HODL For These Common Crypto Terms
15 Sep 2020, by Bittrex Marketing
2FA – “Two-Factor Authentication” also known as 2FA is an extra layer of security that is known as “multi-factor authentication” that requires not only a password and username but also a second layer of security to access an account or system.
Altcoin – Short for alternative coin, this term is generally used to describe any cryptocurrency other than Bitcoin (“BTC”). Altcoins can commonly be a variant (fork) of Bitcoin’s computer code, built using the Ethereum blockchain app platform or built with original codebase to help foster innovative ideas.
Airdrop – A method of distributing coins or tokens to wallet addresses, typically used to market a new currency.
ATH – “All-Time High.” This acronym is used when a cryptocurrency or coin has surpassed past records and reached its highest value ever recorded.
Blockchain – A data system, either public or private, that allows for the creation of a distributed digital ledger of transactions in a non-centralized network. Transaction data is stored in “blocks” which are constantly growing as new information is added onto the ledger, also known as a “chain” for everyone to see. The purpose of a blockchain is to allow fast, secure, and transparent peer-to-peer transactions.
Block Explorer – A tool used to view all past or current transactions on the blockchain.
Coin/Token – Most coins or tokens are regarded as cryptocurrencies, even if most of the coins do not function as a currency or medium of exchange. While “coin” and “token” are often used interchangeably, a crypto coin is generally meant to indicate it can be used as a means of payment, while a token has other functionalities or use cases.
Cold Storage – This is a system of storing cryptocurrency offline, as a way of safekeeping from hacking.
Cryptocurrency – A virtual currency that uses cryptography for security. Because of this security feature, cryptocurrency is difficult to counterfeit. Cryptocurrency is not issued by any central governmental authority, nor tied to a specific country and can be used for many reasons including an exchange medium or store of value.
Cryptocurrency Exchange – An online platform that allows customers to buy or sell cryptocurrencies or digital currencies for other assets. These platforms function as a marketplace for cryptocurrency holders to discover fair pricing for their digital assets. They also serve as a secure distribution center for blockchain-based tokens and coins.
Decentralized – Cryptocurrencies do not have a central computer or server that confirms transactions. They are “decentralized” – distributed across a network of several computer nodes.
Decentralized Exchange – An exchange without a central authority, operating to facilitate peer-to-peer trading. Users retain full custody of their currencies, which remain distributed throughout the crypto network.
Exchange Wallet – A web-based wallet hosted by an exchange (like Bittrex) for all your crypto assets.
Fiat Currency – Fiat money is currency that a government has declared (by “fiat”) to be legal tender. The U.S. dollar, the euro, the Japanese yen, and the Mexican peso are examples of fiat currency. The value is derived from the relationship between supply and demand, rather than the value of material from which the fiat money is made. It can take the form of physical dollars or it can be represented electronically, such as with bank credit.
Fork – A fork represents a change to the underlying programming protocol, or code, resulting in a split of the original blockchain into a new blockchain. There are multiple types of forks such as hard fork, soft fork, or accidental fork. A fork results in the creation of a new coin often due to competing philosophies or protocol upgrade.
FUD – “Fear, uncertainty and doubt.” It’s a common term in the crypto world to see someone spreading fear, uncertainty or doubt about a blockchain project.
Hash – A function created using an algorithm which converts letters and numbers.
Hardware Wallet – A small device that plugs into your USB port and generates an offline private key while displaying a public key to allow for crypto transfers.
HODL – When first used in an early bitcoin forum, it was supposed to be written as “hold” but was misspelled and since then has taken a life of its own. When the industry is going on a wild ride, it means to hang in there. It’s also a pretty common meme.
Know Your Customer (KYC) – A compliance process set by regulators to verify the identity of customers.
Maker Orders – Create liquidity on a market by being entered onto the order book. They are not filled when they are placed, but instead wait until a further order is placed that matches them.
Mining – A computer process of recording and verifying information on public ledger known as the blockchain. In this process, nodes verify transactional data and are awarded for their work with the release of a new cryptocurrency coin or token.
Node – A node can be any active device that helps support the network by maintaining a copy of the blockchain. In some cases, nodes process transactions.
Paper Wallet – A piece of paper which you store a 12-word seed phrase to access your wallet and crypto assets.
Public/Private key – A cryptographic key that can be utilized by any party to encrypt a message. Another party can then receive the message and use the private key that is only known to that individual or group to decode the message. A private key will open your wallet. Both keys are used in cryptocurrency transactions.
Satoshi Nakamoto – The anonymous founder(s) who created Bitcoin.
Software Wallet – A trusted app that you can download on your phone or PC to store your cryptocurrency.
Stable Coin – A cryptocurrency that attempts to peg their market value to some external reference.
Taker Orders – Reduce (take away) liquidity on a market. Orders which execute immediately and take volume off the order book are takers.
Wallet – A digital wallet is a software program that stores private and public keys and interacts with various blockchains to enable users to send, hold, and receive digital currency. If you use cryptocurrency, you will need to have a digital wallet.