30 Must-Know Cryptocurrency Terms For Dummies

Quick Navigation

• ATH (All-time high)
• Alternative Coins (Altcoins)
• Bitcoin Maximalist
• Bitcoin to the moon
• Block reward
• Blockchain
• CEX – Centralized Crypto Exchange
• DAO
• dApps
• DEX
• DeFi
• Digital Address
• Digital Wallet
• FIAT
• FOMO
• FUD
• HODL
• Halving
• ICO
• IEO
• KYC
• Market Cap
• Mining and Miners
• Proof-of-stake (PoS)
• Proof-of-work (PoW)
• Private Key (Seed)
• Pump & Dump
• Satoshi
• Shitcoin
• Total Market Cap
• Whale (Bitcoin Whale)
• Whitepaper

Cryptocurrency Terms

What is ATH (All-Time High)?

The highest price reached by an asset, Bitcoin’s ATH is at $19,800 (as of writing these lines). The ATH was reached on December 26, 2017. The opposite of ATH is ATL, which is an all-time low.

What are Alternative Coins (Altcoins)?

Aside from the Bitcoin cryptocurrency, there are thousands of other digital cryptocurrencies, which are also based on blockchain technology.

Each coin brings its uniqueness and innovation. The vast majority of the altcoins are not recognized, and they have relatively low daily trading volume and market capitalization. However, there are several examples of alternative coins, like Ethereum and Ripple, with decent liquidity and trading against FIAT pairs. Over the years, of the thousands of altcoins, many bled-out their value and just disappeared.

Who is a Bitcoin Maximalist?

Such a person believes only and emphatically in Bitcoin. Usually, the maximalist considers the other altcoins as unworthy and unnecessary, or as “shitcoins.”

What is Block Reward?

The compensation that miners receive for successfully validating new transactions and recording them on the blockchain.

What is Blockchain?

Blockchain can be described as a huge information file which lists all transactions that were ever made. Blockchain is the heart of the Bitcoin network and serves as a kind of a ledger.

What is a Centralized Crypto Exchange (CEX)?

A crypto exchange is an online trading platform where cryptocurrencies and FIAT money can be traded. Centralized means that the exchange is operated by a specific entity that maintains full control over it.

Most of the crypto exchanges allow crypto-to-crypto trading only. However, the larger ones also allow crypto-to-FIAT trading. The most popular exchanges are Binance, Coinbase, Kraken, Bitstamp, and BitFinex.

What is a DAO?

A DAO, or Decentralized Autonomous Organization, is an organization working without a central government, usually operated by shareholders, which has a transparent set of rules encoded on a computer program.

The famous DAO Hack: In 2016, a hacker found a loophole in the coding and used it to drain Ethereum. In just a few hours, over 3.6 million ETH was stolen, or $70 million at the time. In response, the ETH plunged over 30% in only one day.

What are dApps?

dApps, or Decentralized Applications, are applications built on top of blockchain technology, without a central operational authority.

What is DEX?

A DEX, or decentralized exchange, is an exchange operating without a central authority – no company operates it. Some of the advantages in DEX over CEX are in its security level – they are harder to breach, as well as the regulations.

What is DeFi?

DeFi, or Decentralized Finance, is a new monetary system built on public blockchains without the involvement of a centralized institution

What is a Digital Address?

A sequence of 27 to 34 letters and numbers. Each address is unique. Here is an example of a digital address: 135sti2R9ZooiGrFFRJxYGeDvF5Uvjj7JK.

Digital addresses are representing cryptocurrencies wallets. In order to send cryptocurrencies or funds, we will need to use the recipient’s digital address.

What is a Digital Wallet?

A digital wallet is an application installed on a local computer (PC), a mobile app or a remote server, facilitating the storage of digital currencies. Most digital wallets are made to store Bitcoin. A digital wallet uses public addresses as well as private keys to hold one’s funds.

The most secured digital wallets are the cold storage paper wallets or hardware wallets, such as Trezor and Ledger.  For more info on digital wallets.

What is FIAT?

Any currency that is backed by the state or country. Basically, it is all kinds of coins we know and use on a daily basis (USD, Euro, CAD, etc.).

What is FOMO?

FOMO stands for “Fear Of Missing Out,” a term that describes one’s fear of not entering a winning trading position.

What is FUD?

FUD stands for fear, uncertainty, and doubt. It conveys bad news about crypto, which is constantly being spread by the traditional press and aimed at creating mass panic. FUD can relate to Bitcoin regulatory issues, rumors about banning crypto, and more.

What is HODL?

HODL is a disruption of the English word “hold”. Hodlers believe in Bitcoin and hold it all times regardless of its price, for the long term, even forever. HODL was first used during the crypto bubble pop of December 2013.

What is Halving?

A predetermined process that cuts in half the rewards that miners receive for recording and verifying transactions to the new blocks that will be added to the blockchain. Bitcoin halving happens once every four years; the next halving will take place during the summer of 2020.

What is ICO?

An Initial Coin Offering is a fundraising method by which crypto projects raise capital from the public. Unlike traditional fundraisings, the ICO investors are only eligible for the tokens and they are not equity holders with any voting rights.

The ICO Bubble lasted from October 2017 to March 2018; each of those months saw hundreds of successful ICO fundraisings. The vast majority of those ICOs were ERC-20 type, based on the Ethereum blockchain.

Investing in ICOs is considered very risky. Many ICOs turned into crypto scams, completely erasing investors’ funds. The number of ICOs had sharply decreased during the year of 2018, and in January 2019, Binance was the first exchange to conduct an Initial Exchange Offering (IEO).

What is IEO?

IEO stands for Initial Exchange Offering, which is a form of fundraising for the creation of a new token that is conducted by a crypto exchange.

The first IEO was GIFTO that raised $30 million on Binance Exchange during 2018. IEOs became popular in the first half of 2019, shortly after the number of ICOs drastically decreased.

Just as ICOs, IEOs are considered a high-risk type of investment.

What is KYC?

KYC stands for “Know Your Customer.”, is a process that users are requested to provide identity information due to regulations. This is including but not limited to a passport scan, proof of address, and online webcam verification.

What is Market Cap?

Market cap, or capitalization, represents the current price of a single cryptocurrency multiplied by the total number of coins in the market (the circulation supply). Bitcoin is the cryptocurrency with the highest market cap.

What is Mining? Who are the Miners?

Mining is the process of creating new Bitcoins. Mining is done by ‘miners,’ who are solving complicated equations. The miner that solves the fastest will receive the reward (fee) for the transaction and add it to the block.

On average, every 10 minutes, a new block is added to the gigantic distributed public ledger of already existing transactions, which is the blockchain.

Bitcoin mining could be done using a personal computer (PC) in the early years of the cryptocurrency. These days, the mining efforts are divided between giant companies such as the Chinese-based Bitmain.

Mining is not limited to Bitcoin only, but to PoW (Proof-Of-Work) type of cryptocurrencies.

What is Bitcoin to the Moon?

Moon is a term used to describe an asset whose price grows significantly, as in “Bitcoin to the moon!”

What is Proof-of-Stake (PoS)?

This consensus algorithm allows users to decide on who will validate the next block, depending on the number of coins they have. The token holders lock those tokens to secure the network and receive rewards in return.

What is Proof-of-Work (PoW)?

The original consensus algorithm of the blockchain network. The algorithm is being used to confirm transactions and add new blocks to the chain. Miners compete with each other to receive rewards when confirming transactions.

What is a Private Key? What is Seed?

Each public or digital address has a unique private key that is required to access the funds. Here is an example for a private key: 6AkL0TJAuKcucHGqWVfUIa4g1haE0ilcm7eWUDo..fd + PpzdCJf1s4WdsK.
A private key is usually represented in a neater way, by a seed phrase. The seed is a combination of 12 or 24 words.

What is Pump & Dump?

P&D is artificially inflating the price of an asset (“pump”) over a short period before mass-selling it (“dump”) even quicker, while the value drops to the price level before the pump.

The lower the trading volume and liquidity, the easier it is to pump and dump a coin. Hence, lower-cap cryptocurrencies are usually selected for P&D.

 

What is Satoshi?

Satoshi is the cent unit of Bitcoin. One Satoshi is 0.00000001 of a Bitcoin. It’s named after Satoshi Nakamoto, the anonymous creator of Bitcoin.

The reason for 8 decimal spaces is because Satoshi Nakamoto had planned Bitcoin to be used as everyday-currency even when Bitcoin reaches the price of over one million USD.

What is a Shitcoin?

Shitcoin is a nickname for an altcoin with no working product and no actual value. Shitcoins are mostly used by Bitcoin Maximalists to describe most, if not all, of the altcoins besides Bitcoin.

What is the Total Market Cap?

Total market cap, or capitalization, is the combined market capitalization of all cryptocurrencies.

Who is a Bitcoin Whale?

A person or entity that owns such a large amount of Bitcoin that they can single-handedly affect the price of Bitcoin by mass-buying or selling.

What is Whitepaper?

Whitepaper (or WP) is an authoritative report or guide designed to inform readers about the specifications of a newly created crypto project. It’s equivalent to a business plan in the traditional financial sphere. The WP is written by the project’s team and usually has chapters discussing the problem solved, the token, the team, and the technical aspects of the project.