If you are interested and reading this article then you might be familiar with the terms Bitcoin or cryptocurrency. However in order to get the full idea which will never be easy since it’s a full time developed system, there are some terms need to be digested and be a part of your knowledge of the cryptocurrency terms. No matter how intimidating it is to get into a whole new world some basic terms explained below will help you to get a holistic view once you stumble upon an article on cryptocurrencies, especially on bitcoin.
Most Important Cryptocurrency Terms
1- What is Blockchain
“Blockchain Revelution” (2016) author Alex Topscott makes the simplest explanation on what it is. He defines it as an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but value of everything virtually.
2- What is a Block
Blocks are basically files related to bitcoin network permanently. A block records transactions. It can be defined as a page of a ledger.
3 – What is a Cryptocurrency Wallet
A wallet is the place where the bitcoins are stored. Of course it’s not something like a leather one you carry in your back pocket but on your computer, or on a software or on a piece of paper where private and public keys are on as QR-codes. You can find detailed explanations, advantages and disadvantages of various wallets in our blog.
4 – What are Altcoins
It is a compound word combining the words coin and alternative. So basically it’s alternatives of bitcoin. There are other cryptocurrencies such as Ethereum, Litecoin, Dogecoin etc. The term has been invented after the success of bitcoin.
5 – What is a Bitcoin Address
If bitcoin was not an electronical currency but a traditional one, the address would be your bank account number. In cyrptocurrency terms the numbers assigned for you to recieve bitcoins are called address.
6 – Cryptocurrency Exchange
An online system that allows trading one cryptocurrency with other assets.
7 – How Cryptocurrency Mining Works
The verb mining is simply the process to create bitcoins by using computer power. Mining is how transactions are added on the blockchain. Miners are rewarded for the each block they add on.
8 – What is Hash Power
The rate of a hardware to crack cryptographic codes to mine a coin on the network.
9 – What is an Hard Fork
Fork is the name given to a protocol or s software update. Forks can be either backward on non-backward compatible. Hard fork is not backward compatible which means all users are required to upgrade to the latest version of the protocol. Bitcoin protocol has undergone a hard fork like Bitcoin cash.
10 – HODL HODL HODL
It’s an acronym that stands for Hold On for Dear Life. A slang meaning holding on to your coins and rather than selling them.
11 – Bearish Market
Is the term used when the market is going down.
12 – Bullish Market
Is the term used when the price trend is upward.
13 – What is a Private Key
Your personal must be secret password. It enables you to unlock your wallet.
14 – What is a Public Key
It’s the account number and your address embodied with 27 to 34 alphanumerical characters. To receive bitcoins from a friend this is the key you need to send.
15 – Fiat
Fiat money is legalized money by the governments. This is an distinguishing terms between crptocurrency and traditional currency. Fiat is the money that cannot be converted into coin or specie of equivalent value. The value is derived from the relationship between demand and supply rather than the material from which the currency is made.
16 – FOMO
Fear Of Missing Out. An emotional response against buying coins at their all time-high rates. Not to react to FOMO is challenging.
17 – FUD
Fear, doubt and uncertainty. When the price of a coin is high, people who want to lower it, they try to invoke a fear based emotion. It can be smart to react to FUD since it basically couses economic depressions.
18 – What is an ICO
An initial coin offering. The process of creating a new token and to raise money for it. Picture a company willing to create its own cryptocurrency. Before it’s launched the produce some and sell to investors. After the required demand is fulfilled the project can be launched.
19 – What is PND
Pump and dumb. To create an intense demand on a coin among people just to sell it on a higher prize when planned target is accomplished.
20 – Bitcoin Whales
They are investors with many coins. They make the market move or stop. If you come across a 300 BTC sell wall this probably is a whale.
21 – What is KYC
Acronym for ‘Know Your customers’. To use bitcoin exchange you will be required to complete a KYC verification procedure which will include confirming your phone number and providing personal ID.
22 – Node
A node is a software or a computer that hosts the blockchain. Blockchain is not stored in one place so every running node is important to verify the ledger.
23 – Satoshis (Sats)
The smallest fraction of bitcoin. It’s the one hundred millionth of a bitcoin.
24 – Satoshi Nakamato
Probably the most frequent term you’ll see when you enter in bitcoin world in the early stages. And also the one you’ll never get a clear definition of who he/she is. Also may be ‘them’. Satoshi Nakamato is a persona who created BTC and wants to stay anonymous.
25 – What is PoW and How it Works
‘Proof of work’ system. As mentioned before to mine a coin is costly in terms of hash power, time and energy. Any miner who calculate the block equations is traded with rewards.
26 – Whitepaper
Before launching a new cryptocurrency a whitepaper is prepared in cryptos by a party which includes technological and financial details in a language where every beginner can understand.
27 – What is PoS and How it Works
‘Proof of Stake’ system. It is where coin-holders mine.
28 – Decentralized
The digital ledger, aka blockchain, is not on a particular holder but on every single device connected to the network. The whole report of all transactions is not in a central location but everywhere.
29 – What is Distributed Ledger
Is exactly blockchain feature. The copy of the ledger can be found on any computer not only one.
30 – What is a Token
The term token is generally used to refer to a cryptographic string of numbers and letters just like coins. Basically it’s a synonym for ‘a cryptocurrency’. But the difference is that they contain no real data but relates back to real data. Ethereum tokens are a good example of this.