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Commonly Used Cryptocurrency Terms, Know What They Mean!

By February 26, 2018Uncategorized

Don’t know what a Fiat or a Node is? ….Check out our glossary of commonly used Cryptocurrency terms.

Altcoin – Any coin besides Bitcoin. Altcoins were once just a handful, but with time grew to thousands. Some are more established than others. Litecoin was one of the first altcoins that met with success. Other projects like PandaCoin had less fame and a much lower market price.

ATH – All-Time High. The highest market price for a digital asset. Usually not a good price to buy at.

Bitcoin – The original peer-to-peer payment network created in late 2008 – 2009 by Satoshi Nakamoto.

Blockchain – A data structure made of blocks. Each block of data has a unique number related to the next and the previous block. This ensures that the data within the block cannot be altered without leaving evident discrepancy.

Difficulty – The parameter for the required block hash. The smaller the number, the less possible solutions there are to the cryptographic problem. When the block hash target is a smaller number, the difficulty rises.

Ethereum – A digital asset and a network created in 2014. The first Initial Coin Offering sale. Ethereum is also a platform for additional tokens and smart contracts.

Exchange – A platform where digital assets can be traded against each other, or exchanged for fiat.

Fiat – Government-issued currency, backed by trust. “Fiat” means literally “let this be”, and the money’s value is based on trust in the issuer, in this case, the government and the central bank.

Flippening – Any switch between two assets when the market capitalization of one asset exceeds that of the other. Usually reserved for notable coins, for instance, a flippening between Bitcoin and Bitcoin Cash, or a flippening between Ripple and Ethereum.

Fork – An alteration to the blockchain’s rules. A soft fork means the new rules are not mandatory. A hard fork is backward-incompatible and the blockchain must follow the new rules from the time of the fork onward.

FOMO – Fear of Missing Out. Buyer behavior, where a recently spiking coin invites outrageous buying demand.

FUD – Fear, Uncertainty, Doubt. Unverified bad news or excessive criticism, which undermine trust in one coin, or the whole market.

Hash – A mathematical transformation of a string or other data, producing a long alphanumeric string. A hash is valuable, because even a small change in the initial message produces visible large changes in the resultant hash. This feature has been used to protect data from tampering.

Hashrate – The rate at which hashes are produced, to discover the right one for the next block. The basic unit of hashrate is hashes per second.

HODL – Misspelled “Hold”, a meme related to user behavior when an unusual and dramatic crash happens on the market, and investors who do not trade on time are invited to “HODL”, instead of panic-selling.

ICO – Initial Coin Offering. A sale of coins and tokens used for fundraising, to kickstart a project.

Key – A unique cryptographic hash signifying a user’s tamper-proof identity on the blockchain.

Market Capitalization – A calculation multiplying the asset price by the number of assets in circulation.

Mining – The process of producing cryptographic hashes until the right one is discovered and the next block is properly protected. When this happens, we say a block has been “mined”, or “solved”.

Node – A computer with a wallet that holds the whole history of the blockchain and verifies transactions for double-spending.

Proof-of-Work – A concept underlying the fact that Bitcoin transactions are tamper-proof and protected by calculation power that cannot be easily found. The work done on Bitcoin or another asset signifies the safety of the blockchain.

Proof-of-Stake – A technology in which holding coins in a specialized wallet is used to perform small-scale calculation and secure the network.

Pump and Dump – A coordinated effort to increase the price of a digital asset, then sell to late buyers who believe the price will rise more. The dump part comes second, when the large-scale holders shed their coins or tokens for profit.

Rig – A specialized machine optimized for producing hashes at the highest possible rate. Also known as “mining rig”.

Token – A digital asset that is not a coin, and is not mined, but already exists in an encoded state, with a fixed or variable supply.

Wallet – A specialized software that ensures a user’s identity on the blockchain and holds their private keys, while displaying public keys to communicate with the network.