Crypto terminology for beginners

So you can avoid the FUD and hodl your altcoins to the moon

No matter your position on crypto, we can all agree that the terminology is intimidating if you’re new to the space.

Do you need 2FA on your cold storage wallet so you can hodl your shitcoins, or are the shills giving you FUD?

If that sentence scares the hell out of you, then read on.

What follows is a lighthearted breakdown of the most common terms used in the crypto space.

Altcoin (Alt)

Any alternative crypto to Bitcoin.

Bagholder

Somebody who buys a crypto at its peak value then and missed their chance to sell, leaving them with worthless coins and broken dreams.

Bearish (Bear market)

When prices in the market or a specific crypto are falling. Always seems to coincide with every coin purchase you make.

Bitcoin

The original cryptocurrency created in 2008 by Satoshi Nakamoto, used primarily as a digital store of value, like gold but so much more practical. Some people think it’s a fraud, some think it’s the biggest innovation since the internet. You can decide for yourself by learning more about Bitcoin here.

Blockchain

The term that makes most people’s brains melt. In essence a blockchain is a decentralised database or ledger of accounts, that, instead of being updated by a central authority, is maintained by a decentralised network, and verified by complex maths called cryptography. It is the underlying layer of most cryptos, including Bitcoin. Learn more about blockchain here

Bullish (Bull market)

The opposite of a bear market. Most likely to occur once you decide to sell your cryptos, and miss out on a 2000% rise, missing your chance at getting a Lambo.

(See: Lambo)

Buy low, sell high

What you’re supposed to do when trading cryptos.

Buy high, sell low

What every noob ends up doing instead.

Buy the dip

A term frequently thrown around in crypto groups referring to the best time to buy into a crypto — during an extended dip in price.

Cold storage

Refers to a type of crypto wallet that doesn’t rely on an internet connection, such as paper storage or a hard wallet such as a Ledger Nano S or Trezor.

(See: WalletLedger Nano STrezor)

Crypto

A loose term for the whole industry. Also refers to the coins, utility tokens and tokenized securities that are generally called ‘cryptocurrencies’. I try not to use the term ‘cryptocurrency’, as most cryptos aren’t actually currencies. Confusing AF, but at the moment they’re generally used interchangeably.

Ethereum

The second largest crypto by market cap (as of September 2018), behind Bitcoin. Used primarily as a platform for building decentralised applications (Dapps), as opposed to a currency like Bitcoin.

Exchange

A place to buy and trade cryptos online. Some of the biggest exchanges include CoinbaseBinanceCEX and many more.

Fiat currency

Paper or coin currency with no intrinsic value (not backed by a commodity such as gold). It’s value comes only from the government issuing the currency. The US Dollar used to be backed by gold, but this stopped in 1971, meaning it’s value became essentially arbitrary.

Fear of missing out (FOMO)

Often occurs after all your colleagues quit their jobs because they invested in an ICO 2 months ago that jumped by 3000% and currently all own Lambos.

(See: ICOLambo)

Fork, hard

When the code behind a blockchain is irreversibly split, and a new chain is formed from the existing one. They are now separate blockchains, and cannot be joined again.

Fork, soft

A temporary divergence in the code of the blockchain, that is either accepted by all the computers running the blockchain over time, or rejected if consensus can’t be reached.

FUD

Fear, uncertainty and doubt. Typically occurs when you spend all night reading about a crypto, realise that this is what’s going to make you rich and decide to invest $5000. You share your excitement with your friend the next day who says it’s just a shitcoin and you’ll lose your money. You’re scared, uncertain and very doubtful.

(See: Shitcoin)

FUDster

Somebody who distributes FUD, typically through social media. Often is a shill for another crypto, intentionally trying to spread misinformation. Probably a constant disappointment to their parents.

(See: Shill)

Hot storage

The opposite to cold storage. It is always connected to the internet and readily available for you to make crypto transfers. Less safe than cold storage but far more convenient.

(See: WalletCold storage)

Hodl

The crypto investor’s mantra. An intentional misspelling of ‘hold’, referring to what to do once you purchase your crypto.

ICO

Initial coin offering. Crypto’s answer to an IPO in the business world. Essentially, a new startup will announce that they are building a crypto, and ‘sell’ the crypto to investors in order to raise money to develop their idea. Typically, most ICOs don’t have a working business or even a working prototype, which makes them incredibly risky investments.

Keys, private

This is like the password to your email account. Only you (should) have it, and only the owner of the key can access the funds at that address. If anyone else knows your private key, your account can be compromised and you could lose all your funds at that address. Public and private keys are stored in a crypto wallet.

Keys, public

Can be thought of like an email address, it is the address that your cryptos are stored. Anyone can see your public key and are able to send cryptos to it.

(See: Wallet)

Lambo

A crypto hodler’s dream and a shortening of ‘Lamborghini”. It was prophesied that crypto hodlers will receive their Lambos once Ethereum moons.

Ledger Nano S

A type of hardware wallet that allows you to store your cryptos securely offline. The gold standard for crypto security.

Lightning network

A new function being added to the Bitcoin and Litecoin networks, allowing for faster and cheaper transactions. Bitcoin has been struggling with scaling issues for a long time, so Lightning Network is an attempt to solve that.

Litecoin

Often described as the ’silver to Bitcoin’s gold’, Litecoin was developed as a faster and cheaper version of Bitcoin.

Market cap

Short for ‘market capitalisation’. Refers to the value of a crypto, which is calculated by multiplying the number of coins by the coin’s price.

Mining

The process of contributing computing power to solving computational problems in a blockchain. This verifies the transactions on a blockchain, and in turn the miners are rewarded with crypto.

Moon

The objective of hodling: so your investment goes to the moon. Memes abound.

Proof of stake (POS)

A method of making sure all transactions in a blockchain are secure and correct. It works by allocating a trusted user (who owns a large number of coins in the network) to validate a group of transactions.

Currently, very few blockchains run full POS validation.

Proof of work (POW)

Another method of making sure all transactions in a blockchain are secure and correct. It works by miners committing large amounts of computing power to solve a cryptographic puzzle, with correct answers being rewarded with new bitcoins.

Currently in use on the Bitcoin network, as well as most other blockchains.

Pump and dump

A coordinated effort to artificially inflate the price of a crypto by encouraging investors to buy in, before selling off one’s own share while the price is still high. Usually undertaken by groups of whales. Also, not a sex act.

(See: Whale)

Satoshi Nakamoto

The mysterious creator of Bitcoin. It could be one person, or a group of people. His/her/their identity has never been uncovered. Is rumoured to hold 1 million bitcoins.

Shill

Somebody who has vested interest in a specific crypto, who intentionally spreads FUD about rivals, or talks up their own crypto in return for compensation.

Shitcoin

A useless altcoin. Either a scam or just a really stupid idea that sucked in ignorant investors.

Smart contract

Essentially a small piece of code stored inside a blockchain, that allows users to enforce contracts without a third party such as a bank, a lawyer or a company such as Kickstarter. These program can be coded to verify, facilitate and enforce contracts. As they exist on the blockchain, they are completely distributed and immutable — they cannot be tampered with once they are launched.

The flippening

Refers to a time when another crypto takes over Bitcoin as the most valuable crypto by market cap. For most of Bitcoin’s history, a flippening was a remote possibility, but with the rise of altcoins like Ethereum and Ripple, it is becoming more likely.

Trezor

A similar device to the Ledger Nano S, Trezor is a type of hardware wallet that allows you to store your cryptos securely offline. The gold standard for crypto security.

Two-factor authentication (2FA)

Also known as ‘multi factor authentication’, 2FA is the process of logging in to an account using two pieces of evidence for authentication. This is usually your password as well as a time sensitive code sent to a phone number or email address during a login attempt. Highly recommended for use on accounts associated with crypto to reduce the risk of being hacked.

A piece of hardware similar to a USB stick that can securely store cryptos (e.g. Trezor, Ledger Nano S). Regarded as the most secure way to hold cryptos.

Wallet, paper

The process of printing the keys to your crypto onto a piece of paper. Open source projects like MyEtherWallet are able to generate paper wallets for you. Can be risky if physically lost, but prevents all hacking through the internet.

Wallet, software

Crypto storage that exists as a piece of software — an app or computer program. Popular software wallets include Metamask and Jaxx.

Whale

Somebody who owns a lot of crypto and can influence its price.

White paper

A white paper is traditionally understood to be an authoritative report summarising a complex topic. In crypto, white papers are used as a way to explain the technology behind and discuss the future applications of a new crypto.


This post was originally published on Medium by Jack Dossman in October 2018.

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