The Trader’s Quick Guide to Crypto Terms

A coin usually represents the digital store of value of any specific cryptocurrency or blockchain network. Some coins are named after their blockchain like  Bitcoin, and others use a network name like Stellar.

 Bitcoin (BTC) is the first and original cryptocurrency. It was launched in 2009. The price of BTC climbed sky-high where the all-time high level is at 69k USD. There are a total of 21,000,000 in circulation, and from them, more than 90% were mined.

Altcoin refers to any crypto other than BTC. The second-most valuable cryptocurrency,  Ethereum (ETH), and many other altcoins are currently available in the crypto industry. Some other examples of altcoins are  Litecoin, Ripple, Cardano, Ethereum Classic, etc.

You can consider blockchain as a digital ledger that stores data. Sequential blocks create a blockchain that stores data on transactions. All the transactions in Bitcoin are stored in the Bitcoin blockchain and everyone in the world can see it. Some other forms of blockchains are private and hidden where information access is limited.

Blocks are specific places where the network stores information and each block consists of specific data. For example, the average size of the Bitcoin block is 1MB where information for around 2000-3000 transaction is stored.

A node is a computer that connects to any blockchain network.

Mining is the process of adding new coins to the network. Miners create blocks in blockchains.

Transactions or some calculations for smart contracts are included inside the block transactions. They keep the blockchain running by solving mathematical equations and as a reward, they earn cryptocurrencies from the blockchain network.

The public key is like a bank account number that you can share with any entity or organization that you wish to send or receive money. In terms of cryptocurrencies, the public key is the account address shared with other people so that they can send cryptocurrency.

The private key is like a bank account password that you usually do not share with anyone as they would then have access to your wallet.

A Crypto wallet is where users store or make transactions of cryptocurrencies. Many exchange platforms offer wallets to store and make transactions. Two types of crypto wallets are available: Hot wallets and cold wallets. Hot wallets are connected to the web while cold wallets are like memory cards that you can carry with you much like a normal wallet.

"HODL" is a term in cryptocurrency that stands for "Hold On for Dear Life." It comes from the Bitcoin forum in 2013. It is actually a misspelling of “hold” from a Bitcoin forum, but has evolved into a common expression to “hold,” not sell your coins regardless of the turmoil in the market. It is a passive method in which investors purchase and hold the coin for longer in hope to generate more profits.

Defi is the short term for project financing that comes from the cryptocurrency sphere. Since crypto blockchains operate outside the direction of central banks, lending to new projects can be done using a combination of true market forces and “smart contracts.”

The result is a system that allows innovators to find financing from cryptocurrency investors willing to shoulder a degree of risk.

An Initial Exchange Offering (IEO) is a method of fundraising or crowdfunding operated by the currency exchange platform. Often used by startups that want to raise funds for a new crypto project. It allows investors to buy assets – tokens – before they are available on the open market.

CEX, or centralized exchange, is a platform that offers cryptocurrency trading on a large scale and operates in a similar way to other classical asset exchanges such as for stocks. On the contrary, DEX, or decentralized exchange, provides a peer-to-peer marketplace where buyers and sellers can exchange their cryptocurrencies without any involvement of a middleman.

Know your Customer (KYC) is a system required by many governments for brokers and exchanges to identify the people that are using their services for financial transactions. The initial explanation for these regulations was to help curtail money laundering and terrorist activity.

Essentially, for traders, it is a process of requesting an investor’s information such as name, email, address, phone, etc. to verify that they are who they claim to be.

A block reward refers to the reward every miner receives from a blockchain after successfully creating a block and storing that info in the network.

An airdrop is a method for distributing cryptocurrencies among many users simultaneously. New projects often conduct airdrops to increase awareness and interest of users.

All-time high (ATH) is a common term in financial markets and subsequently, cryptocurrencies. It refers to an asset’s highest traded value.

BTD stands for “buying the dip”. When the price of any crypto drops rapidly, many investors choose to buy the asset while the price is low with the expectation that it is just “dipping” and will rebound soon. Sometimes it reflects the all-in mentality of many financial investors.

FOMO, or "Fear Of Missing Out," refers to investor fear of not entering a winning position and failing to profit off of price movements.

This term is common in financial markets that refers to any asset including crypto that is rising rapidly or continues to grow.

A "Whale" is a common term that crypto investors use to define any person or group that holds a large portion of any cryptocurrency. It has been a common term in trading circles for many years, but became more popularized with the rise of crypto.

Suppose someone installs any malware on your computer and enables them to access and use your computer for mining crypto without even you knowing it! 😡 This term is Cryptojacking in the crypto industry.

FUD stands for fear, uncertainty, and doubt. This term usually refers to conveying awful news about crypto coins and aims to create considerable panic among crypto investors. You can relate this term to crypto ban rumours, regulatory issues, etc.

POS stands for Proof-of-Stake, and POW stands for Proof-of-Work. You can mine coins that use the POW system. On the other hand, cryptos that use the POS system enable generating staking rewards.