You’re not alone.
The world of cryptocurrency is filled with almost as many terms as there are cryptocurrencies. And while the latter results in a wealth of opportunities for investors, the prior leads to a flood of confusion.
To help you gain a better understanding of cryptocurrency, here are some commonly used terms and phrases in the crypto space.
The term given to all cryptocurrencies developed after bitcoin. Combining the words ‘alternative’ and ‘coin’, altcoins are alternative cryptocurrencies to bitcoin – each with its own use, purpose and market.
Acronym for “All Time Low” usually refers to the lowest price per unit of a coin/token achieved.
Acronym for “All Time High” usually refers to the highest price per unit of a coin/token achieved.
A term associated with investors and trends where there is a belief that an asset will decline in value.
Related article: Bull versus Bear Market
Launched in 2009, bitcoin is the world’s first cryptocurrency.
Blocks are essentially storage containers that hold historical data of transactions. Once these containers are full, they are stored in a publicly accessible chain (blockchain) where they can be viewed at any time.
A blockchain is to cryptocurrency what a ledger is to a bank, it records transactions. However, while bank ledgers are maintained privately, a cryptocurrency blockchain is an online, decentralised database maintained publicly by nodes in its network.
Related article: What is the blockchain?
A term associated with investors and trends where there is a belief that an asset will increase in value.
A term given when tokens are removed from the available supply. The act of burning tokens increases relative scarcity.
The science of encoding information to ensure its integrity and confidentiality. The internet is far from a secure channel for communications and transactions. However, the encryption processes built into cryptocurrencies ensure that only authorised parties are able to transact – and do so securely.
Capitalisation refers to the total number of coins available in a market multiplied by their unit price.
Refers to the units of cryptocurrency tokens or coins that are publicly available and in the market.
Not governed or maintained by a central authority, but jointly maintained by all their participants.
An open-source program that utilises blockchains to store data. These applications can run autonomously and are not controlled or operated by one single entity.
When something that was encrypted is turned back into plain text.
A term used to describe the sale of a lot (or all) of your cryptocurrency.
The process of securing data, by converting information using one or more mathematical techniques into a code that hides the true information.
An intermediary that holds funds during a transaction as a third-party between the ones sending and the ones receiving.
Exchanges facilitate the sale and purchase of assets such as stocks, bonds and currencies. Cryptocurrency exchanges allow parties to buy and sell digital money.
Currency that is recognised as legal tender by governments. For example, the Australian Dollar (AUD) is a fiat currency.
Acronym for Fear Of Missing Out
An update to the software or protocol.
Acronym for Fear, Uncertainty, Doubt.
A program that goes through the blockchain and completely validates all transactions and blocks on the network.
The fee or pricing value that is required to conduct a transaction or execute a contract on a blockchain.
Refers to an event where the reward for mining bitcoin transactions is halved.
Acronym for Initial Coin Offering – a method of fundraising by startups wanting to offer products and/or services.
In cryptocurrency, a ledger is a record keeping system that maintains the identities of participants (anonymously) as well as holds all information about user’s crypto-asset balances and genuine transactions.
Refers to how easily an asset can be bought and sold e.g. the availability of an asset.
Acronym for “Moving Average Convergence/Divergence”. An indicator used in technical analysis of stock prices that is designed to show changes in the strength, direction, momentum and duration of a trend in prices.
The total value of a cryptocurrency market. The MCAP can be calculated as an individual cryptocurrency’s market price multiplied by the number of coins available e.g. bitcoin’s price at $65,000 per coin multiplied by the total supply (21 million) would be a MCAP of ~ $1.3 trillion.
Often used as a verb (mooning) in the crypto space in relation to a token showing strong upwards trends. The term “to the moon” is also used by people with a firm belief that the price of a token will rise considerably.
Mining refers to the computational process performed by nodes to validate cryptocurrency transactions, record them in ‘blocks’ and then broadcast them to the rest of their network.
Dubbed ‘mining’ because of the extensive computational work required to ‘solve’ the maths behind the creation of transaction blocks, miners are themselves rewarded with cryptocurrency for their efforts.
Related article: What is bitcoin mining?
Nodes are the computers that maintain cryptocurrency transaction records (see blockchain). Responsible for checking the validity of transactions, grouping transactions into ‘blocks’ in the transaction chain and broadcasting the updated ledger to the other computers in the network, nodes are the engine rooms of cryptocurrencies.
A set of rules that allow information to be shared between computers.
Acronym for Relative Strength Index, a technical indicator used when analysing a cryptocurrency market.
Sats is short for Satoshi which is the name of the creator of bitcoin. Sats are the smallest unit of the bitcoin currency and is 1/1,000,000 of a full bitcoin.
Much like a traditional contract, a smart contract is an agreement between two parties. The difference is the contract is in the form of computer code and stored on a public database. These contracts are unable to be changed or altered.
A fungible and tradable asset or utility that lives on their own blockchain. Used as a virtual currency
Liable to unpredictability and rapid change, especially for the worse.
Think of a wallet as you would your internet banking system. This system stores information about all the accounts you hold with that bank and can also serve as a transaction platform.
Similarly, in the world of cryptocurrency a wallet is used to store information relevant to your dealings, including addresses, balances, transaction histories and public and private account keys.
A slang term given to an big investor whose buying and selling make big waves in the market.
So there you have it! While not an exhaustive list, hopefully we’ve helped to declutter some of the confusion and given you a firmer understanding of these terms and how they are used in the cryptocurrency space.
Cover image source: Chinnapong(Shutterstock.com)
Lee Perry, Head of Growth at Cointree
Cointree is a cryptocurrency exchange that is here to help make things, make sense.
Developed in Melbourne in 2013 with our easy, fast and safe platform and a belief that these incredible technologies should be made more accessible, and more understandable to the everyday individual.