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Top Crypto Terminologies Explained For Beginners

Top Crypto Terminologies Explained For Beginners

If you’re new to the crypto world, the conversations here can feel like alien language at times. The technologies behind cryptocurrencies are deep and the community is very young so together, they give birth to a wide variety of lingos. Below is a list of the most important and common terminologies, explained.


 


Blockchain


Blockchain is the foundation technology behind cryptocurrencies. In short, blockchain is a type of database that stores information in blocks then chain them together in a chronological order, so that each new block is set in stone on the chain, completely irreversible


 


Mining


Mining refers to the process of adding new blocks onto the blockchain by virtue of transaction verification. Mining is how a new bitcoin or some others are created, and it consumes a lot of energy.


 


PoW and PoS


PoW stands for Proof of Work, and PoS for Proof of Stake. With Proof of Work, you create new blocks by having all nodes on a network solve a complicated mathematical puzzle and the first one to do it gets a reward whereas the rest validate his solution. A few popular coins that use PoW are Bitcoins, Litecoin, Dogecoin and Monero.


In contrast, Proof of Stake achieves the same goal by letting the coin holders staking their coins for a while for an algorithm to make one staker the validator to validate transactions. Famous PoS cryptocurrencies include Cardano, Polkadot, Stellar… and Ethereum will soon join the list.


 


Altcoins


Every cryptocurrency that is not Bitcoin is referred to as altcoins (alternative coins). This is obviously because Bitcoin is the first and the most popular coin.


 


Slangs: HODL, MOON, DIP, SHILL, FUD and Whale


HODL originates from a misspelling of ‘hold’ and some would explain HODL as Hold On for Dear Life. HODL is usually used when people want to remind others to not sell their crypto.


MOON is a state of a coin having significant increases in price. For example, “ABC is mooning”.


DIP refers to a big drop in price. You will see many people advising each other to ‘buy the dip’.


SHILL: a person who heavily endorses a cryptocurrency.


FUD stands for Fear, Uncertainty and Doubt, used to describe the feeling when the price of a coin drops or fluctuates.


The word ‘whale’ means a person who holds a large enough amount of tokens to influence the market of said token.


 


Fork


No, it’s not kitchen silverware. Sometimes there are disagreements among developers and miners as to how a cryptocurrency should evolve and as a result, some of them would change the code in the blockchain. This creates a new version of said crypto with altered DNA while the original version still exists separately and unchanged.


A split like this is called a fork. For example, Bitcoin Cash is a fork of Bitcoin while Ethereum Classic is a fork of Ethereum.


 


NFTs


NFTs, or non-fungible tokens, are unique and irreplaceable. Bitcoin is fungible because 1 BTC always equals another BTC while 1 NFT is not interchangeable with another. The most common application of NFTs is to represent digital pieces of art.


 


Airdrop


Airdrop is one way for you to get free coins. New crypto projects will send coins into your wallet so that you share information or do referrals for them as a marketing tactic.


 


Exchanges and Brokers


A crypto exchange is a platform where you can buy, sell and trade one cryptocurrency for another or to fiat and vice versa. The process is done peer-to-peer so you will be trading with another customer. The money you keep on an exchange can be lost when the platform is hacked.


A crypto broker, on the other hand, lets people buy and sell but not trade. The coins you purchase on brokers will go straight into your digital wallet.


 


51% Attack


This refers to the situation when more than 50% of the computing power in a blockchain’s network is controlled by one individual or entity. They can then damage the network, or manipulate the system to spend the same coin repeatedly.


 


Stablecoin 


Stablecoins are cryptocurrencies which are linked to fiat or some other assets in an attempt to eliminate the volatility that most coins suffer from.


 


ATH and ATL


ATH is All Time High and ATL is All Time Low. They’re used when a coin’s trading value reaches the highest or lowest point in its existence.


 


DAO


DAO stands for Decentralized Autonomous Organization. DAOs are governed by computer-set rules and smart contracts, essentially dismissing human involvement in order to avoid human error and manipulation.


Many blockchain games use DAO to hand power to the players, who can stake the games’ currency to the DAO to attain voting power.


 


Faucet


A faucet is a website that gives away free coins for completing simple tasks. The concept was first implemented by Bitcoin because cryptocurrencies were very foreign back then so faucets incentivized the receivers to research Bitcoin.


 


Conclusion


The universe of crypto terminologies expands much wider and new concepts are being introduced regularly so it’s important to keep following the news. But these 14 terms should be a good base for you to start your crypto journey. Have fun!


Source: Jack Spade is a crypto enthusiast. He believes knowledge is power so he loves writing content geared towards people new to crypto.
On the side, he has a Medium page where he shares knowledge on a wide variety of topics.


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