☰ Crypto Library

Terminology

It's easy to get confused if you jump into Social Networks and start reading when people throw in weird expressions and words you don't recognize. Here we will try to explain the most common buzzwords.

  • 51% Attack: Blockchains are decentralized databases, and if more than half of all nodes in a network are controlled by one and the same party, they can in many cases do what they want. For example, prevent certain transactions, create new incorrect transactions or steer the currency in a direction that most people do not find desirable.
  • Address: A public key is the same as your address in most cases. Some blockchains allow you to generate new addresses. An address is therefore where you can send a cryptocurrency to. They usually consist of a bunch of letters and numbers and it is important to not dilly-dally when you send money to an address.
  • Airdrop: A marketing technique where you give away tokens for free. A common example is that you get different tasks - to join their Telegram group, join Twitter and write a post about a project - and in return you get free tokens of this currency.
  • Altcoins: A concept that comes from the time when Bitcoin was alone at the top and it suddenly began to attract competition from, for example, Litecoin and Ethereum. These are alternative currencies, or alternative coins.
  • ASIC: A special kind of computer that specializes in mining a blockchain based on Proof of Work. These are so powerful that it is usually no idea to mine on a regular computer.
  • Atomic Swap: When you can directly switch between two different cryptocurrencies with market prices, without typical intermediaries and exchanges.
  • Bear/Bearish: When a currency has a negative price trend.
  • Block: A blockchain is made up of blocks. A block usually contains several transactions. When a block is approved by a bunch of nodes, it is added to the blockchain and the transactions are considered approved and complete.
  • Block Explorer: A website that displays the addresses and transactions of a blockchain. You can see if a transaction is approved, when it was approved, which transactions have been made on an address, and so on.
  • Burn: Sometimes crypto projects choose to burn a bunch of their tokens, which actually means that they send them to a special address that everyone can see and validate. When these tokens are removed from the total number of tokens, the value of those that remain increases.
  • Cold storage: When you store your cryptocurrencies in a place outside an exchange, where they are not connected to the Internet and risk being hacked. Etc "paper wallets".
  • Concensus: When all nodes in a network agree that a block of transactions is approved.
  • DAO: Decentralized Autonomous Organization, a concept in which a new kind of organization is created that is not controlled by a centralized organization. Where money comes in and goes out and can be managed via smart contracts.
  • DAPP: Decentralized applications, where smart contracts are used to send data to an application. For example, CryptoKitties which is a game where you can exchange virtual cats with each other. No one can stop a decentralized application because it is not located on specific servers but is spread out.
  • Dump: When large quantities of a currency are sold and prices go down.
  • ERC-20: A standard developed by Ethereum where different tokens can be on top of Ethereum. Token X and Token Y can be at your Ethereum address, either by design or as a placeholder while waiting for a new blockchain to be developed.
  • FIAT: Ordinary cash such as USD, GBP and EUR.
  • FOMO: Fear of missing out, a term that describes the fear you feel when prices go up and you risk missing out gains. If you quickly buy in to be a part of the winning group it is high risk that you make a loss, since it probably will go down just as fast as it rose.
  • Fork: When a blockchain is updated, it can be done through a Soft fork, whereupon everything rolls on as before as it is backwards compatible. Or a hard fork where all nodes must be updated to be part of the new blockchain. In some cases, there are differences of opinion that make some people want to keep the old system, after which two competing block leaders appear. For example, Bitcoin Cash is a fork of Bitcoin because the Cash team had ideas that did not go together with the Bitcoin Core gang.
  • Gas: Many blockchains such as Ethereum and NEO require gas, to send money to other addresses. It is like a side blockchain to the main blockchain, which is only used for transaction fees. You usually get free gas by holding the main blockchain.
  • HODL: Uncertain origin, may be Hold on for dear life, or just a misspelling on "Hold". In any case, it is about not selling but holding on to a currency for a long time. Usually it is a recommendation from users not to sell too early.
  • KYC: Know your customer, often a requirement from exchanges and ICOs to comply with the laws of the country in which the buyer is located. To prevent money laundering and illegalities. It means that you have to prove that you are you, by sending a photo on a driver's license or similar.
  • ICO: Initial Coin Offering, a way for new cryptocurrencies to both sell their currency for FIAT, and to get more capital for further development. A bit like Kickstart.
  • IEO: Initial Exchange Offering, the same as ICO in most ways but is centralized and managed by exchanges. It has become more common in recent times for an ICO to take place at Binance, for example, whereupon it is an IEO.
  • Lightning Network: A layer-2 solution on top of Bitcoin and a few others. Because Bitcoin is relatively slow, transactions take place in a separate layer 2 blockchain.
  • MarketCap: The total value of all tokens in a cryptocurrency.
  • Mining: In a blockchain based on Proof of Work, you can generate hash through algorithms, and by doing so you contribute to the network's security, approve transactions and be rewarded with tokens for your work. It requires a high CPU / GPU load and of course costs electricity. Therefore, the reward must be higher than the electricity consumption if it is to be profitable. Today, it is usually ASICs that mine.
  • Moon: Mooning or that a currency goes to the moon is a common expression to describe that prices go up crazy much.
  • Node: A computer in a decentralized network that monitors and approves transactions.
  • Proof of Work (PoW): A consensus model based on generating hash with CPU / GPU. Whoever guesses the correct hash approves a block, and if everyone comes to the same conclusion, the block is considered approved.
  • Proof of Stake (PoS): A consensus model that involves allocating parts of their money and thus gaining the right to vote. Requires no CPU power which is more environmentally conscious. The idea is that you will not want to sabotage the network because you are obviously invested in the network working. Becoming more and more common.
  • Pump: When people or companies tactically pump up prices.
  • Sharding: Classic blockchains like Bitcoin are slow and can only handle x number of transactions per second. This means that many people choose to divide the network into several different pieces, where all the nodes in the network do not have to agree with each other, but only within their cluster.
  • Smart contracts: Is program code on a blockchain that can perform tasks if certain things happen. For example, if 10 tokens are deposited in this account, 5 tokens are sent to address x and 5 tokens to address y. Can be made complex and used for game logic or whatever.
  • Token: A fragment of the total number of tokens. Same as coin, but does not have to be a currency, although they can almost always be used as such.
  • White paper: A document that describes a crypto project in detail. Usually technically heavy.