Cryptocurrency glossary for beginners

Bull market – prices have been consistently going up for some time

Be bullish on something – be optimistic about it; expect for prices to rise

Bear market – prices have been consistently going down for some time

Be bearish on something – be pessimistic about it; expect for prices to go down

Contributing — type of activity in the Bitbon system aimed at receiving income from participation in financing of promising projects using the blockchain technology and smart contracts. Financing occurs by exchanging a crypto asset for equity tokens of a specific project that determine the degree of share participation and the volume of potential profit according to the terms stipulated in a smart contract. An important feature of contributing is legality of all operations, audit and thorough examination of projects, stage-by-stage financing, and verification of all participants (parties) of such activity type.

Whale – an investor that has amassed a huge amount of a certain security, whose trades can move the entire market and affect the price

ATH – All time high of the price or market cap

Bagholder – an investor who bought near the ATH, possibly in a spike or a pump and dump operation, now holding his bag of coins waiting for the price to reach the previous levels, in order for him to sell and break even or make some profit

FOMO – fear of missing out – the action of buying because of FOMO is typically buying very late into the bull market, because you don’t wanna miss out on the action. Or buying low, selling high at a profit, then observing the price keep going up and buying again at an even higher price.

FUD – fear, uncertainty and doubt

Market cap – the hypothetical amount of money that the entire supply of the coin can be sold for, at the current price

Bubble – the economic state of events where the price has been going up with a much higher and probably unsustainable pace than the inherent value of the underlying asset, because of reflexivity and euphoria.

Fork – a change in the programming code of a cryptocurrency that is not backward compatible, and it would require for a new chain of blocks to be started

Blockchain – all blocks of transactions for a cryptocurrency, chained together by every block knowing the previous block’s hash ID. There are many copies of the blockchain, on millions of computers around the globe, for many cryptocurrencies and other platforms/projects. This is also the name of the technology behind all this – a technology that records every transaction in every digital ledger (i.e. a copy of the blockchain) so that all members know about every transaction, so that no trusted central authority is needed

Block – a pack of transactions grouped together. It has a hash ID and it also contains the hash ID of the previous block

Transaction – a set of parameters that indicate the act of one member of the blockchain spending a certain amount of the remainder of their quantity of the cryptocurrency, left from previous transactions, by sending it to another address on the blockchain. It also contains meta data, timestamp, amount reserved for the fee.

Address – a long alphanumeric string of characters, representing an address on the blockchain, to which transactions can send amounts of the cryptocurrency. The address is actually the public key in a pair of a public and a private key. The private key is the password, which unlocks the right to spend the cryptocurrency held in the address.

Wallet – one or many combinations of public/private keys, and possibly some programing interface allowing for actions to be performed, such as spending, receiving, staking, checking ballance

Miner – owner of a node in the blockchain, i.e. a copy of the blockchain ledger and some software that is used to verify the validity of transactions and propagate the results to the network, thus enabling transactions to be performed. The miner stands to gain from the fees attached to every transaction and also from block reward – a certain amount of cryptocurrency, issued by the network for every block of transactions sealed, rewarded either randomly or in some other way, depending on the cryptocurrency

PoS – Proof of Stake – a way to sustain the blockchain by having participants “stake” their own amount of cryptocurrency via their wallet, in order to be able to gain the right to verify transactions. They get rewarded for that by being paid transaction fees, and stake reward – issuance of new cryptocurrency amounts by the network. It is an alternative to PoW that doesn’t require the waste of electrical power, but it still hasn’t been proven to be as secure.

PoW– Proof of Work – a way to sustain the blockchain by having participants’ nodes verify transactions by performing very hard computations with their hardware, thus proving that actual work has been done. This way the network is protected from flooding by spam transactions and the verification process has been made secure.

Inflation rate – the amount of newly issued tokens in the cryptocurrency network on a regular basis either as a result of staking reward, mining reward or new public offerings. The bigger the inflation rate, the stronger the effect of price dilution per existing token, because the supply is increased.

ICO – Initial Coin Offering – modeled after traditional IPO in the stock market (Initial Public Offering) it is the process of raising funds for a new venture by offering digitally issued tokens corresponding to an asset or a currency on a newly built blockchain network.

Token – a digital asset representing the amount of value held by a participant in a blockchain network. It is like cryptocurrency, but in most cases does not represent money. Bitcoin is a cryptocurrency, because it is used as money. EOS, Veritas, Bitquence are not cryptocurrencies, it is a token, a digital asset, a representation of value/stake or something else on the blockchain.

Fiat – the traditional paper currency, issued by the government or a private corporation such as the Federal Reserve, not backed by anything since 1971