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Glossary crypto currency

Bitcoin Address
a series of letters and numbers that people use to send bitcoin to or from. A bitcoin address is shared from one user to another, so that they can send you Bitcoin. Likewise, if you want to send bitcoin to someone, you need their address (obtained from their wallets).

Bitcoin
An electronic peer-to-peer money system.

Block
a group of Bitcoin transactions that took place during a specific period. The average is about 10 minutes. Miners do not process Bitcoin transactions one by one but in groups or “blocks”.

Block Reward
a quantity of Bitcoin that miners earn when making a block (of outstanding transactions). The remuneration is equal to the sum of 1) the block subsidy (new ‘beaten’ satoshis) plus all transaction costs associated with transactions included in that block. The subsidy remuneration is halved every four years.

Blockchain
the decentralized, public ledger of every Bitcoin transaction that has ever taken place. Because blocks are verified by miners, they are added to the chain of previous blocks, hence the name.

BTC
an abbreviation for the Bitcoin currency.

Centralized / Centralization
an organizational form in which one party, group, authority has the control. These systems have some failure points. VISA, Paypal and ApplePay are examples of centralized payment systems. Centralized organizations are contrasted by decentralized systems.

Confirmation (s)
A bitcoin transaction is confirmed once it has been recorded in a block on the blockchain by a miner. Each subsequent block added to the blockchain is another confirmation for that transaction. Generally, 6 or more confirmations are accepted to finalize a transaction, although 99.99% of the time Bitcoin Cash transactions can be considered as final with 0 or 1 confirmation.

Cosigner
a person or entity who has partial control over a Bitcoin wallet with multiple signatures. To complete a bitcoin send, a multi-sig wallet requires permission from a certain number of all co-signers in the wallet. The required amount of unqualified cosigners is known as ‘M or N’.

Cryptocurrency
a digital currency that uses cryptography to provide security and verify transactions on its network. Bitcoin is the first cryptocurrency. Unlike traditional fiat currencies, a cryptocurrency does not require a central bank or any other centralized authority to ensure security or maintain control over the money supply.

Cryptography
the practice and study of techniques for secure communication in the presence of third parties. Bitcoin and other currencies are related to cryptography as far as they use mathematics to secure information. Within Bitcoin, cryptography creates and secures portfolios, signs all transactions and verifies every transaction on the blockchain.

Decentralized
an organizational form that does not require any party, group or agency to manage services. Bitcoin is a decentralized network because no company, government or individual has made it or has it under control. The management of Bitcoin depends on the community and the code is open-source.

Distributed
also known as peer-to-peer (p2p). A distributed network does require that users connect to a central server or entity. Users connect directly to each other in a distributed network. Bitcoin is a distributed network that does not have a central processing entity.

Encryption / encrypt
the Bitcoin network uses cryptography to secure portfolios so that only those who manage the private key associated with that wallet have access to send Bitcoin from that address.

Hash
a mathematical process that miners use on blocks to secure the network and maintain network security. “Hash”
also refers to the unique identifier of a Bitcoin transaction.

Ledger
a list of IDs, transactions, timestamps, balances and other data related to a financial account. The Bitcoin blockchain is unique in the sense that it is distributed, decentralized and public.

M from N
the required number of cosigners required to deliver signatures (M) from the total quantity of cosigners (N) within a wallet with multiple signatures. A typical M of N value is “2 or 3”. This means of the three co-signers, each two are required to authorize a signature.

Miner
a specialized Bitcoin user consisting of a computer or a group of computers that 1) collects pending transactions in blocks for processing and 2) verifies blocks made by other miners. Miners are encouraged to perform this work because they collect all transaction costs (related to transactions within blocks) and are rewarded with new bitcoins as part of the block reward.

Multi-Signature
also known as ‘multisig’. These are bitcoin transactions where signatures from multiple parties must be authorized. Bitcoin.com portfolios offer the multisig function.

Open Source
freely distributed software whose code is available for the public to edit, use and share. The Bitcoin code is open source.

Private Key
a series of numbers and letters used for bitcoins on a specific Bitcoin address.

Protocol
a set of official rules that determine how participants must communicate to a particular network. The Bitcoin protocol determines how each node connects to the others, the Bitcoins offer at a given time and also defines other aspects of the network.

Public key
a series of letters and numbers mathematically derived from a private key. With public keys, someone can receive bitcoins from other users.

QR code
an image, usually square, that digitally represents a public or private key bitcoin. QR codes are similar to barcodes that can be found on physical products and can be scanned by digital cameras on smartphones or computers.

Signature
part of a Bitcoin transaction that proves that the owner of the private key has approved the transaction.
satoshi
the smallest divisible bitcoin of one bitcoin. There are 100 million satoshis (8 decimals) in one bitcoin. One satoshi = 0.0000001 bitcoins.

Satoshi Nakamoto
author of the Bitcoin Whitepaper, published in 2008. Nakamoto is the founder and creator of Bitcoin.

SHA-256
the specific hash function used in the mining process to secure bitcoin transactions.

Transaction
an item in the blockchain that describes a transfer of bitcoins from one address to another. Bitcoin transactions can contain different inputs and outputs. Abbreviated as ‘tx’, for example, Usually the first tx within a block is the currency base.

Transaction cost
sometimes called the “miners’ contribution”. The transaction costs are a quantity of Bitcoin included in each transaction by users and collected by miners. These fees are used to encourage miners to add the transaction to a block.

Node
A computer with a copy of the blockchain and working to maintain it.

Mining
The process of ‘solving’ the next block. It requires obscene amounts of computer processing power to be able to do effectively, but is rewarded with ether.

Mining rig
A computer specially designed for processing block chains such as BTC. They often consist of multiple high-end graphics processors (GPUs) to maximize their processing power.

FORK
A situation in which a blockchain splits into two separate chains. Forks generally occur in the crypto world when new ‘governance rules’ are built into the code of the blockchain.

PoW
Proof-of-work. The current consensus algorithm used by BTC.

PoS
Proof of commitment. The proposed future consensus algorithm used by Ethereum. Instead of mining in its current form, people who own ETH will be able to lock their ether for a short time to ‘vote’ and generate network consensus. The plan is for these stakeholders to be rewarded with ETH.

sharding

A scale solution for blockchains. Normally, every node in a blockchain network contains a complete copy of the blockchain. Sharding is a method by which nodes can have partial copies of the entire blockchain to increase overall network performance and consensus speeds.

software wallet
Crypto-currency storage that exists purely as software files on a computer. Software portfolios can be generated free from different sources. MyEtherWallet (MEW) is one of the popular ones.

hardware wallet
A device that can safely store crypto-currency. Hardware wallets are often considered the safest way to keep crypto-currencies.

Ledger Nano S / Trezor
Two of the most popular hardware wallet models.

Cold storage
The process of moving crypto-currency offline, as a way to secure your crypto-currency against hacking. There are several ways to do this, but some most commonly used methods:
– Print the QR code of a software portfolio and store it in a safe place, such as a safe
– Move the files from a software portfolio to a USB disk and save them somewhere securely.
– Use a hardware wallet.

Smart contract
Code that is used on the Ethereum blockchain, often directly interacting with the way money flows. Not my quote, but: “With a normal transaction you can send money from A to B. Smart contracts let you send money from A to B, provided that C happens.”

Dapp
Decentralized App. This refers to an application that uses a smart Ethereum contract as a back-end code.

The Flipping
A possible future event in which Ethereum’s market cap outperforms the market value of Bitcoin, making Ethereum the most ‘valuable’ crypto-currency. In my eyes this will not happen.

Gas
A measurement of the amount of processing that the ethereum network needs to process a transaction. Simple transactions, such as sending ether to another address, usually do not require much gas. For more complex transactions, such as the use of a smart contract, more gas is needed.

Gas price
The amount of ether to be spent on each transaction for each gas unit. The initiator of a transaction chooses and pays the gas price of the transaction. Transactions with higher gas prices are given priority by the network.

Whei
The smallest denomination of ether. 1 Ether = 1000000000000000000 Whey (1018)

Gwei
Another denomination of ether. Gas prices are usually measured in Gwei. 1 Ether = 1000000000 Gwei. (109)

Exchange
Websites where you can buy and sell crypto-currencies.

FIAT
Currency issued by the government, such as the US dollar.

Whale
Someone who possesses absurd amounts of crypto-currency.

Limit order/limit buy/limit sell
Placements placed by merchants to buy or sell a crypto currency when the price reaches a certain amount. They can be seen as ‘for sale’ signs. These orders are what are bought and sold when merchants place market orders.

Sell wall/buy wall
Using a depth gauge, traders can see the current limit buys and sales points. The graphical representation on the depth chart looks like walls:

Market order/market buy / market sell
A simple purchase or sale at a trade fair at the current price. Market buys the cheapest BTC available in the order book and the market sells the most expensive purchase order in the books.

Margin trading
The act of ‘increasing’ the intensity of your transactions by risking your existing coins. (ATTENTION: Very risky, only for experienced traders and only on certain exhibitions even then)

Going Long
A margin trading that benefits when the price rises.

Going Short
A margin trading that benefits when the price falls.

Bullish
An expectation that the price will rise.

Bearish
An expectation that the price will fall.

ATH
All-Time-High. We’ve gotten a lot of it in the past few months.

Altcoin
Generally every crypto-currency other than Bitcoin.

Tokens
Refers to the ‘currency’ of projects built on the ethereum network that have raised money by issuing their own tokens. Examples: DEEPAERO, MONEYTOKEN, DECOIN, POWERLEDGER.

ICO
Initial coin offer, somewhat similar to crowdfunding in the non-crypto world. Startups issue their own token in exchange for BTC. This is in fact crowdfunding on the ethereum platform.

Shilling/pumping
Someone who mainly promotes crypto-currency. If a coin is promised to cure cancer or to be the return of Jesus, it is called shilling.

Stable coin
A crypto-currency with extremely low volatility that can be used for trading with the overall market.

Arbitrage
Benefit from a difference in price of the same commodity on two different fairs. Is often mentioned when it comes to comparing BTC prices on Korean fairs with American fairs.

FOMO
Fear or missing out (Fear of missing). The overwhelming sensation you need to get on the train when the price of something starts to rise.

FUD
Fear, uncertainty and doubt. Unfunded negativity that is deliberately spread by someone who wants the price of something to drop.

FUDster
Someone who spreads FUD.

Pump and dump
The recurring cycle of an altcoin gets a lot of attention, which leads to a rapid price increase, and of course followed by a huge crash.

Bag holder
Someone who still holds an altcoin after a pump and dumps a crash. Can also refer to someone holding a coin that decreases in value with few future prospects.

Market cap
The total value that is stored in a crypto-currency. It is calculated by multiplying the total number of coins by the current price of an individual unit.

ROI
Return on investment. The percentage of how much money is made in comparison with an initial investment. The ROI calculation is flexible and can be used for different purposes. A company can use the calculation to compare the ROI on different potential investments, while an investor can use it to calculate a return on a share.
For example, an investor buys $ 1,000 in BTC and sells the BTC two years later for $ 1,200. The net profit of the investment would be $ 200 and the ROI would be calculated as follows: ROI = (200 / 1,000) x 100 = 20%

TA
Trend analysis or technical analysis. Refers to the process of researching current graphs to predict how the market will then move.

MACD
Average convergence divergence. A trend indicator that indicates the relationship between two moving averages of prices.

Bollinger Band
A margin around the price of a crypto that indicates when a coin is overbought or oversold. More information is available at:

DYOR
do your own research, freely translated: do your own research. This term is 1) for persons who ask a question without any kind of research. 2) a disclaimer if someone gives a tip for the purchase of a certain cryptophone.

HODL
either hold a hold, but then wrongly written. HODL is now a jargon for ‘long-term investor’ cryptocurrency trader who waits for his coins to be worth a lot in a day.

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