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Address – A secure identifier marked by a unique string of characters that enables payments to an individual or entity via blockchain transactions. It usually requires a private key to exclusively access the funds. For example, Bitcoin addresses are alphanumeric strings that begin with a 1 or 3; Ethereum addresses begin with ‘0x’.
Altcoin – A cryptocurrency or a category of cryptocurrencies that are an alternative to bitcoin. Many altcoins project themselves as better alternatives to bitcoin in various ways (e.g. more efficient, less expensive, etc.).
Bitcoin (BTC) – A type of cryptocurrency created by Satoshi Nakamoto in 2009. It was one of the first digital currencies that enabled instant P2P payments. Bitcoins are created through a process known as bitcoin mining that requires a massive amount of computing power. For more information, please see the Bitcoin white paper.
Block – Refers to a collection of data related to transactions that are bundled together with a predetermined size and are processed for transaction verification and eventually becomes part of a blockchain.
Blockchain – A decentralized, digital ledger where transactions made in Bitcoin or other cryptocurrencies are recorded chronologically and publicly. The block contains information that, once it goes into the blockchain, it becomes part of the permanent and immutable database, connecting to other blocks in the blockchain like the links in a chain.
Circulating Supply – An approximation of the number of coins or tokens that are circulating in the public market. See also: total supply and maximum supply.
Cryptocurrency – A type of digital currency that is generally decentralized and uses cryptography (i.e. data is converted into a format that is unreadable for unauthorized users) for added security, making it difficult to counterfeit or manipulate.
DAO – decentralized autonomous organization
Decentralized applications (dApps) – A type of software program that runs on a decentralized P2P network rather than on a single computer. Although similar, it differs from smart contracts as it can have any number of participants on all sides of the market and it does not have to be financial. Ethereum is a popular development platform for creating dApps. For more information, see Vitalik Buterin’s terminology guide.
Distributed consensus – Collective agreement by various computers in a network and allows it to work in a decentralized, P2P manner without the need of central authority to deter dishonest network participants.
ERC-20 – A type of token standard for Ethereum which ensures the tokens perform in a predictable way. This allows the tokens to be easily exchangeable and able to work immediately with decentralized applications that also use the ERC-20 standard. Most tokens released through ICOs are compliant with the ERC-20 standard.
Fiat money – Refers to currencies that have minimal or no intrinsic value themselves (i.e. they are not backed by commodities like gold or silver) but are defined as legal tender by the government, such as paper bills and coins.
Flipping – A type of investment strategy (popular in real estate investing) where you buy something with the goal of reselling for a profit later, usually in a short period of time. In the context of ICOs, flipping refers to the strategy of investing in tokens before they are listed on the exchanges and reselling them for a profit when they are trading in the secondary market.
FOMO – An acronym that stands for ‘fear of missing out’ and in the context of investing, refers to the feeling of apprehension for missing out on a potentially profitable investment opportunity and regretting it later.
FUD – An acronym that stands for fear, uncertainty and doubt. It is a strategy to influence perception by spreading negative, misleading or false information about something, as opposed to reasoned criticism.
Gas limit – A term used in the Ethereum platform that refers to the maximum amount of units of gas the user is willing to spend on a transaction. The transaction must have enough gas to cover the computational resources needed to execute the code. All unused gas is refunded at the end of the transaction.
Gas price – A term used in the Ethereum platform that refers to the price you are willing to pay for a transaction. Setting a higher gas price will make miners more incentivized to prioritize and validate that particular transaction ahead of those set with a lower gas price. Gas prices are typically denominated in Gwei. For more information on the various ether denominations, see this documentation.
Genesis block – The first block of data that is processed and validated to form a new blockchain, often referred to as block 0 or block 1.
Hard cap – The maximum amount that an ICO will be raising. If an ICO reaches its hard cap, they will stop collecting any more funds. See also: soft cap.
HODL – A type of passive investment strategy where you hold an investment for a long period of time, regardless of market volatility. The term was made famous by a typo made in a bitcoin forum. Also referred to as ‘buy and hold’ or ‘hold on for dear life’.
Initial coin offering (ICO) – An unregulated means by which a cryptocurrency venture, typically early stage, can raise money from supporters by issuing tokens. It is often referred to as a crowdsale as ICO participants may potentially earn a return on their investments (as opposed to crowdfunding, where supporters donate money to a project or cause). Ethereum is currently the most popular platform for launching ICOs.
Lightning Network – A low latency, off chain P2P system for making micropayments of cryptocurrencies. It offers features such as instant payments, scalability, low cost and cross-chain functionality. Participants do not have to make individual transactions public on the blockchain and security is enforced by smart contracts. For more information, visit the official website or the whitepaper.
Market capitalization (market cap) – The market value of a company, market or sector at a point in time commonly used to rank relative size. In equities, it refers to the total market value of a company’s outstanding shares. In cryptocurrency investing, it refers to either price multiplied by the circulating supply (i.e. free float market cap) or price multiplied by the total supply (i.e. fully diluted market cap).
Maximum supply – An approximation of the maximum number of coins or tokens that will ever exist for a cryptocurrency or crypto asset. See also: circulating supply and total supply.
Mining – A process where transactions are verified and added to a blockchain. It is also the process where new bitcoins or certain altcoins are created. In theory, anyone with the necessary hardware and access to the internet can be a miner and earn income, but the cost of industrial hardware and electricity has limited mining for bitcoins and certain altcoins today to large-scale operations.
Pre-sale – A sale that takes place before an ICO is made available to the general public to participate.
Proof of Stake (PoS) – An algorithm that rewards participants that solves difficult cryptographic puzzles to achieve distributed consensus. Unlike proof of work or PoW, a person can validate transactions and create new blocks based on their individual wealth (i.e. stake) such as the total number of coins owned. One of the key advantages that PoS has over PoW is lower energy consumption.
Proof of Work (PoW) – An algorithm that rewards the first person that solves a computational problem (i.e. mining) to achieve distributed consensus. Miners compete to solve difficult cryptographic puzzles in order to add the next block on the blockchain. It prevents spam and cyber attacks such as DDoS as it requires work (i.e. processing time) from the service requester.
Pump and dump scheme – A scheme in which the development team (or short-term traders) hypes up a project without fundamental basis in order to pump up the price of the tokens temporarily and then sells their holdings immediately after launch to earn a profit. See the US SEC’s investor alerton pump and dump schemes.
Segregated Witness (SegWit) – The process where the block size limit on a blockchain is increased by removing digital signature data and moving it to the end of a transaction to free up capacity. Transactions are essentially split (or ‘segregated’), into two segments: the original data segment and the signature (or ‘witness’) segment.
Smart contracts – An automated mechanism involving two or more parties where digital assets are put in and redistributed at a later date based on some preset formula and triggering event. The contract can run as programmed without any downtime, censorship, fraud or third party interference. For more information, see Vitalik Buterin’s terminology guide.
Soft cap – Generally refers to the minimum amount that an initial coin offering (ICO) needs to raise. If the ICO is unable to raise that amount, it may be cancelled and the collected funds returned to participants. See also: hard cap.
Token – Crypto tokens enable the creation of open, decentralized networks, and provides a way to incentivize participants in the network (with both network growth and token appreciation). This innovation, made popular with the introduction of Ethereum, has given rise to a wave of token networks (e.g. prediction markets, content creation networks, etc.) and token pre-sales, or ICOs.
Total supply – The total number of coins or tokens that are in existence, including those circulating in the public market and those that are locked or reserved. See also: maximum supply and total supply.
Wallet – A store of digital assets such as cryptocurrencies, analogous to a digital bank account. Crypto wallets can be divided into two categories: hosted wallets (e.g. wallets store on exchanges or third-party servers) and cold wallets (e.g. hardware wallets such as the Ledger Nano S, paper wallets and desktop wallets).
Whale – Someone that owns absurd amounts of crypto-currency.
Whitelist – A list of registered and approved participants that are given exclusive access to contribute to an ICO or a pre-sale.
Whitepaper – An informational document that generally informs readers on the philosophy, objectives and technology of a project or initiative. Whitepapers are often provided before the launch of a new coin or token.