Crypto Definitions

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As cryptocurrency is becoming popular, many investors are still unaware or confused about many of the basic terms. It can be overwhelming when learning about crypto at the beginning. In order to understand any new industry, one has to know the basic terms.

Source: Bing Images

Bitcoin is the first cryptocurrency to successfully record transactions on a secure, decentralized blockchain-based network. It was launched in early 2009 by an anonymous creator(s) Satoshi Nakamoto, Bitcoin is the largest cryptocurrency measured by market capitalization and amount of data stored on its blockchain.

Here are some of the basic terms of crypto world:

  1. Cryptocurrency: A digital currency with encryption techniques for regulatory purposes in order to transfer units of the currency without the need of a central bank. Bitcoin, Ethereum, Litecoin, etc. are called cryptocurrency.
Source: Faisal Photography

2. Wallet: As money is stored in a wallet, similarly there is a digital place to store your cryptocurrency. There are different wallets like coinbase, exodus and etc.

3. Altcoin: Everyone has heard of Bitcoin, the famous cryptocurrency. Apart from Bitcoin there are many other currencies like Algorand, Ethereum, Litecoin, Dogecoins and etc. These are known as Altcoins, an alternative to Bitcoin.

Source: Faisal Photography

4. Fiat: They are the traditional physical currencies which the government has declared as legal tender like US Dollar, Japanese Yen, Euro, Dirham and etc.

Source: Faisal Photography

5. ICO– Initial coin offering. This means when a new coin or token is on the market for the investors to purchase.

6. Blockchain: This is a system of recording information which makes it difficult, even impossible to change, hack and cheat the system. This is a digital ledger of transactions that holds block of information across many computers without changing the information.

7. Block: This is batch of information which is processed and recorded in the blockchain.

8. HODL: This is an acronym which stands “HOLD ON FOR DEAR LIFE”. Basically, holding a coin/token for a long time and not selling it.

9. Address: Every wallet consists of an address which is a string of numbers which acts as a bank account number, this is the address to which a coin can be received or send. There is an address for every cryptocurrency.

Note: Just for reference purpose.

10. Bearish: Simply means the market is going down. Similar term in the Stock market.

11. Bullish: term used to denote the market is going up.

12. Satoshi Nakamoto: The mysterious creator of Bitcoin, no one has seen him/her. Rumors say, the person is Russian and there are group of people behind this creation but no hard evidence on it. Satoshi Nakamoto, simply means “Central Intelligence” in Japanese.

13. Whitepaper: A technical writing on different cryptocurrencies, giving the information of their project, structure and plan. For example: This is a link to one of the cryptocurrency “Cosmos” whitepaper –https://v1.cosmos.network/resources/whitepaper

14. Private Key: A secret password to unlock a wallet. REMEMBER, NEVER SHARE THIS TO ANYONE! This is an access to your cryptocurrency, it protects the wallet.

15. Public Key– This is mainly used to accept cryptocurrency to a wallet. For example: If someone wants to send you a Litecoin then the public key is needed of the wallet to send it. The person sending does not have any access to the wallet.

16. Exchange: An online platform to exchange, trade, buy and sell cryptocurrency. Not all exchanges carry all cryptocurrencies.

17. Mining: A process by using computer power to process transactions on a blockchain, the miners are then rewarded with the cryptocurrency for each block they process.

18. Satoshi– This word would appear couple of times. This refers to smallest original subunit of Bitcoin which is divisible by 8 decimal place.



19. Gas fees – Gas fees are payments made by users to compensate for the computing energy required to process and validate transactions on the Ethereum blockchain. “Gas limit” refers to the maximum amount of gas (or energy) that you’re willing to spend on a particular transaction.

20. Hash Rate: The speed at which the coin is mined on a network using the computing power. The bigger hash rate the better.

21. Node: This is simply a software or a computer which is connected to a cryptocurrency’s network to maintain the blockchain.

22. Pump and Dump – Buying a coin for a lower price and holding it when it hypes, then selling it at a higher price. For example: The recent scenario of Dogecoin. Most of them including me bought the coin on January at a price of $0.00098, then selling it at $0.73.

23. Hard Fork – A code or software which changes a cryptocurrency in a significant way, these are some types of improvement. For example: Ethereum 2.0 would be a hard fork from Ethereum.

24. Whale – An investor which holds or controls a large portion of a specific cryptocurrency. This can bring a hype in the market and also crash it when there is a dump. For Example: Robinhood is one of the whales in Dogecoin. They hold a large portion of the cryptocurrency.

25. StableCoin: A stablecoin is a digital currency that is pegged to a “stable” reserve asset like the U.S. dollar or gold. Therefore, the price is stable and no fluctuations, no matter the quantity an investor buy, the price remains same. The purpose of stable coin is to reduce the volatility relative unpegged currencies like Ethereum and Bitcoin or Dogecoin. Some of the popular stablecoins are DAI, USDC, Tether, Gemini and etc.

26. POS– This is known as “Proof of Stake”, this means a person can validate or mine block transactions based on the amount of coins they hold. The more coins they hold the more mining power they have.

27. POW – It stands for “Proof of Work”. This is a way to validate transactions which can prevent hacking or cheating. This is an algorithm which secures the cryptocurrency whether it is Bitcoin, Ethereum or any other coins. Proof of work is needed to make the online currency work without the need of a central bank, government or a company.

28. DeFI – DeFI which stands for “Decentralized Finance” and this is the technology behind the cryptocurrency. This allows several entities to hold a copy of historical transactions; therefore it is not controlled by a single, central source.

29. TOken – This term can be little confusing to many, sometimes they mix the term “cryptocurrency” and “token” in same place. A CRYPTOCURRENCY operates independently and uses its own platform, whereas, a token is just a subset of cryptocurrency. There are more than cryptocurrencies which are traded many exchanges/ platforms around the world. Ethereum and Bitcoin are two popular cryptocurrencies which is supported by their own blockchain. Now anything on top of those blockchains are called tokens.

For example: Ethereum is an independent cryptocurrency with its own native token ETH, ERC20 tokens such as Ox, CEL, RLC, MATIC, MANA.

Source: Coin Rivet

30. Staking: Staking is the process of participating in transaction validation (similar to mining) on a proof-of-stake (PoS) blockchain. On these blockchains, anyone with a minimum-required balance of a specific cryptocurrency can validate transactions and earn Staking rewards.

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