Brought to you by the Liquid team to help you make sense of crypto.
Crypto can be confusing. In this A-Z jargon buster, we explain some of the more common terms and phrases you will come across.
All time high/low - The highest price point a cryptocurrency has ever traded at.
All time low - The lowest price a cryptocurrency has ever traded at.
Altcoin - Altcoin means alternative coin. The term is used to refer to any cryptocurrency that is not Bitcoin, although other more prominent coins (Ethereum for example) are not usually referred to as Altcoins.
Arbitrage - Taking advantage of the price discrepancies between different markets in order to profit. This could mean buying Bitcoin on one exchange, and then selling it on another exchange at a higher price.
Bag holder - someone who holds a sizable amount of a certain cryptocurrency that has lost value over time. They continue to hold their bag in the hopes that the price will appreciate.
Bear market - A term used to describe a negative market, where prices are falling and investors are selling and suppressing prices further. This term is not exclusive to cryptocurrency.
Bearish - Bearish is used to describe the overall sentiment of the cryptocurrency space. It means the news hasn’t been very positive, and the prices are either going down, or will start to go down.
Blockchain - Blockchain is the technology that cryptocurrencies are built on. It is a decentralized ledger that stores records of transactions.
Bull market - A positive market, where prices are increasing and new investors are entering the space to buy.
Bullish - positive community sentiment within the cryptocurrency space. This may be the result of a large price increase or the release of lots of positive news.
Burn - The process of destroying tokens so they no longer exist or cannot be accessed. This decreases the total supply, which can cause a price increase if the demand remains the same, but the supply has decreased.
Buy/sell wall - Buy and sell walls are placed on cryptocurrencies in order to keep the price at a certain point. A sell wall will stop the price increasing, and a buy wall will stop the price decreasing.
Circulating supply - The amount of a cryptocurrency that is in circulation. This means the amount that is currently tradable on the market. This is not always the same as the total supply because of things such as mining and lock up periods.
Cold storage - Storing cryptocurrency somewhere that is offline - not connected to the internet. Cold storage is the most secure way to store cryptocurrency.
Confirmations - Confirmations are the number of blocks in a blockchain that have been produced and accepted by the consensus network since the creation of the blog that includes the initial transactions.
Crypto - Crypto is a short way to write cryptocurrency.
DYOR - An acronym for Do Your Own Research. The term is used to encourage new investors to do their own due diligence into a project before investing, instead of blindly listening to the advice from others.
Dapp - A decentralized application that is run on the blockchain. Dapps require multiple users in order to run. Dapps do not require third parties to remain operations and they are open source.
Decentralized - If something is decentralized, there is no central entity and it is spread out geographically. Usually, if something is decentralized, the decision making is not controlled by one central entity either, but is shared between a number of users or voters.
Distributed Ledger Technology (DLT) - Distributed Ledger Technology is tech that allows a ledger to be distributed globally. This means that multiple people across the world are able to contribute to the upkeep of a database. Changes can only be made to the database if they are agreed upon by enough of the contributors.
Dump - refers to the mass selling of a cryptocurrency that results is a price drop
Ethereum - The second most known cryptocurrency after Bitcoin. It is an open source blockchain platform, and the first to introduce smart contracts.
Exchange - A third party that facilitates the trading of cryptocurrencies. They can also offer features beyond trading, such as margin trading, ICOs, lending, and more.
FOMO - An acronym for Fear Of Missing Out. This term relates to when investors fear they are missing out on a good opportunity, usually when a certain crypto has largely increased in price. The FOMO mindset would suggest that the price will continue to increase, so get in while you can so you don’t miss it.
FUD - An acronym for Fear, Uncertainty and Doubt. Someone is spreading FUD if they are actively trying to spread fear within a community, usually in an attempt to reduce prices.
Faucet - A type of reward system that dispenses cryptocurrency. They used to be much more common. Users could complete a small task, such as a captcha, and receive a small amount of a certain crypto.
Fiat - Fiat money is a currency that is declared legal tender by a government, like US dollars, but is not backed by a commodity. Value is controlled based on supply and demand.
Flippening - The flippening refers to an expected shift in the cryptocurrency markets where Bitcoin is no longer dominant, and altcoin value is not primarily based on the value of Bitcoin. Since the beginning of cryptocurrency Bitcoin has had the largest market cap, and the prices of altcoins have been derived from its value.
Fork - A change to open-source code. The change is usually small, but includes important modifications that stand out from the other product. There are two kinds of forks, hard and soft.
- A hard fork is when a change is made to the code that makes the old version technically invalid. Older versions of the code can continue to run, but the data and protocol between the two versions will be different. A major example of a hard fork is Bitcoin Cash, which was created to increase the blocksize of Bitcoin.
- A soft fork is when a change is made to the code, but the old version and the new version can still operate using the same data and protocol.
Gas - The name for the transaction fee paid on the Ethereum network.
HODL - A meme that originated from a post on Bitcointalk in 2013. It is a misspelling of the word "hold". Cryptocurrency investors say hodl to express the fact that they will not be selling their investment.
Hardware wallet - A hardware wallet is a type of cold storage. It is an external piece of technology, similar to a memory stick, that stores your private keys. They are immune to viruses, and often have buttons on that are used to confirm any transactions, so the funds are only available if the password is known and the device is at hand.
Hashing - Using maths to turn an input into a cryptographic fixed output. This enables messages, regardless of length, to be cut down into a cryptographic output to be stored on the blockchain.
Hot wallet - A wallet that is permanently connected to the internet. These are regarded as the most risky kind of wallet.
ICO - Acronym for Initial Coin Offering. An ICO is when a company raises funds for their project in major cryptocurrencies, usually ETH, in exchange for some of their own new tokens.
Indicator - Indicators can be added to trading charts to provide some insight into the future movements of an asset.
Leverage - The amount of increased buying power you have based on the amount of money you borrow from the exchange. Leverage allows a trader to enter bigger positions than they could with their available funds, but each trade is at a higher risk of liquidation. Read more about margin trading.
Limit - A limit order is a buy order placed at a fixed price or better. Therefore, setting a limit buy order will allow you to buy at or below the specified price, but not above.
Liquidity - The availability of an asset on the market. In a liquid market, a trader can buy or sell the asset easily without significantly impacting the price of the asset.
Long - Going long is the process of betting something will increase in price using leverage in margin trading. You borrow money to purchase more of an asset than you can with your available funds. If the price increases as expected, you earn more profit than you would have without borrowing the money.
Margin Trading - Margin trading is a type of trading where you borrow money from the broker in order to buy more of an asset than you can with your available funds.
Market cap - The total valuation of a cryptocurrency. This is calculated by multiplying the circulating supply by the current trading price. The market cap is a much better indicator of value in comparison to the trading price.
Market maker - Someone who provides liquidity to a market by creating buy or sell orders.
Market taker - Someone who accepts the price of an order in the order book, and settles their trade immediately by trading at this price.
Mining - Using computational power to process transactions on the blockchain in order to earn a reward. Processing means contributing to the verification of the transaction, and then adding it to the blockchain
Moon - Moon is a phrase used by crypto investors to depict the direction of a currencies price. If a coin is said to be going to the moon, this means the price is going to increase.
Nocoiner - A term used to describe someone who does not hold an cryptocurrency
Node - Any electronic device that contributes to the blockchain network in some way. This includes maintaining a copy of the blockchain, and can also include contributing to processing transactions.
Paper wallet - An offline method for storing cryptocurrency. A paper wallet is a print out or piece of paper containing the private keys and addresses onto paper.
Proof-of-Stake - A method used to process transactions on the blockchain. In a Proof-of-Stake (PoS) protocol, miners have more control based on the amount of the specific crypto they hold.
Proof-of-Work - A method used to process transactions on the blockchain. Proof-of-Work (PoW) allows miners to process transactions by solving mathematical problems, and earn rewards for being the first to solve the transaction.
Public and public keys - Public keys are keys that people share for others to view and send crypto to. A private key is a string like a password used to access and send cryptocurrency, much like a password.
Pump - A sharp increase in the price of an asset. These are often unsustainable and artificially created. Individuals or groups often pump a price up so they can sell their holdings at a higher price than market value.
Pump and dump - A scheme orchestrated by a group that sharply increases the price of a certain cryptocurrency, so the group can create hype, sell their holdings when the price is artificially high, before the price ‘dumps’. When the price dumps, it is decreasing down back to or below the price before the artificial price increase or ‘pump’.
Roadmap - A piece of content used to lay out the plans and milestones of a project. Some projects use it to set deadlines for their upcoming releases, whereas others use roadmaps to show what they are working on without a deadline.
Satoshi - A Satoshi or ‘sat’ is a unit of Bitcoin. 1 Satoshi = 0.00000001 BTC. Satoshi comes from Satoshi Nakamoto, the creator of Bitcoin.
Security - A security is tradable asset that is also a proof of ownership.
Shill - The act of promoting a product under the guise of personal endorsement, whereas in reality you have financial motivation behind the promotion. Either the shill is being paid, or holds the crypto they are promoting.
Short - The act of betting that a cryptocurrency will decrease in price using leverage in margin trading. If you short a crypto, the exchange lends you the crypto which you immediately sell for fiat. If the crypto decreases in price, you can resell the crypto, pay back the amount lent and interest and keep the profit.
Smart Contract - A self executing contract built on the blockchain. Smart contracts can execute under specific parameters without the requirement for a third party, and the the results are unchangeable.
Stablecoin - A stablecoin is a coin that is designed to have a stable price. There are a few ways that this is possible, but the most common is to peg the price of the coin to a commodity, usually a fiat currency such as USD. Stablecoins that are not backed by assets sustain a price through careful control of the circulating supply.
Spread - The price difference between the best buy and sell offer on a specific market.
TA - Acronym for technical analysis. TA is used to find trading opportunities by considering statistics around price movement and trading volume. Traders use TA to increase the likelihood of their trades being successful.
Token - A tradable digital asset that provides some kind of utility within the ecosystem of the project that issued it.
Total Supply - The amount of total amount of a cryptocurrency that will ever be able to exist. This includes coins that are locked up and that will be mined in the future.
Volatility - The measure of how much the price of an asset fluctuates. If a price is highly volatile, this means the price fluctuates heavily.
Whale - A whale is someone who holds a lot of crypto.
Whitepaper - A document that holds all of the technical details about the project. This includes how it works, token details such as tokenomics, details about the team, and often a future roadmap.
This content is not financial advice and should not form the basis of any financial investment decisions nor be seen as a recommendation to buy or sell any good or product. Trading cryptocurrency is complex and comes with a high risk of losing money, particularly if you trade on leverage. You should carefully consider whether trading cryptocurrencies is right for you and take the time to learn how trading works and decide how much money you are prepared to lose.
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