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The Trader’s Quick Guide to Crypto Terms

Crypto Guide about Terms - Official Olymp Trade Blog

Cryptocurrencies are comparatively new financial assets that are growing fast. Technology introduces these digital products or payment options that have become attractive investment options for financial investors. Therefore, to participate in this industry, investors should have a clear knowledge of new and key terms in crypto, the new digital currency in the world.

There are several types of terms that you can list on cryptocurrencies, such as terms for dummies, must-know terms, slang terms, etc. Whether you choose to frequently trade or “HODL” crypto for a longer period, learning these terms will help you make appropriate trade decisions. This article will guide you on all these terms that you need to know when seeking to invest in this marketplace.

Interact with the underlined words and green dots to get additional details and explanations.

 

Basic Terms of Cryptocurrency

It is common among financial traders that they invest in assets depending on features such as interest rates, emerging funds, asset classes, stocks, retirement plans, etc. As we already said, cryptocurrencies are a comparatively new addition to the financial world, so learning crypto terminology is essential.

The most common terms include:


Coin

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.

Ethereum trading - Olymp Trade - 10-07-2022
Fig. 1. Ethereum chart

In the Olymp Trade platform, cryptocurrencies are available under FTT and Forex sections, from which you have to select the coin you want to trade. The above image shows the Ethereum chart where traders can make money by clicking the Up or Down tab on the right section.


Bitcoin

 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

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.


Blockchain

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

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.


Node

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


Mining

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.


Public Key

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.


Private Key

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.


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

"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 (decentralized finance)

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.

Some Other Terms Crypto Traders May Hear

In this part, we list some terms that traders may encounter while trading crypto.


What is IEO?

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.


What are CEX and DEX?

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.


What is KYC?

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.


What is a block reward?

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.

Top Slang Terms For Cryptocurrencies’ Enthusiasts

This part introduces the top slang terms for crypto coins. Popular crypto slang terms include the following selection, but there are many more.


Airdrop

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


ATH

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


BTD

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

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


Mooning or Moon

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


Whale

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.


Cryptojacking

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

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 & POW

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.

Final Thoughts

Crypto terms are crucial for a trader as these names will appear over and over again. Understanding these names will help traders make better trading decisions. With Olymp Trade’s market Insights, you will see cryptocurrency analysis along with forex and stocks where these crypto terms are used.

Trading in the cryptocurrency market requires the continual learning of new ideas. Therefore, the Olymp Trade Blog is a great source of educational materials, covering a wide range of useful concepts including technical and fundamental analysis.

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