Bitcoin Glossary 2018
Bitcoin was created following the 2008 economic crisis. The invention is attributed to a Satoshi Nakamoto whose identity and gender affiliation remain unknown till today. Bitcoin was initially developed to serve as a digital currency, but it is now serving other purposes in the industry. Today, the crypto space has many layers, and it is essential to have a good understanding of what you are about to invest in.
Many people in the cryptocurrency space see Bitcoin as a gold standard. It was the very first digital asset, and it is still the most famous in the industry. Bitcoin dominates half of the cryptocurrency industry, as it is often used to purchase other cryptocurrencies. Since Bitcoin attained its incredible popularity, many other cryptocurrencies, known as Altcoins have also emerged.
The rise of cryptocurrencies also brought the coinage of new terms with it. Many platforms have successfully taken steps in educating new users about the crypto world and its use in daily activities. However, there are still many people who find it difficult to grasp the whole concept of cryptocurrency.
To give a better understanding of what cryptocurrency is all about, here is a list of various terms used in the industry and what it is all about.
Bitcoin Related Terms
Who is Satoshi Nakamoto?
The creator of Bitcoin identified himself as Satoshi Nakamoto. Satoshi’s identity remains a mystery, but based on the value of his Bitcoin share, he is one of the richest persons in the world today.
Satoshi as a currency
On the blockchain, Satoshi is recorded as the smallest unit of the Bitcoin currency. It is valued at a hundredth of a billion BTC (0.00000001 BTC). This unit of currency was named in respect to the creator of the cryptocurrency.
Cryptographic hash algorithm popularly known as SHA-256 is a sort of signature for a data file or text. It produces a 32-byte signature for a text. It has a fixed size for any size of the source text, as it is a ‘one way’ cryptographic function.
XBT and BTC
Either XBT or BTC can denote Bitcoin; BTC is used to represent Bitcoin because the acronym matches the sound of the name while XBT was formed because the BTC infringes ISO 4217, and therefore, goes against the Bhutan currency.
Bit as a sub unit of bitcoin
A bit is a new unit used to denote smaller amounts of bitcoin. One bitcoin contains a million bits. Due to the enormous price of a single bitcoin prices are often presented in fractions.
Altcoins serves as an alternative to Bitcoin. They are created to improve on the shortcomings of Bitcoin. Bitcoin’s successful entrance into the world made way for many other cryptocurrencies.
Ethereum Related Terms
Erc20 a technical standard used to designate smart contracts on the Ethereum blockchain. It was created in 2015 to let developers program new tokens to work in the Ethereum system. This was accomplished by establishing certain rules that the ethereum platform can execute.
These are self-executed contracts that permit irreversible, traceable and transparent transactions and agreement among people without interference from a third party such as central authority, a legal system, etc.
Ethereum Virtual Machine neatly abbreviated as EVM. It is a sizeable decentralized computer containing millions of objects called “accounts,” It runs to maintain the internal state, perform performs computations and launch code.
A decentralized application is abbreviated as dApp. Its backend code operates on a decentralized peer to peer network that links users directly to providers. It can also use a frontend code which can make calls to its backend.
This is coined to represent an event that may happen in the future when Ethereum passes Bitcoin to become the most valued digital asset based on market cap. “The flippening of Ethereum.”
Gas is a special unit used in Ethereum, which helps determine how much work a specific action takes to perform. Each operation done by a transaction on the Ethereum platform costs a particular amount of gas.
The wage paid for a transaction is referred to as Gas price. No one will execute transactions with a low gas price. Coupled with gas cost, it defines the total fees of your transaction.
Wei is a type of denomination that is used to calculate small transaction. Just as Cents are in Dollars, it is the base unit and fraction of ether. 1 Ether is equal to 1000000000000000000 Wei.
Gwei is also a fraction of ether. It is also called a Shannon. Gwei currently dominates costs for making payments through the ether network. 1 Ether is equal to 1000000000.
These are simple converters for the main ether values. One ether coin is equal to one million Szabo, and one thousand Finney. That is, 1 ether= 1000000 Szabo and 1 ether= 1000 Finney
This network broadens leaders and makers in the Blockchain technology and Finance to produce a more creative economy.
Its primary focus is to create three initiatives, which are; Blockchain Education, Diversity-powered consulting, and Culture & leadership.
Frontier, Homestead, Metropolis, Serenity
These are essential phases of the developmental stage of Ethereum. Frontier gets exchanges up and running. The current phase, Homestead is more of eliminating risks related to Ethereum; Metropolis has fully fledged and tested user interfaces while Serenity has a crucial principle of rearranging the Ethereum network.
MyEtherWallet abbreviated as MEW is used for creating Ethereum wallets. It is free, open sourced and client-side interface that communicates quickly and securely with the Ethereum blockchain.
Enterprise Ethereum Alliance abbreviated as EEA is a platform for learning. In the process, it connects startups, technology vendors, Fortune 500 enterprises, academics with experts on Ethereum subject matter.
He is a programmer and writer popularly regarded as the co-founder of Ethereum and Bitcoin Magazine. He is Russian-Canadian by Nationality, born on 31st January 1994. He ventures in sectors like Digital currencies, Game Theory, and Digital contracts.
Decentralized Autonomous Organizations, abbreviated as DAO is a digital organization operated by its members to accomplish the same goal. It is also a type of investor-directed enterprise capital fund. It has open source code.
Trading Related Terms
It is a platform for companies, governments, and other financial groups to sell securities to the members of the public interested in investing. In the cryptocurrency space, exchanges are businesses that develop platforms for clients to trade cryptocurrencies.
This is a currency without inherent value that has been set as money as a result of government regulation. It is entirely based on the credit of the economy. A country’s legal tender is usually referred to as FIAT currency.
Whales are a group of people or an individual that can manipulate the market using their substantial crypto wealth. Their presence can be felt when a token enjoys an increased price in a short period and dies out very instantly.
Limit order/Limit sell/Limit buy
This type of order sets the minimum or maximum price which you can buy or sell a stock. The set limit price or lower will trigger a buy limit order and the limit price or higher will trigger a sell limit order.
Sell wall/ Buy wall
A sell wall is an enormous sell order that helps to stop the market price from rising until the entire sell volume is complete, while buy wall happens when the amount and size of buy orders on a particular cryptocurrency surpass the number of sell orders.
Market order/Market buy/Market sell
This is an order to purchase or sell digital currencies at set market prices. It is also said to be an order or instruction from a trader to a broker to execute a trade instantly at the best price available in the market.
This means borrowing money from a broker to purchase stock. Borrowed funds can only be used to trade a financial asset. It is also referred to as buying on margin. The collateral for the loan is usually securitized in the trader’s account.
This is a more traditional practice of investing which implies buying a currency in hopes that the price will increase. When a currency pair is long, the first currency is purchased while the other currency is sold short.
This is an investment tactic in which the investor sells shades of borrowed cryptocurrencies in the open market in hopes that the price of the stock will diminish over time. The investor must acquire the assets from their company, agreeing to pay interest.
A bullish is an investor who purchases hoping that the cryptocurrency price will rise. If prices rise, it is said to be a bull market. Bullish investors are referred as optimistic investors.
These are investors who have a negative stance towards cryptocurrecny prices and anticipate the prices to fall in the near term.
This is known as all-time high, an asset striking a new all-time high can serve great opportunities and pitfalls for investors.
This is used to refer to a person who advertises another digital currency: This kind of advertisement is done attractively to bring more people to the crypto world.
These are stable-price digital currencies, which means the market price of a stable cryptocurrency is connected to another substantial asset like the USD. It is a coin with very low volatility which can withstand a great deal of market volatility.
When an asset is bought and sold at the same time to profit from the difference; it is referred to as arbitrage. Arbitrage is a way of taking advantage of a difference in price of the same stock on two different exchanges.
Fear Of Missing Out (FOMO) applies to a circumstance in which fear of missing out an opportunity affect the way of trading. Traders might have a fear of missing out on a new form of investment that might benefit them.
This stands for fear, anxiety, and doubt.it is a tactic used to influence the perception of people by broadcasting negative and dubious or false information. This can discourage traders from investing; it is always carried out deliberately.
Someone who spreads negative, false and dubious information about something is referred to as a FUDster. A FUDster spreads FUD with the aim of wanting the price of something to fall.
Pump and dump
This occurs when investors promote a coin they hold and immediately selling the coin price has increased as a result of a rise in the interest. In the crypto space, announcements are used as a way of promoting the coin.
Investors holding a bag of stock that has become worthless over time are referred to as Bag Holders. In the crypto space, it refers to someone holding an altcoin following a pump and dump crash.
The total value held in a cryptocurrency is called Market Cap. It is the product of the total circulating supply and the current price of a single unit.
ROI, return on investment, is the percentage of how much money has been made compared to initial investment.
Technical analysis is a tool used by traders to evaluate the crypto market. It helps the trader get a better perception of the market sentiments and also predicting direction, momentum and support and resistance levels.
A short form of the moving average convergence divergence, MACD is a trend signal using moving average crossovers to spot changes in prices momentum. The MACD indicator is used to help forecast momentum changes by providing a visual description of different moving averages. It forecasts developing trends.
This is a handy tool in the cryptocurrency space used to predict hugely beneficial trends in the industry. It is used to estimate and visualize price instability within a market and helps to adjust them automatically based on market conditions.
General Cryptocurrency Terms
This is the world’s leading digital assets platform that allows users to have a direct transaction without involving any third parties. It uses new technology to develop a better financial system. It was created Satoshi Nakamoto in 2008 for use in Cryptocurrency.
Any computer that connects to the Bitcoin network is referred to as a Node. Nodes that thoroughly follow the instructions of Bitcoin are called full nodes while those that support only part of the rules are called lightweight nodes.
ICO is an abbreviation for Initial Coin Offering. This is a somewhat common way of funding new cryptocurrency related businesses. During the ICOs people give the investors their new tokens in exchange for other well-known digital currencies like BTC, ETH, etc.
This deal with two roles: the discharge of new coins as well as verifying and securing transactions in the blockchain. It can also be called a process of collecting information on every operation carried out with digital currencies.
This stands for Blockchain as a service. It is an idea proposed by IBM and Microsoft. Baas nodes are used to create an environment proper for their development.
Any temporary or permanent divergence in the blockchain is referred to as a Fork. This happens when a Blockchain is divided into two branches due to changes in consensus algorithm or software. It can be classified into a hard and soft fork, depending on the nature of change.
This stands for proof of work, which is the current consensus algorithm used by Bitcoin, Ethereum, and many other cryptocurrencies. The system requires miners to use specialized hardware and software programs to solve complex mathematical algorithms before being permitted to verify a bitcoin transaction.
Proof of Importance is called the cornerstone and significant aspect of NEM and also relates to making possible the consensus of all computers accessible in the network.
It is a crypto Jargon that stands for “Hold on for dear life” because the prices will be rising over the next few hours or days
This is a solution to blockchain’s scaling. It works to enhance overall network performance and speed, by providing nodes with partial copies of the whole blockchain
Created by Colin Percival, Scrypt is a password based algorithm that needs large amounts of memory to make large-scale hardware attacks. Many cryptocurrencies use its simplified version of the proof-of-work scheme.
This refers to requiring more two or more signatures to execute a Bitcoin transaction. They are also called M-of-N transactions; Where M is the number of signatures necessary and N is the total number of signatures associated with the transaction.
Hash is an algorithm that helps turn a significant amount of data into a fixed length. Hashes are large numbers and are generally written as hexadecimal. Bitcoin uses the SHA-256 hash algorithm to create random numbers in a way that needs some amount of CPU effort.
A wallet is used to store, receive and send cryptocurrency. Wallets are very useful when making use of any cryptocurrency. Most cryptocurrencies have an official wallet or some approved third-party wallets.
This describes any programming language or system that provided the necessary resources and requirements computes anything computable. It is the most powerful and can act as a computer.
This is a device that helps store digital currency securely. When it comes to keeping and securing your digital assets, hardware wallets are best. The Ledger Nano S is an excellent example of a Hardware wallet.
This is an act of storing your digital assets offline for security purposes. The use of a hardware wallet or moving the files from your software wallet to a USB drive achieves this.
This stands for Application-specific integrated circuits. This circuit has become quite prevalent in Bitcoin mining. For this purpose, Bitcoin miners can make chips that are really fast.
This is a theoretical attack on the Bitcoin network in which an organization is somehow able to take control of a majority of the network’s mining power. It means that an attacker has amassed more computing power than all other members of the network put together.
Proof of stake is a notion that relates to granting permission to a person to approve block transactions, depending on how much coins that person holds; This means that the mining power owned is determined by the amount of cryptocurrency the miner possesses.
This is an open web tool that lets you view information regarding blocks, addresses, and transactions on the Bitcoin blockchain. Digital currency users rely on it for all sorts of information. The history of any public Bitcoin address can be checked using the Block Explorer.
This is the number of blocks between a given chain and the genesis block which has height 0. Also, it is the number of blocks in the chain between the one you are seeing and the very first block in the blockchain.
This is the amount that miners may demand as a reward for developing blocks on the blockchain. It is a transaction without the sender and the miner being the recipient. The sender gives the miner the amount of Bitcoin for block development, as well as all fees from the transaction the miner entered in the block.
It is essential to take time to have a good understanding of each of the above terms, before taking steps to investing in order to achieve great success in the crypto world.