Blockchain Glossary
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Welcome to the Blockchain Glossary! This list is frequently updated so come back again later for more blockchain knowledge. If you find this glossary valuable, feel free to share this post.
A
Airdrop: An event where the developers of certain crypto asset give it to audience for free in order to gain attention and user base.
Altcoin: Alternative coin. A nomination used of all the other crypto assets except Bitcoin.
All Time High (ATH): A moment of time where a crypto asset(s) or the whole crypto market has reached its highest point in history.
B
Bubble: An event in the market where the price of a certain equity, such as Dogegoin, rises rapidly in a speculative manner, and can´t be explained by its fundamentals. Just as market bubbles grow fast, they also burst in a similar manner.
Bull Market: A market cycle during which the general atmosphere among investors is full of optimism and even euphoria.
Bear Market: A market cycle during which the general atmosphere among investors is pessimistic.
Blockchain: “The motor” under the hood of each crypto asset. Blockchain enables the operation and functionality of these assets. The same blockchain may be utilized by many different assets, or just one.
C
Capital Gains Tax (CGT): Tax that is paid on capital gains, e.g. gains on crypto investments. Note that capital gain taxation differs between countries and some countries do not even have capital gain tax in place for crypto investments. One of those countries is Germany.
Centralized Exchange: An exchange that is operated by a middleman that is trusted and handles the transactions. For example, Coinbase and Gemini are centralized exchanges.
Circulating Supply: Amount of certain crypto asset in circulation.
Coin: Cryptocurrency that runs on its own dedicated blochain. Examples: Bitcoin, Dogecoin.
Cold Wallet: A crypto wallet that is not connected to the internet.
Cryptocurrency: A currency that is run on a blockchain.
Cryptography: A technique originated all the way to ancient civilizations which enable communication between two parties in a manner which do not give a possibility for outside parties understand the messages. Cryptography is one of the founding principles behind blockchain technology.
D
Dapp: Decentralized Application. Application that is decentralized. Examples of Dapps include Aave which can be used to lend tokens to other in exchange for interest, and Zapper that can be used to track crypto portfolio.
Decentralized Finance (DeFi): A new era of finance where typical financing actions (e.g. lending) are executed without the middlemen (i.e. banks) that exist in a traditional field of finance. The role of banks are handled by smart contracts.
Decentralized: An operation that is handled without a central atuhority or middlemen.
DEX: Decentralized Exchange. Exchange in which transactions are handled by smart contracts.
Desktop Wallet: A software wallet that works on your PC.
Dollar Cost Averaging (DCA): Investment strategy where instead of purchasing a certain crypto asset at one point, the purchases are spread along a longer time period, each time making a purchase with the same amount.
Do your own research (DYOR): A highly recommended action to be taken before investing, whether talking of crypto asset or any other type of asset classes.
E
Exchange: A place where different crypto transactions can be made, such as purchasing, selling or loaning crypto.
F
Fiat: Name used for traditional currencies such as US dollar or euro.
FOMO: Fear Of Missing Out. A phenomenon that typically occurs during bull markets when price of certain crypto asset is rapidly raising.
Fork: An update made to blockchain´s protocol. Two types of forks exist, soft forks and hard forks.
FUD: Fear, Uncertainty and Doubt. A psychological phenomenon that typically occurs during bear markets / market crashes. Some people or entities may also spread FUD in hope to manipulate the market.
Fundamentals: Series of factors that can be used to evaluate the valuation and future potential of a crypto asset. The fundamentals include ia. existence of real-world use cases and whether the crypto do anything better than an existing solution.
G
Gas: A fee that is paid for transactions made on the Ethereum blockchain. GWEI is used as a denomination for gas fees. One GWEI equals 0.000000001 ETH.
H
Halving: An event when Bitcoin miners´ rewards are cut in half. Halving occurs in about every four years.
Hard Fork: An update made to a blockchain´s protocol. Hard fork is not backward compatible.
Hardware Wallet: A wallet that includes a hardware component, typically an USB device. Most popular hardware wallet brands are Ledger and Trezor.
Hodl: Hold On to Your Dear Life. Referring to holding on to crypto investments for a prolonged period of time. The HODL acronym originated from a Bitcoin Forum post back in 2013.
Hot Wallet: A crypto wallet that is connected to the internet.
I
Initial Coin Offering (ICO): ICO is an event where the general public is given the first opportunity to purchase certain crypto asset. For example, Ethereum ICO was held in 2014 when the price of one ETH was around 0.30 USD.
K
Know Your Customer (KYC): Legislation which requires centralized crypto exchanges to collect personal information about their customers. KYC is put in place in order to restrict money laundering and other criminal activities.
L
Leverage: Investing that is made with borrowed money.
Linear Chart: The basic type of chart where distance between price levels remain fixed.
Limit Order: A purchasing order in an exchange that is only executed if the price is the exact or better than specified in the order.
Logarithmic Chart: Chart where the distance between percentage changes stay the same.
M
Market Cap: Value where the price of one unit of crypto asset is multiplied with the total circulating supply of the tokens.
Mining: A process where complex mathematical problems are solved with computers on a given blockchain. Mining help ensuring the security of a blockchain and releases new tokens into circulation.
Miner: An entity that runs mining operations. In exchange for mining, the miner is rewarded with the given crypto asset.
Mobile Wallet: A software wallet that works through an app on your phone.
N
Non-Fungible Token (NFT): A type of token that typically has a very limited supply, most typically collectibles. NFT:s can be anything from baseball cards to art pieces. Popular blockchains for NFTs include ia. Ethereum and Tezos.
P
Paper Wallet: A crypto wallet that is literally made of paper.
Proof of Work: One of the two methods to confirm transactions on a blockchain. For example Bitcoin utilizes PoW protocol on its blockchain.
Proof of Stake: One of the two methods to confirm transactions on a blockchain. Tezos is one example of those utilizing PoS protocol. PoS is much more energy-efficient than PoW.
R
Return on investment (ROI): Tells how much you have made or lost with your investment after the original investment is deducted.
S
Satoshi Nakamoto: A pseudonym for the creator or creators of Bitcoin. There is no clear evidence of who that person or entity is.
Soft Fork: An update made to a blockchain´s protocol. Soft fork is backwards compatible.
Shilling: An occurrence where person or organization questionably promotes certain crypto in order to get financial gain out of it.
Scalability: The extent of which a certain blockchain is able to answer to the growing load and demand on it.
Seed Phrase: A collection of words (typically 12 or 24) which enable to gain access to your crypto wallet even if you physically lose it.
Staking: A procedure in which you have locked up some or all of your tokens to the blockchain. Staking helps in keeping the blockchain functional. In exchange, the staker is rewarded with crypto asset that is deposited to his / her wallet.
Stable coin: Crypto which price is tied to the price of fiat currency it follows. For example, USDC is a stable coin which price is 1:1 to US dollar.
Shitcoin: Crypto asset which has no real world utility and is purely based on price speculation. In comparison to a shitcoin, crypto asset such as Ethereum is utilized e.g. in banking and gaming sector.
Solidity: Coding language for Ethereum.
T
Technical Analysis: Largely quantitative analysis technique where patterns and trends are recognized on the price chart in order to forecast the future price movement of a crypto asset. If you want to learn more about technical analysis, I recommend checking out Benjamin Cowen.
Ticker: Individual acronym that exists for each coin. For example, Bitcoin carries the ticker BTC and Ethereum ETH.
Token: Crypto asset that exists on another blockchain that is not created solely for it. For example, AAVE token runs on the Ethereum blockchain.
Two-Factor Authentication: A security measure that is typically utilized when logging in to services or when making a transaction, such as buying Bitcoin. Instead of just using an username and a password, additional step is added e.g. a rapidly changing numerical code that can only be found from account holder´s phone.
Y
Yield Farming: A process of locking up crypto in exchange for rewards.
V
Vitalik Buterin: Co-founder of Ethereum. Buterin was born in Russia but nowadays lives in Canada. You can check Buterin´s website here.
Volatility: Refers to the extent of price changes for a certain investment asset. Higher the volatility, higher the price movement. Crypto marketplace is highly volatile.
W
Wallet: A medium that enables user to send and receive crypto.
Whitepaper: A document created by the developers of the crypto asset that provides technical details underlying that asset.
123
51 % Attack: An attack in a PoW blockchain where one entity would gain 50% of the computing power of a certain blockchain and would then commit malicious actions on it.
