Tier 1 Crypto Glossary

These are the 15 most important crypto terms to know if you’re just dipping your toes into the industry.

1. Altcoin

Altcoin stands for alternative coin or every cryptocurrency other than Bitcoin. The first altcoins appeared in 2011, and right now, there are thousands of them.

Early altcoins aimed to solve the limitations of Bitcoin, such as high energy consumption or low transaction speed.

Recent altcoins serve various purposes, like a payment method, store of value, and governance. Some examples of altcoins include Ethereum, Solana, Litecoin, and Cardano.

2. Bitcoin

Bitcoin ($BTC) is the first blockchain and eponymous cryptocurrency launched in 2009 by Satoshi Nakamoto.

Over time, Bitcoin’s value has been turbulent. Nonetheless, it has since become the most famous cryptocurrency in the world. Bitcoin can be used as a form of payment and also as a reward for miners for verifying transactions on the blockchain.

3. Blockchain

Blockchain is the underlying technology of all cryptocurrencies and non-fungible tokens (NFTs).

It’s a decentralized ledger of ordered records called blocks, which continuously grow and are linked using cryptography. Each block contains a timestamp, transaction data, and cryptographic hash of the previous block.

Data in the blockchain is chronologically consistent because no one can delete or modify blocks. Furthermore, most participants of the blockchain must agree that a transaction is valid before it’s recorded.

4. Coin

A coin is a native cryptocurrency of a specific blockchain, like $BTC on Bitcoin, $ETH on Ethereum, or $SOL on Solana.

For example, there are thousands of cryptocurrencies on Bitcoin, but only $BTC is the native coin. The native coin is typically used for paying transaction fees, rewards, and participating in the network.

It’s worth noting that often, people in casual conversations within the crypto space call any cryptocurrency a coin.

5. Cryptocurrency

A digital currency is secured by cryptography, which makes it impossible to counterfeit. Plus, cryptocurrencies aren’t issued or controlled by a central authority like the government or bank.

Instead, they operate on distributed networks maintained by community members who validate transactions.

Cryptocurrencies are used as a medium of exchange, investment, or to support the creation of decentralized applications.

6. Exchange

Cryptocurrency exchange is a platform that allows investors to buy and sell their digital assets, similar to stock exchanges. Additionally, some exchanges provide educational resources, real-time market data, and various trading tools.

Centralized exchanges (CEX) operate as a traditional financial platform where one authority manages the trading process. CEXs like Binance and Coinbase offer high liquidity and advanced trading features. However, they may also pose security risks, like the case of FTX.

On the other hand, decentralized exchanges (DEX) don’t rely on intermediaries. Users trade directly with each other, ensuring security and transparency with smart contracts.

DEXs like Uniswap and PancakeSwap have greater privacy but lower liquidity and often higher transaction fees compared to CEX.

7. Fiat Currency

Fiat money refers to any government-issued currency not backed by a commodity like gold or silver. Its value depends on the supply, demand, and stability of said government.

Most modern paper currencies, including euro, U.S. dollar, and British pound sterling, are fiat currencies.

In the crypto space, this term is used to distinguish between traditional money and cryptocurrencies. For example, if someone exchanges cryptocurrencies for fiat currency, they are converting digital assets into traditional money.

8. Market Capitalization

The market cap represents the total value of a specific cryptocurrency and is calculated using a formula:

Market Cap = Current Price per Token x Circulating Supply

Because cryptocurrency prices constantly change, the market cap isn’t fixed. To put it differently, the market cap reflects a given cryptocurrency’s popularity at a specific time.

If a currency has a low market cap, it means it has low value, or few people are interested in trading it. In contrast, currencies like Bitcoin and Ethereum have the highest market cap because of their utility and relatively high cost.

9. Mining

Some blockchain networks, like Bitcoin, Litecoin, and Monero, use mining to finalize transactions. It’s called mining because the process involves releasing new tokens into circulation.

Miners validate transactions by solving cryptographic puzzles in exchange for rewards, usually some amount of the blockchain’s native currency.

Of course, they don’t have to solve puzzles manually but instead rely on computational power – hence why mining requires advanced hardware and consumes plenty of energy.

10. Private Key

If you own any amount of crypto, you need a wallet to store it and a private key to access that wallet. However, that’s an oversimplification.

Cryptocurrencies aren’t stored in a wallet itself but on a blockchain, and your private key simply proves your ownership and grants you access to the account where you can manage your assets.

A private key can take many forms, including a QR code, 256-character binary code, or 64-digital hexadecimal code. Never share it with anyone.

It’s an astronomically large number for a good reason – your private key should remain private.

While you can generate a public key using a private key, you can’t do the opposite.

11. Public Key

A public key is visible to all users on the network and allows you to receive cryptocurrency transactions.

Essentially, it acts as an account number, making your wallet uniquely identifiable. Like the private key, a public key is a long string of characters, but you can share it freely.

Interestingly, public key cryptography, also known as asymmetric cryptography, existed long before cryptocurrencies. It was first described in the 1970s and saw widespread adoption in SSL/TLS protocols for securing internet connections and digital signatures.

12. Transaction

In the case of traditional currencies, the transaction means buying or selling something in exchange for money. But in the case of cryptocurrencies, it merely refers to transferring information between blockchain addresses.

When you sign a transaction using your private key, validators verify its integrity and add it to the blockchain as a new block. Once a block is added, you can’t modify or delete it without the consent of other network members.

13. Token

A token is a cryptocurrency that operates on a programmable blockchain and adheres to its standards.

For example, $ETH is the native cryptocurrency of Ethereum, so it’s a coin. On the other hand, $USDT and $LINK are ERC-20 tokens that operate on Ethereum but aren’t native currencies.

Token is also a single unit of a cryptocurrency. For example, “the total supply of $LINK is 1 billion tokens,” meaning that there are 1 billion individual units of the Chainlink cryptocurrency.

14. Volatility

Volatility is a statistical measure that represents the degree of fluctuation in the value of a financial instrument over time.

Put simply, it shows how much an asset’s price changes in relation to its average value.

Cryptocurrencies are volatile by nature because their price is influenced by market sentiment. However, some cryptocurrencies are more volatile than others.

For example, Tether ($USDT) is among the least volatile cryptocurrencies because it’s pegged to the US dollar. In contrast, meme coins like Dogecoin ($DOGE) tend to be extremely volatile because they have no real utility and rely on speculation.

15. Wallet

A crypto wallet is an application used for storing and managing your digital assets. Back in the day, sending cryptocurrency was a tedious task because you had to enter a long string of characters manually. Modern wallets make this process fast and simple.

A hot wallet is connected to the internet, so you can access it through a mobile app or browser. This type is more convenient for trading and transactions but more susceptible to hacking.

Coinbase hot crypto wallet interface

A cold wallet is an offline hardware device. Because it’s not connected to the internet, it’s not suitable for trading, but it’s also more secure.

Tier 2 Crypto Terms

While you can do without them, these crypto words will give you a much better understanding of what’s happening in the trading world.

1. All-Time High / All-Time Low

An all-time high, or ATH, is the highest price a specific cryptocurrency has ever reached since its launch.

Consequently, an all-time low (ATL) is the lowest price a cryptocurrency has ever traded at.

ATH and ATL help to understand a cryptocurrency’s historical performance and its potential for future growth.

2. Bear Market

In a bear market, the value of cryptocurrencies falls by at least 20% from recent heights. For example, in 2017, Bitcoin crashed from $20,000 to $3,200 within a few days. However, a bear market isn’t a one-day occurrence but a lasting downward trend.

The term bear refers to a bear’s fighting style, pushing down on the opponent with all its weight.

While a bear market is a sign of poor economic conditions, crypto traders strive to use it to their advantage by purchasing assets for lower prices. However, it’s hard to tell when a bear market ends or which assets will grow in price.

3. Bull Market

In contrast to the bear market, a bull market means cryptocurrency prices are on the rise over a sustained period of time.

Alt text: Bear vs. bull market in the crypto world

The term bull market came from a bull’s fighting style, where it attacks the opponent with its horns in an upward motion.

Often, investors initiate a bull market by actively buying stocks, which causes the prices to rise. However, external factors are also at play, like favorable economic conditions in the country, distrust in traditional financial institutions, or pop culture influence.

4. Consensus Mechanism

The consensus mechanism is the process by which participants in a blockchain agree on transaction validity. This is necessary to maintain the integrity and security of the networks without the need for a central authority.

There are several consensus mechanisms, with new ones being introduced sporadically. The most common ones are Proof-of-Work, used by Bitcoin, and Proof-of-Stake, used by Ethereum 2.0.

5. Decentralized Autonomous Organization (DAO)

DAO is an entity that operates through smart contracts on a blockchain. Because DAOs are governed by predefined rules rather than a central authority, participants can collectively make decisions and manage assets.

One example of a DAO is Uniswap, a decentralized crypto exchange. It allows holders of the native token $UNI to vote on proposals and protocol upgrades. SushiSwap has a similar operating model, where $SUSHI holders can drive the platform’s development.

6. Decentralized Application (dApp)

dApp is any application that runs on a blockchain instead of a centralized server, meaning they are collectively controlled by users. They use smart contracts to automate transactions and enforce rules.

Examples include decentralized exchanges like Uniswap, blockchain games like Axie Infinity, NFT marketplaces like OpenSea, and utility dApps like IPFS.

The likes of MetaMask Swap and Uniswap are among the most popular dApps

7. DeFi

DeFi stands for decentralized finance and refers to all financial applications built on blockchain networks. Unlike traditional financial systems, which rely on banks, brokers, exchanges, and other authorities, DeFi removes third parties from the process.

DeFi strives to make financial services accessible to anyone with an internet connection and reduce fees by allowing parties to negotiate directly.

It’s worth noting that DeFi doesn’t provide full anonymity. While transactions don’t include your name, they can be traced by anyone.

8. Fork

A fork, in this case, has nothing to do with utensils but is an open-source protocol code modification. Usually, these modifications are minor, and the two versions of the same protocol coexist.

Sometimes, the changes are so radical that the original protocol and fork are incompatible. In this case, the nodes of the older protocol can’t process transactions and push new blocks to the new version. Such significant updates are known as hard forks.

If a hard fork was planned, nodes voluntarily upgrade their software and leave the old version behind. However, if the fork is controversial, the protocol may be split into two standalone blockchains with different cryptocurrencies and communities.

A classic example is the Bitcoin Cash blockchain that forked out from Bitcoin.

9. Gas

Gas fee, or simply gas, is the cost necessary to perform a transaction on a blockchain network. Gas prices depend on the supply and demand for validation requests and thus change constantly.

Ethereum developers introduced gas fees in 2022 after rolling out the Proof of Stake consensus mechanism. These fees act as a reward for users who stake their $ETH to validate transactions.

10. Initial Coin Offering (ICO)

ICO is a fundraising method for cryptocurrency projects. A company that wants to raise funds for a new token or dApp can offer investors a new cryptocurrency in exchange for their contributions.

This cryptocurrency may have utility related to the project or offer potential for returns.

However, many ICOs turn out to be fraudulent or perform poorly.

You should be cautious and do your due diligence before participating in ICOs because they’re, for the most part, unregulated.

11. Know Your Customer (KYC)

CEXs usually require new users to undergo a KYC procedure, which involves verifying their identity to prevent financial crimes like money laundering.

The exchange requests a government-issued ID and corroborates it from official databases to determine the customer’s risk profile. Only after the KYC procedure is complete can you start trading.

Some exchanges don’t require KYC. However, they cater to a smaller customer base and thus have lower liquidity.

12. Liquidity

In traditional finance, liquidity refers to how quickly you can convert an asset into cash without losing significant value.

Similarly, liquidity in the crypto world is the ease with which you can convert a digital token into a different digital asset or cash.

Liquidity has no formula or units. However, you can measure liquidity by the trading volume and overall market size. The availability of trading pairs can also influence cryptocurrency liquidity.

For example, you can find the Bitcoin to US dollar trading pair on almost any exchange, which means $BTC has high liquidity. On the other hand, new tokens only available on presale have low liquidity.

13. Smart Contract

A smart contract doesn’t contain legal language or signatures; instead, it’s a self-executing agreement stored on a blockchain. When specific conditions are met, the script launches predefined actions.

Smart contracts allow users to create tokens, lend cryptocurrencies on DEXs, trade NFTs, and much more.

Ethereum was the first to support smart contracts, followed by Binance Smart Chain, Cardano, Tezos, and other blockchains. Bitcoin only received smart contract capabilities in 2021.

14. Stablecoin

Stablecoins are all cryptocurrencies whose value is pegged to a commodity or another currency. They are less volatile than cryptocurrencies like Bitcoin or Ethereum, thus more useful for exchange.

For example, Tether ($USDT) is pegged to the US dollar, so the value of one $USDT is almost always equivalent to $1. For this reason, $USDT is a common trading pair on cryptocurrency exchanges and has the highest market cap of all stablecoins.

Tether (USDT) price trend over five years

15. Validator

A validator is a user or a group of users responsible for verifying transactions and adding new blocks in a blockchain.

Only blockchains with a Proof-of-Stake consensus mechanism, like Ethereum, have validators. In blockchains with a Proof-of-Work mechanism, like Bitcoin, miners perform the role of validators.

Tier 3 Crypto Terminology

Here’s some more advanced crypto terminology that will give you a better grasp of the technology behind cryptocurrencies and market dynamics.

1. Allocation

Allocation refers to how tokens are distributed to different entities or participants within a particular project or investment. In the early stages, crypto projects usually decide what part of their assets they will allocate for marketing, development, operations, and team rewards.

Additionally, some allocation of tokens may be offered for public sale, exchange liquidity, or staking rewards.

2. Double Spend

As evident from the name, double spend refers to the unwanted scenario when you spend the same coin twice because digital money can be easily copied.

To prevent this, blockchains have a mechanism you’re already familiar with – validation. Once validated, the transaction becomes a permanent block no one can alter.

While double spending on a cryptocurrency is bordering on impossible, there are theoretical vulnerabilities that could make it happen. For example, if someone gains control of more than half of a network’s validating nodes, they could potentially manipulate transactions.

3. Do Your Own Research (DYOR)

If you ever read crypto forums, you may have noticed users repeat ‘DYOR’ like a mantra. DYOR simply stands for ‘Do Your Own Research’ and is a common phrase used by cryptocurrency enthusiasts.

It is a frequently used term for crypto due to how fast and easily misinformation can spread across the internet and on dedicated forums.

You can often come across ‘DYOR’ on crypto forums

Doing your due diligence is crucial because the cryptocurrency market is unregulated and overloaded with information. This means there’s a higher risk of scams and deception.

Start by researching the project’s whitepaper and the team behind it. If the project is established, look for performance history and compare it with similar projects to see how it stacks up.

4. ERC-20

ERC-20 is a fungible token standard on the Ethereum blockchain. Fungible means that each token is identical and interchangeable, much like dollar bills.

The ERC-20 standard defines a set of functions that tokens should implement for smooth interaction. These functions enable essential actions like transferring tokens, checking balances, and getting the total token supply.

5. ERC-721

Like ERC-20, ERC-721 is a token standard on the Ethereum blockchain. However, it’s designed for non-fungible tokens (NFTs), which are unique and irreplaceable. Think of them as artworks – each has a different value and characteristics.

ERC-721 builds upon ERC-20 but adds features important for NFTs, such as ownership tracking, a unique identifier, and programmability.

The latter means that smart contracts associated with ERC-721 tokens can hold information and functionalities beyond basic ownership. For example, ERC-721 allows you to divide an NFT into small fractions so that multiple people can co-own it.

6. Ethereum Virtual Machine (EVM)

EVM is the core processing engine (like its brain) of the Ethereum blockchain, which executes smart contracts and keeps track of the current network state.

When you make a transaction on Ethereum, each node on the network receives it and runs it through its own copy of the EVM. If the transaction is valid and reaches consensus, the EVM updates the network state accordingly.

7. Fear of Missing Out (FOMO)

Have you ever felt anxiety seeing others take advantage of an opportunity while you were still doubting?

This feeling is known as FOMO and is very common in the crypto world. It arises from price volatility and social media hype surrounding many crypto projects.

First, there’s FOMO, then there’s Oh No.

For example, during a bear market, many start buying cryptocurrencies at lower prices. You might start thinking, “Everyone is buying Bitcoin, waiting for prices to surge. If I don’t invest now, I might miss out on huge gains.” This is FOMO.

FOMO often leads to poor investment decisions led by emotions. Instead of blindly following the crowd, DYOR.

8. Hash

A hash converts the input of letters and numbers into an encrypted fixed-length output. It’s like a digital fingerprint because it’s unique and identifiable.

The same input will always produce the same hash output, which is necessary for block verification. Another important property is that hashes work one way: you can generate a hash from data but not recreate the original data from the hash.

9. Margin Trading

Margin trading, also known as leveraged trading, is a method of magnifying returns, whether positive or negative. The amount of leverage you borrow can vary from 1X to 25X and, sometimes, even higher. You can speculate on the price going up (long position) or down (short position).

For instance, imagine Bitcoin is trading at $10,000 per coin. With $1,000 of your own capital, you could buy 0.1 BTC. But with 5x leverage in margin trading, you could borrow $4,000 to buy 0.5 BTC (total investment of $5,000). However, if the price goes down, you might lose more than you invested.

10. Multisignature

A multi-signature wallet is like a digital safety deposit box with multiple keys. Unlike a regular wallet, it requires several private keys to authorize access. This solution is useful for storing large amounts of cryptocurrency or managing shared funds.

11. Orphan Block

Orphan block, sometimes called a stale or detached block, is a valid block that doesn’t get added to the main chain. Think of it like an extra bolt that doesn’t fit into the completed IKEA wardrobe.

Orphan blocks occur when two or more validators verify transactions simultaneously. When this happens, the network temporarily splits into two branches, with each valid block forming the head of a separate chain.

Computers on the network then work to verify both branches. The chain with the most cumulative blocks becomes the main chain, and the other branch becomes orphaned.

12. Regulated Market

A regulated market operates with rules and control of an authority. For example, regulators may decide who can participate in the market, set price ceilings, and outline consumer protection laws.

In contrast, an unregulated market operates without authority intervention. This increases flexibility but also carries risks like volatility and scams.

The current cryptocurrency market is partially regulated. Different countries have different approaches.

For example, South Korea has a strict stance on crypto. They require real-name verification for crypto trading platforms and tax cryptocurrency gains. On the other hand, Singapore has no regulations other than KYC procedures.

13. Staking

Staking means you lock up your cryptocurrency for a specific period to support a blockchain network and earn more coins as a reward. It’s like putting your crypto into a savings account, but you also help the network by verifying transactions. This consensus mechanism is called Proof-of-Stake.

However, not everyone who stakes their coins becomes a validator. But the more coins you stake, the higher your chances are. Note that you won’t be able to trade or sell your crypto while it’s staked.

14. Tokenomics

Tokenomics is a combination of the words token and economics. It describes the economic model of a cryptocurrency, with aspects like token supply, distribution, and utility. Tokenomics assesses a project’s viability and helps you make informed investment decisions.

For example, the tokenomics of Bitcoin are as follows:

• Total supply: 21 million coins
• Utility: None apart from a means of exchange
• Burning: Yes, around 6% of all $BTC have been burned to this day
• Allocation: No predefined allocation; distribution happened organically through mining and gradual release

15. Yield

Yield is the return on investment (ROI) from your digital assets. It’s similar to the concept of interest in traditional finance, but unlike fiat currencies, cryptocurrencies don’t generate returns themselves. You have to stake them, lend them to others, or participate in liquidity pools.

A related term is APY or Annual Percentage Yield. It expresses the yearly profit from your investment in percentages. Usually, APY is an estimated metric, but it helps you compare your investment options.

Useful Crypto Lingo

You’re more likely to come across the next 15 crypto terms on forums and social media. While not as technical as ‘hash’ or ‘orphan block,’ they’re useful when interacting with people in the crypto space.

1. Airdrop

Airdrop is a marketing strategy where a blockchain project distributes free tokens directly to user wallets. New projects use airdrops to generate audience interest, similar to how brands on Instagram launch giveaways to gain followers.

At first glance, it seems like a win-win: you get free crypto and the project gains traction.

However, airdropped tokens aren’t guaranteed to have value, and sometimes, such promotions turn out to be scams. Always do your research before participating in airdrops.

2. Algorithmic Trading

Algorithmic, or automated trading, involves using computer programs that analyze market data, identify trading opportunities, and automatically place orders. This way, you can save time and remove emotions from the equation, avoiding impulsive decisions (like those led by FOMO).

However, algorithmic trading is technically complex and susceptible to technical issues. Furthermore, it may be banned on specific exchanges.

3. Burning

The higher the cryptocurrency supply, the more likely it is to inflate. Many cryptocurrencies have a deflationary mechanism to prevent this.

Essentially, some amount of tokens are sent to an inaccessible wallet address and removed from circulation permanently (burnt).

Reducing supply can increase the value of the remaining tokens. However, it also reduces liquidity, meaning it might be harder to buy or sell the token. Plus, the value increase is not guaranteed as it depends on many factors other than supply.

4. Buy the Dip

The phrase ‘Buy the dip’ came from the stock market and is used to encourage investors to purchase assets when their prices are in decline. You can often notice it on crypto forums during a bear phase.

Buy the dip is a common phrase among the crypto folk

5. Gwei

Gwei is a tiny unit of Ether ($ETH), the native token of the Ethereum blockchain. Gwei derives its name from Wei Dai, a computer scientist who’s credited with the concept of b-money, an early proposal for a decentralized digital currency.

Ether refers to one unit, but its value can be pretty high. That’s why many people own small fractions of an Ether. Gwei expresses one billionth of an $ETH – 0.000000001 $ETH and thus eases calculations.

Similarly, using units like millimeters and centimeters is easier than one-thousandths or one-hundredths of a meter.

6. HODL

HODL is a misspelled version of ‘hold.’ In 2013, a user of a Bitcoin forum expressed their intent to hold onto their assets despite a price drop with a post titled “I AM HODLING.” The misspelling stuck and became a rallying cry for long-term crypto believers.

The original HODL post

HODLing essentially boils down to a buy-and-hold investment strategy. HODLers believe that one day, their assets will skyrocket in price, yet there’s no set time frame for this surge to happen.

7. Liquidity Pool

Liquidity pools are fundamental to decentralized finance (DeFi). They act like digital reservoirs of crypto assets that ensure smooth trading. Without liquidity pools, it would have been much more challenging to find a buyer for your crypto.

Here’s how it works. Liquidity providers (LPs) deposit equal values of two different cryptocurrencies (usually a trading pair) into a smart contract.

When a trader wants to buy or sell an asset from the pool, an algorithm automatically executes the trade based on the pool’s current price. Finally, LPs get some portion of trading fees as a reward for their help.

8. Meme Coin

Meme coin is a cryptocurrency inspired by internet memes. Usually, such coin value depends on speculation and hype more than on their utility, and some meme coins have no utility whatsoever. Notable examples include Dogecoin ($DOGE), Pepe ($PEPE), and Shiba Inu ($SHIB).

Dogecoin is the original meme coin

While most meme coins are shitcoins, not all shitcoins are meme coins. Shitcoins typically have even less underlying value than meme coins and might be created with the intention of misleading investors.

9. Ponzi Scheme

A Ponzi scheme is a type of fraud where investors get returns from funds contributed by new investors rather than from any legitimate profit-making activity, and project owners take a cut.

For example, Bitconnect offered a “lending program” with unrealistic returns allegedly generated through a crypto-trading bot software. However, it heavily relied on MLM tactics, where members earned rewards for recruiting new investors.

In January 2018, Bitconnect shut down its lending program and stopped processing withdrawals, which left investors unable to access their funds. Bitconnect’s founder disappeared and was later charged with orchestrating a global Ponzi scheme by the US government.

10. Rekt

‘Rekt’ is an intentionally misspelled version of ‘wrecked’ used by crypto community members to describe significant financial loss due to a bad investment.

Rekt is a common phrase for describing financial loss

11. Rug Pull

A rug pull is a scam tactic where developers abandon a project after raising funds from investors, never delivering on their promises. Usually, they heavily promote the project to create hype and attract as much funding as possible before draining the treasury. Rug pulls are more likely with new tokens during the ICO and presale phases.

A notable example is the $SQUID token, which capitalized on the popularity of the series Squid Game. Within days of launch, the developers disabled the ability to sell SQUID tokens on the project’s platform. They then drained the liquidity pool, estimated to be around $7.6 million, and disappeared.

12. Sat (Satoshi)

Satoshi is the smallest unit of Bitcoin; one Bitcoin is equal to 100 million Sat. The name pays homage to Satoshi Nakamoto, the creator of Bitcoin. Because you can trade small fractions of Bitcoin, counting in Satoshis increases transaction precision.

For example, if you wanted to buy a cup of coffee that cost $0.50 and Bitcoin was trading at $40,000 per coin, you wouldn’t need to use an entire Bitcoin. Instead, you could pay for the coffee with 5,000,000 Satoshis (0.50 USD / $40,000 per BTC * 100,000,000 Satoshis per BTC).

Alternatively, if you wanted to try your hand at a Bitcoin casino in the UK, most of them let you convert your crypto to even smaller denominations.

13. Shitcoin

‘Shitcoin’ is an informal term describing a cryptocurrency project with no value or long-term potential.

The term ‘shitcoin’ is subjective, so every project has some number of followers

Despite the lack of clear purpose, shitcoins are not necessarily scams and can still yield returns for investors. However, their price is driven by speculation and hype and thus tends to be very volatile.

It’s important to understand that the classification of shitcoins is subjective and DYOR.

14. Slippage

Slippage is the difference between the price you expect to pay for a cryptocurrency and its actual price. It occurs because cryptocurrency prices can be highly volatile, and by the time your trade order reaches the market to be executed, the price might have moved slightly.

Imagine you want to buy Bitcoin (BTC) at $40,000. You place a market order, but by the time the order reaches the market, the price of Bitcoin has risen to $40,050. In this scenario, you would see a slippage of $50 per BTC.

15. Whale

A whale is a person or entity holding a significant percentage of a specific cryptocurrency compared to other holders. Whales can influence the prices due to their trading activities. Sometimes, they even deliberately manipulate the market for their own benefit.

Crypto Glossary Takeaways

Now that you’ve read our crypto glossary, you should have a strong foundation for understanding industry news and participating in discussions.

However, this is just the beginning – the technology constantly evolves, and new projects are introduced nearly every day. There’s so much more to explore, so don’t be afraid to ask questions and delve deeper into concepts that pique your interest.

Remember that the crypto market is largely unregulated, so DYOR so you don’t fall for FOMO and end up investing in shitcoins. Dive into the tokenomics and background of each project to identify worthy opportunities.

FAQs

What is cryptocurrency in simple terms?

A digital currency secured by cryptography, which makes it impossible to counterfeit. Cryptocurrencies aren’t issued or controlled by a central authority like the government or bank. Instead, they operate on distributed networks maintained by community members who validate transactions.

What is a crypto exchange in simple terms?

Cryptocurrency exchange is a platform that allows investors to buy and sell their digital assets, similar to stock exchanges. Additionally, some exchanges provide educational resources, real-time market data, and various trading tools.

What is mining cryptocurrency in simple terms?

Some blockchain networks, like Bitcoin, Litecoin, and Monero, use mining to finalize transactions. Miners validate transactions by solving cryptographic puzzles in exchange for rewards, usually some amount of the blockchain’s native currency. Mining requires advanced hardware and consumes plenty of energy.

Are crypto exchanges safe?

Major centralized crypto exchanges like Binance and Coinbase are generally safe because they have strong security and compliance measures. However, CEXs are like banks – they hold your crypto for you. If the exchange is hacked or goes bankrupt, your crypto could be lost.
On the other hand, decentralized exchanges may have less secure protocols, but there’s no central authority and, thus, no single point of failure. You are entirely responsible for the security of your own crypto. Either way, it’s important to do your own research when choosing an exchange.

What is a safe way to store cryptocurrency?

You can store cryptocurrency in a hot wallet (online) or cold wallet (hardware). The former is more convenient but also more susceptible to hacks. The latter is better for storing large amounts of crypto for the long term. Regardless of the wallet type, never share your private key with anyone.

References

Our Editorial Process

The Tech Report editorial policy is centered on providing helpful, accurate content that offers real value to our readers. We only work with experienced writers who have specific knowledge in the topics they cover, including latest developments in technology, online privacy, cryptocurrencies, software, and more. Our editorial policy ensures that each topic is researched and curated by our in-house editors. We maintain rigorous journalistic standards, and every article is 100% written by real authors.

Fuente