Cryptocurrency Vocabulary For Beginners

Cryptocurrency Vocabulary For Beginners

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Address: an address is a code used to send, receive or store cryptocurrency. See Private & Public Key.

Airdrop: is a procedure of distributing tokens by awarding them to existing holders of a particular blockchain currency like Winco or Ethereum.

Air-gapped: no direct connection to the internet.

Altcoin: Stands for alternative coin it is any digital coin other than Bitcoin, the first digital coin.

APIs: they interact through a program to applications, an interface used by programs to interact with applications. No, they are not a programming language. They “deliver” the language per se, through a program to a system.

Bearish: when the market is on a downtrend, it´s bearish!

Bitcoin: It is the first decentralized digital currency, as the system works without a central bank or single administrator.

Block: is a block of transactions recorded forever in the blockchain. Miners collect transactions by blocks. See Miners.

Blockchain: is a continuously growing list of records, called blocks, which are linked and secured using cryptography; see cryptography.

Bubble Theory: In simple terms, it’s a term used in finances to describe a market that is supposedly out of control with too many buyers trying to buy. A market that causes people to buy without any reasonable reasons to believe in a return. So, it grows uncontrollably.

Bullish: used when the market is going up, it is bullish!

CEX: Centralized Exchange, see Centralized.

Coin Appreciation: acknowledgement, recognition, growth, prices go up.

Coin Burn: is when you send a portion of altcoins to a wallet address without a known private key. Which means they will be “burned “and go to waste. This process also gets recorded in the blockchain, and because of its immutable records, it serves as proof it would never be able to be used again without a private key, meaning no access to the coin; See Altcoin.

Cold Wallet: (hardware) air-gapped, meaning not always connected to the internet.

Consensus Algorithm: is a process used to achieve an agreement on a single data of a distributed process or system. See Proof of Work (POW) and Proof of Stake (POS).

Cryptocurrency: is a digital asset used as a medium of exchange for purchases, trading & services. It uses cryptography for secure transactions; see Blockchain

Cryptography: is a process of encoding a message or information in such way that only authorized parties will be able to access it; synonym of encryption; See Blockchain.

DAPPS: blockchain apps that run entirely in a decentralized manner. See Decentralized.

Decentralized: transfer (authority) from central government into several others. Instead of being concentrated into one place like a bank, cryptocurrency blockchain lives in every node (computer) part of this tech; it is a copy of the blockchain or digital ledger on every device connected to the network. An exact copy of the information is everywhere instead of in a central location like a government or companies servers. see node.

DEX: Decentralized Exchange, see Decentralized.

Digital Asset: is a digital currency, coin, token, a medium of exchange. See Token and Cryptocurrency.

Distributed Ledger: the base of decentralized. Distributed list. See Decentralized.

Ethereum: is an open-source (public), blockchain-based distributed computing platform and operating system featuring smart contract (scripting) functionality, available for anyone who would like to create their own tokens. It is the second biggest market after Bitcoin. It also has its own token called ETHER. See Smart Contracts.

Fiat Currency: is used to describe any physical paper money like USD and EUR.

FOMO: Fear of Missing Out

Fork: forking is said to happen when a Blockchain splits into two branches. It can happen as a result of a change in the software, which could turn out temporary or permanent; See Hard Fork.

GAS: Whenever anyone transacts on the Ethereum blockchain network they need what is known as “gas” to transact which is paid in ether.

Hard Fork: A hard fork is a permanent divergence from the previous version of the Blockchain, and nodes running previous versions will no longer be accepted by the newest version; Like Bitcoin and Bitcoin Cash for example; see Fork.

Hash: This is a random and complex algorithm that takes a variable amount of data and produces a shorter, fixed-length output. Which is “imprinted” on each token, coin or transaction.

HODL: Hold On for Dear Life meaning hold your coins, spelled wrong on purpose.

Hot Wallet: are the wallets always connected to the internet.

ICO (Initial Coin Offering): is just similar to an IPO in the stock market, but instead of stocks, coins and tokens are offered. If a new cryptocurrency project wants to raise fund for their project, they offer a particular amount of coins to the public at a particular price.

KYC: Know Your Customer. An acronym used to verify identity mostly by banks.

Mining: mining is a validation of transactions, computing hardware where miners verify and add transactions to blockchain; see blockchain.

Node: A node is a computer, any and every computer connected to a platform network like Ethereum. A node receives a copy of the full blockchain. It supports the network through validation and relaying of transactions. See Decentralized.

P2P(peer-to-peer): directly from one person to another. Peers are equally privileged, equipotent participants in the application

Private Key: is a key that gives access to cryptos in a specific wallet. Private keys must never be shared with anyone. Whoever holds the private key owns the value of the address which helps them spent the balance in the wallet. Private keys “unlocks” Public Keys. See Wallet and Public Key.

Proof of Stake(POS): concept states that a person can mine or validate block transactions according to how many coins he or she holds. This means that the more Bitcoin or altcoin owned by a miner, the more mining power he or she has.

Proof of Work(POW): system (or protocol, or function) is an economic measure to deter denial of service attacks and other service abuses such as spam on a network by requiring some work from the service requester, usually meaning processing time by a computer.

Public Key: A public key is a key that is shared among multiple users. A wallet is a collection of public keys and it can contain one public key or many. When someone sends you cryptocoins over the Blockchain, they are actually sending them to a hashed version aka “Public Key”. See Wallet & Private Key.

Scalability: refers to the performance, a characteristic of a company´s system. It is a processing ability to perform at high demand, showing it has the capability to successfully handle increases.

Security Token: derive their value from external sources and tradable assets subjected to federal regulations. They are created to be a company’s share, just like selling stocks or shares, but in the form of a token, you turn money into capital. Securities allow holders to have partial ownership of an asset without actually “having it”. One characteristic of the security tokens is that the creators or company delivers a promise of profit. Any external investment contract with the intention of collecting a profit is considered a security. To officially be considered a security, a token must pass the Howey Test.

Smart Contract: is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation of a contract. Smart contracts allow the performance of credible transactions without third parties. They carry a set of “rules” and once met they self-operate.

Soft Fork: is said to happen when a change to the software protocol keeps it backward compatible. The original chain will continue to follow the old rules. See Fork and Hard Fork.

Spoofing: To imitate, technological impersonation. Intruders will scam or phish for people´s information to try to pretend to be them with the intent of stealing from them.

Token: is the term used for cryptos created on a platform like Ethereum. It is pretty much the same as coin, but a token can have other functions the serving as a medium of exchange as a coin would be.

Tokenization: is the process of removing sensitive data from a system by replacing them with an undecipherable token, so that it can store the original data in a secure cloud data vault.

Utility Token: are created with a purpose to be utilized in the future, used to grant access to a certain platform or service. No regulations. These tokens usually focus on solving problems and can be of much profit in the future. They are seen as vehicles to means. Their price is dictated and will rise according to demand.

Volatility: liability to change rapidly and unpredictably.

Wallet: A cryptocurrency wallet is a digital wallet where private keys are stored for cryptocurrencies like Winco WCO. See Private Key and Public Key.

Whale: is someone who owns a majority percentage of a cryptocurrency.

Whitepaper: The paper that describes the cryptocurrency’s protocol.

Much content has been collected from Wikipedia. The collected content has been modified to fit the context, our only intention is to put into one place the vocabulary needed to comprehend the cryptocurrency and to make life easier for someone who is new to this ecosystem.


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