Your Guide to Crypto Lingo Part One - The Basics
As I continue on my mission to educate the masses on cryptocurrency, I thought it would be helpful to provide you with a Guide to Crypto Lingo.
Above all, it can be frustrating when you’re doing your own research, and new words and phrases constantly pop up.
So below, I’ve compiled a list of some of the most commonly used crypto terms along with their definitions.
These are only the basics, but they’re a great starting point in understanding crypto lingo.
Next week, I’ll continue this list with more advanced lingo.
The first and most valuable cryptocurrency. Launched on January 3, 2009, its value has climbed since then with some wild fluctuations. It’s mostly used as a long-term store of value and a means to transfer wealth without any limitations.
A peer-to-peer electronic cash system formed from a “fork” of the original Bitcoin. Whereas Bitcoin was considered too volatile to be useful as a currency, Bitcoin Cash is designed to be better optimized for transactions. However, it can now be considered a failure.
Groups of data within a blockchain. On crypto blockchains, blocks are made up of transaction records. Each block can hold a certain amount of information. When it reaches that limit, a new block is formed to continue the chain.
A digital ledger and the underlying technology behind cryptocurrencies. A blockchain is the result of sequential blocks that build upon one another, creating a permanent and unchangeable ledger of transactions or other data.
A representative store of digital value that lives on a given blockchain or cryptocurrency network. Some blockchains, such as Bitcoin, use the same name for the network as for the coin. Others have different names for each. The monetary incentive is one of the key elements that makes blockchains work.
A popular centralized cryptocurrency exchange. The first crypto exchange to go public on the Nasdaq. Coinbase is also notorious for bad customer support. I recommend using other exchanges.
Cold Wallet/Hardware Wallet
The most secure method of storing cryptocurrency completely offline. Many cold wallets, or hardware wallets, are physical devices that look much like USB drives.
A type of currency that’s digital and decentralized.
The principle of distributing power away from a central point. Blockchains are typically decentralized with hundreds or even many thousands of network nodes. Because blockchains typically require majority approval to operate and make changes, rather than a central authority.
Decentralized Finance (DeFi)
Financial activities conducted via blockchains without the involvement of an intermediary, such as a bank, government, or other financial institution.
Decentralized Applications (DApps)
Applications designed and deployed on a blockchain that operate without intermediaries. They are permissionless. In other words, there’s nobody that can prevent you from using them. Decentralized finance activities are often completed on decentralized apps.
The second-largest cryptocurrency by market capitalization. It’s a crypto network and software platform that developers use to design and deploy new applications. Its currency is called Ether. Ethereum was the first blockchain with a decentralized computer that allows anyone to deploy or use small computer programs called smart contracts.
A feature of Bitcoin where after a certain amount of blocks are mined, the amount of new Bitcoin entering circulation is halved. This typically happens every four years and makes bitcoin less inflationary over time.
A software-based crypto wallet connected to the Internet. These wallets are more susceptible to hacking and cybersecurity attacks than cold/hardware wallets.
Initial Coin Offering (ICO)
A way newer crypto projects raise funds. Similar to an Initial Public Offering (IPO) of stock.
Crypto market capitalization refers to the total value of all the coins that have been mined.
Process in which new cryptocurrency coins are made available, and the log of transactions between users is maintained.
A computer that connects to a blockchain network.
Non-Fungible Token (NFTs)
Units of value that represent the ownership of unique digital items such as art or other collectibles. NFTs are mostly held on the Ethereum and Solana blockchains.
Two users interacting directly without a third party or intermediary.
Your wallet’s unique address. Similar to a bank account number, you can share your public wallet key with people or institutions so they can send you money.
An encrypted code that gives you direct access to your cryptocurrency. Similar to a bank account password, your private key should never be shared with anyone. In some cases, it is the only way to recover cryptocurrency.
The pseudonymous creator of Bitcoin. No one knows the true identity of Nokomoto, or if it is more than one person.
A software program that is hosted on a blockchain and enacts the terms of its functionality automatically based on its code.
A stablecoin pegs its value to some other currency or commodity. The most popular stablecoins are USDC and USDT that are backed by dollars.
A unit of value on a blockchain that usually has some other value proposition besides a transfer of value. The terms token and coin are often used interchangeably.
Programmer who designed and invented Ethereum in 2015.
A place to store your cryptocurrency holdings. Most exchanges offer a digital wallet. There are hot (online, software-based) and cold/hardware (offline, usually on a device) wallets.
That’s all for today. Tune in next week for some more advanced crypto lingo and in no time you’ll be able to understand the Blockchain Ecosystem better.
To sovereignty and serenity,