Cryptocurrency and blockchain technology are hot topics nowadays. But when you first start diving into this world, it’s understandable to have difficulty understanding the fuss.
If you’re new to the crypto world, then for a quick introduction to cryptocurrency slang and important terms that every trader should know!
We’ve compiled a list of Bitcoin & blockchain slang just for you, complete with definitions and explanations of all the key phrases in this space.
We’ve divided up the list into three categories: Terminology, Cryptocurrency Vocabulary, and Blockchain Terms.
Popular Crypto Slang Terms
1) Altcoin:
A cryptocurrency or cryptocurrency is other than Bitcoin (BTC). Thousands of altcoins exist, making keeping track of all of them a huge challenge. In any case, since the introduction of Bitcoin in 2011, dozens of alternative cryptocurrencies have developed.
While certain currencies have the potential to disrupt markets and alter industry trends, other coins are little more than financial crime-ridden hot rubbish. Most of the most popular alternative cryptocurrencies have some use in the real world. My apologies, Dogecoin.
Most altcoins strive to be decentralized, meaning that the currency is meant to function independently from major banking or financial institutions.
2) Bitcoin:
Another term for Bitcoin. It is used less often but can be advantageous in specific situations. For example, if you’re talking about the price of Bitcoin vs. Ethereum, you wouldn’t have to worry about mixing them up by accident. Bitcoin is a prefix that describes a series of transactions on the Bitcoin Network.
3) Blockchain:
The public ledger documents all valid transactions in the cryptocurrency. It’s commonly known as “the blockchain” but also referred to as a “distributed ledger.”
Just like a traditional bank keeps track of every single transaction within its system, the blockchain keeps track of cryptocurrency transactions for every wallet address. Each chain of blocks contains all the data related to cryptocurrency transactions.
4) Bitcoin ATM:
A physical kiosk where people can buy and sell Bitcoin. To use, you’ll need to link a bank account, debit card, or credit card to your account, then instruct the ATM on how much Bitcoin you want to buy. The machine will then match that with the spot price and complete the transaction.
5) DeFi:
The abbreviated term for “decentralized finance.” This technology is a huge opportunity for crypto to disrupt the traditional financial system massively. It would allow users to hold their money in their smart devices and make investments without paying service fees.
The decentralized ledger technology behind cryptocurrency has the potential to change everything from how we make transactions to how banks interact with each other to how we invest on exchanges. This space is still in its infancy, but it’s evolving incredibly quickly and has the potential for massive disruption.
6) Blockchain:
The term “blockchain” is an example of one of these buzzwords. Still, I don’t believe that more than half of the individuals that use it have a solid grasp of what it is. When I initially learned about cryptocurrencies in 2016, I connected the term “blockchain” with some bizarre underhanded Russian operation. I still need this clarification. Don’t ask.
A blockchain is a decentralized digital ledger that records every transaction that has ever been made using a specific coin. Blocks are the unit of construction for these transactions. When the storage space of a block is all used up, another block is generated, and so on. While some blockchains are designed to contain a finite number of blocks, others can accommodate unlimited transactions.
Because a blockchain, such as the one used by Bitcoin, is open to the public, anybody may view any transaction. It’s strange because most people identify Bitcoin with its early days when it was a breeding ground for illegal drug and gun deals. But now, it’s used for legitimate transactions. However, if Bitcoin becomes increasingly accepted, it will become much simpler to attribute a transaction to a specific person. Particularly on centralized trading platforms that have KYC procedures in place.
On the other hand, a blockchain, such as Monero, is entirely anonymous. It is not feasible to associate a transaction with any particular address. This is one of its defining characteristics, and it appeals to people interested in anonymously conducting business.
There is no single location on a blockchain where the ledger can be accessed at any given time. Instead, it is replicated numerous times among numerous computers and servers located all over the world. Because of this, we refer to it as a decentralized system.
7) Decentralized apps (dApps):
An open-source software platform that allows users to create their crypto-based apps.
It’s a decentralized version of the massively successful app stores that the likes of Google, Amazon, and Apple understand so well. Blockchain technology could even change how governments interact with each other on a global scale (even though there are still many issues to be resolved). In any case, it’s important to know that the term has only been around for a couple of years.
8) Digital Currency:
A cryptocurrency is a digital currency used exclusively in the digital world. This can often include operations that are more complicated than you may think. For example, ripple allows banks to make instant international transfers, effectively increasing the speed of transactions.
Like Bitcoin, various currencies exist in the digital world, such as Ethereum or Ripple. Ethereum uses its own “Ether” token to provide slower transactions and cheaper costs for users who require it.
9) Disruptor:
Disruptive technology is a new product that replaces an old one but has the potential to replace it rapidly. Many bad products can disrupt an industry, but if the disruption is too slow or subtle (like with Sony), the disruptor can’t take off, and the product becomes irrelevant due to its lack of appeal.
The first type of disruption is horizontal disruption. This occurs when innovations in other markets can be applied to our industry.
10) Distributed Ledger Technology (DLT):
A DLT is a digital ledger that records transactions in a particular blockchain. We went through some fundamental ideas underpinning public ledgers, the databases that record all transactions on a blockchain. A distributed ledger, often known as DLT, is another moniker for the technology behind blockchains. Consider blockchain whenever you see the abbreviation DLT. Remember to make a note of that.
11) Know Your Customer (KYC)
The phrase “KYC” refers to conformity. If you adopt a more conventional way of obtaining cryptocurrency, you should be asked about it at some point. The Know Your Customer requirement is a component of the onboarding process for major platforms like eToro and Coinbase. “Knowing your customer” is what is meant by “KYC.” As a measure to prevent money laundering and the funding of terrorist organizations, regulators mandate that identity and background checks be performed on newly acquired banking customers.
Because the financial regulation of cryptocurrencies is here to stay, you can anticipate seeing that acronym more and more frequently as governments try to link blockchain transactions to individual citizens.
12) Address:
Every transaction is assigned an address. This is a unique identification code essential to everyday transactions on a blockchain. However, it’s also the key to access a cryptographic private key used to spend cryptocurrency. Think of an address like an email address or username. It’s public information, but you need access to your private keys to find the address.
13) Fiat:
The government supports fiat currency and is not backed by any particular commodity (like gold). Are they green United States dollars that you have in your wallet? This is an example of fiat currency. The primary factor determining US dollar value is the general public’s confidence in the legitimacy of the United States government as an institution. If the United States falls apart, so will your fiat currency.
14) Distributed ledger:
Not to be confused with the term DLT, a distributed ledger is another moniker for the technology behind blockchains.
A distributed ledger is a public database that maintains a record of all cryptocurrency transactions that have ever taken place on the blockchain. In other words, it’s different from Bitcoin, which only shares a public ledger. Think of it as what we see when we scroll down a webpage and see the number of hits and likes each post gets compared to those on other websites.
15) Gas:
You must pay a charge whenever you transact on the blockchain. The fee in question is referred to as a gas price. You are paying a miner to go out and collect cryptocurrency on your behalf. You can pay greater fees in exchange for faster transaction speeds or lower fees in exchange for slower transaction speeds.
One of the most significant issues that cryptocurrency markets are now facing is the cost of gasoline. If we can figure out a better way to reduce the energy needed for transactions, cryptocurrency will become more widespread.
16) Initial Coin Offering:
An ICO is a form of fundraising that allows software developers to raise money for projects in an unregulated way. When you invest in an ICO, you buy the tokens for a product or service but need equity in the company. This can be great if you believe in the project and want to support it, or it could be terrible if you lose all your money and the company fails, but it still needs to be regulated enough that there’s no recourse.
17) Private Key:
Make sure to distinguish this from a public key. A private key is a password that can be used to access whatever cryptocurrencies were created with the corresponding private key. Your private keys are your cryptocurrency keys and are secured in your wallet.
The advantage of having them is that you can control the blockchain transaction history and ownership of the cryptocurrencies themselves. When you create an account, use a strong password to secure your private key, or use two-factor authentication if possible.
18) Non-fungible tokens (NFTs):
An NFT is a type of non-fungible cryptocurrency. This coin can be mined and used for transactions and does not have an associated blockchain address. In other words, it can only be spent on the blockchain by its corresponding private key.
A common example is CryptoKitties, a collectible game where players can own and trade digital cats. Each crypto kitty has a unique name, image, DNA sequence, and rarity level determined by the cosigners behind the kitty’s creation.
19) Mining:
Mining is the process by which cryptocurrency gets created and released. It involves solving a math problem which becomes more difficult and energy-consuming as time goes on. Creating Bitcoin requires computing power, which requires energy, making it so costly, and why environmental issues are starting to emerge.
However, mining is also how transactions get processed on the blockchain. Unlike banks, miners are not centralized in one place; they are spread throughout the network.
20) Proof of Authority (PoA):
PoA is a consensus protocol that is seen as an alternative to Proof of Work (PoW). PoA has been largely criticized because it is “set and forget,” like in the case of a centralized network.
It also relies on an out-of-band consensus mechanism (not using the blockchain itself) and only requires some nodes in a network to be online all the time. All PoA systems try to achieve better security than proof-of-work by reducing the energy expended and latency needed for validating transactions.
21) Proof of Work (PoW):
PoW is a consensus protocol that is used by blockchain networks. In this case, when someone says “proof,” they are referring to the fact that Byzantine Fault Tolerance ( BFT ) requires proof of work to reach a consensus.
PoW has been criticized for consuming too much power and taking too long to make transactions. There is also the possibility of a 51% attack on a blockchain if one entity controls more than half of the mining power in the network.
22) Public Key:
A public key allows you to encrypt and send a message securely from your computer (or phone). The private key is what unlocks the associated cryptocurrency. The public key is associated with a wallet and can be shared if you want others to be able to use your cryptocurrencies. Just like your private key, you must keep the public key safe, especially if you use two-factor authentication.
23) Proof of Stake (PoS):
PoS is a consensus protocol seen as an alternative to proof of work. PoS eliminates the mining process because validators replace miners. This helps reduce transaction times and energy consumption because you no longer have to calculate hashes. There are also fewer chances of forks, which means a potential reduction in transaction fees and faster transaction speeds.
24) Smart Contracts:
Smart contracts are the “next evolution” of business transactions, according to Ethereum founder Vitalik Buterin. They allow entities in a transaction to agree to something that is already written into the Ethereum blockchain and then execute it automatically once a set of conditions are met.
A smart contract is based on the concept of Ethereum’s “World Computer,” a decentralized network that executes computations that are not possible on any single computer. To achieve this, each participant in the Ethereum network (called a node) runs a program that uses all other nodes’ power to perform its calculations.
25) Public Key:
Public key encryption is making a digital signature and sharing it with others. A public key creates a message or transaction that no one except the holder of the matching private key can read. You can share your public key with anyone. Still, anyone who has it cannot take ownership of any cryptocurrency associated with it (even if they have access to your private key). Technically, this process is called asymmetric encryption.
26) Wallet:
A wallet is a software program that stores your cryptocurrency keys and securely manages balances and transactions. Some wallets are free; others cost money. Some are open source and easily accessible by anyone, while others are not. If you want to download one, you’ll need to find someone who has one or is willing to share their information.
27) Centralized Finance (CeFi):
Centralized finance is a term that describes the relationship between centralized institutions that hold cryptocurrency and blockchain technology. The concept of CeFi is to have non-minable cryptocurrencies combined with a central gatekeeper (or exchange). CeFi allows organizations to establish their cryptocurrency while bypassing the time, energy, and transaction costs required by mining.
28) Decentralized Autonomous Organization (DAO):
DAOs are organizations run without a central authority. DAOs are smart contracts on the blockchain, and they act as a more autonomous actor. Individuals can contribute funds to support the organization through DAO tokens (users vote and decide how to allocate funds). There is no need to rely on top-down management because the people involved in the DAO are those democratically casting their votes.
Conclusion:
As you can see, blockchain technology is still in its infancy. We could go into many more concepts, and new ones are always being created.
Some of the challenges associated with the hype surrounding the technology include: it’s still very early, it is not safe or stable (it can still be hacked or manipulated), it doesn’t have good consumer protections, and it is much harder to monetize than other forms of finance.
Read Also-
How Do Bitcoin Transactions Work?
What Are Altcoins? A Beginner’s Guide