A comprehensive list of useful and important Cryptocurrency and Bitcoin terminology that you should definitely know about. Credits to Bitcoin Talk and other sources from the Internet.
List of Popular Terms
Alternate coin. Everything other than Bitcoin (BTC).
All-Time High. The highest historical price of a coin.
Buy The Fucking Dip.
Huge green candle in Candlestick chart.
Do Your Own Research.
Fear of losing out. An anxiety that you are missing out a great opportunity.
Fear of missing out. A feeling of missing out a coins price growth.
Fear. Uncertainty. Doubt. An attempt to influence people by spreading negative and false information.
Initial Coin Offering: Pre-sale of tokens. Similar to IPO with stocks.
Extreme bullish movement of a coin that goes above ATH.
The most bitcoins paid for a pizza is 5,000 BTC. In fact, it was two pizzas for 10,000 BTC.
Short for satoshis: Smallest possible denomination of bitcoin, which is 0.00000001 BTC.
An altcoin which is designed just to con people out of money.
Promoting a coin through social media.
Technical Analysis: A system of tools used to predict price movement.
A person who is able to manipulate the prices of specific crypto assets
Zhou Tong, creator of Bitcoinica, a margin trading platform that no-longer exists. Being ‘Zhoutonged’ means losing all your money.
An address is a metaphysical location where bitcoins can be stored. When you make a transaction, bitcoins are sent from one address to another.
Bitcoin Improvement Proposals. A system for submitting ideas for future development.
An organization set up for the purposes of standardizing, protecting and promoting Bitcoin.
Bitcoin Daemon. A program that implements the bitcoin protocol for command line and remote procedure call. This makes it useful for integration with other software or in larger payment systems.
A block is a record of all or some of the most recent transactions.
To publish a block a miner must solve a cryptographic puzzle which links the block being published with the previous block, forming a blockchain.
Miners get a reward, a fresh batch of bitcoins straight out of the oven, every time they successfully publish a block.
A brain wallet refers to the concept of storing bitcoins in one’s own mind by memorization of a passphrase. The passphrase is used to generate all your private keys and addresses. It should be noted that if you forget your passprase then your bitcoins are lost forever.
Change & Change Address
When you send a transaction, the value, at the address you’re sending from, must be spent in its entirety. If you only want to spend part of the funds at that address, then the client generates a ‘Change Address’, and sends the difference there. You should be especially careful when sending from a ‘Paper Wallet’, as there have been several situations where people using paper wallets have lost some of their BTC because they are not aware that, depending on the client they imported their key into, the remainder of their unspent BTC is not necessarily sent back to the original address on the paper wallet.
The software application used to send and receive transactions.
All bitcoins can be traced back to the point where they were created as a reward for the miner. The coinbase transaction is the transaction inside a block that pays the miner his block reward.
Cold Wallet & Cold Storage
A wallet that has no connection to the internet (or another network). As it is stored ‘off-line’ it’s not susceptible to attack via a network and is, therefore, more secure than its ‘Hot Wallet’ counterpart.
The depth of the block containing your transaction in the blockchain. When a block is published it has a depth of 0 as it is the top block. As more blocks are published the previous blocks get deeper in the chain.
A wallet that you need to backup only once. It creates all your bitcoin addresses, and private keys, from a random number, called a “seed”. Your wallet can be recovered from the seed if the wallet file is accidentally deleted.
The bitcoin network has a target rate of block production which is one every ten minutes. In order to control block production rates, the network adjusts the difficulty of the cryptographic puzzle miners need to solve in order to publish a block. Difficulty adjustments occur once every 2016 blocks, which is about every two weeks.
A site which gives out free coins to get newbies started.
A type of double spend attack originally described by ‘Hal Finney’. It targets merchants accepting zero confirmation transactions and requires the cooperation of a powerful miner.
The first block of the blockchain released by Satoshi Nakamoto on Jan 4, 2009.
When there are a sufficient number of bitcoin clients on the network that disagree on the rules about how blocks are created and recorded in the blockchain. It leads to a split in the chain, one set of bitcoin clients follow one branch and another set follows the other.
A hash is a unique string of data. They are used in the bitcoin network and most often discussion of hash values relates to mining performance.
A unit a mining performance expressed as follows;
1 Kh/s = Kilohash per second. 1,000 h/s
1 Mh/s = Megahash per second. 1,000 Kh/s (1,000,000 h/s)
1 Gh/s = Gigahash per second. 1,000 Mh/s (1,000,000,000 h/s)
1 Th/s = Terahash per second. 1,000 Gh/s (1,000,000,000,000 h/s)
Pool hopping is the act of switching from pool to another. Miners do this in order to increase their likely profitability.
A wallet that is accessible via the web, or other network connection. It should be noted that ‘Hot Wallets’ are vulnerable to a variety of online attacks and are not as secure as their ‘Cold Wallet’ counterparts.
The view that Bitcoin will not succeed because of its deflationary nature. People will “hoard” it instead of spending it, expecting it to rise in value later.
Mining is the act of linking blocks into the blockchain by solving cryptographic puzzles.
A computer system, usually custom built and used for mining bitcoins.
A computer that is connected to the bitcoin network. Nodes are described as full if they accept new incoming connections.
Whenever a ‘Soft Fork’ or ‘Hard Fork’ occurs, the blockchain is split into two paths. One of these chains will eventually be considered the valid one, and the other will be the invalid chain. Blocks that are in an invalid chain are called orphaned blocks.
A paper wallet is a way to store bitcoins by printing the addresses and private keys directly on a piece of paper, or other material.
A group of miners that all work together in order to improve their chances of solving a block.
Before some altcoins are released to the public they are premined. This generates coins for the developers, who hope to profit from them in the future.
Proof Of Stake
An alternative to Proof of Work. With Proof of Stake, the resource that’s compared is the number of bitcoins a miner holds rather than the computational effort expended.
Proof Of Work
It is a computational problem which when solved proves you expended some computational effort.
Bitcoin enforces artificial scarcity by halving the reward given to miners every 4 years. Eventually, in the year 2140, all the bitcoins will have been mined and there will be just under 21 million of them.
The original bitcoin client.
A situation where two or more competing blocks are published at the same height in the blockchain. These kinds of forks will solve themselves without any intervention from us.
When you make a transaction it is possible to include a transaction fee. The miner that publishes the block containing your transaction gets to keep the transaction fee. It should be noted that once all the bitcoins have been mined the transaction fee will be the only reward for miners.
A data store for keeping private keys in.
Bitcoin is designed with the belief that a single attacker will never have more than 50% of the total network processing power. If an attacker did have 51% or more they could perform a double spend, amongst other things.
Markets & Trading
Anti-Money Laundering. A legal control that requires financial services, such as bitcoin exchanges, to detect and report money laundering activities.
The practice of taking advantage of a price difference between two or more exchanges. The aim is to profit from the difference between the market prices, by buying cheaper on one exchange and selling higher on the other. This also keeps the market price relatively similar across all the exchanges.
Someone who thinks the market value will go down. A bear market is a prolonged period of falling prices.
The opposite of a bull trap, where the price goes down and then sharply back up “trapping” bearish speculators who sold their positions.
This is the opposite of ‘Ask’. The price a buyer is willing to pay for a bitcoin and the number of bitcoins to be bought at that price.
A self-fueled surge in market price, where prices rise above their true value. It will continue to rise until the bubble bursts and a massive selloff occurs.
Opposite of bear, they think the market value will go up. A bull market is a prolonged period of rising prices.
An upward trend in price that invites bullish speculators to buy before reversing suddenly and “springing the trap.”
Business-to-business. Commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer. Contrasting terms are business-to-consumer (B2C) and business-to-government (B2G).
CYA & CYOA
Cover Your Ass / Cover Your Own Ass. Describes practices that serve to protect oneself from legal and administrative penalties, criticism, or other punitive measures.
Deflation & Deflationary
The opposite of inflation, deflation is defined as a sustained decrease in the general level of prices for goods and services relative to a certain measure. It is measured as an annual percentage decrease. Currencies which are subject to deflation are described as being deflationary.
Double-spending is successfully spending the same money more than once.
A form of technical analysis. It is used to analyze financial market cycles and forecast market trends by identifying extremes in investor psychology.
Holds payments made for a service and releases them to the intended recipient only after it has been verified that the recipient has kept his end of the deal.
A banking system in which only a fraction of the deposits are backed by actual cash-on-hand and are available for withdrawal. This is done to expand the economy by freeing up capital that can be loaned out to other parties. Fractional-reserve systems permit the money supply to grow to a multiple of the underlying reserves of base money.
The property of a good or a commodity whose individual units are capable of mutual substitution, such as crude oil, shares in a company, bonds, precious metals, or currencies. Shoes are an example of a non-fungible good. You can’t just wear someone else’s, it’s gross and they’ll be the wrong size, so they are not mutually substitutable.
I Am Not A Lawyer. Used in discussions regarding the legality of various activities, usually by people who have no business dispensing legal advice or opinions.
Inflation & Inflationary
The opposite of deflation, a general increase in prices of goods and services relative to a certain measure. Currencies which are subject to inflation are described as being inflationary.
A school of economic thought inspired by the ideas of the economist John Maynard Keynes. Keynesian economics advocates a mixed economy, predominantly private sector, but with a role for government intervention during recessions.
Know Your Customer. A legal requirement to make a reasonable effort to confirm your costumer’s true identity. This policy helps to prevent things like money laundering.
In finance, leverage is a general term for any technique used to multiply gains and losses. A common way to attain leverage is by borrowing money.
A limited order is an order that is place above or below current market price. It may or may not be filled depending on the movements of the market.
Market liquidity is an asset’s ability to be sold without causing a significant movement in the price and with minimum loss of value. Liquidity is characterized by a high level of trading activity. Assets that can be easily bought or sold are known as liquid assets.
A long position means the holder of the position owns bitcoins and will profit if the price goes up.
In margin trading the trader borrows money to trade with. The margin is a collateral deposit made to cover the credit risk of the lender.
When the margin falls below the minimum required to cover the credit risk of the lender, the broker or exchange issues a margin call. At this point the position is automatically closed and the margin is lost.
A market order is an order to buy at market price. Market orders are always filled immediately.
Over The Counter. Off-exchange trading that is done directly between two parties.
A fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors.
Pump And Dump
A form of market manipulation where the price is artificially inflated, through false and misleading positive statements, so they can sell higher than they bought.
A short position means the holder of the position has borrowed bitcoins and sold them, hoping to buy them back again when they are cheaper. They will profit if the price goes down.
The practice of trading in an attempt to profit from short or medium term fluctuations in the market value. Also refers to prediction of future market value.
The amount by which the ‘Ask’ price exceeds the ‘Bid’ price. This is essentially the difference in price between the highest price that a buyer is willing to pay for a bitcoin and the lowest price for which a seller is willing to sell it.
Stop Loss & Stop Order
A stop-loss order is designed to limit an investor’s loss on a security position. Setting a stop-loss order for 10% below the price you paid will limit your loss to 10%. This strategy allows investors to determine their loss limit in advance.
Tragedy Of The Commons
A market failure scenario where production and consumption are unbalanced due to conflicts of interest. In the future, when the only reward for miners is the transaction fee, people might only want to pay a small fee. This would leave the miners disincentivized, and lead to a dangerously underpowered network.
A period in the Dutch Golden Age and the first major financial bubble. Investors began to madly purchase tulips, pushing their prices to unprecedented highs; the average price of a single flower exceeded the annual income of a skilled worker. Tulips sold for over 4000 florins, the currency of the Netherlands at the time. As prices drastically collapsed over the course of a week, many tulip holders instantly went bankrupt.
A measure of how unstable the market is, for example, frequent and large swings in market value would be described as a highly volatile market.
A wall is a relatively large limited order which influences the current market price. Placing bid walls and ask walls is a common tactic of the manipulator.
Web Of Trust. A system that firstly forces its users to prove their identity and secondly associate that identity with positive/negative feedback from other users. The purpose of a web of trust is to help users identify trustworthiness in other users.
Application-Specific Integrated Circuit. An advanced type of hardware used for mining.
Bots or robots are software applications that run automated tasks, such as bitcoin trading, over the internet.
An attempt to gain access to something by trying all possible keys until the correct key is found.
Cloud’ & Cloud Computing
A collection of networked computers that share hardware and software resources.
A scheme which allows people to buy shares in hashing power without having to deal with any hardware.
A cypherpunk is anyone who advocates the use of cryptography for the purposes of political change. A community of cyperpunks was established around the Cypherpunks mailing list, an informal group aimed at achieving privacy and security through proactive use of cryptography. It was into this community that Satoshi Nakamoto decided to release Bitcoin.
Deep Web & Deepnet
World Wide Web content that is not part of the Surface Web, and can not be found on any standard search engines.
DoS & DDoS
Denial-Of-Service Attack / Distributed Denial-Of-Service Attack. An attempt to make a computer or internet resource, such as a web site, unavailable to its intended users. Usually the attacker will attempt to overload the systems resources.
General Public License. The most widely used software license, which guarantees end users the freedoms to use, study, copy, and modify the software.
A honey pot is a “trap” expressly set up to attract people. Its purpose is to detect, deflect, or in some manner counteract attempts at unauthorized/illegal use of information or computer systems.
A piece of software that logs all keystrokes on a keyboard. They are often used nefariously to gain access to secret information such as passwords.
A data tree structure whose leafs contain the data and a hash is generated at each branch all the way down to the root. Changing the data at any leaf results in a change in the root hash.
A Man-In-The-Middle attack is a type of exploit where attackers intrude into an existing connection to intercept the exchanged data and inject false information.
A system that requires multiple cryptographic authentication keys.
An extra bit of data provided to enforce uniqueness in a data set.
Peer To Peer. A network architecture where all nodes cooperate on an equal basis, as opposed to the client server model.
Tor, TOR & The Onion Router
A system that enables its users to communicate anonymously on the Internet. The routeing mechanism used by ‘Tor’ is a ‘Darknet’.
A type of malware that masquerades as a legitimate file or helpful program but whose real purpose is, for example, to grant a hacker unauthorized access to a computer.