The world of cryptocurrency is vast. Like any other sector, it comes with a set of unique terms that would confuse anybody who is looking to learn about this emerging field. In this guide, you will find commonly used crypto words explained for easy understanding.
Cryptocurrency
Cryptocurrency is a term used to describe a class of currencies that were formed through blockchain technology. They’re transferred using P2P systems and are connected to wallet systems identifiable only by a unique hash key. This adds a layer of anonymity to cryptocurrency and its transfers.
Cryptography
Cryptography is a key technology that was instrumental in creating the blockchain system. Crypto means “secret” in Greek, and cryptography is the craft of sending and receiving encrypted messages between two parties. Cryptography was used in World Wars 1 and 2 by the Germans to relay confidential information back and forth. Public keys, private keys, and hash functions used in cryptocurrency all arise from this concept.
Tokens
Tokens are another term used to describe specific cryptocurrencies. Cryptocurrencies and tokens are interchangeably used to describe the same thing. The difference is that the term token allows for divisibility and counting when measuring this asset class.
Blockchain
Blockchain is the underlying system upon which cryptocurrency is created. It is a ledger system that records transaction history for the cryptocurrencies it hosts. It is known for being completely transparent, allowing anyone to peek and see previous transaction history.
Bitcoin
The very first cryptocurrency to be introduced to the market. It is the largest crypto by market capitalization and was created by a pseudonymous individual named Satoshi Nakomoto. Bitcoin can also be defined as the mother blockchain that inspired the rest of the blockchains you see today.
Satoshi Nakomoto
Satoshi is a person or a group of people credited with developing the first form of blockchain technology and Bitcoin as a currency along with it. It is a pseudonymous name that is applied to an identity that remains unknown still.
Altcoin
Altcoins are a blanket term for every cryptocurrency other than Bitcoin.
Altcoin Season
This term refers to the period when the Altcoin market is doing well in terms of price growth. It typically happens once every year.
Memecoin
Memecoins are cryptos that are based on popular memes and cultural references. If you’ve heard of the popular Shiba Inu, PEPE, or the Gigachad, there’s a meme coin about it. While this class of crypto is known for not having any clear investment potential, they are still popular and bought by millions of people.
Hodling
Hodling is a term commonly used in crypto, and it means, quite literally, to hold your cryptocurrency.
DeFi
DeFi, or decentralized finance, is a term used to describe an alternative method of finance and transfers based on blockchain. It operates on its own and is not connected to major stock exchanges or the official banking system. While this term is becoming less apt due to the closing gap between the normal stock market and cryptocurrencies, DeFi still remains a popular word.
NFT
NFTs, or Non-Fungible Tokens, are an asset class within crypto. They are not interchangeable like typical cryptocurrencies and are used to create unique collectibles, artworks, and other forms of personalized digital valuables.
Bitcoin Halving
It is a critical event for the BTC currency. Block rewards are halved every 4 years during this time, reducing the incentives for BTC mining and lowering the supply of new currency. Typically, the price of BTC spikes following this event.
Proof-of-work
Proof-of-work is a verification system whereby a new block is created in the blockchain by expending a certain amount of effort in computational energy. Cryptocurrency miners use their heavy-powered engines to unlock these new blocks by attempting to solve complex algorithmic problems. The miner, if successful, receives a reward in the form of cryptocurrency. Bitcoin runs on the proof-of-work mechanism.
Proof-of-stake
Proof-of-stake is a less energy-intensive verification system when compared to proof-of-work. In this consensus mechanism, validators are selected according to the proportion of their token holdings instead of how much engine power they use. It is far more energy efficient as it does not rely on computational effort. Ethereum is a popular altcoin that uses proof-of-stake.
Staking
Staking is the process of locking your tokens within a blockchain network for a period of time. Blockchains typically give out a reward for this in the form of more tokens. Think of it as a bank deposit accruing interest, except it’s for crypto.
DAO
A DAO, or a decentralized autonomous system, is an organization that decides on governance issues relating to the blockchain.
DEX
DEX, or decentralized exchange, is a platform used to buy and sell cryptocurrencies. Crypto investors can take buy or sell positions based on their preferred cryptos, similar to a conventional stock exchange. DEXs are usually based online and have no physical presence.
Shitcoin
These coins sit at the bottom of the slush pile. They have no utility or clear purpose and may or may not net you returns.
