Although more and more people are becoming aware of cryptocurrencies, much of the language used can seem a bit daunting and peculiar. Unlike conventional money, the ever-growing space of crypto requires some understanding of somewhat complex concepts.
It’s beneficial first to understand that a cryptocurrency is a digital currency facilitated through cryptographic means. For instance, does the term ‘mining’ have any relation to precious metals being dug out of the ground?
What about blockchain? Luckily, this article has put together a relatively comprehensive A-Z glossary of the phrases any new or experienced enthusiast in cryptocurrencies will likely come across in their journey.
The A-Z crypto glossary of most commonly used jargon
| Term | Meaning |
| 51% attack | A malicious attack by a group of miners controlling more than 50% of a blockchain’s mining power |
| Airdrop | Typically free distribution of a new cryptocurrency for marketing purposes |
| Altcoin | Every other coin other than or ‘alternative’ to Bitcoin |
| Arbitrage | The practice of buying a cryptocurrency from one exchange and selling it to another to profit from price discrepancies |
| ASIC (application-specific integrated circuit) | Customized computer hardware designed to mine cryptocurrencies with astronomically high hash functions |
| Blockchain | The foundational distributed digital ledger containing a database of blocks linked through cryptography |
| Block explorer | An online-based application for track in real-time all transactions occurring in a particular blockchain |
| Bulls/bears (or bullish and bearish) | Financial market jargon describing uptrend (bullish) and downtrend (bearish) price movements |
| Circulating supply | The total amount of tokens currently in circulation |
| Cloud mining | A cloud-based form of mining using rented processing power without the need for hardware (see mining) |
| Cold storage | The storing of coins in wallets not connected to the internet (see hot storage) |
| Consensus mechanism | A system used in blockchains for a group of computers to agree to particular datasets |
| DAO (decentralized autonomous organization) | A developer group adhering to and facilitating the processes of a blockchain without a centralized authority |
| dApp (decentralized application) | A type of cryptocurrency-reliant application running without any central authority |
| DDos(distributed denial of service) | A cyber attack where perpetrators make a network unreachable to users by disrupting or overloading its services |
| Decentralization | The opposite of centralization where processes occur amongst a network of users |
| Double spending | A potential defect in a blockchain where the same token can be spent twice through falsification |
| Exchange | A business or platform allowing for the trading of cryptocurrencies |
| Fiat currency | Money identified as government legal tender: US dollar, euro, etc. |
| FOMO | The acronym for ‘fear of missing out’ |
| FUD | The acronym for ‘fear, uncertainty, and doubt’ |
| Fork | A software change in a blockchain causing a new or altered version of a cryptocurrency |
| Going long and short | Buying in anticipation of a price increase (long) or selling in anticipation of a price decrease (short) when trading |
| Halving (or halving) | A supply-controlling mechanism where the distribution of a cryptocurrency is reduced in half |
| Hard cap | The maximum supply of a cryptocurrency |
| Hardware wallet | A physical device like a USB stick for storing coins considered the most secure compared to a software wallet |
| Hash | A computer function decrypting bits of cryptographic data |
| Hash rate | The speed at which a piece of computer hardware can perform hash functions |
| Hot storage | The storing of coins in wallets connected to the internet (see cold storage) |
| HODL/HODLing | A slang acronym for ‘hold on for dear life,’ describing the practice of long-term cryptocurrency holding |
| ICO (initial coin offering) | Similar to an IPO (initial public offering); a fundraising and token-distributing process for the launch of a new cryptocurrency |
| Leverage (or margin) | A mechanism offered by exchange or broker allowing for the opening of bigger positions with a smaller balance |
| Liquidity | The ability for a financial instrument to be easily and quickly bought or sold without affecting its price |
| Market capitalization (or market cap) | Similar to stocks, an indicator of a cryptocurrency’s dominance taken from multiplying its price and circulating supply |
| Mining | A method of computers solving hashes in a blockchain to create new tokens |
| Mining pool | A group of computer owners gathering to mine a cryptocurrency where rewards are distributed proportionately based on the contributing power |
| Mining rig | A set-up of computer equipment or hardware designed to mine a cryptocurrency |
| Mooning (or ‘going to the moon’) | Slang describing a sharp rise in the rise of a cryptocurrency |
| Node | A computer connected to a blockchain |
| Oracle | Third-party services providing external, real-world data to smart contracts |
| Private key | A long set of alphanumeric characters which act as a digital signature to access a wallet (see public key) |
| Proof-of-stake | A popular consensus mechanism where transactions are automatically confirmed by a blockchain-based on the stake of investors |
| Proof-of-work | Another popular consensus mechanism where nodes prove some computational effort has been performed in a blockchain to confirm transactions |
| Public key | The unique wallet address used to receive cryptocurrencies |
| Pump and dump | A fraudulent scheme where a group of traders artificially inflate the price of an instrument through exaggerated statements |
| Seed phrase (or mnemonic phrase) | A collection of designated English words use to recover a cryptocurrency wallet in the event of theft, loss, or damage |
| Sharding | A latency-improving, scalable solution where bits of a blockchain network is split into ‘shards’ or partitions |
| Smart contract | A code-written digital contract designed to execute based on pre-designed conditions autonomously |
| Stablecoin | A unique type of cryptocurrency maintaining a stable price by being pegged to another fiat currency, commodity, or algorithmic collateral |
| Wallet | A computer application allowing the sending, receiving, and storage of cryptocurrencies |
| Whale | A wealthy investor who owns substantial amounts of a cryptocurrency |
Final word
Cryptocurrencies are perhaps the most fascinating amongst all financial instruments as they continue to challenge the status quo. Although understanding how they work is a bit of a learning curve, it makes more sense as time goes on.
In this article, readers will hopefully better comprehend the common processes in this space by understanding the language.