Cracking Cryptocurrency Terms Glossary

cryptocurrency glossary

A false market signal where the falling trend of a asset appears to be turning up, but actually is not. Long buyers can be forced to exit their positions to stop loosing money. A person that is optimistic and confident that market prices will be going up. This person is also known to be “bullish” about the market and price expectations. The controversial business license issued for cryptocurrency companies in New York. Created and provided by the New York State Department of Financial Services .

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A family of cryptographic hash functions published by the National Institute of Standards and Technology . A type of layer 2 scaling solution that batches multiple transactions and submits them to the Ethereum main chain in a single transaction. This allows for reductions in gas costs and increases in transaction throughput. There are Optimistic and Zero-knowledge rollups which use different security methods to offer these scalability gains. An amount of ether included in each new block as a reward by the network to the miner who found the proof-of-work solution.

Only the person in possession of the substitution table (i.e. your friend) will be able to revert the list of numbers or symbols into the original message. Cryptography appeared thousands of years ago due to the need of private communications in military contexts and during wars. We know how hard it can be to navigate the crypto world, especially when you hear terms like ‘on-chain‘ or ‘CSW‘. For this reason, we’ve put together a complete cryptocurrency glossary to help you understand what it all means. We hope these cryptocurrency terms will help you to navigate the industry more easily. If you’re a beginner and still need a bit of help, or even if you’re a seasoned trader looking for new information, our definitive cryptocurrency guides have been created especially for you.

Mining Rig

A clone (AKA “fork”) of Bitcoin that focuses on handling high volumes of transactions differently. Similar to Bitcoin Cash and also created because of community disagreements.

cryptocurrency glossary

Digital Commodity

Short for “decentralized finance,” a broad category of Dapps aiming to provide financial services backed by the blockchain, without any intermediaries, so anyone with an internet connection can participate. In Ethereum, a sequence of blocks validated by the proof-of-work system, each linking to its predecessor all the way to the genesis block. There is no block size limit; it instead uses varying gas limits. is considered a “reversal” pattern; that is to say, it represents the transition over time of a downward-trending, or “bear” market, into an upward-moving “bull” market. This is a very long-term pattern, often taking several months to a couple of years to fully form. with their smartphone, and it will direct them to a URL where they can make the purchase right then and there, without the inconvenience of waiting in line at a cash register. Most digital currency mobile apps include QR code-scanning capability.

The BIP author is responsible for building consensus within the community and documenting dissenting opinions. A rollup of transactions that use validity proofs to offer increased layer 2 transaction throughput while using the security provided by mainnet .

Although they can’t handle complex transaction types, like Optimistic rollups, they don’t have latency issues because transactions are provably valid when submitted. A layer 2 solution that uses validity proofs to improve transaction throughput. Unlike Zero-knowlege rollups, Validium data isn’t stored on layer 1 mainnet. A security model for certain layer 2 solutions where, to increase speed, transactions are rolled up into batches and submitted to Ethereum in a single transaction. The transaction computation is done off-chain and then supplied to the main chain with a proof of their validity. This method increases the amount of transactions possible while maintaining security. A hard fork of the Ethereum blockchain, which occurred at block 2,675,000 to address more denial-of-service attack vectors and clear state .

cryptocurrency glossary

A very strong cryptographic standard that is used as the basis for Bitcoin’s and other proof of work systems . For example, a 100% ROI means that the price of the asset or investment has doubled in value. An upcoming protocol change to the Ethereum blockchain that is designed to allow for high-speed transfers and better scaling. Investment scheme that advertises the benefits of a certain asset, with the hope that a lot of people buy it and raise the price. A peer-to-peer network that distributes computing tasks among many, private computers , instead of using company computers . For blockchain, an oracle is an automated system that decides based on pre-set rules and real-world events. It’s an essential function that helps to arbitrate smart contracts.

A wallet using the hierarchical deterministic key creation and transfer protocol. They are assumed valid but can be challenged if fraud is suspected. A fraud proof will then run the transaction to see if fraud took place. A change in protocol causing the creation of an alternative chain, or a temporal divergence in two potential block paths during mining.

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A false market signal where the rising trend of an asset appears to be turning down, but actually cryptocurrency glossary is not. Short sellers are forced to to exit their positions to stop losing money.

This is why applications created from such contracts are referred to as decentralised applications – Dapps. Before we elaborate on the main types of cryptocurrencies, we should first explain the term ‘blockchain’. Blockchain is a special type of software technology that most cryptocurrencies are built on.

Bagholder A person who holds large quantities, or bags, of a cryptocurrency. Often used to describe such a person when the price of that cryptocurrency is declining. Automated Market Maker An automated market maker is a system that provides liquidity to the exchange it operates in through automated trading. Ask Price In any financial market, buyers and sellers place their orders to determine the highest price they are willing to buy and the lowest price they are willing to sell. Arbitrage Arbitrage is the practice of quickly buying and selling the same asset in different markets to take advantage of price differences between the markets. Airdrop A marketing campaign that distributes a specific cryptocurrency or token to an audience.

The Cryptocurrency Dictionary: Hodl And 25 Other Terms Explained

In contrast, fundamental analysis aims to predict the future price of a crypto based on alternatives such as economic, financial and other qualitative/quantitative factors. The dump refers to a price crash when the coins are sold on mass. In essence, ICON is a central point into which other blockchains can link into and, in turn, connect across. The new chain starts from the last block at which the fork was cryptocurrency glossary agreed. AppsThe abbreviation for decentralized apps, dApps are programs built on a decentralized network like Ethereum. While the above is certainly not a comprehensive round-up of all of the specialist cryptocurrency terms you will encounter, it should briefly cover many of the terms you will come across. There are plenty of online resources available should you wish to learn about them in more detail.

The shortened word to describe alternative cryptocurrencies that were launched following the success of Bitcoin and Ethereum. Altcoins are often designed as iterations of existing cryptocurrencies in a bid to overcome their perceived limitations. Cryptocurrency’s strength comes from a distributed computer network.

  • A node in a proof-of-stake system responsible for storing data, processing transactions, and adding new blocks to the blockchain.
  • This is because miners, the people responsible for processing your transaction, are likely to prioritise transactions with higher fees – so congestion forces the price up.
  • Examples include sending funds from your wallet or a dapp interaction, like swapping tokens or buying a collectible.
  • Each subsequent block strengthens the verification of the previous blocks, making it impossible to double spend bitcoin transactions .
  • A method by which a cryptocurrency blockchain protocol aims to achieve distributed consensus.
  • To active validator software, you need to be able to stake 32 ETH.

A business model where very small payments can be made in exchange for digital goods cryptocurrency glossary and services. For example, paying a tiny fee for every page of an ebook you read.

Both you and your friend would deposit the money into a temporary Bitcoin wallet, and the software itself would verify cryptocurrency glossary whether or not there was rain on that specific day. The software would then transfer the money to the winning party.

ASIC Short for “Application Specific Integrated Circuit”; it is a mining equipment that is used specifically to mine a certain cryptocurrency. Often compared to GPUs, ASICs are specially created and bought for mining purposes and offer significant efficiency improvements and power savings due to its narrow use case. 51% Attack If cryptocurrency glossary more than half the computer power or mining hash rate on a network is run by a single person or a single group of people, then a 51% attack is in operation. A digital contract that gets automatically executed by software upon its completion. Suppose you want to make a bet with a friend about whether or not it will rain tomorrow.

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