The Complete Cryptocurrency Glossary 2020
If you want to understand cryptocurrency better, you have to take time to learn certain words that describe different things in that world.
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It is exactly like the different terminologies used in different fields to explain certain things. They are a lot; however, the top ones that you are likely to encounter more have been picked for this article.
Address: Addresses consist of between 26 and 35 characters and represent a unique wallet ID on the blockchain, much like an account number. They are used when conducting transactions on the network, including the receipt, remittance, and storage of cryptocurrency.
Altcoin: This usually refers to any cryptocurrency coin other than Bitcoin, which was the original cryptocurrency. There are over 1,000 other cryptocurrencies in the market.
Blocks: These are packages of permanently-recorded data on the blockchain network.
Blockchain: This is a distributed ledger secured using cryptography. It’s a database that’s accessible for everyone to read. Therefore, data can only be changed by ledger owners. Data isn’t stored on a centralized server but is instead shared by thousands of computers around the globe.
Confirmation: When a transaction has been verified by miners and added to the blockchain, it receives a confirmation.
Consensus: Consensus is reached when all network participants approve the validity of the transactions by ensuring that ledgers are exact copies of one another.
Cryptocurrency: This is a type of digital asset used as a medium of exchange in business transactions. Cryptography is used to maintain the security of transactions and control the creation of additional currency coins or tokens.
Digital Asset: Not all cryptocurrencies trade as coins or currencies. If they are digital stores of value, they are termed digital assets. These can be freely exchanged or not.
Fiat currency: A fiat currency is any currency that’s issued by a government or a central bank, such as the dollar.
Fork: This term applies to a blockchain that’s split into two separate chains, normally to accommodate new governance rules.
Genesis block: This describes the very first block in any blockchain.
Going long/going short: These terms describe a margin trade that profits when the price either increases or decreases.
Hash algorithm: This transforms a large amount of data into a fixed-length hash or string of characters for a cryptographic key. Hash algorithms are central to blockchain and cryptocurrency transactions.
Hash rate: This refers to the speed at which a piece of hardware can decrypt hashes. This is the basis of cryptocurrency mining.
Hot wallet: A hot wallet is connected to the internet and used to hold cryptocurrency for everyday transactions. Because of the increased security risk over a cold wallet, a hot wallet should not store large amounts of currency
Laddering: Investors who set incremental buy or sell orders are said to be laddering.
Mining: Cryptocurrencies aren’t printed like traditional currencies – they are mined. This process uses computer hardware to solve complex mathematical problems and decrypt hashes. Miners are rewarded for their work with cryptocurrency coins.
Mining rig: Cryptocurrency mining requires a huge amount of power. Mining rigs consist of Multiple Graphic Processors (GPUs) to increase processing power.
Moon: When a cryptocurrency coin goes on a market run and drives the price up quickly, it’s referred to as mooning.
Multi-signature, or multisig: This refers to a situation where multiple signatures are required to authorize a transaction. This increases the security of cryptocurrency transactions and reduces the risk of theft.
Node: A blockchain isn’t stored in a central location. In fact, it’s distributed to any number of computers – called nodes – which host it. Each node is instrumental in verifying the ledger within the blockchain.
Private Key: This is the key – or password – which unlocks a wallet. It shouldn’t be shared with anyone.
Public Key: A public key is a wallet address that can be shared with other parties to effect transactions.
Pump and Dump: This is a form of market manipulation by traders who artificially inflate prices and then exit the market, thus causing a collapse in the price.
Spoofing: Spoofing occurs when investors with large holdings trade with themselves to create the illusion of volume.
Volatility: Market or price volatility refers to the movement in the price of a cryptocurrency over time. The cryptocurrency market typically experiences wild swings between high and low prices.
Wallet: In the cryptocurrency sector, a wallet is a software program that stores private and public keys and interacts with various blockchain to enable users to send and receive digital currency and monitor their balance.
Whales: Whales are investors who hold a significant number of coins or other cryptocurrencies. They can have a marked influence on market movement.