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Reading Blockchain: A Complete Glossary Of Cryptocurrency Terms
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Reading Blockchain: A Complete Glossary Of Cryptocurrency Terms

by John M.January 23, 2018

Cryptocurrencies have their own language. If you have been trying to put your finger on what people have been talking about on forums, discussing on Slack channels and generally bustling about in the news, it is time to run through a comprehensive list of terms for all things cryptocurrency. Cool down a bit, because while it may sound like a massive undertaking, it really will be a breeze to go through all of these. Let us have a closer look.

ATH

All Time High is the highest level in history that a single asset has reached. In the case of cryptocurrencies, this may be more often the case than not.

Altcoin

As cryptocurrencies start to compete between each other, alternative units have appeared. It is a term generally used to single out all coins that are not Ethereum or Bitcoin.

Arbitrage

A trader would engage into an arbitrage when they look at two separate cryptocurrency exchanges based in different countries.

51% Attack

If a single individual or a group of individuals control over half of the computing power needed to carry out various transactions on certain networks, then you have a 51% attack situation.

A 51% attack is dangerous because it may allow individuals to do away with verification process and rig transactions. In addition, the 51% group may also ban all users from further mining.

Bollinger Band

A Bollinger Band will help you identify a Pump and Dump in the making. It is a crypto index used to show when a particular unit generates a surplus in either buying or selling transactions.

Blockchain

Blockchain is the building technology of all cryptocurrencies. In term, cryptocurrencies (ALSO KNOWN AS coins) give rise to tokens. A public ledger brings all cryptocurrencies together. Separate holders help verify that the information entered in the ledger is genuine and thus prevent fraudsters from tinkering with the source code of the blocks. If one block in the chain breaks, all blocks will flounder with it. However, this is an unlikely scenario as every user automatically verifies any transactions occurring in the public ledger.

Bagholder

Someone who decides to retain altcoins that are quickly losing value.

Bullish

If you have been watching CNCB or even the news in general, you would have heard the term Bullish. It is a forecast that price is going to increase.

Bearish

A term used to indicate that price is going to decrease.

Block Reward

Distributed in units of 25, block rewards are what individuals receive for helping solve mathematical problems linked to a particular blockchain block. However, this amount will halve every 210,000 blocks.

Crypto wallet

Crypto wallets store the strings of codes that indicate one’s ownership of particular units of cryptocurrency. New users often like to make a physical back-up of their wallets, or go for a hardware wallet from the beginning.

Cold Storage

If you have decided to switch from a crypto wallet to a physical storing device, there are several ways to do it:

  • Use a USB drive to back up your copy;
  • Print the QR code and put it somewhere safe;
  • Use an alternative hardware wallet

Exchanges

Exchanges are websites, which allow you engage in various transactions that feature cryptocurrencies. In other words, a trader may decide to flog their coins or add new ones, as well as swap existing ones. Usually, this could be another denomination of the cryptocurrency, such as Bitcoin, or you can instead swap your digitalized money for any mainstream currencies backed by a central bank.

We have listed some of the best-known exchanges available on the market by volume of transactions.

FIAT

There has been a lot of talk by central banks about the digitalization of common money, including the Euro. FIAT are currencies issued by a government, including the Euro, Chinese yuan and US dollar.

Fork

Forks are the equivalent of looking under the hood and tinkering with the engine. On occasion, developers decide to introduce alternations to the original protocol and create a new one, which diverges from the existing one.

In most cases, users who operate old nodes end up upgrading to the latest available version.

Fear of missing out (FOMO)

When you decide to invest hurriedly into an asset, including cryptocurrencies, lest you miss a decent opportunity.

Fear, Uncertainty, and Doubt (FUD)

The trading world knows its doomsayers. Known as FUDsters, they attempt to spread enough misinformation and fear so that a price may actually drop.

Going long

One of the two forms of margin trading. If the price increases, the trader stands to benefit.

Going short

Another form of margin trading. If the price falls this will translate into profit for the trader.

Halving

Halving is a process whereby the number of available rewards per blockchain block is reduced twofold for every 210,000 blocks.

Hashrate

Hashrate is a common metric in cryptocurrencies. In essence, it represents the speed at which people discover new blocks and how fast they solve associated mathematical problems.

Initial Coin Offerings

Like Initial Public Offerings (IPOs), it means the distribution of assets from a company that decides to go public to individuals willing to invest in a stake.

All of these new assets are launched on the Ethereum platform (a protocol). In other words, tokens represent a sort of crypto crowd funding.

Market Cap

The cumulative price of all units of a cryptocurrency. The following link provides a great overview broke down by cryptocurrency. If you are interested in calculating the value yourselves, then simply multiple the current stock of any single currency by the value of a single unit.

Market order

If you choose to engage in market orders, you may either sell or buy crypto units. When a trader opts for a market buy, they usually buy the cheapest available option. Conversely, a market sell means they are selling the most valuable currency.

Margin trading

Margin trading occurs when a trader opts to borrow funds from a broker and risk those. It is a high-risk form of trading and even experienced traders may suffer overwhelming losses.

Moving Average Convergence Divergence (MACD)

Another popular stock exchange term that also applies to crypto currencies. MACD draws on short-term and long-term price trends to make accurate predictions about future prices.

Mining

Mining is the most popular crypto term you have heard. These days mining has become grossly expensive and inefficient. In essence, mining pools the computing power of multiple users who then decide to mine a node of blockchain. In reality, miners are channelling computing power to solve mathematical problems.

Mining Rig

A computer configuration designed to mine cryptocurrencies. You should note that mining requires a lot of computer power and generates a steady electricity bill. On top of that, you will need a last-generation graphics chip. Refrain from using laptops for mining.

Some argue that mining has become vastly inefficient way of acquiring ether as early as late 2010.

Node

Miners go after nodes. In cryptocurrency slang, nodes are strings of code based on the blockchain technology. Individual users then use computer power to secure their nodes.

Pump and Dump

The term used to indicate the soaring rise to salience of an alternative coin, abandoned shortly after a new coin appears.

Proof of Work (PoW)

PoW is a special verification method Ethereum uses to make sure that a transaction occurs. It also avoids double-spending and confirms that a transaction is genuine. Lastly, it is necessary in order to reward miners with coins.

Proof of Stake (PoS)

Proof of Stake differs from PoW. While PoW serves to validate a transaction as genuine, PoS picks the creators of new blocks drawing on the value of their assets.

Ethereum is now making a definitive shift towards PoS. One of the main concerns with PoW is that cryptocurrencies minted this way drive high amounts of electricity use. In turn, people use fiat currencies to pay off, which leads to pressure on digitalized money.

By introducing PoS on the Ethereum network, users will have a cheaper and more sustainable way to obtain new coins. There is also the benefit that any newly-forged coins will go to their respective owners unlike PoW where miners may not end up the owners of a coin.

Whale

In cryptocurrency slang, whales are traders who have been able to amass substantial amounts of any cryptocurrency. Whales first appeared at the dawn of Bitcoin in early 2010.

Return on Investment (ROI)

A common term used on exchanges. ROI indicates how much profit you have made.

Stop order

A term used to indicate when a trader sells or buys a cryptocurrency, provided the price meets certain criteria.

Shilling/pumping

It is artificially trying to rise the value of a cryptocurrency.

Stable coin

A cryptocurrency marked with a relative level of stability.

Sharding

Shards are blueprints for miners. They contain a completed copy of a mined blockchain node, which helps boost overall performance and expedite the process of mining.

Tokens

Tokens are entities that are linked to blockchain-based protocols. A protocol is one of the main established cryptocurrencies, including Bitcoin, Bitcoin Cash, and Ethereum. Tokens on the other hand depend on those protocols to operate. Here we have several examples.

  • Bitcoin (BTC)
  • Ripple (XRP)
  • NXT (NXT)
  • Ethereum (ETH)

Note that the terms in bold are coins. They serve as protocols (based on the blockchain technology) and subsequently serve as the groundworks for a number of tokens, i.e. BTC, XRP, NXT, and ETH.

Trend Analysis or Technical Analysis (TA)

TA looks into current information to try to forecast future developments.

 

About The Author
John M.

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