This is an overview of terms used in the beautifull crypto ecosystem. If you come across a term which is unknown to you or you miss on this page, feel free to contact us.
Accumulating: investor’s cash contributions to invest in cryptocurrencies over a period of time in order to build a portfolio of desired value. Investors often set low buy orders hoping they get filled, in order to build their portfolio as cheap as possible.
Airdrop: cryptocurrencies or tokens that are given away free of charge before the token enters the market. The idea behind this is that these recipients will promote the coin in a natural way, because they obviously benefit from the fact that at the moment the coin comes to an exhibition, it has an acceptable value.
Altcoin: the abbreviation for alternative coin, or all blockchain projects and related currencies or tokens that exist alongside Bitcoin.
Arbitrage: the act of buying and selling on different exchanges to earn the difference in the spread. Arbitrage opportunities occur due to differences in exchange reputation, community coin preferences and ease of bank funding.
Take note that fees, limits and prices could change anytime when you are transferring your coins between exchanges, especially during volatile times.
ASIC: the abbreviation of an ‘application-specific integrated circuit’. It is a microchip that is specially designed and manufactured for a very specific purpose.
ATH: short form for “All-Time High”. Therefore it means the highest historical price of a specific coin.
Bag holder: a term to refer to a trader who bought in at a high and missed his opportunity to sell, leaving him with worthless coins.
Block: a group of transactions, chosen from the mempool (the list of all currently pending transactions) and recorded by a miner into the ever-growing record of blocks known as “the blockchain.”
For example; a new Bitcoin block is created on average every ten minutes. Other cryptocurrencies (alts) have a much faster transaction time. It often only takes a few seconds.
Blockchain: a specific database technology that leads to a distributed autonomous general ledger system. Transactions between parties are signed using cryptography (public / private keys). The purpose is that transactions or other orders can always be traced back to the person who initiated the transaction / assignment. After production, the transactions are broadcasted in a peer-to-peer network. One or more transactions are put into a ‘block’. This block is added to the blockchain. This ensures integrity (no adjustments afterwards are possible) and irrefutability (no one can claim that a transaction did not take place). A bock is added to the blockchain if consensus is reached by participants. This consensus can be achieved through the proof-of-work mechanism or, for example, through the proof-of-stake mechanism. Parties that contribute to reaching the consensus, for example by using computing power (PoW), are rewarded for this. In this way there is an incentive to validate. As soon as a block is added to the blockchain, every participant in the network takes it over because it is then seen as the longest and thus the most “true” version. In this way a distributed, non-changeable database of consecutive blocks is created. An intermediate block can not be modified without affecting all the blocks that come after them. There is no single central storage of data, but all parties involved have a copy.
Blockreward: the reward in cryptocurrency that a miner receives for the computing power he delivers to control nodes in the blockchain. Creating a new block with associated blockreward is the only valid way in which new cryptocurrencies can be released. The software behind most cryptocurrencies has been developed in such a way that the blockreward halves for a certain period each time, until the maximum supply is reached, which is often also determined in advance.
BTFD: “Buy The Fucking Dip” – When people are running around and selling because of fear, this is the time to buy.
Buy or sell wall: Relative large buy or sell orders at a fixed price. Large cryptocurrency holders, also known as whales, effectively manipulate cryptocurrency prices whenever they can. It is not in their best interest to let currencies break out above a certain level until they finished accumulating. A sell wall is often an artificial oppression mechanism to keep prices well below the maximum threshold so the whales can buy up a lot of cheaper coins. If you have the money to manipulate a market, it is only to be expected someone will try to do exactly that.
However, contrary to what some people believe, buy and sell walls are not native to one trader specifically. Once larger buy and sell orders appear, it is only normal others will place their respective readers at that same price point.
Circulating supply: the total supply that has been distributed among token holders. Usually the part of the supple that the developers team holds is excluded here.
The price of a coin has no meaning on its own. However, the price of a coin, when multiplied by the circulating supply, gives the coin’s market cap.
Consortium / partially decentralized / hybrid blockchain: a blockchain in which a limited number of parties can reach a consensus.
CPU-mining & GPU-mining: miners use different types of hardware for the mining process. The early mining adopters used their home-garden-and-kitchen CPUs to mine. The arrival of GPU mining made CPU mining – due to the increased hashrate – unwise in financial terms. In addition to GPU miners more and more miners now use ASICs.
Core wallet: a digital wallet to store cryptocurrencies. Owns the blockchain and in many cases allows programmers to develop tools in or on top of the blockchain.
Dapps: or blockchain applications, i.e. the decentralized applications, abbreviated as dapps.
Difficulty: the difficulty for solving a block. So how difficult or easy it is to find a new block. A recalculation is performed after every X blocks. It is then checked how long it took exactly to find the previous X blocks. If we assume the desired speed of 1 block per 10 minutes (example), then it would take exactly 2 weeks to find X blocks. If it took longer than 2 weeks for X blocks to be found, the difficulty of the algorithmic puzzle will be reduced. On the other hand, it also works in such a way that if X blocks were found within a period of 2 weeks, the difficulty level will be increased. In general, the difficulty increases when the hashrate increases. As more computing power is available that mines a particular coin, the difficulty changes to the ratio of the added hashrate. This prevents a lot of blocks from being suddenly found and occurs a rapid rise in inflation. The idea behind most cryptocurrencies is a stable release of new coins, to ensure there is a stable inflation.
Encryption: data lock that can often only be unlocked with a key (private key).
FOMO: short form for ‘fear of missing out’. The feeling when you see a huge green dildo on a chart and you don’t own that coin, so you sell other coins to buy into it freaking out. As crypto trading is still very much driven by emotions rather than valuation, FOMO is a huge factor to consider when swing trading in crypto.
FUD: abbreviation for fear, uncertainty and doubt. Usually used in the form of “xxx spreading FUD again.” Example: JPMorgan’s Dimon spread FUD by saying Bitcoin is a fraud that will eventually blow up. Often used by people who are planning to buy more, in hope others will panic sell.
Fully private blockchain: a blockchain where one party guarantees that transactions have taken place. Parts of the structure, such as the blockchain itself, can be public, but the way consensus is achieved is fully private. This form is far removed from the original vision behind blockchain.
Hash: an encryption that can not be undone.
Hashrate: hashrate is the measure of a miner’s computational power. The higher their relative power, the more solutions (and hence, block rewards) a miner is likely to find. Initially measured in hash per second (H/s), due to the increasing speed of mining hardware. H/s was soon commonly pre-fixed with SI units as follows:
- Kilohash = KH/s (thousands of H/s), then
- Megahash = MH/s (millions of H/s), then
- Gigahash = GH/s (billions of H/s), then
- Terahash = TH/s (trillions of H/s), and even
- Petahash = PH/s (quadrillions of H/s).
Hodl: A misspelling of ‘hold’ that stuck around to mean ‘keep’. A crypto trader who buys a coin and does not see himself selling in the foreseeable future is called a hodler of the coin. The term was born by a post by a drunken person on bitcointalk.org after the price was significantly lower after one of the first big increases. The term went viral, became a ‘meme’ and can no longer be ignored from the crypto world.
ICO: Initial Coin Offering. A crowd sale offering the possibility to purchase digital coins from a new blockchain project. Can be compared with an Initial Public Offering (IPO) as we know in the equity markets.
Long: a position that a trader takes. To take a long position on something is to believe its value will rise in the future.
Margin Trading: a term for ‘trading with leverage’. In this instance of trading, you borrow one side of the trading pair at an agreed loan rate and sell it for the other side of the trading pair. Depending on the direction you believe the market to move, you may place a long or a short bet on the trading pair of concern.
Market capitalization (market cap): a stock’s market cap refers to the market value of the company’s outstanding shares.
In the cryptocurrency market, the market cap is used to illustrate a coin’s dominance in the entire cryptocurrency market and is calculated by the total amount of circulating coin x the current value of one coin.
Mining: the process whereby transaction information is added and validated to a decentralized distributed ledger, in which transactions from the past are stored. This ledger with already executed transactions is called ‘the blockchain’. The miner receives a fee and a blockreward for this process.
Mining pool: a collaboration of different miners whereby the revenues are divided proportionately to the delivered hashrate per individual miner. Unless you have a extremely powerful miner, it is unprofitable to mine in your own. There is a constant battle to find blocks within the blockchain network. Only the miner who first solves a block receives a reward. For this reason, most miners are connected to a mining pool, in order to search blocks with joint computing power.
Miner: an advanced application-specific integrated circuit (ASIC) computer specially designed to mine.
Moon: extreme bullish movement of a coin.
Node: each computer equipment connected to a Core Wallet and synchronized with the blockchain network, which validates the transactions the miners add to the blockchain network through full consensus. After this, the transaction is recorded in the blockchain.
Orderbook: the order book is simply the overview of the buy and sell orders.
Peer-to-peer: abbreviated ‘P2P’ is a logical network of computers that are equivalent in this network, and can offer services to each other without the intervention of third parties.
Private key: the private key needed to be able to open your wallet.
Proof of Stake (PoS): a proposed alternative to Proof of Work. Like proof of work, proof of stake attempts to provide consensus and doublespend prevention (see “main” bitcointalk thread, and a Bounty Thread). Because creating forks is costless when you aren’t burning an external resource, Proof of Stake alone is considered to an unworkable consensus mechanism. Control of the blockchain is done by (wallet) addresses with a certain amount of coins. The more coins, the more computing power is provided for validating the relevant blockchain. This creates a monopoly problem, and is therefore often less attractive than PoW.
Proof of Work (PoW): a method in which a blockchain (transaction) is validated with computer calculation power. The more computing power is provided for verifying, the more chance of finding a block with associated blockreward. Miners perform cryptographic work in order to find the solution which allows them to define a new block. Miners compete to solve a cryptographic “puzzle,” known as a hash. There are no shortcuts in this process, which can only be solved with raw computational power.
By correctly hashing the current block, miners prove their investment of work and are rewarded with a certain number of newly-created cryptocurrencies.
Public / fully decentralized blockchain: a blockchain where everyone, worldwide, can read, send and help to validate transactions (reach consensus). This is seen as the most ‘pure’ variant.
Public key: publicly accessible ‘key’ in the cryptocurrency your wallet.
Pump & dump: the act of an investor or group of investors promoting a coin or token they hold and selling once the price has risen following the surge in interest as a result of the endorsement.
The coin is usually promoted as a “hot tip” or “the next big thing” with details of an upcoming news announcement that will “send the stock through the roof”, or “send it to the moon”. The details of each individual pump and dump scam tend to be different but the scheme always boils down to a basic principal: shifting supply and demand. ‘Pump and dumpers’ often use bots. Pump and dump scams tend to only work on small and micro-cap coins or tokens that are traded over the counter. These cryptocurrencies tend to be highly illiquid and can have sharp price movements when volume increases. The group behind the scam increase the demand and trading volume in the stock and this new inflow of investors leads to a sharp rise in its price. Once the hype is coming to an end, the group will sell their position to make a large short-term gain.
Satoshi: the smallest part of a Bitcoin, namely 0.00000001 BTC. Shortened also called Sat.
Satoshi also refers to Satoshi Nakamoto, the pseudonym of an unknown person who designed Bitcoin and founded the first blockchain database. Nakamoto was the first to solve the double-spending problem, making electronic money possible without a central authority. Nakamoto was actively involved in the development of bitcoin up to and including December 2010. To this very day, it is still unknown who or wich group is the real inventor of Bitcoin.
Shill: the act of unsolicited endorsing of the coin in public. Traders who bought a coin has an interest in shilling the coin, in hopes of igniting the public’s interest in that particular coin.
Short: a position that a trader takes. To take a short position on a coin is to believe its value will fall in the future.
Smart contract: programmable code linked to blockchain transactions. As soon as conditions in the contract are met, the program code comes into action. Smart contracts make it possible to make, monitor and comply with binding agreements. This would make traditional agreements and contracts, including associated risks and costs, redundant.
Transaction Fee: the fee miners receive for validating a transaction.
Weak hands: those who cannot be patient and sell at loss when the market is down. A well known saying in the crypto world is “Only strong hands deserve Lamboland!”
Whale: someone who has a lot of possession of a certain cryptocurrency. When someone can exactly be called a whale is subject to discussion, but it is clear large investors are meant.
W/xHash/s: watts per hashrate per second. Electricity is the major on-going cost of Bitcoin mining. The price paid per Watt will greatly influence profitability.