The A to Z of Crypto Lingo (Part 2)

Welcome to the second part of the A to Z of crypto jargon! Whether you’re a seasoned investor or just getting started, it pays to know what these terms mean so that you can understand what other people are talking about.

This time we’ll be looking at some more terms you may have come across in your cryptocurrency adventures.

Gas

Gas is the unit of currency used to pay for computation on the Ethereum network or any other network. The higher the gas price, the more expensive it is to run a transaction.

The cost of gas is calculated by how much data needs to be stored for your transaction to be processed. For example, if you send someone $10 worth of ether and they want to send you back $5 worth (this happens sometimes), then there will be two transactions happening at once—one where they’re sending you their funds, and another where they’re withdrawing them again. The amount of gas needed depends on how much information each transaction requires: if they need only an id number or address number as proof that they own those funds, then it will take less time than if they were doing something like transferring all their money into another account with different security features (which would require verifying ownership twice).

Graphics card

Graphics cards can also be used to mine cryptocurrency. They’re more expensive than CPUs, but they’re also more efficient and powerful. The popularity of graphics card mining has led to an increase in GPU prices due to a lack of supply.

Hash

Hash is a cryptographic function that maps data of any size to data of fixed size.

In a blockchain, hashes are used as permanent addresses for transactions. Each transaction is signed by a private key and hashed with a public key algorithm. The resulting hash is then added to the block header along with other metadata, such as the timestamp and the current difficulty for mining purposes. This allows the network to verify the authenticity of each block in the chain without storing all previous blocks themselves or having all miners recalculate them from scratch every time one new block is added (which could take hours).

Hot wallet

Hot wallets are cryptocurrency wallets that are connected to the internet. They are used for making daily transactions and are vulnerable to cyber-attacks. The private keys of your cryptocurrency wallet are stored on the web, which means they’re fully connected to the internet. If a hacker gets access to your hot wallet, he or she can drain all of your funds in an instant.

ICO (Initial Coin Offering)

The term ICO is an Initial Coin Offering, which is a way to raise funds for a new cryptocurrency project. The funds raised through the ICO are used for the development of the project and various other things such as marketing, etc.

ITO (Initial Token Offering )

An Initial Token Offering (ITO) is the first step in the creation of a new cryptocurrency. This is when a cryptocurrency is made available to the public for the first time.

If a company wants to create its own token and issue it on an existing platform like Ethereum, it will usually raise money through an ICO (Initial Coin Offering). In this case, investors buy tokens in exchange for cryptocurrencies like Bitcoin or Ethereum.

IDO (Initial Dex Offering)

An Initial Dex Offering, or IDO, is a crypto token sale in which tokens are sold at a decentralized exchange, it is also a kind of ICO or ITO, the only difference is the fund raising event is happening at a decentralized exchange.

KYC (Know Your Customer)

Know your customer (KYC) is the process of a business identifying and verifying the identity of its clients. It’s an anti-money laundering (AML) measure used to prevent financial institutions from being used for criminal purposes, such as financing terrorism or other illegal activities.

Ledger

A ledger is a record of transactions, and in the context of cryptocurrency, this refers to the blockchain. The fundamental difference between a traditional ledger and a blockchain-based one is that the latter is decentralized; it doesn’t rely on central authorities like banks or governments to verify transactions. Instead, every node in a blockchain network maintains its own copy of the ledger and must validate new entries when they are added to ensure accuracy (and prevent fraud).

Market Capitalization

Market capitalization, or market cap for short, is the total market value of a cryptocurrency. It’s calculated by multiplying the price of a cryptocurrency by the total number of coins in circulation. So if you had one token worth $1 and there were 100 tokens in existence, then your market cap would be $100.

Market cap is used to rank the relative sizes of cryptocurrencies compared to other assets, such as gold or fiat currencies (i.e., U.S. dollars). For example, Bitcoin has a current market cap of over $388 billion USD while Ethereum has a current market cap of over $186 billion USD (as on November 2022).

Mining

Mining is the process of adding transaction records to Bitcoin’s public ledger of past transactions (and a “mining rig” is a colloquial metaphor for a single computer system that performs the necessary computations for “mining”). Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady over time, producing a controlled finite monetary supply.

Meme Coin

You’ve probably heard the term “meme coin” thrown around a lot. The term is typically used to describe a specific type of cryptocurrency: one that’s satirical or ironic, and often serves as a way for crypto enthusiasts to make fun of themselves. Often, meme coins are not serious projects—though some people buy them with the intention of becoming valuable in the future.

Fun fact – The very first meme coin created was “Dogecoin” in 2013.

Node

Node: A node is a computer connected to a cryptocurrency network. It can be a full node or a light node. Full nodes store the entire blockchain and verify transactions by downloading it from other full nodes or from bootstrapping nodes. Light nodes do not store the entire blockchain, instead, they only download block headers to be able to verify if transactions are valid or not.

NGMI (Not Going to Make It)

NGMI refers to Not going to make it. The term is used frequently in the crypto market.

Example: “Shorters are not going to make it” means they will get liquidated or lose their money.

NFT (Non-Fungible Tokens)

A non-fungible token (NFT) is a digital token that has some form of uniqueness and individuality. This means that one NFT cannot be exchanged for another NFT of the same type. In other words, each token has its own history, value, and characteristics that make it unique. To give you an example, let’s say you have two rare baseball cards in your collection: one autographed by Babe Ruth and the other signed by Cy Young. You could sell them both on eBay for different amounts because they are each unique pieces of baseball memorabilia!

Now how does this apply to crypto? Well in most cases, when people talk about NFTs they’re referring to crypto tokens that represent some sort of ownership over an asset or real-world item (also known as ‘ERC721’). 

On-Chain

On-chain transactions are those that are recorded on a blockchain.

On-chain transactions are public and permanent. They can be used to track the movement of assets, such as cryptocurrency or other digital assets (like smart property).

On-chain vs Off-chain Transactions: On-chain transactions have higher security but lower liquidity than off-chain transactions, which have lower security but higher liquidity.

Examples of On-Chain vs Off-Chain Transactions: Cryptocurrency payments are typically conducted through an exchange, which is an off-chain process because they occur off of the blockchain itself; however, if you want to trade your crypto into fiat money through an exchange like Coinbase then that would be considered an on-chain transaction since it involves moving crypto from one address to another within the same blockchain network.

On-Ledger Currency

On-ledger currency is a cryptocurrency that is not controlled by a central authority. The term “blockchain” refers to the public ledger that records all transactions on the network. Cryptocurrencies like bitcoin, ether, and litecoin are examples of on-ledger currencies..

Orphan Block

An orphan block is a block that has been mined but not incorporated into the main chain. These blocks are called orphans because they don’t have a known parent.

Orphan blocks occur when two miners find blocks at approximately the same time, and one of them doesn’t get accepted into the main chain because it’s invalid. 

P2P

Peer-to-peer (P2P) refers to a system in which all nodes are equal, as opposed to a traditional client-server architecture where there is a central authority. In this type of network, one person can connect directly with another person across the internet and no middleman or server is required. This makes it decentralized, meaning that the data isn’t stored in one central location and isn’t controlled by any single entity.

Private Key

A private key is a string of numbers and letters that allows you to access your wallet. Private keys are used to sign transactions to send cryptocurrency from one address to another.

Public Key

A public key is a string of numbers and letters that’s used in public key cryptography. It can be thought of as an address, except instead of being used to receive bitcoin from someone else, it’s used to send bitcoin from your wallet to someone else.

If you have a Bitcoin wallet and want to receive money from someone else, they will use their public address (which looks something like this: 1Ht4HoaLwXXkKg5S5JbR8nFhf1X9MTcxoD). For them to send the transaction into the blockchain, they will need their private key to access their wallet.

Hopefully, this post has helped you to understand some common terms relating to crypto exchanges, wallets, and trading platforms as well as more in-depth definitions of the most important terms used by those involved in the space. 

Watch out this space for Part 3. . . and see part 1 HERE.

Hopium on!