2021 Crypto Dictionary
Welcome to thecrypknow.com Cryptocurrency Dictionary, where you can find detailed definitions, terms and jargon for the crypto industry.
A digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authority. Cryptocurrency is just a symbol for the underlying technology that it uses: Blockchain Technology.
“Decentralized cryptocurrencies such as bitcoin now provide an outlet for personal wealth that is beyond restriction and confiscation”
BONUS: Choosing a crypto, is about choosing a technology. There are thousands of cryptocurrencies, we want to empower you to know how to choose the best ones.
A worldwide peer-to-peer network that maintains a record of digital currency transactions, linked across several computers.
“Data, once sent to a blockchain network, cannot be deleted or removed from all the systems, as it is a publically accessible online ledger containing every transaction that has ever happened in it.”
Decentralisation is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group.
Decentralized currency, peer-to-peer money, and digital currency all refer to bank-free methods of transferring wealth or ownership of any other commodity without needing a third party.
“Most centralized, and some decentralized, markets use fiat currency—or physical money issued by a central bank, like U.S. dollars.”
The term mining in cryptocurrencies means gaining cryptocurrencies by solving cryptographic equations through the use of computers. This process involves validating data blocks and adding transaction records to a public record (ledger) known as a blockchain.
“Miners have become very sophisticated over the last several years using complex machinery to speed up mining operations.”
Bitcoin is a type of cryptocurrency invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto. It is a type of digital currency in which a record of transactions is maintained and new units of currency are generated by the computational solution of mathematical problems, and which operates independently of a central government. The transactions are public forever – you can view every single bitcoin transaction since it’s inception in 2009 here.
“The currency Bitcoin began use in 2009 when its implementation was released as open-source software.”
See also: Satoshi’s (Sats)
Launched in 2015, Ethereum is an open-source, blockchain-based, decentralized software platform used for its own cryptocurrency, ether. It enables SmartContracts and Distributed Applications (ĐApps) to be built and run without any downtime, fraud, control, or interference from a third party.
One of the big three in cryptos – the big 3 being Bitcoin (BTC), Ethereum (ETH) & Binance Coin (BNC).
Visit the Ethereum website here.
Binance Coin (BNB)
As the native coin of Binance Blockchain, BNB has multiple use cases such as fueling transactions on the Chain, paying for transaction fees on Binance Exchange and making in-store payments.
The Binance coin is one of the big three in cryptos – the big 3 being Bitcoin (BTC), Ethereum (ETH) & Binance Coin (BNC).
Visit the Binance website here.
“Sats” is short for Satoshis, the smallest unit of Bitcoin (BTC), equivalent to 100 millionth of a bitcoin (there are 100,000,000 satoshis in one Bitcoin). Bitcoins can be split into smaller units to ease and facilitate smaller transactions.
“The satoshi was named after the founder, or founders, of bitcoin, known as Satoshi Nakamoto.”
See also: Bitcoin
Crypto tokens are a type of cryptocurrency that represents an asset or specific use and resides on their blockchain. Tokens can be used for investment purposes, to store value, or to make purchases.
“Altcoins and crypto tokens are types of cryptocurrencies with different functions”
In early bitcoin forums, someone posted a message that spelled the word “hold” wrong, and readers interpreted it as an acronym “hold on for dear life.” Hodling is an investment strategy in which traders are encouraged to not sell their crypto assets regardless of the price change.
“Stay strong, HODL (hold) even when the price drops.”
FUD (fear, uncertainty & doubt)
FUD is an acronym for “Fear, Uncertainty, Doubt” and is commonly used in the cryptocurrency community as a short way to describe negative information about a blockchain based currency or asset.
“Stop spreading fud about bitcoin”
Fiat money is a government-issued currency that is not backed by a commodity such as gold. Fiat money gives central banks greater control over the economy because they control how much money is printed.
“Most modern paper currencies, such as the U.S. dollar, are fiat currencies.”
The word “Altcoin” is said to stand for “alternative to Bitcoin”, in other words, an altcoin is simply any cryptocurrency that is not Bitcoin.
“Bitcoin was the first cryptocurrency ever created. Subsequently, any other coin was referred to as ‘altcoin’!”
A decentralized application (DApp, dApp, Dapp, or dapp)
Decentralized applications (dApps) are digital applications or programs that exist and run on a distributed computing system ie: on blockchain or a P2P network of computers instead of a single computer, and are outside the purview and control of a single authority.
“The development of Dapps is another step in the future of the Internet that’s commonly referred to as Web 3.0”
Decentralised Exchange (DEX)
A dentralised exchange is a business that provides a marketplace in which users can buy, sell, and trade their crypto assets in exchange for fiat money or other cryptocurrencies. A dex is a type of cryptocurrency exchange which allows for direct peer-to-peer cryptocurrency transactions to take place online securely and without the need for an intermediary.
“A typical cryptocurrency exchange works 24/7, i.e., it never closes.” #cryptoneversleeps
BONUS: The largest crypto exchange as of April 2021 is Binance, followed by Coinbase,
deFi (Decentralised Finance)
DeFi is short for “decentralized finance,” which involves taking traditional elements of the financial system and replacing the middleman with a smart contract. It is an umbrella term for a variety of financial applications in cryptocurrency or blockchain geared toward disrupting financial intermediaries.
“DeFi expands the use of blockchain from simple value transfer to more complex financial use cases.”
A stablecoin is a type of cryptocurrency whose value is tied to an outside asset, such as the U.S. dollar or gold, to stabilize the price.
“A stablecoin is a cryptocurrency designed to have low price volatility.”
Proof of stake (PoS) is a type of consensus mechanism by which a cryptocurrency blockchain network achieves distributed consensus. In PoS-based cryptocurrencies the creator of the next block is chosen via various combinations of random selection and wealth or age (i.e., the stake).
“On PoS blockchains, anyone with a minimum-required balance of a specific cryptocurrency can validate transactions and earn Staking rewards.”
Staking is the process of actively participating in transaction validation (similar to mining) on a proof-of-stake (PoS) blockchain.
“On PoS blockchains, anyone with a minimum-required balance of a specific cryptocurrency can validate transactions and earn Staking rewards..”
Node / Noding
In order to validate and relay transactions, bitcoin requires more than a network of miners processing transactions, it must broadcast messages across a network using ‘nodes’.
To function to its full potential, the bitcoin network must not only provide an avenue for transactions, but also remain secure. By using a number of randomly selected nodes, the network can reduce the problem of double spending – when a user attempts to spend the same digital token twice.
“The more nodes there are, the more secure the network is.”
Yield farming is the practice of staking or lending crypto assets in order to generate high returns or rewards in the form of additional cryptocurrency. In short, yield farming protocols incentivize liquidity providers (LP) to stake or lock up their crypto assets in a smart contract-based liquidity pool. The goal is to maximize a rate of return on capital by leveraging different DeFi protocols
“The rocket fuel of the DeFi (decentralised finance) space is yield farming.”
Initial Coin Offering (ICO)
It is a crowdfunding method that creates a cryptocurrency and utilizes it as a means to raise funding to finance a company in its early stages on its own website.
Market Cap (market capitalization)
Usually, market capitalization means the total market value of a company. In the crypto world, it identifies how valuable this cryptocurrency is. it is calculated by multiplying the total number of a company’s outstanding shares by the current market price of one share.
“To calculate the market cap of any cryptocurrency you just need to multiply the crypto coin’s current price by the total number in circulation.”
Non-fungible Token (NFT)
A non-fungible token is a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable.
“NFTs can be used to represent items such as photos, videos, audio, and other types of digital files.”
BONUS: For an excellent detailed explanation of NFT’s see Johnny Harris’s video here.
Also called a “hardware wallet” and “offline wallet,” the cold wallet stores the user’s address and private key and works in conjunction with compatible software in the computer.
“With cold storage, the digital wallet is stored on a platform that is not connected to the internet, thereby protecting the wallet from unauthorized access, cyber hacks and other vulnerabilities to which a system that is connected to the internet is susceptible.”
A hot wallet is a tool that allows a cryptocurrency owner to receive and send tokens. … One of the most popular kinds of cryptocurrency wallets is called a hot wallet.
“The difference between a hot wallet and a cold wallet is that hot wallets are connected to the internet, while cold wallets are not”
An investor who holds on to a stock or cryptocurrency regardless of the risks, headwinds, or losses to get to an end goal.
“Diamond hands is a term often used to call on a group’s collective strength to get through hell or high water.”
Bull Market / Bullish
A bull market is the condition of a financial market in which prices are rising or are expected to rise. When an investor has this optimistic expectation of an asset’s future bull, this frame of mind is described as “bullish.”
“The term “bull market” is most often used to refer to the stock market but can be applied to anything that is traded, such as bonds, real estate, currencies, and commodities. ”
See also: Bear market
A bear market is when a market experiences prolonged price declines. A market is considered a bear market when the price of an investment falls at least 20% from its high.
“A bear market typically describes a condition in which securities prices fall 20% or more from recent highs amid widespread pessimism and negative investor sentiment.”
See also: Bull Market
The art of writing or solving codes. Cryptography is the process of encoding and decoding information so that would-be observers are unable to understand the information being sent.
“Cryptography is used to provide secrecy and integrity to our data, and both authentication and anonymity to our communications.”
BONUS: The term Cryptography is where we get the term cryptocurrency from.