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Crypto Terminology

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Glossary of Terms

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Bags

Cryptoassets being held, generally as longer-term plays; sometimes used self-deprecatingly for soft or losing positions one should close, but can’t for whatever reason. “Too bad none of my alt bags saw the moon that I did today. #cryptoeclipse”

Bitcoin Maximalists

The truest believers in bitcoin’s original mission and design, often paired with a disdain for altcoins.

Block

Blocks are found in the Bitcoin block chain. Blocks connect all transactions together. Transactions are combined into single blocks and are verified every ten minutes through mining. Each subsequent block strengthens the verification of the previous blocks, making it impossible to double spend bitcoin transactions (see double spend below).

BIP

Bitcoin Improvement Proposal or BIP, is a technical design document providing information to the bitcoin community, or describing a new feature for bitcoin or its processes or environment which affect the Bitcoin protocol. New features, suggestions, and design changes to the protocol should be submitted as a BIP. The BIP author is responsible for building consensus within the community and documenting dissenting opinions.

Black Swans

A black swan is an event or occurrence that deviates beyond what is normally expected of a situation and is extremely difficult to predict. Black swan events are typically random and unexpected. The term was popularized by Nassim Nicholas Taleb, a finance professor, writer, and former Wall Street trader.

Block Chain

The Bitcoin block chain is a public record of all Bitcoin transactions. You might also hear the term used as a “public ledger.” The block chain shows every single record of bitcoin transactions in order, dating back to the very first one. The entire block chain can be downloaded and openly reviewed by anyone, or you can use a block explorer to review the block chain online.

Block Height

The block height is just the number of blocks connected together in the block chain. Height 0 for example refers to the very first block, called the “genesis block.”

Block Reward

When a block is successfully mined on the bitcoin network, there is a block reward that helps incentivize miners to secure the network. The block reward is part of a “coinbase” transaction which may also include transaction fees. The block rewards halves roughly every four years; see also “halving.”

BTFD | #BTFD

“Buy the Fucking Dip.” Advice to other traders to pick up a coin that’s presumably hit its bottom. “$GNT Golem making moves. Underpriced @ 7.5K If U are buying GNT under 10K still a good price 3 X LETS GO $ETH #CRYPTO #trading #BTFD”

Change

Let’s say you are spending $1.90 in your local supermarket, and you give the cashier $2.00. You will get back .10 cents in change. The same logic applies to bitcoin transactions. Bitcoin transactions are made up of inputs and outputs. When you send bitcoins, you can only send them in a whole “output.” The change is then sent back to the sender.

Cold Storage

The term cold storage is a general term for different ways of securing cryptocurrency offline (disconnected from the internet). This would be the opposite of a hot wallet or hosted wallet, which is connected to the web for day-to-day transactions. The purpose of using cold storage is to minimize the chances of your bitcoins being stolen from a malicious hacker and is commonly used for larger sums of bitcoins.

Cold Wallet and Hot Wallet

Cold storage is an offline wallet provided for storing cryptocurrency. With cold storage, the digital wallet is stored on a platform that is not connected to the internet, thereby, protecting the wallet from unauthorized access, cyber hacks, and other vulnerabilities that a system connected to the internet is susceptible to.

Confirmation

A confirmation means that the bitcoin transaction has been verified by the network, through the process known as mining. Once a transaction is confirmed, it cannot be reversed or double spent. Transactions are included in blocks.

Cryptocurrency

Cryptocurrency is the broad name for digital currencies that use blockchain technology to work on a peer-to-peer basis. Cryptocurrencies don’t need a bank to carry out transactions between individuals. The nature of the blockchain means that individuals can transact with each other, even if they don’t trust each other. The cryptocurrency network keeps track of all the transactions and ensures that no one tries to renege on a transaction.

Cryptocurrency 2.0

Also known as a decentralized app, a cryptocurrency 2.0 project uses the blockchain for something other than simply creating and sending money. They typically involve decentralized versions of online services that were previously operated by a trusted third party.

Cryptography

Cryptography is used in multiple places to provide security for the Bitcoin network. Cryptography, which is essentially mathematical and computer science algorithms used to encrypt and decrypt information, is used in bitcoin addresses, hash functions, and the block chain.

Cypherpunk

1. A person with an interest in encryption and privacy, especially one who uses encrypted email. 2. Cypherpunk, a term that appeared in Eric Hughes’ “A Cypherpunk’s Manifesto” in 1993, combines the ideas of cyberpunk, the spirit of individualism in cyberspace, with the use of strong encryption ( ciphertextis encrypted text) to preserve privacy. Cypherpunk advocates believe that the use of strong encryption algorithms will enable individuals to have safely private transactions. They oppose any kind of government regulation of cryptography. They admit the likelihood that criminals and terrorists will exploit the use of strong encryption systems, but accept the risk as the price to be paid for the individual’s right to privacy.

Dark Web

The part of the World Wide Web that is only accessible by means of special software, allowing users and website operators to remain anonymous or untraceable. The Dark Web poses new and formidable challenges for law enforcement agencies around the world.

Decentralized

Having a decentralized bitcoin network is a critical aspect. The network is “decentralized,” meaning that it’s void of a centralized company or entity that governs the network. Bitcoin is a peer-to-peer protocol, where all users within the network work and communicate directly with each other, instead of having their funds handled by a middleman, such as a bank or credit card company.

Difficulty

Difficulty is directly related to Bitcoin mining (see mining below), and how hard it is to verify blocks in the Bitcoin network. Bitcoin adjusts the mining difficulty of verifying blocks every 2016 blocks. Difficulty is automatically adjusted to keep block verification times at ten minutes.

Dogecoin

Dogecoin is an altcoin that first started as a joke in late 2013. Dogecoin, which features a Japanese fighting dog as its mascot, gained a broad international following and quickly grew to have a multi-million dollar market capitalization.

Double Spend

If someone tries to send a bitcoin transaction to two different recipients at the same time, this is double spending. Once a bitcoin transaction is confirmed, it makes it nearly impossible to double spend it. The more confirmations that a transaction has, the harder it is to double spend the bitcoins.

DYOR | #DYOR

“Do Your Own Research.” The trader’s caveat that advice shouldn’t be taken at face value. “$BCY has an appealing risk/reward here. Could take a few months to play out, however, and will require patience. #DYOR”

Exit Scam

Traditionally a term for darknet markets and vendors that, after building up a good reputation, accumulate bitcoins and disappear; exit scams are also feared by ICO participants who worry that, once they’ve raised hundreds of millions in hard-to-trace money, the developers will take the money and run.

Fiat

Government-issued money.

Full Node

A full node is when you download the entire block chain using a bitcoin client, and you relay, validate, and secure the data within the block chain. The data is bitcoin transactions and blocks, which is validated across the entire network of users.

FOMO | #FOMO

“Fear of Missing Out.” When a coin starts to moon, dumb money rushes in. “$LGD on a TEAR right now!!! It has major highs right now! Some major #FOMO going on!!! Sell while it’s high. It WILL drop before fight!!!”

FUD

“Fear, Uncertainty, and Doubt.” Another non-crypto term that describes attempts to scare weak-handed coin-holders into selling their positions, often with rumors of exit scams or hacks; the cheap, dumped coins are then picked up by the FUD-ers.

Fungibility

Fungibility is a good or asset’s interchangeability with other individual goods or assets of the same type. Assets possessing this fungibility property simplify the exchange and trade processes, as interchangeability assumes everyone values all goods of that class the same.

Hodl

HOLD ON FOR DEAR LIFE! The intentionally misspelled word hodl has its roots in a December 2013 post on the Bitcoin Talk forum, “I AM HODLING”; when the author, GameKyuubi, couldn’t be bothered to fix his typo, the community instantly turned it into a verb: to hodl. Along with other terms, hodl is an effective litmus test for sussing out newcomers, carpetbaggers, and tourists.

Halving

Bitcoins have a finite supply, which makes them scarce. The total amount that will ever be issued is 21 million. The number of bitcoins generated per block is decreased 50% every four years. This is called “halving.” The final halving will take place in the year 2140.

Hash

A cryptographic hash is a mathematical function that takes a file and produces a relative shortcode that can be used to identify that file. A hash has a couple of key properties:

• It is unique. Only a particular file can produce a particular hash, and two different files will never produce the same hash.
• It cannot be reversed. You can’t work out what a file was by looking at its hash.

Hashing is used to prove that a set of data has not been tampered with. It is what makes bitcoin mining possible.

Hash Rate

The hash rate is how the Bitcoin mining network processing power is measured. In order for miners to confirm transactions and secure the block chain, the hardware they use must perform intensive computational operations which is output in hashes per second.

Hard Fork

A hard fork is when a single cryptocurrency splits in two. It occurs when a cryptocurrency’s existing code is changed, resulting in both an old and new version. Meanwhile a soft fork is essentially the same thing, but the idea is that only one blockchain (and thus one coin) will remain valid as users adopt the update. So both fork types create a split, but a hard fork is meant to create two blockchain/coins and a soft fork is meant to result in one. Segwit was a soft fork, Bitcoin Cash, Bitcoin Gold, and Segwit2x are all hard forks.

Immutability

In object-oriented and functional programming, an immutable object (unchangeable object) is an object whose state cannot be modified after it is created. This is in contrast to a mutable object (changeable object), which can be modified after it is created.

Lambo | #Lambo

A running joke among traders, you’re cryptorich when you can buy a Lamborghini; though absurd, it’s not unheard of — when Alexandre Cazes, the suspected founder of a major darknet marketplace, was found hanged in his Bangkok jail cell, Thai media reported that he owned four Lamborghinis.

Mining

Bitcoin mining is the process of using computer hardware to do mathematical calculations for the Bitcoin network in order to confirm transactions. Miners collect transaction fees for the transactions they confirm and are awarded bitcoins for each block they verify.

Moon | #Moon

A rapid price increase.

Peer-to-Peer

Typically, online applications are provided by a central party that organizes all the transactions. Your bank runs its own computers, and all the customers log into the bank’s computer to handle their transactions. If Bob wants to send money to Alice, he asks the bank to do it, and the bank controls everything. In a peer-to-peer arrangement, technology cuts out the middleman, meaning that people deal directly with each other. Bob would send the money directly to Alice, and there wouldn’t be any bank involved at all.

Pool

As part of bitcoin mining, mining “pools” are a network of miners that work together to mine a block, then split the block reward among the pool miners. Mining pools are a good way for miners to combine their resources to increase the probability of mining a block, and also contribute to the overall health and decentralization of the bitcoin network.

Private Key

A private key is a string of data that shows you have access to bitcoins in a specific wallet. Think of a private key like a password; private keys must never be revealed to anyone but you, as they allow you to spend the bitcoins from your bitcoin wallet through a cryptographic signature.

Proof of Work

Proof of work refers to the hash of a block header (blocks of bitcoin transactions). A block is considered valid only if its hash is lower than the current target. Each block refers to a previous block adding to previous proofs of work, which forms a chain of blocks, known as a block chain. Once a chain is formed, it confirms all previous Bitcoin transactions and secures the network.

Pump

A rapid price increase believed to be the result of market manipulation, a.k.a. pump and dump.

Public Address

A public bitcoin address is cryptographic hash of a public key. A public address typically starts with the number “1.” Think of a public address like an email address. It can be published anywhere and bitcoins can be sent to it, just like an email can be sent to an email address. Learn how to receive bitcoin in your bitcoin wallet here.

Private Key

A private key is a string of data that shows you have access to bitcoins in a specific wallet. Think of a private key like a password; private keys must never be revealed to anyone but you, as they allow you to spend the bitcoins from your bitcoin wallet through a cryptographic signature.

Rekt | #Rekt

Meaning “wrecked”. “I never sell because of #FUD, and I never buy because of #FOMO. That’s the easiest way to get #Rekt”

Sats

Satoshis, currently the smallest unit of a single bitcoin, useful for tracking coin prices. “At the rate $XRP’s moving, I wouldn’t be surprised if it hits 10K sats by the end of the day.”

Security Tokens

A security token (sometimes called an authentication token) is a small hardware device that the owner carries to authorize access to a network service. The device may be in the form of a smart card or may be embedded in a commonly used object such as a key fob.

Shitcoins

Pejorative term for altcoins, especially low-cap coins, often affectionately used by shitcoin hodlers.

SEGWIT

SegWit is the process by which the block size limit on a blockchain is increased by removing signature data from Bitcoin transactions. When certain parts of a transaction are removed, this frees up space or capacity to add more transactions to the chain.

Transaction

A transaction is when data is sent to and from one bitcoin address to another. Just like financial transactions where you send money from one person to another, in bitcoin you do the same thing by sending data (bitcoins) to each other. Bitcoins have value because it’s based on the properties of mathematics, rather than relying on physical properties (like gold and silver) or trust in central authorities, like fiat currencies.

Wallet

Just like with paper dollars you hold in your physical wallet, a bitcoin wallet is a digital wallet where you can store, send, and receive bitcoins securely. There are many varieties of wallets available, whether you’re looking for a web or mobile solution. Ideally, a bitcoin wallet will give you access to your public and private keys. This means that only you have rightful access to spend these bitcoins, whenever you choose to.

Whale

Anyone who owns 5 percent of any given coin, often used as a boogeyman to explain unwanted price movements. “Nice support $NEO. Clear whale manipulation.”

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