wallet is one that’s online i.e. it’s always active and, therefore, hot.
A cold wallet is an offline solution such as a USB stick. Cold wallets are considered safer because hackers can’t log in to them.
|Chainwashing||Coined by Tim Swanson of R3, chainwashing is a way to describe the hype surrounding blockchains. Much like companies started to offer “cloud this” and “cloud that” when cloud servers became popular, chainwashing is where everyone is either trying to develop a blockchain or simply labelling their products “blockchain XYZ” in a bid to cash in on the hype.|
|Distributed Ledger||A ledger is a record of information/data. A blockchain chunks data into blocks and links these blocks in a chain. The information is then distributed to nodes in the network.Each node has all the information in the ledger as opposed to one central point storage point. A distributed ledger is the basis of a decentralized network.|
|Decentralization||When there is no single point of control, a network is decentralized. This is the core concept in the crypto world. In other words, all parts of the network are equal and working together to process/store data.|
|EVM||Otherwise known as Ethereum Virtual Machine, EVM is the software that allows a computer to take part in the Ethereum blockchain. To become a node on the network, a system has to be running EVM.
When it does this, the software ensures data is processed securely.medium through which programming language is injected into the blockchain to make improvements, adjustments etc.
|Exchange||When you want to buy a particular cryptocurrency, you use an exchange. Exchanges are different from brokers in that they allow you to buy the underlying asset (i.e. actually own Bitcoin etc) whereas brokers all you to trade on the price of an asset.|
|FIAT||This is the term used in the crypto world to describe traditional currencies such as dollars and pounds.|
|Fork||In the event of a dispute between developers/the community or a major flaw/incident, blockchains can be forked. The way these networks are structured (i.e. blocks linked together) means that a new chain can be started at any time.
Bitcoin has forked multiple times. The new chain starts from the last block at which the fork was agreed. Forks can either be hard or soft.
|FOMO||Fear of Missing Out (FOMO) is a term used to describe someone that invests in something because everyone else is.|
|FUD||Fear, uncertainty and doubt (FUD) is a term used to describe a negative outlook on a crypto’s future e.g. the Bitcoin bubble is about to burst.|
|Hard Fork||A hard fork is when a new blockchain is created and supersedes the old one. All transactions on the old blockchain are invalid once a hard fork occurs.|
|Hardware Wallet||When you store your cryptos offline, you’ll use a hardware wallet. This is typically a USB stick. In contrast, a software wallet is a virtual storage place on the internet.|
|HODL||This is the crypto term for hold i.e. not selling the coins you own.|
|ICON||A South Korean-based company, ICON is a blockchain that’s designed to connect independent blockchains.
In essence, ICON is a central point into which other blockchains can link into and, in turn, connect across.
|IOTA||This is a distributed ledger designed to facilitate transactions between devices connected to the Internet of Things. For example, IOTA allows data to be transferred between the various elements of a connected home (e.g. virtual assistants, lights, heating, security etc) in a secure, verifiable and decentralized way.|
|ICO||A form of fundraising, initial coin offerings (ICOs) allows a company to create their own digital token and sell it to raise capital.|
|Market Cap||Market cap is a currency’s market capitalization. This is the coin’s price or value multiplied by the number of tokens in circulation.|
|Mining||The process of creating a cryptocurrency is known as mining. It involves computers solving complex equations which, in turn, process a block of data in a blockchain.
Each time this happens, new coins are created and added to the network. The computer responsible for solving the problem is rewarded with coins.
|Mooning||When the value of a cryptocurrency reaches a new high, it’s said to have mooned.|
|On Balance Volume (OBV)||The OBV is an indicator that helps to predict price changes. It is based on the assumption the when the volume increases sharply without a change in price, the price will jump award. Using the OBV means adding volume on up days and subtracting volume on down days. The indicator then measures buying and selling pressure.|
|Peer to Peer||This is another way of saying computer-to-computer or person-to-person.|
|Private Key||Part of a crypto wallet, private keys are secret numbers that allow coins to be spent/processed. Private keys have to match up with a public key for a transaction to be verified.|
|Proof of Stake||In some blockchains, the people/nodes are ranked based on the number of coins they hold. The more coins someone has, the more processing power they have.|
|Proof of Work||In contrast to proof of stake, which delegates processing power/authority based on the number of coins held, proof of work is an open competition. In other words, if a miner can successfully prove a transaction before everyone else, they receive a reward regardless of their previous actions.|
|Pump And Dump||When investors buy and then sell large amounts of coins quickly, it’s known as a pump and dump. The pump refers to the price of a coin increasing because a large quantity has been taken off the market.
The dump refers to a price crash when the coins are sold on mass.
|Sharding||In an effort to improve the scalability of blockchains, sharding has been floated as a solution. Under the current dynamics, each node stores all the information present in the blockchain (i.e. account balances, storage data, transaction logs etc).
Because blockchains can’t process more transactions than a single node can, the scale of a blockchain is limited by the amount they can do. Sharding is a form of portioning that separates larger databases into smaller ones.
Doing this can distribute the workload and improve the speed of transactions. In essence, sharding separates nodes into smaller sections but keeps them linked in a single structure. That, in theory, can make blockchains larger and faster but remain secure and decentralized.
|Smart Contract||These are self-executing contracts. In order for a smart-contract transaction to be processed, an agreement between the buyer and seller is coded into the transaction. The transaction is only verified if all parts of the agreement are satisfied.|
|Relative strength index (RSI Indicator)||The the RSI (Relative Strength Index ) is an indicator for a technical analysis. Because of its ease of use, it is one of the most used cryptocurrency signals by operators and alert systems and provides some clues to know when to invest or sell. It measures speed and change price fluctuations, demonstrating the strength of a currency in a specific period. The general principle: sell when the overbought level is reached (above 70) and buy when the oversold level is reached (below 30).
However, the interpretation for short time intervals (15 min, 30 min) can be confusing
|ROI||Each investment you make will have a return on investment (ROI). Your job is to achieve the best ROI possible by buying low and selling high.|
|Securities||A security is a term used to describe a tradable asset. In the crypto world, digital tokens e.g. BTC, LTC, ETH etc can be used as securities.|
|Soft Fork||A soft fork is when the original blockchain remains in place and a new one operates alongside it.|
|Software Wallet||This is a virtual storage place for your digital tokens. In general, software wallets are available in three forms: desktop, mobile and online.
This is a virtual storage place for your digital tokens. In general, software wallets are available in three forms: desktop, mobile and online.
Desktop software wallets connect to the internet and store your coins on your computer. Mobile wallets offer the same service but via a mobile app. Online crypto wallets are web-based, which means you log in to a secure website where your funds are kept.
|Satoshi||This is a unit of currency in the Bitcoin blockchain. A Satoshi is equal to a hundredth of a millionth of one BTC.|
|TA||The acronym for technical analysis, TA looks at historical price data as indicators to predict future movements of a cryptocurrency.
In contrast, fundamental analysis (FA) aims to predict the future price of a crypto based on alternatives such as economic, financial and other qualitative/quantitative factors.
|Tank||When the performance of a cryptocurrency takes a negative turn, it’s said to tank. For example, following a price drop, investors will say that “Bitcoin is in the tank”.|
|Tokens||This is another term for digital coins/cryptocurrencies.|
|Total Supply||Determined before a digital token is released, the total amount is the maximum number of coins that will ever be mined/made available.|
|Wallet||A cryptocurrency wallet is a place where you keep your coins. There are two types of wallet: software and hardware. Some digital tokens will have their own specific wallet, while some can be stored in general wallets that can hold multiple cryptos.|
|Whale||A big money investor is known as a whale.|
|Whitelist||A whitelist is a list of verified products/services. In crypto, ICO whitelists are ICOs that have passed a number of checks in order to be seen as more reputable.|
|Whitepaper||Every blockchain is based on a whitepaper. A whitepaper outlines how the technology works, what it can be used for and how it will evolve in the future.|