There are some crypto terms everyone should know. If you want to understand these terms then keep reading.
Stoshi:
Satoshi means one of two things. The first is in reference to smallest unit of Bitcoin. Bitcoin can be presented upto 8 decimals (i.e. 1 Satoshi = 0.00000001 Bitcoin). Stoshi also means Satoshi Nakomoto, the anonymous founder of Bitcoin who disappeared from online profile shortly after his Bitcoin creation.
Altcoin:
All cryptocurrencies other than Bitcoin refer as Altcoins (i.e. Ethereum, Doge, Sol, BNB, Matic, Chainlink etc.) There are thousands of Altcoins available in todays market.
Blockchain is a digital ledger of all the verified transactions made on a particular cryptocurrency. It is a series of blocks, which are inter connected to each other. Read more…..
Block:
Groups of data within a blockchain. On cryptocurrency blockchains, blocks are made up of transaction records as users buy or sell coins. Each block can hold only a certain amount of information. Once it reaches that limit, a new block is formed to continue the chain.
Wallet
A place to store your cryptocurrency holdings. Many exchanges offer digital wallets. Wallets may be hot (online, software-based) or cold (offline, usually on a device).
Cold Wallet/Cold Storage
A secure method of storing your cryptocurrency completely offline. Many cold wallets (also called hardware wallets) are physical devices that look similar to a USB drive. This kind of wallet can help protect your crypto from hacking and theft, though it also comes with its own risks –like losing it, along with your crypto.
Seed Phrase
A 12, 18, or 24-word phrase that you and only you have access to and which acts as a backup to your private keys. If you forget or lose your private key, a seed phrase will help you recover it. An example of a seed phrase is: dove lumber quote board young robust kit invite plastic regular skull history
Stands for “Hold On for Dear Life” though the term originated from a user typo on a Bitcoin forum in 2013. It refers to a passive investment strategy in which people buy and hold onto cryptocurrency — instead of trading it — in the hopes that it increases in value.
Halving
A feature written into Bitcoin’s code in which after a certain number of blocks are mined (typically every four years) the amount of new Bitcoin entering circulation gets halved. The halving can have an impact on Bitcoin’s price.
Market Capitalization
Cryptocurrency market capitalization refers to the total value of all the coins that have been mined. You can calculate a crypto’s market cap by multiplying the current number of coins by the current value of the coins.
Public Key
Your wallet’s address, which is similar to your bank account number. You can share your public wallet key with people or institutions so they can send you money or take money from your account when you authorize it.
Private Key
The encrypted code that allows direct access to your cryptocurrency. Like your bank account password, As the name suggests though, this is meant to be kept private and not shared with anyone.
You can think of it like a password, a really strong one, that contains a bunch of letters and numbers that allow you to prove ownership over your address. Anyone who has the private key has access to make transactions from your address i.e. send money from your address to theirs.
A private key looks something like this: 'E9873D79C6D87DC0FB6A5778633389F4453213303DA61F20BD67FC233AA33262'
If you think of your address as a username for your account, the private key is it’s password. Therefore sharing your address is okay, but never ever share your private key or someone might steal your funds – and then nothing can be done about it.
Caution: Since blockchains are decentralized, there is no ‘forgot password’ option. If you lose your private key, you lose access to your account. Similarly, if someone steals your private key and steals your funds, you cannot do anything about it. It is VERY important to keep this private key safe.
For developers, we often use the private key as part of our codebase to perform certain transactions, such as deploying our own smart contracts to the Ethereum network. While you are still learning, we highly suggest you use a separate account entirely for development than you use for storing any sort of funds. Unfortunately, beginner developers often use the same account they have funds on, and accidentally share their codebase publicly – and hackers can see your private key in the codebase and end up stealing funds. Please take that as a tale of caution.
Smart Contract
Pieces of code that live within the blockchain whose purpose is to execute on a logic that the developer has programmed. When certain information is submitted to the blockchain, the code does what it is programmed to do; for example, make a payout. It is an algorithmic program that enacts the terms of a contract automatically based on its code. One of the main value propositions of the Ethereum network is its ability to execute smart contracts. Read more….
Mining
The process by which transactions are verified by a computer or a group of computers. When all the computers on the network accept the transaction, two things happen: a new block is added to the chain and new coins are created and added to the new block.
Consensus
The algorithm by which transactions are verified and submitted. The main types of consensus algorithms are Proof of Work (PoW), Proof of Authority (PoA) and Proof of Stake (PoS).
Proof of Work (PoW)
An algorithm that enables multiple computers in a blockchain to compete to mine blocks. The first computer to mine a block must prove that it has used a certain amount of energy to do so before the new block is accepted by all the other computers in the blockchain.
Proof of Authority (PoA)
An algorithm that gives a trusted computer or a specific group of trusted computers the authority to mine blocks. This is a much faster method than PoW.
Proof of Stake (PoS)
An algorithm that allows a computer to mine blocks in proportion to how many coins it holds. For instance, a computer that owns 2% of the coins available can mine a maximum of 2% of all blocks.
Proof of Activity (PoA)
An algorithm that uses both Proof of Work (PoW) and Proof of Stake (PoS) to verify transactions. The system starts with PoW and then switches to PoS after a block is successfully added.
Arbitrage
Buying cryptocurrency on one exchange and selling it for a higher price on another exchange.
Dollar Cost Averaging (DCA)
The practice of buying a fixed amount of cryptocurrency on a weekly, monthly or annual basis regardless of price fluctuations. This removes emotions from the investment process and maintains consistency and benefits from price falls.
FOMO (Fear of Missing Out)
A feeling of anxiety, stemming from missing out on an opportunity. Selling other assets to buy into a cryptocurrency whose value is rising.
Shill
Someone who promotes an altcoin so that they can personally benefit when it rises in value.
White Paper
A document that explains to potential users of a blockchain the various aspects of the blockchain and how it will work. A white paper precedes the launch of a blockchain.
Airdrop
A technique in which crypto projects send tokens directly to their users’ wallets to increase awareness and adoption.
ALPHA
valuable information, usually regarding the value of digital assets like crypto and NFTs before they hit mainstream.
ATH –
All-Time High – the highest price an asset has ever had.
ATL –
All-Time Low – the lowest price an asset has ever had.
COLLATERAL –
any asset accepted as security for a loan, such as physical assets like real estate or digital assets like NFTs.
DAO –
Decentralized Autonomous Organization – an organization based on open-source code governed by its users.
DeFi –
Decentralized Finance – the ecosystem of borderless, trustless, peer-to-peer financial tools built on public blockchains.
DEX –
Decentralized Exchange – a peer-to-peer cryptocurrency exchange built on the blockchain. E.g.:@Uniswap
Day trading-
Taking a position in the market, either buy or sell and exiting it the same day.
Swing trading-
This method looks for buying and selling positions in a weekly range. Swing traders make my 2-3 traders a week. Most of my trades are swing trades.
Positional trading-
The aim is to buy monthly lows and hold them for days, weeks or sometimes months. This is a longer term trading time period.
Leverage-
Refers to the extra amount of asset bought or sold, over your capital limit.
E.g. If you buy $2000 of Bitcoin with a Capital of $1000, you have a leverage of 2x.
Sites like Bitmex, Bitfinex allow leverage as per your choice.
Margin-
The amount of funds required to open a leveraged trade.
E.g. If you want to open a position of $1000 with a leverage of 5X, your margin requirement would be $200.
200 x 5 = $1000
Long Position-
This is a buy position buy with leverage.
E.g. If you have $1000 as capital, you could buy $2000 worth of Bitcoin with leverage, or even more.
Both profit and loss in this case is multiplied by the leverage you take.
E.g. A 10% rise/fall in price in case of a long position with 2x leverage will lead to 20% profit or 20% loss.
Short Position-
Exact opposite of Long Entry. You enter a short entry when you expect the prices to fall.
Shorting allows you to make money in a bear market.
