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Bitcoin was invented just after the economic crisis of 2008. It is attributed to an unknown person named Satoshi Nakamoto. No one knows the true identity of Satoshi, their gender or affiliation. The cryptocurrency was originally developed as a digital currency but it’s currently used for other services within the industry. Today, the crypto world has several layers and it is vital to have a good knowledge of what you are investing in.
Too many people in the crypto world, Bitcoin is seen as the gold standard. It was the very digital currency and it’s still the most popular in the industry. Bitcoin is often used to buy other cryptocurrencies and dominates almost half of the cryptocurrency industry.
Since Bitcoin gained popularity, several other digital currencies have emerged, all referred to as altcoins (alternative to Bitcoin)
The rise of cryptocurrencies has led to the coinage of new terms. Several platforms have successfully taken steps in educating new users about the cryptocurrency industry and its use in our daily activities. However, there are still people who find it hard to comprehend what cryptocurrency is all about. After some interaction with various people, I saw the need to enlighten us on the various terms used in the cryptocurrency world to give a better picture and understanding of what it is all about.
Bitcoin Related Terms
Who is Satoshi Nakamoto?
Satoshi Nakamoto is the name used by the creator of Bitcoin. Satoshi’s identity is unknown but he is one of the richest persons in the world based on the value of his bitcoin’s share today.
Satoshi as a currency
Satoshi is recorded on the blockchain as the smallest unit of the Bitcoin currency. It is valued at 0.00000001 BTC (a hundredth of a billion BTC). This unit of currency was named in homage to the creator of Bitcoin.
SHA-256 also called Cryptographic hash algorithm is a kind of signature for a text or data file. It generates a 32 byte signature for a text. It is a ‘one way’ cryptographic function and has a fixed size for any size of the source text.
XBT and BTC
XBT and BTC are both used to refer to Bitcoin; Bitcoin is called BTC because the acronym follows the sound of the name while XBT came into being because the BTC violates ISO 4217, and thus, goes against the currency of Bhutan.
Bitcoin and bitcoin:
When the B is in upper case, it signifies the overarching concept of Bitcoin i.e. its technology, software, community and protocol and when it is in lower case, it signifies the unit of currency.
Bit as a sub unit of bitcoin
A bit is used as a new unit to represent smaller amounts of Bitcoin. There are a million bits in one bitcoin. Due to the high price of a single bitcoin prices are often displayed in fractions.
Altcoins (alt-alternative), are used as an alternative to Bitcoin. They are developed to become better replacements for Bitcoin. Bitcoin’s successful entrance into the world paved the way for several other cryptocurrencies (Altcoins)
Ethereum Related Terms
This refers to a technical standard used by the Ethereum blockchain for smart contracts. It was developed in 2015 to provide developers with the ability to program new tokens to function in the Ethereum system. This was achieved by setting specific rules that can be executed by the ethereum platform.
These are self-executed contracts that permit transactions and agreement among people without interference from external forces i.e. central authority, legal system etc. Its transactions are irreversible, traceable and transparent.
EVM is the abbreviated form for Ethereum Virtual Machine. It is a large decentralized computer with millions of objects known as “accounts”, It functions to maintain the internal state, executes code and performs computations
dApp is the abbreviated form of decentralized application. Its backend code runs on a decentralized peer to peer network that connects users and providers directly. It can also make use of a frontend code, written in any language, which can make calls to its backend.
This refers to an event that may occur in the future when Ethereum overtakes Bitcoin to become the most valued cryptocurrency based on market capitalization. “The flippening of Ethereum”.
Gas is referred to as a special unit used in Ethereum. It helps calculate how much work a specific action or set of actions takes to perform. Each operation performed by a transaction on Ethereum costs a specific amount of gas.
Gas price refers to wage paid for a transaction. No one will process transactions with a low gas price. Coupled with gas cost, it determines your total transaction fees
Wei is a type of denomination that helps in calculating small transaction. It’s like cents are in dollars. It is the base unit and fraction of ether (lowest denomination). 1 Ether is equivalent to 1000000000000000000 Wei
It is also a fraction of ether (the most referenced unit when we talk of Ethereum). It could also be referred to as Shannon. Costs for making payments through the ether network are currently denominated in Gwei. 1 Ether is equivalent to 1000000000.
These are simple converters for the main ether denominations. One ether coin is equivalent to one million Szabo, and one thousand Finney. i.e. 1 ether= 1000000 Szabo; 1 ether= 1000 Finney
This network diversifies leaders and makers in the Blockchain technology and Finance to develop a more intelligent economy. Its main focus is to develop three initiatives, namely Blockchain Education, Culture & leadership and Diversity-powered consulting.
Frontier, Homestead, Metropolis, Serenity
These are key phases of the developmental process of Ethereum. Frontier gets exchanges up and running. Homestead (current phase) is more of removing Ethereum related risks; Metropolis has fully fledged and tested user interfaces while Serenity has a key principle of switching the Ethereum network.
MEW an abbreviation of MyEtherWallet. It is used for generating Ethereum wallets. It is free, open sourced and client-side interface that interacts easily and securely with the Ethereum blockchain.
EEA is an abbreviation for Enterprise Ethereum Alliance. It is a platform for learning and in the process connects Fortune 500 enterprises, startups, technology vendors, academics with Ethereum subject matter experts.
He is a writer and programmer popularly referred to as the co-founder of Ethereum and also a co-founder of Bitcoin Magazine. He was born on 31st January 1994 and is of Russian-Canadian by Nationality. He ventures in fields such as Game Theory, Digital contracts, and Digital currencies.
This is the abbreviated form of the Decentralized Autonomous Organizations. DAO a digital organization run by its members to achieve the same goal. It is also a form of investor-directed venture capital fund. Its code is an open source.
Trading Related Terms
It is an avenue for companies, governments, and other financial groups to sell securities to the investing public. In the crypto world, exchanges are businesses that create platforms for customers to trade cryptocurrencies.
This is a currency without intrinsic value that has been established as money according to government regulation. It is based solely on the credit of the economy. FIAT currency is usually a country’s legal tender.
This refers to an individual or a group of people that can manipulate the market using their large crypto wealth. Their presence can be seen when a token experiences an escalated price in a short time frame and dies out very quickly.
Limit order/Limit sell/Limit buy
This is an order that sets the maximum or minimum price which you can buy or sell a particular stock. A buy limit order can only be executed at the limit price or lower and a sell limit order can only be executed at the limit price or higher.
Sell wall/ Buy wall
A sell wall is a huge sell order that helps to prevent the market price from increasing until the entire sell volume is complete, while buy wall occurs when the amount and size of buy orders on a specific cryptocurrency exceeds the amount of sell orders.
Market order/Market buy/Market sell
This is an order to buy or sell cryptocurrencies at specific market prices. It is also said to be an instruction or order from a trader to a broker to execute a trade immediately at the best available price in the market.
This refers to borrowing money from a broker to buy stock. Borrowed funds are used to trade a financial asset. It is also known as buying on margin. The collateral for the loan is normally securitized in the investor’s account.
This is a more conventional practice of investing which means buying a currency and hoping that the price will rise. When a currency pair is long, the first currency is bought while the second currency is sold short.
This is an investment strategy in which the investor sells shades of borrowed crypto in the open market hoping that the price of the stock will decrease over time. The investor must borrow the shares from their firm, agreeing to pay interest.
A bullish is an investor who buys with hopes that the crypto price will increase. If prices rise up it is said to be a bull market. Bullish are known as optimistic investors.
These are investors who believe that the price of crypto will fall. The buyer of a put wants the price to fall so that they may sell the crypto at a higher price to the seller of the put contract.
This is known as all-time high, an asset reaching a new all-time high can provide both opportunities and pitfalls for traders.
Someone who advertises another cryptocurrency: This kind of advertisement is done in an attractive way in order to bring more people to the crypto world.
These are price stable cryptocurrencies, which means the market price of a stable coin is attached to another stable asset like the US dollar. It is a cryptocurrency with extremely low volatility which is able to withstand a great deal of market volatility.
When an asset is purchased and sold simultaneously to profit from the difference; it is known as arbitrage. Arbitrage is a technique of taking advantage of a difference in price of the same commodity on two different exchanges.
This is known as fear of missing out. This term applies to a situation in which fear of missing out an opportunity can get in the way of trading. Traders might have the fear of missing out in a new form of investment that might profit them.
This is known as fear, anxiety, and doubt.it is a strategy adopted to influence the perception of people by disseminating negative and dubious or false information. This can discourage traders from investing, it is always done intentionally.
A FUDster is someone who spreads negative, false and dubious information about something. A FUDster spreads FUD with the intention of wanting the price of something to drop.
Pump and dump
This is the act of an investor promoting a coin they hold and selling once the coin price has risen due to an increase in the interest. In the digital currency, world announcements are used as a form of promoting the coin.
This is a term used to describe an investor that is holding a bag of stock that has become worthless over time. In the crypto world, it means someone holding an altcoin after a pump and dump crash.
This is the total value held in a cryptocurrency. It is calculated by multiplying the total circulating supply by the current price of an individual unit.
Return on investment known as ROI is the percentage of how much money has been made compared to an initial investment.
Also called technical analysis or trend analysis, this is a tool used by traders to assess the cryptocurrency market. It helps the trader get a better understanding of the market sentiments and also predicting direction, support, resistance, and momentum. It helps in making better decisions.
The moving average convergence divergence is a trend indicator based on moving averages such as the simple moving average. The MACD indicator is used to help predict momentum changes by giving a visual representation to different moving averages. It predicts emerging trends.
This is a very useful tool in the crypto world used to predict extremely profitable trends in the industry. It is used to measure and visualize price instability within a market and helps to adjust them automatically based on market conditions.
General Cryptocurrency Terms
This is the world’s leading software platform for digital assets that permits users to have a direct transaction without any third parties. It utilizes a new technology to build a better financial system. It was invented in 2008 by Satoshi Nakamoto for use in Cryptocurrency
Node is any computer that connects to the Bitcoin network. Nodes that fully follow the instructions of Bitcoin are referred to as full nodes (forms the backbone of the network) while those that follow only part of the rules are known as lightweight nodes.
ICO stands for Initial Coin Offering. This is a rather common way of funding new crypto related companies. During the ICOs people offer the investors their new tokens in exchange for other well-known cryptocurrencies such as BTC, ETH etc.
This deal with two functions: the release of new coins and securing and verifying transactions in the blockchain. It can also be described as a process of gathering information on every transaction carried out with cryptocurrencies.
This is the abbreviation for Blockchain as a service. It is a concept proposed by Microsoft and IBM. Baas nodes are used to set up an environment suitable for their development.
This refers to any temporary or permanent divergence in the blockchain. This occurs when a Blockchain is split into two branches due to changes in software or consensus algorithm. Depending on the nature of change, it can be categorized into a hard and soft fork
This is the abbreviation for proof of work. PoW is the current consensus algorithm used by Ethereum and other cryptocurrencies like bitcoin. The system demands miners to use special hardware and software programs to solve complex math problems before being allowed to verify a bitcoin transaction.
PoI (proof of Importance) is referred to as the cornerstone and critical aspect of NEM AND ALSO ELATES TO making possible the consensus of all computers available in the network.
It is a cryptocurrency Jargon that passes a message which means “Hold on for dear life” because the prices will be increasing over the next few hours or days. It originated from a phrase made during a Bitcoin forum on 18th December 2013 by a member known as GameKyuubi
This is referred to as blockchain’s scaling solution. It functions to increase overall network performance and speed, by allowing nodes to possess partial copies of the complete blockchain
This is a password based algorithm and created by Colin Percival that requires large amounts of memory to perform large-scale hardware attacks. Several cryptocurrencies utilize its simplified version of the proof-of-work scheme.
This refers to requiring more than one key (two or more signatures) to execute a Bitcoin transaction. They are also referred to as M-of-N transactions; Where M is the required number of signatures and N is the total number of signatures involved in the transaction.
Hash is an algorithm that helps turn a large amount of data into a fixed length. Hashes are large numbers and are usually written as hexadecimal. Bitcoin uses SHA-256 hash algorithm to generate random numbers in a way that requires some amount of CPU effort.
This is used to store, receive and send digital currency. Wallets are very useful when making use of any type of cryptocurrency. Most coins have an official wallet or a few recommended third-party wallets.
This refers to any system or programming language that given the necessary resources and requirements computes anything computable. It is seen as the most expressive and can simulate a computer.
This is referred to as a device that helps store cryptocurrency securely. Hardware wallets are best when it comes to keeping and securing your cryptocurrency. A very good example of a Hardware wallet is the Ledger Nano S.
This is an act of keeping your cryptocurrencies offline for security reasons. This is achieved by the use of a hardware wallet or moving the files from your software wallet to a USB drive.
This is an abbreviated form of Application-specific integrated circuits. This circuit has become very popular in Bitcoin mining. For this purpose, chips that are really fast can be made by Bitcoin miners
This is a potential attack on the Bitcoin network in which an organization is somehow able to control the majority of the network’s mining power. It signifies that an attacker has accumulated more computing power in his hands than all other members of the network combined.
PoS (proof of stake)is a concept that relates to giving permission to a person to validate block transactions, depending on how much coins is held by that person; This implies that, the mining power possessed depends on the amount of cryptocurrency owned by the miner.
This is an open web tool that allows you to view information about blocks, addresses, and transactions on the Bitcoin blockchain. Cryptocurrency users rely on it for all kinds of information. It can be used to check the history of any public Bitcoin address.
The block height is the number of blocks in the chain between it and the genesis block which has height 0. It is also the number of blocks in the chain between the one you are looking at and the very first block in the blockchain.
This is the amount that miners may claim as a reward for creating blocks on the blockchain. It is a transaction with the miner being the recipient and without the sender. The sender grants the miner the amount of Bitcoin for block discovery, plus all fees from the transaction the miner included in the block.
To achieve great success in the crypto world, it is vital to take time to have a good understanding of each of the above terms, before taking steps to investing.
Thanks for your time. I believe this has created a platform to know more about cryptocurrencies. You can visit our site for more information if you desire to become a crypto expert.