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20 useful words for a novice cryptocurrency trader
Nowadays, the cryptocurrency market has become one of the most discussed topics. People read news about crypto and blockchain. More and more people are buying digital currencies. However, not all of them know the major terms of the crypto world. We gathered the most common words with their definitions for you.
- Altcoin. The world Altcoin was created by the merge of two words: alternative and bitcoin. So, the term refers to all cryptocurrencies except for bitcoin.
- Application specific integrated circuit (ASIC) is a computer chip that is used for a particular aim, e.g. to mine data blocks.
- Bitcoin. This term can refer to different dimensions: a protocol, a network or a unit of currency. It is the first decentralized digital currency.
- Blockchain is a ledger of a cryptocurrency’s transactions that are recorded chronologically and publicly.
- Cryptocurrency is a digital asset that is used as a mean of exchange for services and purchases and is not issued by a central authority. Cryptocurrencies are based on cryptography. Their main feature is secure transactions.
- Fiat is a currency that was declared to be valid for financial operations by a government. For example: USD, EUR, JPY.
- FOMO – Fear Of Missing Out. The world means a fear of missing something important and interesting, a good opportunity. For example, people were buying bitcoin, although its price was already too high.
- Fork means a change of a cryptocurrency’s blockchain that leads to the creation of two different blockchain versions. Forks are divided into hard forks and soft forks. A hard fork is a radical and permanent divergence from the previous version of the blockchain. If nodes continue to run the previous version, they won’t be accepted. A soft fork, on the contrary. Requires only a majority of miners to upgrade.
- FUD. The abbreviation consists of three worlds: Fear, Uncertainty, and Doubt. It is a way of psychological manipulation used to lower a price of something.
- HODL is an incorrectly written world “hold”. It is used when people talk about holding their coins. For example: hodl your Litecoin.
- ICO or Initial Coin Offering is the event when a company releases its own cryptocurrency and offers investors some units of it. So the company receives money for its technology’s development. There is a kind of the ICO: pre-ICO. Pre-ICO is the pre-sale of tokens. Usually, during a Pre-ICO a price of tokens is lower, but only certain people (usually large investors) can participate.
- Mining is an activity of adding transaction records to cryptocurrency’s public ledger. A miner is a person who can build a block and add it to a blockchain. If he does it first, a new bitcoin and is awarded to this miner. A miner should count a hash (a random and complex mathematical formula used for the verification of blocks of transactions). If he/she is able to do it, he/she gets a reward.
- Mooning – the process when a price increases radically and aims “to the moon”.
- Node is any computer connected to a cryptocurrency network.
- Pump and Dump is a method of manipulation that is used on a stock market or a cryptocurrency market. A price of an asset is increased artificially so that owners of this assets can sell it at a higher price. Then the price plunges.
- P2P or peer to peer means the sharing of data, information or assets between parties without a central authority. This type of exchange gives an opportunity to move currencies avoiding financial institutions.
- Satoshi – the smallest unit of bitcoin that was named in honor of Satoshi Nakamoto – the mysterious creator of Bitcoin.
- Token. This term is used to describe any digital asset. For instance: bitcoin is a token, dash is a token.
- Wallet is a digital address in which cryptocurrencies are stored, sent or received. There are two types of a wallet: software and hardware. Software wallet is saved as software files on a computer. Hardware wallet is a device. It is more secure than a software one.
- Whitepaper is a report where a company explains problems that a new cryptocurrency ICO project is supposed to solve.
We hope that this small dictionary will make your journey in cryptocurrency world easier.