Glossary of All the Cryptocurrency Terms You Need to Know
If you want to trade or buy cryptocurrency, you’ll first need to do your homework. As you learn more about the market, you’ll come across crypto-specific terms that you may not have heard of before. The jargon may seem confusing and intimidating but luckily, our experts are here to help.
To put you in the best position to trade cryptocurrency successfully, we’ve created a complete glossary of cryptocurrency terms and phrases. Learning this vocabulary is important as it will enable you to read trading strategies, analysis pieces, and news with a greater understanding. The more you understand, the better your trades will be.
On this page, you can find straightforward definitions of the most popular cryptocurrency terms. We’ve also provided you with links to more in-depth guides so that you can continue your cryptocurrency trading education with ease.
Read our crypto glossary now and then bookmark it so that you have an easy-to-access reference page.
A cryptocurrency address is a destination where you send/receive digital currency, similar to a bank account or IBAN number. Cryptocurrency addresses are usually a long series of numbers and letters. You’ll need to share your address with brokers and exchanges, so they have somewhere to send your coins.
An altcoin is simply any type of cryptocurrency that isn’t Bitcoin. As of early 2020, there were over 5,000 altcoins in existence. This includes stablecoins and security tokens.
ATH is an abbreviation of ‘all time high’. When it comes to cryptocurrency terms, this refers to the highest price a cryptocurrency coin or token has ever reached. It can be useful to keep this figure in mind when predicting how the market will move.
ATL stands for ‘all time low’, and this term is the opposite of ATH. It shows the lowest value a specific cryptocurrency has ever had. Again, knowing the ATL of a cryptocurrency can be helpful when trading.
Blockchains are global ledgers that record every cryptocurrency transaction. They are public and unchangeable; a transaction cannot be erased from the blockchain. However, blockchains are also anonymous. Blockchain records only show digital signatures or crypto addresses, they do not show any personal details about the users.
Cold storage refers to storing cryptocurrency offline to protect yourself against hacking. There are multiple cold storage options including hardware wallets or moving software wallet files to a USB device.
In basic terms, a cryptocurrency is any currency that relies on cryptography to verify or secure transactions. Cryptocurrencies are completely digital too; whilst you can use them to purchase goods and services in the same way as traditional currencies, they have no physical tokens such as notes and coins.
Cryptography is the process of encoding or encrypting information to secure it against unauthorized access. Bitcoin and other blockchain cryptocurrencies use cryptographic methods to ensure that transactions are safe.
Cryptocurrency exchanges are essentially marketplaces where you can buy or sell digital currency. If you want to invest in cryptocurrency, exchanges are the easiest and safest way to do so. It’s worth noting, however, that cryptocurrency exchanges are not equal. You may find some easier to use than others, and they may have different prices for their listed cryptocurrencies.
Fiat currencies are those that have been minted by a central bank. In general, these are traditional currencies such as the US dollar, the GB pound, and the euro.
The cryptocurrency term ‘HODL’ comes from a simple misspelling of ‘hold’. It is now synonymous with the crypto trading strategy of holding a position for a long period. Some crypto enthusiasts also believe that the term is now an abbreviation of the phrase, ‘hold on for dear life’.
Initial coin offerings
An initial coin offering (ICO) is when a cryptocurrency developer offers tokens to investors for the first time to raise funds. During an ICO, you pay for a predetermined amount of the currency before it is publicly listed. Your money is then used to finalize the release of the coin. If the coin does well after release, the price paid during the ICO is likely to be the cheapest price in the coin’s lifecycle.
Market cap is simply short for market capitalization. In cryptocurrency terms, this refers to the total market value of the cryptocurrency. Market cap is calculated by multiplying the circulating supply of the currency by the current price of an individual unit. So, for example, if there are 18 million bitcoins in circulation and 1 bitcoin is worth $10,000, bitcoin has a market cap of $180bn.
Mining, or cryptomining, is how new units of cryptocurrency are created. Mining involves confirming transactions and ensuring they are added to the blockchain accurately. Cryptominers do this in blocks, and once the block is released, they gain some units of the cryptocurrency as a reward. To mine cryptocurrencies, you need specific hardware, energy, and a strong internet connection. These costs add up, which is why mining is no longer thought of as a good way to profit from cryptocurrencies.
A public key is an address where you receive cryptocurrencies, whereas a private key is how you access your own cryptocurrencies. Both are a series of letters and numbers but, whilst sharing your public key is safe and necessary, you should never share your private key with anyone. Doing so can make you vulnerable to crypto scams and hacks.
A token may refer to a unit of cryptocurrency, such as a bitcoin. It may also refer to a type of cryptocurrency that is built using an existing blockchain. For instance, Ethereum based tokens are very common.
The cryptocurrency term ‘wallet’ is simply where you store your coins – much like a traditional wallet. There are three main types of cryptocurrency wallets; online wallets, software wallets, and hardware wallets. An online wallet is considered to be the least secure – as it is consistently online and so susceptible to hacks. A software wallet is storage that exists as files on a computer. Software wallets are less risky, but you still need to be aware that a virus could access the files. Hardware wallets are the safest option as they allow you to store your cryptocurrency offline. Hardware wallets can also be stored in a secured physical location, like a safe.
A ‘whale’ is a high-volume cryptocurrency investor. Crypto whales can manipulate the market by selling or buying huge amounts of the coin. As a cryptocurrency trader, it’s important that you know when these individuals may trade.
A white paper is essentially a blueprint for a cryptocurrency. It should detail the function the coin is looking to fulfill, how much capital is required, who is producing the coin, and how many coins will go into circulation. White papers are usually released during ICOs and so may also include details on how long the ICO will last and what methods of payment are accepted. If you are considering investing in an ICO, the white paper can give you insight into the safety and credibility of the project, as well as how likely the coin is to succeed.
Trade with our top cryptocurrency brokers
Put your new vocabulary to good use by trading with our recommended cryptocurrency brokers. All of these brokers offer outstanding trading experiences, expert tools and platforms, and extra educational materials for beginner crypto traders.