Glossary of Crypto Terms
An index of crypto-centric terms and defintions.
In digital currency, an address is basically a destination where a user sends and receives digital currency. In a way, it is similar to a bank account. These addressses usually include a long series of letters and numbers.
An altcoin is a digital currency other than bitcoin. There were more than 1,000 altcoins listed on data source CoinMarketCap at the time of this writing. Another way of describing the term "altcoin" is referring to it as an alternative protocol asset, meaning that it follows a protocol (set of rules) that's different than that of bitcoin.
In crypto, arbitrage refers to taking advantage of the price difference between two different exchanges. If bitcoin is selling for £8,950 on one exchange and £9,000 on another, a trader can buy the digital currency on the first exchange and sell it on the second for a modest profit.
Ask Price is the price a seller is willing to accept for a cryptocurrency. Along with the price, the ask quote will generally also stipulate the number of units of such cryptocurrency willing to be sold at that price. When somebody matches the Ask Price, an order is made.
"ATH" is an abbreviation of "all-time high." This term can be quite helpful to know for tracking the digital currency markets. These assets are so volatile, so keeping their ATH in mind can prove valuable. A digital currency could potentially hit several local highs before rising to a new all-time high.
Airdrop is an ICO distribution method that occurs via a hard fork attempt, free of charge. Airdrops can come as a surprise or be announced beforehand.
Bagholder means someone who is still holding an altcoin after a Pump and Dump crash. It can also just refer to someone holding a coin that is sinking in value with few prospects.
"Bears" believe that an asset, for example a digital currency, will decline in value. Another way of putting this is that if a trader thinks a cryptocurrency will depreciate, their sentiment surrounding the digital asset is "bearish." In many situations, traders will make use of this expectation by taking a short position on an asset, meaning that they will make a wager that will pay off should the asset in question fall in value.
Bear Trap is a situation where the price goes downward and then sharply back up “trapping” Bearish speculators who sold their positions.
Bid Price is the opposite of Ask Price. It is the price a buyer is willing to pay for a certain cryptocurrency and the number of units of such cryptocurrency to be bought at that price.
Many digital currencies make use of blocks, which contain transactions that have been confirmed and then combined.
Block Reward is a reward given to miners. It is “new cryptocurrency units” (not previously held by anyone but created for the purpose of the reward), provided each time a miner successfully publishes a block.
The blockchain which is a distributed ledger system, consists of a series of blocks. These blocks contain verified transactions. The blockchain was designed to be not only decentralised, but also immutable, meaning that entries could not be erased once placed on this distributed ledger. The idea of the blockchain was first introduced when the bitcoin white paper was released in late 2008.
Meaning: Bollinger Band (in short: BBands) means a margin around the price of a crypto that helps indicate when a coin is overbought or oversold. The Bollinger Bands, developed by legendary technical trader John Bollinger.
Bounty is a sum of money offered as a reward for completing a specific task. The reward is normally given to the first person to satisfactorily complete the relevant task. There are several different types of bounties. One usual type is the “bug bounty” given to a person finding a bug on a company’s website or in a company’s product etc.
If a trader believes that an asset will rise in value, he or she is a "bull." When an investor has this optimistic expectation of an asset's future bull, this frame of mind is described as "bullish."
Bull Trap is an upwards trend in price that invites bullish speculators to buy before reversing suddenly and “springing the trap”.
When the market is bullish, it is expecting that the price is going to increase.
Candle / Candlestick
A Candle or a Candlestick is a form of price chart, showing the highest price, the lowest price and the opening and closing prices of a cryptocurrency during a certain period (normally a day). If the price is higher at the end of a trading day than the opening price such day, the candle will be green (or white) and if it is lower, the candle will be red (or black).
The network for a digital currency reaches consensus when the network's nodes agree that a transaction took place. This agreement is crucial if the varying network participants (nodes) are to have the same information. In other words, consensus is crucial to distributed ledger systems.
Cold Storage has nothing to do with temperature but is the process of moving cryptocurrency ‘offline’, as a way of safekeeping your crypto-currency from hacking. There is a variety of ways to do this, but some methods most commonly used include: (i) Printing out the QR code of a software wallet and storing it somewhere safe, such as a safety deposit box, (ii) Moving the files of a software wallet onto a USB drive and storing it somewhere safe, or (iii) Using a hardware wallet.
Confirmations refers to the depth of the block containing your transaction in the blockchain. When a block is published it has a depth of 0 as it is the top block. As more blocks are published the previous blocks get deeper in the chain.
A cryptocurrency is merely a currency that relies on cryptography. Bitcoin, for example, leverages cryptography in order to verify transactions.
Cryptography is basically the process of encoding and decoding information so that would-be observers are unable to understand the information being sent.
DAO is an acronym for Decentralised Autonomous Organization. A DAO can (at least theoretically) run itself without any involvement of individuals and can thus be completely autonomous. It can do so by being based on various smart contracts.
DAG is an acronym for Directed Acyclic Graph.
Dapp means Decentralised Application, which is an application that uses an Ethereum smart contract as it’s back-end code.
A distributed denial of service (DDoS) attack takes place when multiple parties work together to overwhelm a system by inundating it with either requests for information or malicious data. Basically, the nefarious parties involved in such an attack want to prevent a resource, such as a server, from being able to provide some specific service, such as serving a web page.
Some digital currency exchanges have suffered DDoS attacks from nefarious parties looking to cripple these marketplaces and hopefully take advantage of this vulnerability to steal cryptocurrency. While efforts to steal digital assets may not work, an exchange's users could become unhappy simply because they cannot make trades through the marketplace.
Most exchanges charge deposit fees when you deposit fiat currency on the exchange. This fee is sometimes a fixed fee (triggered every time you make a deposit), and sometimes a percentage of the total deposit value. Deposit fees can be particularly high when you deposit via credit card (for the exchanges accepting credit card deposits at all).
A distributed ledger is a system of recording information that is simply distributed, or spread across, many different devices. The blockchain, for example, is a distributed ledger that was originally created to keep track of all bitcoin transactions.
Deterministic Wallet is a wallet that you need to backup only once. It creates all your bitcoin addresses and private keys, from a random number called a “seed”. Your wallet can be recovered from the seed if the wallet file is accidentally deleted.
Double spending is successfully spending the same money more than once.
Escrow refers to a third-party holding financial resources on the behalf of other parties. A third-party would hold funds in escrow when the other entities involved in a transaction may not trust each other.
Exchanges are basically just marketplaces where traders can make digital currency transactions. If a person wants to buy bitcoin, going to an exchange is the fastest way to accomplish this objective.
FA is an acronym for Fundamental Analysis. When doing a Fundamental Analysis, you not only analyse the price changes and Resistance and Support of a certain cryptocurrency, but you also look at a wide variety of factors relevant to the cryptocurrency. These factors include, but is not limited to, demand for the cryptocurrency, supply of the cryptocurrency, the technology behind the cryptocurrency, upcoming upgrades of the technology behind the cryptocurrency, news surrounding the cryptocurrency etc.
Faucet is a site that gives out small amounts of free coins in order to get newbies started.
Fiat currencies are currencies that have value because they are minted by a central bank. Fiat means "by decree," and these currencies have value because some central authority has decreed that they have monetary value.
The Flippening has nothing to do with iCloud leaks of celebrity photos but refer to a potential future event wherein Ethereum’s market cap surpasses Bitcoin’s market cap, making Ethereum the most ‘valuable’ cryptocurrency.
The term "FOMO" stands for the phrase "fear of missing out." This occurs when investors start buying up a particular asset based on their expectations that it will rise in value. Market participants can easily flock to an asset should that asset experience sharp gains.
Getting caught up in FOMO can be dangerous. More specifically, buying up an asset because it has recently enjoyed some notable upside can cause one to fall victim to market manipulation.
A fork is a change in a digital currency's rules or protocol. Developers update a cryptocurrency's protocol from time to time. A fork can be either a hard fork or a soft fork. A hard fork is a change to a digital currency's protocol that makes blocks created using the old protocol incompatible with the new chain.
Fear, uncertainty and doubt can be summed up using the term "FUD." The idea behind this is that market participants may spread misleading or inaccurate information in order to cause an asset's price to decline. A trader may want an asset's price to fall so they can either short it successfully or buy in at a lower price and increase their chance of generating a gain.
Gas is a measurement of how much processing that is required by the Ethereum network to process a transaction. Simple transactions, like sending ether to another address, typically do not require much gas. More complex transactions, like deploying a smart contract, require more gas.
The Genesis Block is the first block of the blockchain of Bitcoin ever released. It was released by Satoshi Nakamoto on 4 January 2009.
Git is a distributed revision control and source code management system focusing on speed. It enables software developers to work together as a team remotely from anywhere in the world. Git is a free software. For more information, see Git.
GitHub is a web-based hosting service for projects that use the Git revision control system.
Going Long means a margin trade that profits if the price of the relevant cryptocurrency increases.
Going Short means, a margin trade that profits if the price of the relevant cryptocurrency decreases.
Goxxed comes from the infamous MtGox, which was a bitcoin exchange that many claim was plagued with technical problems. The term goxxed refers to being impeded by technical issues.
GPU is an acronym for Graphics Processing Unit. It can be used to play games or mine cryptocurrencies.
Gwei is a denomination of Ether (the Ethereum currency). Gas prices are most often measured in Gwei. 1 Ether = 1 billion (1,000,000,000) Gwei. (109)
A hard fork is a type of fork that creates a permanent change to a digital currency's protocol, or rules. When one of these forks takes place, it results in a whole new blockchain, which will not accept any blocks mined using the old rules.
The old chain can survive, however, leading to a scenario where both the old and the new blockchains can continue.
Cryptocurrency investors developed the term "HODL," which stands for "hold on for dear life." The acronym originally came from a misspelling of the world "hold." Digital currencies can be highly volatile, so when they start experiencing significant price fluctuations, some market participants state that they should simply "HODL."
HODLACL stands for Hold On for Dear Life And Complain a Little, and describes the process of HODLing while also complaining about e.g. volatility.
Hardware Wallet means a device that can securely store cryptocurrency. Compare and review all cryptocurrency wallets in our Cryptocurrency Wallet List to find the best wallet for you.
Hot Wallet is a wallet that is accessible via the web or another network connection. Hot Wallets are vulnerable to many online attacks and are not as secure as their Cold Wallet (Cold Storage) counterparts.
Initial Coin Offering
An Initial Coin Offering (ICO) represents the first time that an organisation offers digital tokens to the public in an effort to raise money. Companies frequently hold these offerings so they can finance projects.
These digital token sales have often been likened to initial public offerings (IPOs), where companies sell more traditional assets such as stocks and bonds in order to raise money.
KYC stands for "know your customer." Many jurisdictions have KYC regulations, which have come to affect startups holding ICOs. These regulations require companies holding these digital token sales to verify the identity of their investors.
Going long, also known as taking a long position, means making a wager that an asset will rise in value. If a trader purchases a digital currency like bitcoin, for example, they are making a bet that the cryptocurrency will appreciate.
While simply buying digital currency is one example of taking a long position, there are other methods available. For instance, traders can leverage options and futures.
Limit Order means an order placed by traders to buy or sell a cryptocurrency when the price meets a certain amount. They can be thought of as ‘for-sale’ signs. These orders are what are bought and sold against when traders place market orders.
Liquidity (or market liquidity) is an asset’s ability to be sold without causing a significant movement in the price and with minimum loss of value. Liquidity is characterized by a high level of trading activity. Assets that can be easily bought or sold are known as liquid assets.
MACD stands for Moving Average Convergence Divergence, which is a trend indicator that shows the relationship between two moving averages of prices.
Mainnet is a blockchain in operation where you are also able to transfer cryptocurrencies to different recipients. This is different from a Testnet where you can’t make such transfers.
The Manipulator is a real or an imagined agent who controls the market value with his vast reserves of fiat currency and cryptocurrency.
Market cap is short for market capitalisation, which is a term for total market value. The market cap of bitcoin, for example, is the number of BTC outstanding multiplied by the digital currency's price. The term can also be used to refer to a group of digital currencies.
Meaning: Margin Call is a “call” made by a lender, broker or exchange to the person who has made the margin trade. The call is made when the margin falls below the minimum required to cover the credit risk of the lender, the broker or exchange. At such point, the position is automatically closed, and the margin is lost.
Margin Trading means the act of adding leverage to your trades. When margin trading, you borrow money against your current funds to trade cryptocurrency “on margin” on an exchange. In other words, you are borrowing money to increase your buying power (generally you pay interest on the amount borrowed, but not always).
Market Capitalisation (for short: Market Cap) is total value of a cryptocurrency. It is calculated by multiplying the total supply of coins by the current price of one such coin.
Market Order means a simple purchase or sale on an exchange at the current price. Market buys purchase the cheapest ETH available on the order book, and market sells fill the most expensive buy order on the books.
Mining is the process for creating new units of a digital currency. For example, the bitcoin network releases new bitcoins every time a block is mined. In this instance, mining involves confirming transactions and combining them in to blocks.
This verification requires hardware and electricity, and miners are rewarded with digital tokens for contributing these needed resources.
The mining incentive is a reward that miners get for confirming transactions and mining them in to blocks. Verifying the transactions of the bitcoin network, for example, requires specialised hardware and substantial electricity, so miners are compensated with a mining incentive.
Initially, bitcoin's mining incentive was 50 BTC, but at the time of report, the reward had dropped to 12.5 BTC.
When a digital currency moons, that means it rises sharply in value. For example, a crypto trader could talk about how an altcoin is going "to the moon!"
Mining Rig means a computer specially designed for processing proof-of-work blockchains. They often consist of multiple high-end graphic processors (GPUs) to maximize their processing power.
Multi-sig is a system that requires multiple cryptographic authentication keys.
Newcomers are frequently described as "noobs" by industry insiders. If you are this person, you may want to sit back and observe before "jumping in with both feet." Digital currencies are highly volatile, so those who are newer to these assets should keep their risky nature in mind.
Node means a computer that possesses a copy of a blockchain and is working to maintain it.
Orphaned Blocks is the term for certain blocks following a Soft Fork or Hard Fork, or when miners produce blocks at the same time. Whenever a Soft Fork or Hard Fork occurs, the blockchain is split into two paths. One of these chains will eventually be considered the valid one, and the other will be the invalid chain. Blocks that are in an invalid chain are called Orphaned Blocks.
OTC is an acronym for Over The Counter. This is off-exchange trading that is done directly between two parties.
POW is an acronym for "proof of work," which is a system of proving that a digital currency's transactions have been verified. Many digital currencies, including bitcoin, use POW. Under such a system, miners must do "work" that is difficult for them to contribute, but easy for the broader network to verify.
Miners are usually rewarded for verifying transactions by receiving units of a digital currency.
POS stands for "proof of stake," which is another method of confirming transactions. The digital currencies that use this approach to verification frequently provide all their digital tokens up front, and miners are selected based on how many units they have (their stake). In these cases, users who confirm transactions, sometimes referred to as "forgers," receive transaction fees for their contributions.
Pool is a group of miners that all work together in order to improve their chances of solving a block.
POS stands for Proof of Stake (not Piece of Shit…) and is the proposed future consensus algorithm to be used by Ethereum. Instead of mining in its current form, people that own ETH will be able to ‘lock up’ their ether for a short amount of time in order to ‘vote’ and generate network consensus. The plan is that these stakeholders will be rewarded with ETH by doing so. Another famous POS blockchain is LISK.
POW stands for Proof Of Work (not Prisoner Of War…) and is the current consensus algorithm used by Bitcoin.
Premining is the procedure of mining certain altcoins before they are released to the public. This generates coins for the developers, who hope to profit from them in the future.
A private key is a piece of information—presented as a string of numbers and letters—that an investor can use to access their digital currency.
A public key is an address where an investor can receive digital currencies. This public key, like the private key, is a combination of numbers and letters.
Pump and Dump
A "pump and dump" is a type of investment scheme where a market participant—or several—work together to inflate the price of an asset so they can sell it when its value is artificially high. This practice may be particularly pervasive when it comes to digital currencies, as traders can easily get together using Telegram groups with the goal of causing specific cryptocurrencies to rise sharply in value.
The term "rekt" is crypto trader slang for "wrecked." Basically, it means that a trader lost substantial amounts of money.
Resistance is the opposite of support and is a trading term denoting a price level that a certain cryptocurrency rarely or never will exceed. If Bitcoin’s resistance would be USD 20,000, the price of Bitcoin could go up to USD 20,000 (maybe even several times), but not exceed USD 20,000.
ROI is short for "return on investment." Basically, if an investor puts their money in to a digital currency, they are doing so with the hope that they will receive a compelling return.
RSI is an acronym for Relative Strength Index, being an indicator looking at the magnitude of recent price changes. The RSI is used to analyse whether a certain cryptocurrency is oversold or overbought, which in turn makes it possible to analyse whether it is an appropriate time to buy or sell.
Satoshi Nakamoto is the pseudonym for the creator of bitcoin, and more than one individual has claimed to be Nakamoto. However, none of these claimants have managed to convince the broader cryptocurrency community that they are, in fact, the creator of bitcoin.
Scamcoin is an altcoin created for the sole purpose of conning people out of their money.
Sell Wall/Buy Wall
Sell Wall and Buy Wall means the current limit buy and sell points, as presented in a depth chart. The graphical representation on the depth chart looks like walls.
Shorting an asset, also known as taking a short position, means making a bet that the asset will fall in value. There are several methods that traders can use to short digital currencies, including futures, options and margin trading.
Investors considering this method should keep in mind it involves a lot of risk, especially with cryptocurrencies because of their volatile nature.
SHA-256 stands for Secure Hash Algorithm. It is an algorithm that generates a hash when provided with input data.
Sharding is a scaling solution for blockchains. Every node in a blockchain network typically houses a complete copy of the blockchain. Sharding is a method that allows nodes to have partial copies of the complete blockchain in order to increase overall network performance and consensus speeds.
Shilling/Pumping means strongly advertising a cryptocurrency. If a cryptocurrency is promised to cure cancer or be the second coming of Jesus, it’s being shilled/pumped.
Sig & Signature
Sig (or Signature) is a cryptographic authentication key.
Smart Contract means a code that is deployed onto the Ethereum blockchain, often directly interacting with how money flows. Simplistically put, a normal transaction allows you to send money from A to B. Smart contracts allow you to send money from A to B, on the condition that C happens.
Sockpuppet is an online identity used for the purposes of deception.
Soft Fork is a situation where two or more competing blocks are published at the same height in the blockchain. These kinds of forks will solve themselves without any intervention from holders of the relevant cryptocurrency.
Software Fork is the procedure of splitting an open-source software project into two projects by copying the original project and developing it independently from that point onwards.
Solidity is one of the most popular languages that smart contracts can be written in on Ethereum.
Spread is the amount by which the Ask Price exceeds the Bid Price. This is essentially the difference in price between the highest price that a buyer is willing to pay for a cryptocurrency and the lowest price for which a seller is willing to sell it.
SPV Client stands for Simplified Payment Verification Client. It is a lightweight client that downloads only part of the relevant blockchain.
Stable Coin means a cryptocurrency with extremely low volatility that can be used to trade against the overall market. A “stable coin” is a cryptocurrency that is often pegged to another stable asset, like silver, gold or a fiat currency such as US dollar. It’s a currency that’s global, but not tied to a central bank and has a lower volatility than other cryptos. Examples of stable coins on the market today are: (i) Havven, (ii) MakerDao, (iii) Basis, and (iv) Tether.
Stop Loss & Stop Order
Stop Loss-order (or Stop Order) is an order designed to limit an investor’s loss on a security position. Setting a stop loss order for 10% below the price you paid will limit your loss to 10%. This strategy allows investors to determine their loss limit in advance.
Support is the opposite of resistance and is a trading term referring to a certain price that a cryptocurrency historically does not fall below. If Bitcoin’s support would be USD 5,000, it would mean that the price of Bitcoin rarely or never falls below such level.
Meaning: TA stands for Technical Analysis (some call it Trend Analysis), and is the process of examining current price charts of e.g. a specific cryptocurrency in order to predict which way such cryptocurrency will move next.
Testnet is a blockchain in a testing phase where you are not able to transfer cryptocurrencies to different recipients. This is different from a Mainnet, which is a blockchain in operation where you can make such transfers.
A digital token is a unit of a digital currency, such as a bitcoin. It is worth noting that some of these tokens are used for specific ecosystems, and those are frequently referred to as utility tokens. Other digital tokens are essentially securities.
Tokenomics is the distribution and creation of certain tokens, and how they are put in place in the relevant token ecosystem. Factors such as: (i) how many tokens that can be mined, (ii) how many tokens that have been pre-mined, and (iii) how many tokens that are allocated through pre-sale and public sale, are important factors in a company’s tokenomics.
Trading Fee is the fee you pay when executing an order on a cryptocurrency exchange. This fee is normally a percentage of the order value. Industry average for centralised exchanges is arguably around 0.25% for both “takers” and “makers”. Exchanges sometimes charge “makers” lower fees, thus providing discounts on the trading fees for the makers. This is for the purpose of providing liquidity to the exchange and incentivize makers to tighten the spread in the order book. In our Cryptocurrency Exchange List, you can easily see which exchanges charges which trading fees, and choose the best one for you.
TX stands for Transaction.
Meaning: Wei is the smallest denomination of ether. 1 Ether = 1000000000000000000 Wei (1018).
The term "whale" is used to describe a trader who makes sizable bets. This term is a good one to know because market participants with the ability to execute exceptionally large transactions can potentially manipulate the market—or "make waves in the ocean."
The developers who create digital currencies usually provide white papers for these innovative assets. These documents generally offer comprehensive information on the digital token in question, as well as its underlying technology.
For example, the bitcoin white paper provided information on a "peer-to-peer electronic cash system. Investors who are considering taking part in ICOs can benefit greatly from reviewing any available white papers on the subject.
Withdrawal fees are fees charged by cryptocurrency exchanges when you take out cryptocurrencies (or fiat currencies) from your account at the relevant exchange. Withdrawal fees charged for cryptocurrency withdrawals are normally a fixed fee per withdrawal. There are however certain exchanges that charge a withdrawal fee that is a percentage of the total withdrawn amount. This can add up to quite substantial amounts when you make bigger withdrawals.