We feel a good crypto glossary is a must to help everyone learning, plus there are not many resources online with this information. We will start by writing around a paragraph on each point. When more time is available we will make an article on each point and go into the finer details for people who are interested.
Crypto have things called addresses or keys, an address is just like an email or a home address. But in Crypto you use it like a payment address. It is important to remember both keys/addresses and not get them mixed up like I did once
Pubic Address – Public Key
This is what you give someone when they need to pay you, this is like your bank account.
It is a long code of numbers and letters. For example “28DYDGF86A7D7AD465A98ZD7”
Think of this like a bank account or home address, people need somewhere to send the funds.
Private Address – Private Key
This is your Private Address – Private Key , that is how you access your funds, just like a password. Except this password is crazy long and you will have to write it down somewhere safe.
It is a very long string of numbers or letters. For example “7675LAEWYCN87676XS65402HHBSDFG”
Think of this like a massive password, it has to be safe. Never share your private key
Alt Coin – Alternate Coin – Alts
An Alt coin – Alternate coin is just a way of saying not a top 10 coin, these are coins that most people would not have heard of and are commonly referred to as as Alt coins.
If someone asks you if you are trading bitcoin and you are trading some small currency like dodge coin. You can just say “At the moment I’m just trading an alt coin”.
Bitcoin is the largest digital currency and one of the first, this is the most common term used around crypto, bitcoin is basically:
- A secure way to send data/funds with very little fees.
- A chain of payments that get secured by people all over the world.
More Information on Bitcoin
A blockchain is quite simple, think of the blockchain like the calendar. Each month is a different block and every day is the chain.
For Example: Blocks are made like so – (June 1, June 2) (June 2, June 3) (June 3 ,June 4). the blocks are all scrambled letters and numbers. So days and months work well
Each link contains information and information about the link before it. This means that if someone tampered with it. It would be easy to locate and fix.
For example: This would be a error or hack – (June 1, June 2) (June 2, March 3)(June 3, June 4)
If this happened that blockchain would be voided.
The only possible way to hack is to have a very large number of people to hack with the same information at the same time and confirm it. This is yet to be a problem.
sidechain allows tokens or coins from one blockchain to be securely used within a separate blockchain but still moved back to the original blockchain if necessary. It can be used to link coins.
Coin – Tokens
You may have heard the term token or coin used interchangeably in Crypto currencies. Coins or tokens are what is used to make payments, just like dollars, cents, gold or other forms of real world currencies. Coins or tokens can be used on exchanges. So they are very similar in the way they are used.
Coins are stand-alone relying on there on code and own miners. The top currencies are coins normally, because they have the most work and money invested into them.
Are built on a coin, Some coins like Ethereum have been built to have tokens made running on them. They are a token because they are not stand alone and are only a segment of a larger coin.
Cryptography – Crypto
Is basically just using codes to secure something. Crypto is short for Cryptography
People believe that crypto has grown at an alarming rate and think it will collapse soon like a popped bubble. There has been some signs of this happening but there is still a lot of value stored in crypto.
Not fixed to any point. Just means that one place or region is not holding all the information and sometimes control.
Has a fixed server somewhere that stores information. Like a hub, that a coin operates out of.
DEX -Decentralized Exchange
DEX is just a way of saying a exchange not hosted and controlled at one place. See exchange below for more exchange details.
Distributed Denial of Service, an attack on servers or websites to cause harm or make a profit for the hackers.
The second biggest crypto currency, this coin allows you to build other currencies off it in the form of a erc20 token.
Ethereum allows and runs smart contacts. See below.
More information on Ethereum
The less popular fork of Ethereum, with most of the functionality. See fork below.
More information on Ethereum Classic
A place were you can trade/sell tokens and coins for other tokens or coins of the same value.
You can also deposit or withdrawal funds into any of the coins that are available on the exchanges.
Exchanges make there money by charging small fees.
Binance, Bittrex and Livecoin are some of the top exchanges.
Fork = One into two or more coins
A fork is when a currency splits into two or more currencies, for a number of reasons. Bitcoin has had forks due to transaction times being too slow. Mining being too centralized or too hard for a GPU. These forked currencies are trying to solve some of the current problems.
Ethereum had a fork due to a hack that exposed them, the Ethereum community was split down the middle on rewriting some past transactions, so they created a fork to negate the hack and make each community whole.
A soft fork is small changes to a currency. basically a currency spits into 2 with two sets of rules, and the community accepts to change to the new or stay with the old. This is how changes are made lots of the time.
This will not affect you and you don’t have to do anything. Unless you are mining a coin. Then you will just have to update how you mine that coin.
Soft forks are the most common and have little downsides.
Soft fork = Change to the software that the community can accept or deny.
A Hardfork is when a currency splits into two currencies. This means that if bitcoin forked and you had one bitcoin, you would now have one bitcoin and one bitcoin gold.
Hard forks happen due to changes that can not be fixed on a software level because they would make previous transactions invalid.
If a hard fork happens you will need to download the new wallet core version for both currencies to be able to use them.
Miners will have to pick a currency to mine.
FOMO – Fear of missing out
A term used when you don’t want to miss out on high returns.
Hodling – Holding
Hodling is a long running joke that dates back to 2013, basically somebody did not understand charts so they said they would just be hodling for years to come. It means they will just stay put in a currency because they don’t know or care about selling out and buying back in.
Who knows if they hodled all that time till now.
Hyped – Over Hyped
A coin or token that has had a massive advertising budget. But is overvalued because of this. Be careful of investing in hyped coins or tokens.
Hyped – Under Hyped
Some times a coin or token is just out there doing its job and trying to change the world for the better with its platform, ideas, development and software, sometimes there is not much talk of this coin. This is the kind of coin you need to find for investing.
ICO – Initial Coin Offering
An ICO or Initial Coin Offering is when a origination or group of people want to release a coin or token to the exchanges, so they pitch to you thier ideas, (a “whitepaper”) and give you bonuses for helping them fund some or all of the costs of development and you get the reward of owning the coin before the exchanges have it.
ICO is very common on new coins. There are risks of scams as you normally need to pay into a ICO with Bitcoin or other crypto currencies, so there is no guarantee of getting your money back if they do not follow through with making the coin or they fail in making the coin.
Market Capitalization – Market Cap
Market cap or Market Capitalization is number of coins times their current price. This is how coins are ranked on coin market cap and most of the other sites that rank coins.
Detailed article on Market Cap
Proof of Capacity (PoC)
Proofs of Capacity (PoC) very similar to proof of work, except that instead of computation, storage is used. This means that it is very economical and environmentally friendly at this stage. If larger data farms started putting huge amount of Capacity it could have the same problems as Proof of work. But would still be far more efficient due to the power consumption of hard drives is very low compered to CPU/GPU/ASIC.
Proof of Capacity is also know as Proof of space (PoSpace) But at Coinopsy we will be calling it Proof of Capacity for ease of understanding. As PoS and PoSpace get confusing.
Only limited coins currently use this method of verifying transactions.
Burst Coin is one of them.
Chia is an interesting project that plans on using PoC.
Proof of Stake (PoS) – Minting
Proof of stake is a more efficient way of verifying transactions than proof of work. This is because only limited people validate transactions. They get the rights to do this by investing a large sum that can not be removed for a set time. This time allows other people to verify other people like a network and kick the bad apples and take their stake if they allowed incorrect transactions.
It is also known as minting.
Was first developed around 2011.
Found a cool video that explains it well. Youtube Vid
Proof of Work (PoW) – Mining
Proof of Work is when hardware solves problems to verify transaction to keep the currency safe, miners get rewarded with some coins or a percentage of a coin for their hard work to keep them mining and wanting to mine that currency.
Was first developed over 10 years ago, with some claims dating back to 1993.
Detailed article on Mining/Pow
Some new CPU’s can mine very well like RYZEN Threadripper or any prosseor with more than 6 cores and 12 threads. Currently they can make back the cost of the hardware in under one year of mining.
This type of mining is not commonly done due to the limitations. Because you can only have one CPU per motherboard and the cost of ram is high.
GPU is the most common way to mine because the entry costs are much lower than ASIC and you can have 6 GPUS running on one motherboard by using riser cards. 6 is normally the sweet spot due to power supply limitation and motherboard limitations.
Companies have things called mining farms, were there are 1000s and 1000s of gpus set up like this.
A high end GPU can pay its self back in under 6 months in most cases, this makes for a very good return on investment and only a small investment is required.
ASIC mining is high end mining were the entry level costs are over $5000. ASIC miners are more suited to Bitcoin and some of the legacy coins. This is mostly reserved for big companies.
Pump and Dump
Pushing the price of a coin up so you can make a profit when selling it at the high price, then the price plummets.
Smart contracts are contracts that execute when terms are meet that have been written into lines of code. The code and the agreements are decentralized.
To The Moon – Mooning
Means that the price will go very high without any real hard facts other than speculation and hype.
Stellar to the moon or Litecoin to the moon is quite commonly said.
A coin or token that has not proven its self or has no real value. For example a token that it only valued so high from promises made on its whitepaper or website.
Or a coin or token that has used good marketing to boost sales, but lacks any substance.
A wallet is similar to a normal wallet, it is a place were you can hold or allocate your funds.
A wallet that is online that you can access anywhere from a phone or computer. Like an exchange or on a website like ‘my ether wallet’.
Normally stored on a hard drive or USB stick. This is commonly called cold storage. For people who want the funds to be extra secure. This is because you can not hack something with no outside connection.
You can even buy USB sticks that are bitcoin wallets and wallets for other coins. Here is a link
Coins or tokens having a ICO very commonly have a Whitepaper, this is normally a PDF format. This outlines what the coin is trying to achieve and how it works in detail.