technology
Lexicon of Crypto Terms
Cryptocurrency has gained plenty of first-time investors in the previous year. In a recent survey hosted by CNBC, 65% of respondents claimed that they only started acquiring decentralized financial tokens in 2020. Forbes also reported that about 15% of adult Americans own cryptocurrencies, and more than half of them got into the asset class last year. This surge in demand just demonstrates how far cryptocurrencies have come since the first decentralized coin, Bitcoin (BTC), was released in 2009. Despite the recent boom in cryptocurrency trading and mining, would-be investors will find that they still have plenty of promising investment options if they start getting into the cryptocurrency scene today. Still, it’s important to get to know the terms that you’ll encounter as you start buying, selling, or mining cryptocurrency. Before you invest in an ASIC miner, open a Monero wallet, or start exchanging your fiat currency, get to know these frequently used crypto terms first.
Address
A unique identifier that serves as the virtual location where a cryptocurrency should be sent to.
Altcoin
A portmanteau of “alternative” and “coin”, altcoins refer to cryptocurrencies other than Bitcoin.
Application Specific Integrated Circuit (ASIC)
Electronic circuits that are specifically built for the single purpose of mining cryptocurrencies.
Authentication
The process of verifying that someone or something is exactly who or what they claim to be.
Blockchain
The digital ledger that contains all records of the transactions that use a particular cryptocurrency.
Bounty
The reward that users receive upon completing a task for a project or a given blockchain.
Censorship Resistance
The property of a cryptocurrency to resist an entity’s effort to alter transactions using the said coin.
Circulating Supply
The number of coins or tokens that are circulating the market and are available to the public.
Dead Coin
A cryptocurrency that has been abandoned, used in a scam, has no nodes, or that no longer exists.
Decentralized Finance
A financial network that operates independent of central financial intermediaries like banks, brokerages, or exchanges.
Encryption
The practice and study of techniques that secure and obscure information and communication.
Exchange
A platform that facilitates the exchange of cryptocurrencies and other types of assets, like cash.
Fiat
A currency with no intrinsic value and is not backed by physical goods, like paper bills.
Fork
A split in the blockchain network that happens when parties disagree on the network’s common rules and how the community should move forward. This often results in alternative chains.
Fungible
Goods or commodities are said to be fungible when they are indistinguishable and completely interchangeable with other individual units that belong to the same category of items.
Gas
The fee paid when making a transaction on a blockchain. Faster transactions command higher gas fees, while slower transactions have lower fees.
Hash
The output of a hashing algorithm, hashes have a unique, fixed-length string. The implementation of hash functions prevents fraudulent transactions, double spending, and password storage.
Initial Coin Offering (ICO)
Much like an Initial Public Offering (IPO), an ICO is a means of getting additional funding. Typically, anyone can participate in an ICO, as this activity is often done through crowdsourcing.
Ledger
This refers to an immutable record of financial transactions. Except for adding new transactions, this record cannot be changed or modified.
Market Capitalization
The total value of the cryptocurrency. This number is calculated by multiplying the share price with the number of outstanding shares.
Mining
The process of generating new tokens by solving cryptographic equations, which also adds transactional information to the blockchain.
Node
The most basic unit in a blockchain infrastructure that is capable of storing data. Basically, it is a computer that can connect to the cryptocurrency network and perform specific functions on it.
Non-Fungible Tokens (NFT)
A unique asset that is non-fungible or cannot be replaced with other units that are similar to it. Often in the form of digital artwork, NFTs are verified and stored using blockchain technology.
Open Source
Keeping records so that they remain transparent, public, and less likely to be tampered with.
Private Key
Also known as a secret key, this code is paired with a public key to decrypt the information that the said public key has hashed.
Proof-of-Work
A consensus mechanism for blockchains that makes use of solving cryptographic puzzles to validate transactions and to generate new cryptocurrency tokens.
Proof-of-Stake
A consensus mechanism that depends on the user’s number of coins or tokens to mine or validate transactions.
Public Key
A set of alphanumeric characters that turns plaintext into cipher text. It is paired with a private key to decrypt the information it has obscured.
Satoshi Nakamoto
The pseudonym used by the entity responsible for the creation of Bitcoin.
Timestamp
Identifies when a particular transaction occurred.
Token
A cryptocurrency unit that’s designed to be used. It gives crypto users access to larger crypto-based finance systems.
Total Supply
The total number of cryptocurrency units that currently exist, discounting those that have yet to be mined.
Trading Volume
The total amount of cryptocurrency that has been traded within the last 24 hours.
Wallet
The place where people store their cryptocurrencies.
Whitepaper
A document that details the technical aspects of a crypto project, detailing the currency’s concept, development, and possible trajectory. There are plenty of other words that would-be crypto investors have to take note of. However, this list should enable you to get a good grasp of the terms that you’ll encounter while learning about cryptocurrencies.
