The A to Z of Crypto Lingo (Part 3)

If you’re reading this, you’ve probably already made the leap into cryptocurrency. Whether you’re a seasoned investor or just getting started, it pays to know what these terms mean. If you’re new to the game or just want to brush up on your lingo, we’ve compiled a few of the most commonly used terms in the business.

Proof of Work

Proof of work is a consensus algorithm that is used to validate transactions on the blockchain. It was first introduced by Satoshi Nakamoto in the Bitcoin whitepaper and has since been adopted by many other cryptocurrencies, including Ethereum.

Proof of Stake

Proof of stake (PoS) is an alternative to proof of work. In PoS, participants prove their ownership of the cryptocurrency instead of computing power. You may have heard that bitcoin transactions are slow and expensive because they use proof-of-work mining. In other words, it takes a lot of computational power to solve complicated math problems on the bitcoin blockchain to create new bitcoins and add them to the ecosystem. This takes a lot more energy than other types of cryptocurrencies like ether or litecoin (which have lower transaction times).

Despite its name, however, proof-of-stake systems do not require miners or any kind of computer processing at all; instead, they rely on validators who maintain consensus across all nodes in an open network by using their real money as collateral for every transaction fee that has ever been sent through Ethereum’s network since it started back in 2015 until now–more than $200 million dollars worth!

Quantum Computing

Quantum computing is the next frontier in computer science. Theoretically, it could deliver much greater processing power than traditional computers. The National Institute of Standards and Technology (NIST) has estimated that quantum computers would be able to solve problems that would take current supercomputers thousands of years.

But there’s also potential for quantum computing to be used as a threat against cryptography and blockchain technology. It’s not clear if quantum computers will be built with enough power to actually break encryption methods like those used by cryptocurrencies, but if they do become powerful enough, they could change the way we think about our digital lives forever.

Rekt

Rekt is another word for “wrecked” or “destroyed,” usually referring to someone’s financial status after making a bad decision. For example, if you invest all your money in an ICO (initial coin offering), then the price plummets, and you lose all your money, you could say: “I got rekt.”

Regulated

Regulated exchanges are more trustworthy than unregulated ones. Regulated exchanges have better customer support, security, liquidity, and trading tools than unregulated ones. They also must meet certain standards in order to be regulated by the government.

The most commonly used regulated exchanges include:

• Binance.com
• Coinbase.com
• FTX.com

Rug

In a blockchain, this is a term used to describe someone who has been fooled by a scammer. They’ve lost money or tokens, and they feel like they’ve been tricked out of their hard-earned cash.

Satoshi

The satoshi is the smallest unit of bitcoin, with 1 satoshi equaling 0.00000001 BTC. The term was named after Satoshi Nakamoto, who created Bitcoin. 

The name has been used to describe both the smallest unit of Bitcoin as well as a type of cashless society in which everyone uses Bitcoin instead of fiat currency.

Smart Contract

A smart contract is a computer program that can automatically execute the terms of a contract when certain conditions are met. These contracts are stored on the blockchain, and once deployed, they’re executed by nodes (computers) on the blockchain. Smart contracts are immutable—meaning they cannot be modified after being deployed onto the blockchain.

Seed Phrase/Seed Words

A seed phrase is a string of words that can be used to restore a cryptocurrency wallet. It is used to restore a wallet if the user loses their private key, or for any other reason, they need to restore their funds.

It’s important that you keep your seed phrase secure, so don’t write it down anywhere! If someone gets access to your seed phrases and knows how to use them, they will be able to get access to all of your coins.

Stablecoin

A stablecoin is a crypto asset that’s designed to minimize the price volatility associated with other cryptocurrencies. The most popular stablecoin, Tether, has pegged its value to the US dollar (it’s backed by fiat currency). Another type of stablecoin called USD Coin (USDC) is also pegged to the dollar but managed by Circle—a Boston-based blockchain company.

Tether (USDT)

Tether (USDT) is a cryptocurrency pegged to the US dollar. It’s considered a “stablecoin,” meaning it can act as a substitute for fiat currency in some cases, like if you want to make an investment or trade with cryptocurrencies but don’t want your money to fluctuate in value.

However, the tether is not backed by USD—it isn’t a fiat currency. Instead, it’s supposedly backed 1:1 with actual USD held in reserve by Tether Limited.

Terahash (Th/s)

A Terahash is a measure of how much computing power a computer has. Every second, the computer calculates 1 trillion hashes (a hash is a mathematical process that confirms and verifies transactions to be added to the blockchain). The more hashes per second your computer can calculate, the more blocks you can solve. This means that if there are 5 miners who all have 10 TH/s, they will all receive an equal portion of rewards from solving blocks on average. However, if there’s one person with 100 TH/s and another with 2 TH/s, then s/he could end up receiving twice as many rewards than his competitors because s/he was able to solve twice as many blocks in less time.

Token

A token is a cryptographically-secured digital representation of a particular asset or utility. Tokens can be used as a medium of exchange to pay for services and goods, like Bitcoin. They can also be used to represent any asset or utility, similar to stock in a company.

In short:

• A token is a unit of account
• A token acts as a store of value
• A token can be used as both an investment vehicle and a currency
  

USD Coin (USDC)

USD Coin (USDC) is a stablecoin, meaning it’s a cryptocurrency with high liquidity, low volatility, and one-to-one redeemability with real-world commodities like the US dollar.

Volume

You might be wondering what “volume” is in the crypto world. Volume refers to the total amount of coins or tokens that have been traded during a specified period of time, usually 24 hours. Most exchanges show this information on their websites and make it available through APIs (application programming interfaces).

Validator

A validator is a node that is part of the network and helps to ensure the integrity of the blockchain. A validator can be rewarded with transaction fees or by being given new coins.

Validators are incentivized to ensure that each block added to the chain is accurate and authentic because they will be rewarded in terms of transaction fees or by being given new coins if they succeed in doing so.

Volatility

Volatility is a measure of change over time. When you hear someone say they’re “volatile,” they mean that they’re prone to changing emotions, moods, and reactions. The same applies to crypto prices—they can go up or down at any moment, so if you want to avoid being too volatile yourself when investing in cryptocurrency, you should make sure your portfolio isn’t overly volatile either.

Wallet

A crypto wallet is a secure storage space for crypto. It can be a software or hardware device. The wallet stores private keys and public keys. It’s used to send and receive cryptocurrencies such as ETH, BTC, etc., or to buy and sell them from exchanges or other users.

Wallets must be stored securely to keep your assets safe from hackers! Wallets can be stored on a computer, phone, USB stick (called cold wallets), or paper (called hot wallets).

Wei

Wei is the smallest unit of ether, and it can be used to pay for gas on the Ethereum blockchain. It’s commonly used to represent how much you have invested in a cryptocurrency, as well as fees and other things related to blockchain technology.

WAGMI (We Are All Going to Make It)
It’s a phrase used when everyone is working together towards a common goal. Kind of like, “Hey guys! We got this!”

Whitepaper

A whitepaper is a document that describes a project, usually with a technical focus. It’s most often used to describe the technical design and rationale for a new system or application, but it can also be used to describe the process of developing said system or application.

Crypto whitepapers typically take the form of an academic paper (hence where they get their name) and are usually written by developers to present their idea to other developers and academics who may be able to contribute ideas or help improve upon them.

Yield Farming

Yield farming is the process of mining cryptocurrencies. Miners use their computers to solve mathematical problems to add new transactions on the blockchain, and are rewarded with new coins. Each coin has a different rate of a block reward—the higher the rate of the block reward, the more valuable it is. Yield farmers can be compared to gold miners working for precious metals or oil rigs searching for black gold: they’re looking for something valuable hidden under the surface that they hope will bring them wealth when they strike it big.

Yield farmers may either be individual people or large companies running multiple computers at once to increase their chances of finding rewards faster than competitors do. It’s no surprise then that yield farming is a competitive process—if you don’t find anything within a reasonable amount of time, other miners will take over your claim and reap its rewards instead!

Zero Confirmation

The term zero confirmation of a transaction is where a transaction has been broadcast but not yet confirmed by any block and therefore cannot be considered final.

A transaction is safe when it has been confirmed by at least one block on the blockchain. After that, you know your coins are safe and can be spent without the risk of double spending.

There are tons of words related to crypto. It’s worth understanding the lingo.

Crypto is a new field and there are a lot of terms to learn. It’s worth it because understanding the lingo will help you understand the technology. And if you want to talk about crypto with other people, being able to use the same language they do makes things easier for everyone. 

This completes our series on A to Z of the Crypto jargons and lingo uses everyday in the industry.

In case you missed it, check out Part 1 HERE and Part 2 Here.

Hopium On!