Cryptocurrency Glossary

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.

  • 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.

  • 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.

  • 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.

  • 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.

  • 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.

  • 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.

  • 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.

  • Soft Fork

A soft fork is when the original blockchain remains in place and a new one operates alongside it.

  • 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.

  • Flockchain

  • 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.

  • FOMO

Fear of Missing Out (FOMO) is a term used to describe someone that invests in something because everyone else is.

  • Whale

A big money investor is known as a whale.

  • FIAT

This is the term used in the crypto world to describe traditional currencies such as dollars and pounds.

  • 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).

  • 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.

  • Blockchain

In simple terms, a blockchain is an ever-growing chain of information (stored in blocks). The blocks are linked and secured via cryptography which means the information can be processed autonomously i.e. there is no central point of control (decentralized).

  • Tokens

This is another term for digital coins/cryptocurrencies.

  • ICO

A form of fundraising, initial coin offerings (ICOs) allows a company to create their own digital token and sell it to raise capital.

  • 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.

  • 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.

  • 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.

  • 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.

  • 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.

  • 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.

  • 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.

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.

  • 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.

  • 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.

  • HODL

This is the crypto term for hold i.e. not selling the coins you own.

  • Satoshi

This is a unit of currency in the Bitcoin blockchain. A Satoshi is equal to a hundredth of a millionth of one BTC.

  • Mooning

When the value of a cryptocurrency reaches a new high, it’s said to have mooned.

  • 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”.

  • 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.

  • 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.

  • 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.

  • 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.

  • 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.

  • 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).

  • dApps

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.