Many newcomers are faced with the question: "How do I learn about Crypto?" As with many other niche or specialist fields of interest, the world of cryptocurrency has spawned numerous slang terms and colloquialisms. It's also highly technical! Many terms are not limited to the crypto and blockchain space, but the following glossary will give ‘Newbies’ a pretty comprehensive overview and definition of many of the words, phrases and concepts in ‘Crypto-Speak’. This is a simple guide to cryptocurrency terms and concepts. Hope this helps…
Term | Definition |
|---|---|
Address | |
Airdrop | An airdrop is a distribution of a cryptocurrency token or coin, often free, to numerous wallet addresses. Airdrops are generally initiated by the creators of a cryptocurrency as a way of gaining attention and new followers, resulting in a larger user-base and to encourage wider use, building the popularity of the coin or token. Most airdrop campaigns are run by offering coins or tokens in exchange for sharing news, referring friends or downloading an app. |
Altcoin | Stands for “alternative coins” and refers to all those cryptocurrencies that have followed Bitcoin - the original cryptocurrency - that captured the world’s imagination. All subsequent coins have been termed “altcoins”. |
ATH | “All Time High”, i.e. the highest historical price of a specific coin or asset. |
AML | “Anti Money Laundering”. A term describing international standards and regulations followed to prevent criminal organisations or individuals laundering money through financial products into cash. Usually referred to as part of the “KYC” (Know Your Customer) checks when opening accounts at banks or exchanges. |
Bag Holder | A term referring to an investor who bought into a crypto asset at a peak and missed the opportunity to sell, leaving them with worthless coins. |
Bitcoin | Bitcoin is the original digital cryptocurrency, created in January 2009. It follows the ideas set out in a whitepaper published by the mysterious and pseudonymous developer Satoshi Nakamoto, whose true identity has never been revealed or verified. Unlike fiat currency, Bitcoin is created, distributed, traded and stored with the use of a decentralised ledger system known as the blockchain. The concept behind Bitcoin enabled a digital currency in which a record of transactions is maintained on the blockchain and new units of currency are generated by the computational solution of mathematical problems. There are no physical Bitcoins, only balances kept on a public ledger in the cloud. Bitcoin is operated by a decentralised authority, independent of any central bank, unlike government-issued currencies. Bitcoin is the world's largest cryptocurrency by market cap. Bitcoin's history as a store of value has been turbulent – its price skyrocketed to $20,000 per coin in 2017 - but has since dropped back significantly. As the first cryptocurrency to gain widespread popularity and success, Bitcoin has inspired a plethora of offshoots and new coins. |
Block | Blocks are the data stored on the blockchain and consist of one or more transactions prefaced by a block header and verified by Proof of Work. |
Blockchain | |
Circulating Supply | The number of coins believed to be circulating in the market at any time and in public ownership. |
Cold Storage | Offline storage of cryptocurrencies – either by individual investors or institutional custodians. An important safety measure to look for in your choice of wallet and exchange. Typically involves hardware non-custodial wallets, USBs, offline computers or paper wallets. |
Confirmation | Confirmation of a transaction is achieved when it is included in a block on the blockchain. This equates to one confirmation. Each additional block represents another confirmation. |
Consensus | Consensus is achieved when all participants of a network agree on the order and content of blocks and those transactions contained in the blocks. |
Cryptocurrency | The term now widely used to describe digital currencies, coins and tokens. Cryptocurrency exists only in electronic form and are a medium of exchange which encompass strong cryptography to secure financial transactions, control the issuance of additional units and verify the transfer of ownership. Cryptocurrencies operate independently of any government controlled central bank. |
Cypherpunk | A term describing a zealot or activist who advocates the mass adoption of technological, cryptographic and privacy-enhancing solutions to enact social and political progress. Cypherpunks favour the use of encryption when accessing a computer network in order to ensure privacy, especially from government authorities. |
Dead Cat Bounce | A term describing a temporary recovery in asset prices after a substantial fall, often caused by investors buying back in order to cover their positions. |
Decentralisation | Decentralisation, in crypto terms, describes the system in which the activities of an organisation, particularly those regarding governance and control, are distributed across a network of nodes and delegated away from a central, authoritative location or group. |
Decentralised Applications (dApps) | A decentralised application (dApp) is a computer application that runs on a distributed computing system. dApps have been implemented by distributed ledger technologies such as the Ethereum Blockchain, where dApps are often referred to as Smart Contracts. |
Decentralised Autonomous Organisations (DAO) | A Decentralised Autonomous Organisation (DAO) is an organisation governed by rules encoded as a computer program that is transparent, rather than being controlled by a central governing body. DAOs involve a set of people interacting with each other according to a self-enforcing open-source protocol. Keeping the network safe and performing other network tasks is rewarded with the native tokens of the network. In crypto DAOs, blockchains and smart contracts align the interests of all stakeholders by the consensus rules tied to the native token. Individual behaviour is incentivised with a token to contribute collectively to a common goal. Members of a DAO are not bound together by a legal entity, nor have they entered into any formal legal contracts. As opposed to traditional companies and hierarchies, with many layers of management and bureaucracy, DAOs provide an operating system for people and institutions that neither know nor trust each other, who are located across a distributed network in different geographies and who speak different languages. All agreements are in the form of open-source code that is self-enforced by majority consensus of all network participants. |
Decryption | The process of transforming encrypted, i.e. unreadable data, back into its unencrypted and readable form. |
Delegated Proof of Stake (dPOS) | A consensus mechanism where users can vote for delegates producing blocks on the blockchain, with votes proportional to stakes. dPOS seeks to increase the efficiency and environmental friendliness of blockchain consensus protocols. |
Distributed Consensus | A collective agreement by multiple computers in a network, enabling the network to operate in a decentralised manner without central control or authority. |
Distributed Ledger | Distributed ledgers are ledgers in which data is stored across a network of decentralised nodes. A distributed ledger does not always or necessarily involve a cryptocurrency and may be permissioned and private. |
Distributed Network | In a distributed network, processing power and data are spread over multiple nodes without a centralised data centre or authority. |
Dolphin | Crypto slang name for a person who owns a moderate quantity of cryptocurrency. A Dolphin is some way beneath a Whale but has graduated from being a Minnow. |
Dump | Selling off all your coins. |
ERC-20 | ERC-20 tokens are tokens designed and used solely on the Ethereum platform. They follow a list of standards so that they can be shared, exchanged for other tokens or transferred to a crypto wallet. After a token has been created, it can be traded, spent or given to someone else. |
Ether | In simple terms, Ether is the cryptocurrency of the Ethereum network. Ether is a digital bearer asset and does not require a third party to process a payment. It also acts as fuel for the decentralised apps within the Ethereum network. |
Ethereum | Ethereum is the second largest cryptocurrency by market capitalisation, but it’s important to understand that it is so much more than that. Launched in 2015 by Vitalik Buterin, Ethereum is an open-source, blockchain-based, decentralised software platform used for its own cryptocurrency, Ether. Ethereum enables smart contracts and distributed applications to be built and run without any downtime, fraud, control or interference from any third party. As a decentralised system, Ethereum is fully autonomous and not controlled by anyone. It has no central point of failure, as it is being run from thousands of volunteers’ computers around the world. This means it can never go offline. Although constantly compared to Bitcoin, the two are completely different projects with entirely different goals. Bitcoin is the original cryptocurrency and a system of digital money transfer built on a distributed public ledger technology called the Blockchain. Ethereum took this Blockchain technology and substantially expanded its capabilities to offer the attributes described above. |
Exchange | Cryptocurrency exchanges are commercial platforms that offer customers the opportunity to trade cryptocurrencies for both fiat or other crypto currencies. |
FIAT | Essentially, FIAT money is the money we all know today. Fiat currency (Dollars, Pounds, Euros, etc.) is legal tender backed by a government and with its own central banking system. Fiat can take the form of physical cash or it can be transacted electronically, for example via payment schemes and bank transfers. |
FOMO | A slang term and acronym that stands for “fear of missing out”. In the context of investing, FOMO refers to the anxiety associated with missing out on a potentially profitable investment opportunity and subsequent regret. As crypto trading is still very much driven by emotions rather than fundamentals and valuations, FOMO is a huge factor to consider when trading crypto. |
FUD | More crypto slang. Stands for “fear, uncertainty and doubt”. Often associated with the cryptocurrency market in general by nay-sayers spreading negative, misleading or false information. |
Gas | |
Gas Limit | |
Gas Price | The price you are willing to pay for a transaction on the Ethereum platform. Setting a higher gas price incentivises miners to prioritise your transaction over others. |
Genesis Block | The very first block in a blockchain. Sometimes known as Block 0. Famously in the case of Bitcoin, the Genesis Block was created on or after 3rd January 2009. |
Halving | Sometimes referred to as the Halvening, the halving is the moment when Bitcoin's block subsidy gets cut in half. The halving of Bitcoin's block subsidy occurs every 210,000 blocks (roughly every 4 years) and is a key feature of Bitcoin. |
Hard Cap | The maximum amount that an ICO will raise. If the hard cap is reached, no more funds will be collected. |
Hard Fork | In a hard fork, a single cryptocurrency permanently splits into two, resulting in one blockchain that follows the old protocol and the other that follows the newest protocol. A hard fork is a protocol change that validates all previously invalid transactions and invalidates all previously valid transactions. This requires all nodes and users to upgrade to the latest version of the forked protocol software. Examples of hard forks include: Bitcoin and Bitcoin Cash; Ethereum and Ethereum Classic. |
Hash Rate | Hash rate is the unit of measurement for the amount of computing power being consumed by a network to continuously operate. The hash rate measures mining performance - the speed at which a miner solves the Bitcoin code. |
Hierarchical Deterministic Wallet (HD Wallet) | A wallet that uses Hierarchical Deterministic (HD) protocol to support the generation of crypto wallets from a single master seed using 12 mnemonic phrases. |
HODL | Crypto slang term for “Hold”. Rumoured to have emanated from a typo made on a Bitcoin forum and now affectionately stands for “Hold on for Dear Life” – something you’ll need to get used to if you invest in crypto! A crypto investor who buys and holds is termed a “hodler” of the coin. Hodling is therefore a passive investment strategy where you hold a coin for a long period of time, regardless of any changes in the price or markets. |
Hosted Wallet | |
Hot Storage | Online storage of private keys allowing for quicker access to cryptocurrencies. |
ICO | ICO is an acronym that stands for Initial Coin Offering, which is how funds are raised for a new cryptocurrency offering. It's similar to an IPO (Initial Public Offering) which raises funds by issuing shares onto the stock market. ICOs are essentially a type of crowdfunding, using cryptocurrencies as a means of raising capital for early-stage companies. Many ICOs have come under fire after a number of scams and market manipulations. |
Initial Bounty Offering (IBO) | An Initial Bounty Offering or IBO is the limited-time process by which a new cryptocurrency is made public and distributed to the people who invested their time and skills into the new cryptocurrency. Unlike an Initial Coin Offering where you can buy coins, an IBO requires commitment of skills or value added to the project by the recipient. |
Initial Token Offering (ITO) | Just like an ICO, but based on the offering of tokens as opposed to coins. |
KYC | “Know Your Customer”. A term describing international standards and regulations followed to onboard new customers when opening accounts at banks or exchanges. The process encompasses a financial institution’s obligations to verify the identity of a customer in line with global anti-money laundering laws. Usually referred to in relation to “ID&V” (Identification and Verification) checks. |
Lambo | Crypto slang and short for Lamborghini – the sports supercar that people often aspire to in their excitement over getting rich quick from cryptocurrencies. This term is used in cryptocurrency communities when asking when prices might rise again by saying “When Lambo?” An alternative of “When moon?” |
Libra | Facebook’s cryptocurrency project. Facebook says Libra is a “global currency and financial infrastructure”. In other words, it is a digital asset built by Facebook and powered by a new Facebook-created version of blockchain, the encrypted technology used by Bitcoin and other cryptocurrencies. In Facebook’s vision, Libra will become a global currency for billions of people, especially those in developing countries who have no access to banks or financial services. Libra will be governed by the Libra Association, a Swiss group including 28 members, including: Facebook subsidiary Calibra, Uber, PayPal, Mastercard, Visa, Spotify, and many other household names in technology and finance. |
Lightning Network | The Lightning Network is a second layer payment protocol that operates on top of a blockchain. Theoretically it will enable fast, scalable transactions between and across participating nodes, and has been touted as a solution to Bitcoin’s scalability issues. |
Liquidity | In economic or investment terms, a market’s liquidity is defined by the speed and ease one can quickly purchase or sell an asset without causing a drastic change in the asset's price. Simply put, how easily a cryptocurrency can be bought and sold without impacting the overall price of the coin/token. |
Litecoin | Launched in the year 2011, Litecoin is an alternative cryptocurrency based on the model of Bitcoin. Litecoin was created by an MIT graduate and former Google engineer named Charlie Lee. Litecoin is based on an open source global payment network and is not controlled by any central authority. Litecoin differs from Bitcoin in features such as faster block generation rate and the use of script as a proof of work scheme. |
Mainnet | A mainnet is an independent blockchain running its own network with its own technology and protocol. It is a live blockchain where its native cryptocurrencies or tokens are in use, as opposed to a test net or projects running on top of other widely used networks such as Ethereum. |
Market Cap | Market capitalisation is a well-known metric for traditional securities, such as shares in listed companies. Market cap is defined in crypto as the circulating supply of coins/tokens, multiplied by the current price. |
Mineable | Some cryptocurrencies have a system by which miners are rewarded with newly minted coins for creating blocks through contributing their hash power. Cryptocurrencies with this ability to generate new coins through the process of confirmation are said to be mineable. It is worth noting that some cryptocurrencies are not mineable. These include coins/tokens that are generated only through other mechanisms, such as annual inflation through staking. |
Miner | Miners are contributors to a blockchain by taking part in the process of confirmation. Bitcoin miners receive Bitcoin as a reward for completing "blocks" of verified transactions which are added to the blockchain. These days, miners tend to be professional miners or organisations with large-scale operations, rather than individuals who set up mining rigs at home. |
Mining | A process where blocks are added to a blockchain when verifying transactions. It is also the process through which new Bitcoins or some altcoins are created. Mining rewards are paid to the miner who discovers a solution to a complex mathematical hashing problem first, and the probability that a participant will be the one to discover the solution is related to the portion of the total mining power on the network. |
Mining Pool | A pool is established when multiple miners combine their computing power to gain economies of scale and competitiveness in finding the next block on a blockchain. Rewards are split according to different agreements, depending on the mining pool. |
Minnow | A minnow is someone who holds insignificant amounts of cryptocurrencies – a ‘dabbler’. |
Moon | Also employed as a verb (mooning), the term ‘Moon’ is used to describe a cryptocurrency that is following a strong upward price trajectory. Another common use of the expression is in the phrase “to the moon,” which refers to a strong conviction that a certain coin is going to rise significantly in price. Crypto communities often use the slang expression “When moon?” to question when a cryptocurrency will experience such a phenomenon. You may hear the alternative saying “When Lambo?” |
Mt. Gox | Mt. Gox was a Bitcoin exchange based in Tokyo, Japan and launched in July 2010. By 2013 it was handling over 70% of all Bitcoin transactions worldwide as the world's largest Bitcoin intermediary and exchange. In February 2014, Mt. Gox suspended trading, closed its website and filed for bankruptcy. Mt. Gox announced that approximately 850,000 Bitcoins belonging to customers and the company had gone missing - an amount valued at more than $450 million at the time. It was soon revealed that Mt. Gox had been hacked and the missing Bitcoins had been stolen from Mt. Gox’s hot wallet. |
Network | A network in the crypto space refers to all nodes in the operation of a blockchain at any given moment in time. |
Newbie | An expression in crypto slang to describe those who are new to the crypto scene, a.k.a. crypto beginners. |
No-coiner | A ‘No-Coiner’ is someone who has no cryptocurrency in their investment portfolio and sceptically believes that cryptocurrency as an asset class will fail. |
Node | Simply put, a network node is a point where a message can be created, received or transmitted. In the context of blockchains, which are designed as distributed systems, a network of computer nodes enables Bitcoin to be used as a decentralised peer-to-peer (P2P) digital currency. |
Nonce | When a transaction is hashed by a miner, an arbitrary number is generated for one time only use. This is called a nonce. |
On-Ramp | An ‘On-Ramp’ is crypto exchange that allows for the deposit of fiat currency (cash) into the ecosystem and enables the conversion of those funds into cryptocurrency. These platforms are referred to as ‘on-ramps’ as they allow you to acquire cryptocurrency and enable your participation in the crypto ecosystem. We thought it was a suitable name for this website! |
Pairs | A currency pair is a term to describe two currencies coupled for trading on a foreign exchange (FX) marketplace. Both currencies will have exchange rates on which the trade pricing is based. All trading within the forex market, whether selling, buying or trading, takes place through currency pairs. On crypto exchanges, coins are offered and traded as fiat/crypto (e.g. USD/BTC) or crypto/crypto (BTC/ETH) pairs. |
Platform | A cryptocurrency exchange on which you may trade coins and tokens. |
Pre-mine | The pre-mine describes the phase when some or all of a coin’s initial supply is generated during or before the public launch, as opposed to being generated over time through mining or inflation. Pre-mines can be used for legitimate purposes, such as crowdfunding or marketing. |
Pre-sale | The sale of a coin or token that takes place before an ICO/ITO is made available to the general public for funding. |
Privacy Coin | A privacy coin is a cryptocurrency that hides data about its users. At a minimum, privacy coins hide the identity of participants in a transaction. They can also hide the amount of cryptocurrency traded and held in wallets. Bitcoin is not a true privacy coin. Bitcoin users can be identified by their public address and programs exist which can link public addresses to identities. Bitcoin transactions and wallets are publicly visible data. However there are numerous true privacy coins, such as Zcash, Dash and Monero to name 3 of the most popular ones. |
Private Key | A private key is a small piece of code generated via asymmetric-key encryption process. When paired with a public key, it is used to set off algorithms for text encryption and decryption to transform a message to a readable format. This is a crucial feature to understand in the world of crypto. Your private key is a sophisticated form of cryptography that allows you to access your cryptocurrency. A private key is an integral aspect of Bitcoin and altcoins, as its security feature helps to protect a user from theft and unauthorised access to funds. |
Proof of Authority | A blockchain consensus mechanism that delivers comparatively fast transactions using identity as a stake. The PoA consensus algorithm leverages the value of identities, which means that block validators are not staking coins but their own reputation instead. Therefore, PoA blockchains are secured by the validating nodes that are arbitrarily selected as trustworthy entities. |
Proof of Stake | The Proof of Stake consensus algorithm was introduced in 2011 to solve issues with the most popular algorithm in use, Proof of Work. While they both share the same goal of reaching consensus in the blockchain, the process to reach the goal is quite different. Proof Of Stake uses a pseudo-random election process to select a node to be the validator of the next block, based on a combination of factors. Unlike Proof of Work, within which more and more cryptocurrency is created as rewards for miners, the Proof of Stake system usually uses transaction fees as a reward. Users who want to participate in the forging process are required to lock a certain amount of coins into the network as their stake. The size of the stake determines the chances for a node to be selected as the next validator to forge the next block; the bigger the stake, the bigger the chances. In order for the process not to favour only the wealthiest nodes in the network, more unique methods are added into the selection process. The two most commonly used methods are ‘Randomized Block Selection’ and ‘Coin Age Selection’. |
Proof of Work | Proof of Work is a key concept to understand when learning about crypto and sits at the heart of the Bitcoin system. PoW is a blockchain consensus mechanism which involves solving computationally intensive mathematical puzzles to validate transactions and create new blocks. In a PoW blockchain, miners compete against each other to complete transactions on the network and get rewarded. Mining is a competitive process and a miner will generate acceptable proof of work approximately every ten minutes. Miners often pool together to increase their chances of mining blocks, which generates transaction fees and, for a limited time, a reward of newly created Bitcoins. Proof of work makes it extremely difficult to alter any aspect of the blockchain, as an alteration would require re-mining all subsequent blocks. Critically it makes it extremely difficult for a user or pool of users to monopolise the network's computing power, since the machinery and power required to complete the hash functions are prohibitively expensive. Other Bitcoin-based cryptocurrencies, such as Litecoin, operate the Proof of Work system. |
Protocol | The set of rules that define interactions on a network, usually involving consensus, transaction validation and network participation on a blockchain. |
Pump & Dump | If you’ve seen the movie ‘Wolf of Wall Street’, you’ll be familiar with the concept of Pump & Dump - a form of securities fraud involving the artificial inflation of the price of an asset. This can be achieved by promoting false and misleading positive statements in order to ramp up the price of a stock, before selling out of your position at a peak. Sadly the crypto markets have been susceptible to this tactic in recent years, with a recurring cycle of some altcoins experiencing a spike in price, followed by a huge crash. Such movements are often attributed to low volume and liquidity, hence the ‘pump.’ Traders who pump an altcoin by buying huge volumes, have been known to instil FOMO in naïve investors before dumping (selling) their coins at a higher price. See the definition of ‘Shitcoins’. |
QR Code | A widely used machine-readable label that shows information encoded into a graphical black-and-white pattern. In the crypto space, QR codes are often used to share wallet addresses easily. |
REKT | A crypto slang expression for “wrecked”. Describes a bad loss in a trade. |
Satoshi | |
Satoshi Nakamoto | The pseudonymous inventor of Bitcoin. Satoshi Nakamoto is the pseudonym of either the person or group of people who developed Bitcoin, authored its white paper and deployed Bitcoin’s original reference implementation. Satoshi published a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” in October 2008 and released the first software that launched the Bitcoin network in January 2009. The question of Satoshi Nakamoto’s identity has still not been answered and has generated many different theories and speculations. Satoshi Nakamoto didn’t disclose any private information and stopped working on the Bitcoin project in 2011, subsequently disappearing from public life. |
Segregated Witness (SegWit) | A Bitcoin Improvement Proposal (BIP) that aimed to fix transaction malleability on Bitcoin. Segregated Witness, or SegWit, was initially proposed as a partial solution to the Bitcoin scaling issue. It is an amendment to the Bitcoin protocol (a soft fork) and was activated in 2017. SegWit changes transaction format within blocks, thereby reducing transaction size and increasing the number of transactions that can be included in each block. SegWit splits each transaction into two parts. Sender and recipient data are stored separately to sensitive data, such as scripts and signatures, which are moved to the new ‘Witness’ structure. This witness structure is counted as only a quarter of its actual size when determining its contribution to a block, enabling more transactions to fit into each block. SegWit achieves two enhancements: firstly, an attack class called malleability attacks is mitigated and secondly, due to the reduced block size, the number of transactions recorded in a block is increased. |
Shilling | Shilling is a crypto expression describing the act of unsolicited endorsement of a cryptocurrency in public. Investors who take a position in a coin have an interest in ‘shilling’ the coin, in the hope they can ignite wider public interest in that particular cryptocurrency. You may find this taking place when backers are enthusiastically promoting an ICO project. |
Shitcoins | Shitcoin is a pejorative term used to describe an altcoin that has become worthless. A coin’s value may disappear because interest failed to materialise or because the price was based on speculation. Sadly there have been numerous occasions when an altcoin itself was not created in good faith, leading to investors being ripped off. Hence the term ‘Shitcoin’. |
Silk Road | Silk Road was a digital black market platform that became popular for hosting money laundering activities, illegal drug transactions and many other nefarious offerings. Transactions on Silk Road were conducted using Bitcoin and as a result, became closely linked with Bitcoin’s early reputation, leading many observers to associate the two together. Silk Road, regarded as the first darknet market, was launched in 2011 and shut down by the FBI in 2013. It was founded by Ross William Ulbricht, who is now serving a life sentence in prison for his role in Silk Road. |
Smart Contract | A smart contract is a computer program that defines and enforces a set of conditions. Once a smart contract is deployed, its terms are near impossible to undo or amend, so every party to the contract can be assured they will get what they wanted. Businesses have started to embrace smart contracts because they offer greater protection, whilst providing customers peace of mind. A smart contract is self-executing, with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralised blockchain network. The code controls the execution, whilst transactions are trackable and irreversible. Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system or external enforcement mechanism. While blockchain technology has come to be thought of primarily as the foundation for Bitcoin, it has evolved far beyond underpinning the original virtual currency and smart contracts are a primary example of this. The best known platform for smart contracts is Ethereum. Smart contracts on the Ethereum network operate in the following manner. One party expects a service from its counterparty and transfers a designated asset to them. As the smart contract runs, the service is rendered and the transaction is validated on the blockchain. If the smart contract’s conditions are met, the receiving party gets to keep the asset. Otherwise, it is refunded to the originating party. |
Soft Cap | The minimum amount that an initial coin offering (ICO) seeks to raise. In some cases, if an ICO is unable to raise the soft cap amount, it may be pulled. |
Stable Coin | A ‘stablecoin’ is a relatively new class of cryptocurrency that attempts to maintain price stability. Stablecoins are backed by a reserve asset or pool of assets. Stablecoins have gained traction as they attempt to offer the instant processing, security and privacy associated with payments in cryptocurrencies, and the volatility-free stable valuations of fiat currencies. Stablecoins may be pegged to a currency like the U.S. Dollar or to a commodity's price such as gold. Stablecoins achieve price stability via collateralisation or through algorithmic mechanisms of buying and selling the reference asset or its derivatives. Some investors use such a cryptocurrency with extremely low volatility as a means of portfolio diversification. |
Staking | The activity of ‘staking’ supports the Proof of Stake consensus mechanism. All blockchains have one thing in common: the need to validate transactions. Bitcoin does this via the mining process in a Proof of Work system. Proof of Stake is an alternative form of validation, or what we often refer to as the consensus mechanism. Proof of Stake (PoS) is a consensus mechanism based on staking coins, where currency holders have a degree of decision power on the network. By staking coins, you gain the ability to vote and generate a return on your stake. In short, staking crypto is a little like receiving interest on a deposit. Staking is the process of holding funds in a cryptocurrency wallet to support the operations of a Proof of Stake blockchain network. Staking is a way to maximise your holdings in staking coins that would otherwise just be sitting in a wallet or trading account. By staking your coins, you can earn staking rewards to grow your cryptocurrency holdings. Your return can be increased further by compounding of staking rewards. |
Symbol | The ticker symbol of a cryptocurrency. For example, Bitcoin’s symbol is BTC. |
Testnet | An alternative blockchain used by developers for testing, a testnet consists of a version of identical software to that used by a cryptocurrency. Testnets are built to experiment with new ideas without disturbing or breaking the main cryptocurrency network. |
Token | Crypto tokens are a type of cryptocurrency that represent an asset with a specific use on its native blockchain. Tokens are designed with utility in mind, providing access to and use of a larger crypto-economic system. Tokens do not generally offer a store of value on their own, but are designed to function with the software developed alongside it. |
Tokenise | The process by which real-world assets are turned into something of digital value called a token. |
Total Supply | The total number of coins in existence at this point in time for a certain cryptocurrency, minus any coins that have been verifiably burned. |
Trustless | A property of the blockchain, where no participant needs to trust any other participant for transactions to be enforced as intended. |
Volatility | Volatility is a statistical measure of the dispersion of returns for a given security or market index. Generally we consider volatility to be correlated with risk. If you’re going to invest in crypto, get used to volatility! That’s why we HODL! |
Wallet | A cryptocurrency wallet is a secure digital wallet used to store, send and receive digital currency. To hold cryptocurrency, you need a wallet. Wallets are divided into two categories: hosted wallets and cold wallets. |
Whale | The term ‘whale’ is mainly used to describe the high rollers in the crypto space. Bitcoin whales are the biggest players and include Hedge Funds, ETFs and Bitcoin investment funds. In the case of altcoins, a whale is a big player who has a substantial amount of capital and the ability to move the market for smaller altcoins. |
White Paper | The crypto equivalent of an investment prospectus and business plan. A document prepared by an ICO project team to interest investors with its vision, cryptocurrency use case and crypto-economic model. A white paper should lay out all relevant technical information and a roadmap for how the project plans to grow and succeed. |
51% Attack | A 51% attack is a potential attack on a blockchain network, where a single entity or organisation is able to control the majority of the hash rate, potentially causing network disruption. In such a scenario, the attacker would have enough mining power to intentionally exclude or modify the ordering of transactions, could interrupt the recording of new blocks by preventing other miners from completing blocks and confirming new transactions. They could also reverse transactions they made while being in control - leading to a double-spending problem. Since a blockchain is maintained by a distributed network of nodes, participants cooperate in reaching consensus. This underpins the robust security of the blockchain. The bigger the network, the stronger the protection against attacks and data corruption. A 51% attack on Bitcoin is highly improbable due to the magnitude of the network. Once a blockchain grows large enough, the likelihood of a single group obtaining enough computing power to overwhelm all the other participants rapidly drops to extremely low levels. |
Going down the Rabbit Hole | You’ve reached the end of a very long page. Well done! I fear you may need this final definition to help explain where you are now - or are going! ‘Going down the Rabbit Hole’ is a term that is commonly used in crypto and the world of researching on the internet. It describes the act of journeying into a bizarre or disorienting environment that is difficult to remove oneself from; entering into a situation that is particularly strange, problematic, difficult, complex or chaotic, especially one that becomes increasingly so as it develops or unfolds: CRYPTO! The idiom down the rabbit hole is derived from the children’s book Alice’s Adventures in Wonderland, written by Lewis Carrol in 1865. Welcome to a very mad tea party! (Suggested soundtrack to your studies: Jefferson Airplane, White Rabbit) |
DeFi | What is DeFi? DeFi applications are highly sophisticated and automated in functionality - made possible on smart contract blockchains, such as Ethereum. |