When it comes to investing and trading, there is a lot to learn. Don’t let the tough crypto-jargon scare you away from this new frontier of investing. Whether you are new to the crypto world or have been dabbling in cryptocurrency for years, there are some things you should know. I am here to help you with that.
Here are some basic crypto terms that everyone should know if they want to trade on crypto exchanges.
The word “altcoins” (alternative coins) is used to refer to all cryptocurrencies besides Bitcoin (BTC). They are alternatives to both Bitcoin and conventional fiat money, which is how they got their name.
All-Time High Crypto (ATH)
An asset’s “All-Time High” (ATH) is the highest price (or market cap) it has experienced since being listed or created. No matter how much a trader purchased an item, the price used to define the “all-time high” simply refers to the highest price a trader paid for it.
All-Time Low (ATL)
The lowest price a coin has ever reached.
A computer software’s coding and execution of mathematical instructions to achieve a specific result.
There are several exchanges that trade the same cryptocurrency at any given time, and they can do so at various rates. If there is a profit margin between the two exchanges, arbitrage is the act of purchasing from one exchange and then selling it to the next.
On January 3, 2009, the first and most valuable cryptocurrency was introduced. Since then, its value has increased gradually, although it has also experienced extreme volatility. The cost of Bitcoin has changed considerably recently, going from a record high of $60,000 down to around $30,000.
Buy the dip
An investment strategy entails purchasing an asset at a discount in order to profit when its value increases later.
a digital format for keeping records and the technology that underpins cryptocurrency. Using sequential blocks that build upon one another, a blockchain forms a permanent, immutable record of all transactions (or other data).
An increasing collection of transactions that are organized into blocks make up blockchains. Since each block carries a cryptographic reference to the previous one, it is impossible to alter the blockchain’s history.
A block reward is given when miners or validators create a block. This takes the shape of freshly created cryptocurrency, which serves as a reward for users that support the continued operation of the blockchain.
A bull market is characterized as a situation in which market values are typically heading upward over a specific time frame and the general public’s perspective is favorable.
In contrast to a bull market, a bear market has unfavorable outlooks as market prices appear to be trending lower.
A gang of traders used this approach to try to manipulate the price of a cryptocurrency. This group’s coordinated bitcoin sales set the bear trap by tricking the market into believing a decline is imminent. Other traders then sell their own assets, further bringing down the price.
An online tool that allows you to observe and follow all transactions that are taking place on a cryptocurrency’s blockchain in real-time. Blockchain analysis tools like block explorers can offer data on the total network hash rate, coin supply, transaction growth, and other topics.
A slang phrase used to refer to cryptocurrency. (See meme coin and altcoin.)
The science of information security and privacy is known as cryptography, and it is applied in many aspects of modern computing. The SHA-256 one-way hashing method, which enables Proof-of-Work, and private-key/public-key cryptography, which authenticates and validates bitcoin transfers, both contribute to the security of blockchains and cryptocurrencies.
Market Cap abbreviation (see definition below)
A safe way to keep your cryptocurrency entirely offline. Many cold wallets, also known as hardware wallets, are actual objects that resemble USB drives. Although it carries some dangers, such as the possibility of losing it along with your cryptocurrency, this type of wallet can aid in preventing theft and hacking of your cryptocurrency.
The Circulating Supply of a cryptocurrency is the total quantity of coins available for trading on the open market. Some coins can be locked, reserved, or burnt, rendering them untradeable by the general public.
When a transaction is made, the network’s Nodes check to see if it is valid on the blockchain, and if it is, they come to an agreement.
The method by which new currencies are added to circulation is known as “mining” in the crypto sphere. A procedure in which miners compete for the following block to be added to a blockchain. Hardware is used to complete a challenging computational math problem. The Bitcoin network is protected by miners, making it difficult to attack, change, or halt the network.
The blockchain, a digital ledger that houses all transaction records, is unique to each cryptocurrency. When you move one cryptocurrency to another, a procedure known as chain linking takes place. In order to accomplish this purpose, the transaction must be registered in two different blockchains, which must link together.
The name was given to the algorithm used to both encrypt and decode data.
dApp (Decentralized Apps)
A dApp, short for decentralized application, is an application that isn’t managed by a single entity. A centralized program like Twitter serves as a conduit for users to send and receive messages, serving as an example. A blockchain-based distributed application (dApp) enables users to send and receive data without the involvement of a middleman.
DeFi (Decentralized Finance)
Decentralized finance is abbreviated. Because it depends on reputable intermediaries, finance has always been centralized. For instance, if you need to send money to a friend or family, you depend on your bank to transfer the funds to their account. DeFi, on the other hand, doesn’t need middlemen. Direct asset transfers are possible between participants. Theoretically, this speeds up and reduces the cost of transactions.
Decentralized autonomous organizations, or DAOs, are organizations that operate as transparent rules in various smart contracts. By allowing the community to vote for or against any proposed modifications or upgrades, they often enable the community to control the future of the DAO and its products while reducing centralization as far as possible.
The term “decentralized” is used to characterize technologies that leverage dispersed systems to boost security and redundancy while reducing dependency on central authorities and intermediaries.
Make independent research (DYOR). Some bitcoin experts frequently use it as a sort of disclaimer when they talk about cryptocurrencies or digital assets.
This means converting plain material that has been encrypted into plain text.
This is when the price of a certain cryptocurrency’s economy falls as a result of a decline in demand for that cryptocurrency.
The graph below shows a chart with the requests to buy (referred to as bids) and sell (referred to as asks). The Depth Chart displays the crossing point at which the market is most likely to accept a transaction in a timely manner since you can place a Limit Order on your buy or sell transaction.
Additionally, it displays any large Buy Walls or Sell Walls that may be in effect.
an electronically transferable, elusive, intangible item with a specific value.
Another term for the word Digital Commodity
When someone tries to simultaneously send cryptocurrency to two different wallets or places, this happens.
This is the phrase used to signify selling a significant portion or all of your cryptocurrency.
Dumping happens when a lot of people dump at once, sharply lowering the price of a cryptocurrency.
Ethereum is a software platform and the second-largest cryptocurrency by trade volume. Its associated currency is called ether, and it serves as a platform for developers to build new apps.
An online marketplace where you may buy and sell cryptocurrencies is known as a cryptocurrency exchange.
Is an acronym for “Ethereum Request for Comments” and lists suggested changes to the Ethereum system.
The requirements that each Ethereum token must meet. It specifies each token’s behavior so that transactions can be predicted. The ERC-20 standard is utilized by other coins, which leverage the Ethereum network in the process.
This is the non-fungible token (NFT) standard on the Ethereum network. It enables the production of distinctive, untraceable tokens. It can be used to tokenize real-world unique goods or create digital collectibles and game items.
Funds are kept in escrow when an intermediary is used to hold them throughout a transaction. This is typically a middleman between the transmitting and receiving parties.
The method of transforming digital data into a format that restricts unauthorized access. A website should encrypt your password if you use one to log in so that hackers cannot use it if it is stolen.
Traditional currencies are supported by a nation-state’s complete faith and credit. Fiat currencies include the US dollar, the euro, and the British pound.
A process for determining the worth of a certain asset and forecasting its future performance. It considers elements like a product’s technological and inventive value, the team behind it, or the token distribution strategy and its use cases when evaluating crypto ventures.
A website is referred to as a faucet if it offers to give you free cryptocurrency in exchange for connecting with it. Most of these are con games.
the method by which the community that controls a specific coin modifies the rules controlling the blockchain. The modification represents a significant break from the blockchain’s prior version—a fork, if you will. Typically, soft forks include a change in the software protocol—but one that is backward-compatible. All nodes must update to the newest version in response to hard forks since they are important enough.
This is a previously established agreement between two parties to complete a transaction once the price of bitcoin reaches a specific level. The buyer and seller are already identified and bound, which distinguishes it from a limit order.
When a seller wants to go long and a buyer wants to go short, a future contract comes into play.
Fear of being left out. a form of social anxiety brought on by the belief that others are having fun or benefiting from an event while one is missing out. In cryptocurrency markets, it typically refers to seeing tokens you do not own experience sharp price increases.
The initial or initial few blockchain blocks.
An additional name for a Mining Pool (see below).
The Ethereum network charges a fee for each transaction. Users must pay a certain amount in Ether, the native currency of Ethereum, for each transaction (ETH). Gas is the name given to this charge. Ethereum validators are rewarded with gas in exchange for the energy they expend clearing transactions. Additionally, the gas acts as a barrier to nefarious blockchain usage.
When a piece of data is run through a unique hashing algorithm, the output is a hash. It condenses data into a practically unique string of alphanumeric characters. This is significant for cryptocurrencies since hashing can reveal attempts to fraudulently alter or update data. A blockchain is an immutable record of transactions.
Is used to describe the total amount of computing power being used to mine and process transactions on a Proof-of-Work (PoW) blockchain, such as the Bitcoin blockchain. The indicator is significant because it evaluates the reliability and, more particularly, the security of the Bitcoin network. The hashrate increases with the number of miners, making the blockchain more secure.
a method of cryptocurrency online storage offered by a third party or an exchange. Hot wallets are frequently targeted by hackers because the storage is online and can only be accessed with a password. If users lose their access codes, hot wallet operators can assist them in getting back into their funds.
In contrast to an app or online exchange, a hardware wallet is a cryptocurrency wallet that holds the user’s private keys—a vital piece of information necessary to authorize outgoing transactions on the blockchain network—in a secure hardware device.
Although the phrase was coined in 2013 as a user’s misspelling on a Bitcoin forum, it actually stands for “Hold On for Dear Life.” It alludes to a passive investing approach in which individuals purchase and hold onto cryptocurrencies rather than trading them in the expectation that their value would rise.
Read More: What Does HODL Mean In Trading Crypto
A provision built into the Bitcoin code that reduces the supply of fresh bitcoin entering circulation by half after a specific number of blocks have been mined, typically every four years. The price of Bitcoin may change as a result of the halving.
Initial Coin Offering (ICO)
A means of raising money for a brand-new cryptocurrency startup. ICOs are comparable to stock initial public offerings (IPOs).
Know Your Customer (KYC)
Even though it’s not necessary, several cryptocurrency exchanges follow KYC regulations by doing specific identity checks on their users.
This is a list of transactions kept both by decentralized finance software and centralized financial institutions. Times, dates, senders, and recipients are just some of the information for each transaction that is recorded in a ledger.
Two concepts are referred to as liquidity. It is most frequently used to indicate a cryptocurrency’s ability to be freely bought and sold. It can also refer to the total number of cryptocurrencies that are available for trading on a decentralized exchange.
A form of loan provided by a broker during margin trading on an exchange (see below).
a request made through an exchange to purchase or sell a certain item at that price or a lower one. A buy order will be carried out at the target price or higher, whilst a sell order will only be carried out at the chosen price or lower.
Read more: What Is A Limit Order?
Going long is when you want to take a significant amount of bitcoin and hold onto it in the hope that its value will increase (or take a long position).
It is a style of trading that entails borrowing money. When compared to regular trading, it gives traders access to bigger sums of money, letting them leverage their positions and increase earnings while also exposing them to bigger risks.
Read more: Day Trading Crypto With Leverage
It represents a cryptocurrency’s overall value. The price of the cryptocurrency is multiplied by the number of coins in circulation to determine the cryptocurrency market capitalization.
The procedure by which new cryptocurrency coins are made available and a record of user transactions is kept.
A mining pool is a collection of miners who have pooled their hashing or processing power. As everyone competes to be the first to produce new valid blocks in proof-of-work blockchains, pooling can assist these participants to boost or even out their mining winnings.
Is a cryptocurrency that was established as a joke or based on a meme in a similar fashion to a meme.
To define a coin that is seeing a significant uptrend in its price.
A Market Order buys or sells at the current price at the time the transaction order is issued, unlike a Limit Order, which waits until a specific price.
Read more: Should I Use Crypto Market Order?
Moving Average Convergence Divergence
This analyzes the momentum of price movement in an effort to make future predictions as part of the technical study of a cryptocurrency’s worth.
Node is a system of computers or devices linked together that each has a copy of a blockchain. Each node contributes to the overall network by exchanging data and confirming transactions.
Non-Fungible Tokens (NFTs)
Non-fungible tokens are monetary units used to signify ownership of certain digital goods like works of art or collectibles. The Ethereum blockchain is where NFTs are most frequently kept.
Net Realized Profit or Loss (NRPL)
The total amount of money spent by all holders, including the profit or loss. Realized Profit/Loss is measured in relation to the coin’s most recent price movement. Network profitability trends, capital inflows and outflows, and overall market mood are all reflected in NRPL.
Net Unrealized Profit/Loss (NURPL)
The gap between market cap and realized cap divided by market cap is known as net unrealised profit or loss.
A Nonce is a randomly generated number that is produced when a miner hashes a transaction. Depending on how complicated the transaction is, different characteristics are considered while selecting that number.
In order for your transaction to be executed on the Ethereum or Bitcoin network, a network fee is necessary. The charge serves as a perk for network users like miners and validators who process transactions and support network security.
A blockchain transaction that is recorded on the distributed, public ledger.
The price of a cryptocurrency will rise for a while if a lot of purchases have been made using it. It is currently regarded as overbought, and a selling phase is anticipated.
A cryptocurrency is deemed oversold if it has been sold for a prolonged period of time without experiencing an upward trend. There would be doubts about whether it will recover in this circumstance.
A paper wallet is one that stores the private key associated with your wallet code on a tangible piece of paper. It’s also known as Cold Storage at times.
Simulators for cryptocurrencies are the safest and most convenient approach to learning how to trade. Furthermore, simulators are excellent and useful not just for beginner and beginner traders, but also for professional traders, who may utilize simulated funds to try out and develop new trading methods and strategies.
Read more: Simulators For Leverage Trading Crypto
Your public key is a lengthy string of characters that is processed by an algorithm to create your wallet address. It is generated as a pair with your private key.
The secure code that gives you immediate access to your cryptocurrency. Your private key is something you should never reveal, just like your bank account password.
Abbreviation for peer-to-peer. refers to a transaction that takes place between two parties without the involvement of a middleman or central authority.
Proof of work
This consensus technique, which is frequently abbreviated as PoW, is used by many blockchains to demonstrate that miners have put in the time and effort to guess the 64-character hash required to add a block to the blockchain. By broadcasting the solution, other nodes can rapidly confirm that your hash is accurate and that you have put in the necessary effort to obtain it.
Proof of stake
This consensus process, which is frequently abbreviated as PoS, is used by various blockchains and calls for verifiers to lock up, or stake, a particular amount of bitcoin in order to be eligible to add new blocks to a blockchain. Your chances of becoming a validator increase with the number of coins you stake. You run the danger of losing your stake if you spend your way into a position to knowingly approve a fraudulent transaction, which is a powerful deterrent to cheating.
The collection of guidelines that specify how data is transferred throughout a network.
Pump and Dump
The unethical practice of buying a lot of a particular cryptocurrency to raise its price and attract investors, then selling the whole amount for a profit.
Read more: Crypto Pump And Dump Scheme
A market whose participants are obligated to abide by specified regulations or face fines and/or the loss of their operating licenses.
is the total value at the time that each Bitcoin last moved. Realized value and realized cap are terms that are used synonymously.
By examining the coin value at the time it was last transferred, this metric is calculated. As an illustration, 10 bitcoins trading at $49K have a market cap of $490,000, but if they were last traded at $20K, they would have a “realised cap” of $200,000.
Return on Investment (ROI)
ROI is a performance metric used to assess an investment’s effectiveness or profitability or to compare the effectiveness of several distinct investments.
Satoshis or Sats
The smallest Bitcoin (BTC) unit is the Sat, which has a value of 0.00000001 BTC. One Sat is equal to one hundred millionth of a Bitcoin, and Sat is named after the mysterious person who invented Bitcoin, Satoshi Nakamoto.
This is where you started when you made your wallet ID. A seed is typically a word or group of phrases that can be used to recreate your wallet’s ID if you misplace it.
A seed phrase is a string of words that your cryptocurrency wallet generates for you and uses to grant you access to the cryptocurrency tied to that wallet. Even if you misplace the wallet that created your seed phrase, you will still be able to access all of the cryptocurrency linked to it as long as you have it.
Cryptocurrency owners now have the means to put their digital assets to work and generate passive income through staking, without having to sell them.
Read more: Profitable Crypto Interest Accounts For 2022
Stablecoin or Digital Fiat
A stablecoin links its value to an analog currency. On the blockchain, a digital fiat stands in for fiat, or currency backed by the government. (Tether, for instance, which is linked to the dollar)
The high-level programming language Solidity is used to create smart contracts. Gavin Wood, a co-founder of Ethereum, developed Solidity, which enables programmers to design irreversible, unstoppable systems that anybody may use.
A computer program that, when certain conditions are satisfied, runs autonomously on a blockchain without the assistance of a human or middleman. The agreement cannot be modified after it has been signed.
This strategy also referred to as short selling, involves a trader selling an asset they do not own at a discount. Selling it is intended to further reduce the price. Once the agreement is finalized, they can purchase the asset for even less than they originally sold it for. As a result, they generate a profit in the interim.
A stop-loss order automatically closes a cryptocurrency position when the price reaches a predetermined level.
Read more: Use A Stop-Loss When Day Trading On Leverage
This is a cryptocurrency that typically offers more value than just the ability to transfer money (like a coin).
This is used as a trading tool to study a cryptocurrency’s past data in an effort to predict its future.
Tether (USDC) (USDC)
A stablecoin that is 1:1 correlated to the dollar.
Fees that are typically paid in extremely modest amounts to the miners who are engaged in successfully approving a transaction on the blockchain. Depending on the complexity of a transaction and the current state of the network, this cost may change. If an exchange participates in the transaction’s facilitation, it might also receive a portion of the overall transaction fee.
USD Coin (USDC)
A stablecoin that is 1:1 correlated to the dollar.
Unspent Transaction Output
This is the sum of cryptocurrency that has been sent to an entity but not further. These sums are recorded in the blockchain as data and are regarded as unspent.
The total quantity of currency that is now being exchanged on the open market. Volume in cryptocurrency marketplaces is sometimes expressed as a 24-hour period.
A person who purchases the opportunity to verify transactions and gain cryptocurrency on a proof-of-stake blockchain.
A state of the market when prices change frequently and unpredictably.
Cryptocurrency owners use wallets as tools to manage their private keys and as a transactional interface. Wallets can be custodial or non-custodial today, and they are available as hardware and software. Here, the essential point is whether or not the user still has complete control over their private key.
A person or entity that possesses a significant amount of a specific cryptocurrency is referred to as a “whale.” This term has no precise cutoff point and typically relies on the proportion of the entire supply; however, for Bitcoin, it is defined as someone who holds more than 1000 BTC. The price of a coin may be impacted by a whale selling off its stake.
White papers are often scholarly texts that propose a new technology and lay out all the specifics of its implementation. White papers are frequently released by new initiatives to assist prospective customers or investors in understanding the product or service, its use case, and its potential.
Ahead of an ICO, interested parties can register their interest and buy intent, or even make a pre-sale purchase. The Whitelist is the name given to the list of these parties.
A percentage representation of return on investment.
A transaction that hasn’t yet been added to the blockchain since it hasn’t been verified on it.
Conclusion: Crypto Terms
The world of cryptocurrency can be a bewildering one. But if you’re looking to build a career in it, or you’ll simply be dabbling with cryptocurrencies, it’s helpful to have an understanding of the lingo that’s used within the community.
Here, we’ve listed and defined some popular crypto terms for you to take note of.
Just because they are terms that are foreign to you, doesn’t mean they are confusing or difficult to understand. Once you become familiar with the basics, the rest should come naturally.
Have a great time trading! Remember to bookmark this page to reference all crypto news or lessons you are reading.
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