20 Cryptocurrency Acronyms and Terminologies You Must Know in 2022
But very few know how cryptocurrency works or what it’s used for. According to a recent survey done by Cardify, only 16.9% of investors who have bought crypto “fully understand” the value and potential of cryptocurrency, while 33.5% of buyers have either zero knowledge about the space or would call their level of understanding “emerging.”
Even fewer know about the larger ecosystem that exists beyond the cryptocurrency space which includes Blockchain, Decentralised Finance, Web3, Smart Contract and so much more.
In this article, we will break down all the terminologies and jargon around the cryptocurrency space into much simpler and more digestible bits using related anecdotes.
Let’s go!
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1. Satoshi Nakamoto
What better way to start than with the man who is presumed to be the brains behind the creation of Bitcoin, the first cryptocurrency. Many folks in the crypto space believe he’s a pseudonym that represents the original creator(s) of Bitcoin.
Whatever and wherever he is, dead or alive, the name has made history as being the pioneer of the most disruptive technology innovation at the moment.
Given the price of BTC today, Satoshi would be a billionaire.
In addition, the poor (rich) lad also exists as a token called Satoshi and currently trades on the Coinmarketcap with the price set at $0.000412.
2. Blockchain
Blockchain is a combination of computer networks that transparently stores all the information about a crypto transaction. Visualize several series of blocks that contain the information in a space connected by endless chains.
Blockchain is the technology that powers all cryptocurrency transactions, for without it there won’t be any cryptocurrencies in existence. Its mission is to ‘wrestle power’ from centralized and opaque organizations like banks, government, lawyers, Insurance companies, etc and put it in the safe and transparent hands of ordinary folks like you and me, hence decentralizing the whole process of money exchange (a classic tale of Robinhood).
3. Bitcoin
As you probably have noticed, decentralization is ironically the central theme for cryptocurrency, and no other token, coin, or terminology represents this theme like Bitcoin.
Bitcoin is a virtual or digital token that can only be used on the internet. Unlike the physical currencies e.g the US dollar and UK Pound Sterling which are controlled by the government, Bitcoin is controlled by anyone. And like the traditional currencies which are stored in physical wallets, Bitcoin can also be stored in wallets called digital wallets (We will talk more about this).
Bitcoin is the first and most valuable cryptocurrency with the price currently at $38,230.
4. Ethereum
Ethereum is the second most popular and valuable cryptocurrency but it has a more unique usage than Bitcoin.
The former serves as a medium of exchange and technology within the blockchain where other decentralized applications like Defi, Smart Contracts, NFT can be built on while the latter is only used as a medium of exchange.
Think of Ethereum as the Gold of cryptocurrency and Bitcoin as the dollar.
Ethereum can also be referred to as an alternative coin to Bitcoin.
5. Blockchain wallet
The blockchain wallet acts the same way as your physical wallet which is used to store cash and cards except it is used online to store digital currencies like Bitcoin.
It is very secure and can only be accessed by a key unique only to the wallet online (unlike the physical wallet that can be ‘accessed’ by boys under the bridge).
6. Address
An Address is a string of characters in a wallet that can send and receive cryptocurrency. It is synonymous with a real-life address or an email.
Just like a physical address where no two houses can share the same numbers, each address on the blockchain is unique and marks the location of a wallet.
7. Altcoins
Short form for alternative coins, Altcoins refer to any type of cryptocurrencies other than Bitcoin. Altcoins were created to serve a much better purpose to cryptocurrency users than Bitcoin.
Ethereum was the first-ever altcoin created. Other examples of altcoin include Solana, Bitcoin Cash (which is the 3rd most valuable cryptocurrency), XRP, Cardano, etc.
8. Shitcoins
Shitcoins are altcoins that are fraudulently created and serve no intrinsic value to users. They are truly shitty by every definition of the word. Examples of shitcoins include Dogecoin, Shiba Inu, Safe Moon, Magic Internet Money, etc.
9. Cryptocurrency Exchanges
Crypto Exchanges are platforms where digital currency owners can buy or sell cryptocurrency coins like Bitcoin, Ethereum, Polygon, Litecoin Solana, and the likes. There are two types of Crypto Exchanges:
10. Tokens
Tokens are simply altcoins that have no dedicated blockchain, unlike Bitcoin and Ethereum. They leverage existing blockchain, most commonly Ethereum. They are essentially like coaches that only move once attached to a train engine.
One great advantage about tokens is that cryptocurrencies can be created on an existing blockchain without the need to build a blockchain, just like a coach needing to move on the rail tracks without a need to build a new train engine.
11. Defi
Defi, short for decentralized finance, is the movement within crypto that removes the control banks and institutions have on money, financial products, and financial services.
It eliminates the fees that banks and other financial companies charge for using their services. This means anyone can lend, borrow, and other access financial services just by being connected to the internet without the need for intermediaries like banks.
12. Metaverse
This is the concept most tech enthusiasts and companies (read Facebook or Meta) are gravitating towards. The concept where everyone will interact in a 3D generated virtual world with avatars or emoji characters.
Movies like Ready Player One, James Cameron Avatar, and Free Guy have explored the possibility of a Metaverse.
13. NFT (Non-Fungible Tokens)
Non-Fungible Tokens are blockchain's answers to physical artworks made by artists. They are very unique digital tokens and unlike Fungible tokens like that are irreplaceable and can only be sold by the owner. NFTs can only be bought by cryptocurrencies like Ethereum.
Already, top celebrities are creating digital versions of their artworks and cashing out big time. They include ex Twitter CEO, Jack Dorsey who sold his tweets for millions as an NFT, Basketball legend Shaquill O'Neal who also launched his own NFTs, Canadian Singer Justin Bieber and American standup comedian Kevin Hart who both invested in the sensational Bored Aped Yacht Club NFT last year and a few other celebrities.
14. Mining
Like gold and other precious metals, Bitcoin and other cryptocurrencies can also be mined. Unlike these precious metals, these minings aren't done in caves. They are mined (or produced) using a combination of specialized software and hardware and sometimes a great deal of electricity. It is much the only way coins like Bitcoin can be updated on the blockchain.
15. Proof of Work
As the name suggests PoW is the validation a miner needs to gain the right to update the blockchain. It is not enough to put together the right system to mine, you have to show proof by solving challenges. Examples of these challenges include guessing a combination to a lock, solving a Rubik challenge and finding a random number.
The idea behind Proof of Work is to avoid an individual taking over the blockchain.
16. HODL
This is a colloquial definition of the word 'Hold'. It means "Hold on for Dear Life". It's a piece of advice to all crypto owners to keep their crypto or NFT holdings and not sell during a bear.
17. Web 3.0
This is one for the future. Web 3.0 is a truly revolutionary concept, one based on the idea of a decentralized internet built on a blockchain. This means you don't need to give out your data to any centralized platform like Google, Microsoft, Amazon, and Facebook to sign up on the Web 3.0 platform.
It is a big step up to Web 2.0 which is much more interactive and social. Imagine accessing the internet without the permission of an internet service provider to read this article or chatting away with folks online.
18. Smart Contract
It is said that a contract is an agreement that's binding between two or more persons. But imagine if this contract is created by a computer code that runs on the blockchain? this is kind of contract is called a smart contract.
Unlike the physical contract, you don't need a third party to enforce a smart contract. It is publicly stored and automatically enforced by the blockchain once it's created.
19. Gas Fee
this is the fee paid for every transaction that takes place on the Ethereum blockchain. These fees are used to compensate Ethereum miners who are doing the Lord's job of verifying a transaction and securing the Ethereum network using a great deal of en
20. P2P
Peer 2 Peer is the interaction between two individuals without the need of a third party. This interaction or transaction is done on a decentralized platform.
Honorable mentions include Initial Coin Offering (ICO), Stablecoin, Proof of Stake (PoS), Market Capitalisation, Halving, Hash, Fork, FUD (Fear, Uncertainty, Doubt), Decentralised Application (Dapp), Airdrop, ATH (All-Time High), Liquidity, Public and Private Key, Whale, 51% Attack and Yield farming.
