Alice’s Adventures in Wonderland is the story of a young girl who disappears down a rabbit hole and finds a place that is bizarre, complex and chaotic.
Much like crypto really. Almost everyone who is new to this space has a steep learning curve to go through in order to feel like they have a reasonable understanding of what is going on.
There’s so much to learn, so much technical information to absorb and so many wild differences of opinion. In an attempt to clarify things at least a little, here are simple one sentence definitions for all of the major crypto terms.
Top 40 Bitcoin Terms
Address
A string of characters (unique to the address owner) that enables the sending or receival of crypto.
Alt Coin
Every coin other than Bitcoin.
Bitcoin
Digital currency and payment network utilising mathematics, cryptography, limited supply, decentralisation, zero counter-party risk and constantly evolving open source code.
Block
A permanent, public and unalterable record of data related to the network.
Blockchain
A secure, peer-to-peer, distributed and constantly growing digital record of every transaction involving that coin.
BTC
The abbreviation for Bitcoin – all cryptos have a 3 or 4 letter ticker used as an industry-standard.
BTD (Buy The Dip)
The price has gone down so it looks like a good buying opportunity.
Cryptocurrency
A digital asset that uses cryptography to work as a medium of exchange, control the creation of additional units, secure its transactions, and to verify the transfer of assets. (Wikipedia)
Cryptography
Transforming data so that it can’t be read unless you have a secret decryption key.
DYOR (Do Your Own Research)
Every investor should conduct their own analysis rather than relying on the opinions of others.
Ethereum
ETH is a next generation blockchain that allows dApps to be built on top of it’s protocol and utilise smart contracts.
Exchange
A website marketplace where you can buy and sell cryptocurrencies.
Fiat currency
A currency such as the Australian dollar which has no intrinsic value other than the government’s declaration of it being legal tender.
FOMO (Fear Of Missing Out)
Feeling compelled to buy immediately because you believe the price will be rising so fast, so soon that you’ll miss out forever if you don’t act now.
FUD (Fear, Uncertainty and Doubt)
When bad, or potentially bad, news hits the market causing many traders to react irrationally.
Fungible
An essential feature of any currency, fungibility means every unit of money is the same as another and therefore interchangeable; eg 1kg of gold or 1 dollar.
Hard fork
When a deliberate change in the computer code splits one cryptocurrency into two.
Hardware wallet
Secure hardware device storing private keys.
HODL (Hold On for Dear Life)
Originally a drunken typo on a popular website, it quickly became an acronym for ignoring short-term volatility and remaining a long-term bull.
ICO (Initial Coin Offering)
Crypto’s unregulated version of a stock’s Initial Public Offering (IPO), whereby investors fund the development of a new coin or related crypto project.
Market Cap
Current price per coin multiplied by the number of coins in circulation, so 1 million coins at $10 each means a market cap of $10m.
Mining
The process of computers creating new blocks for the blockchain and being rewarded for verifying these transactions.
Paper wallet
Storing coins offline as a physical document in ‘cold storage’.
Private key
A secret number (known only to the owner) that allows coins to be spent or transferred.
Proof of stake
Coins secure the network via a combination of cryptocurrency ownership and random selection to award fees to the verifier of transactions.
Proof of work
Hardware secures the network via a costly to produce (but simple to verify) competition amongst computers to solve advanced maths problems.
Protocol
The set of rules that maintain security and distributed consensus across a P2P network.
Public key
Used together with a private key to encrypt a message.
Pump and dump
Rapid price rise followed soon after by a big crash, sometimes orchestrated by organised groups.
Satoshi Nakamoto
True identity unknown, ‘Satoshi’ is the computer programmer/s who wrote the original whitepaper and created the concept of Bitcoin in 2009.
Satoshis (aka Sats)
The smallest unit of Bitcoin – a satoshi represents 0.00000001 of a Bitcoin which is one-one-hundred-millionth.
Security token
Represents part-ownership of an asset and therefore subject to government regulations.
Smart contract
Automated mechanism where agreed benchmarks being met will result in another action such as a payment being made.
Soft fork
A majority of participants upgrade to a new version of software, but the old code still works for everyone else.
Software wallet
A computer file to store crypto on your computer.
Technical analysis
The process of analysing historical price/volume charts and indicators to try and predict future prices.
Tokens
Small units that help operate a decentralised network and incentivise participants, they can also be sold on an exchange.
Utility token
Gives the token-holder access to a product or service, rather than any ownership stake.
Wallet
Where you store your coins.
Whitepaper
Project outline and feasibility document with a mix of technical and marketing information.
