Words to know to understand Crypto Currency

by Matt Russell - Posted 3 weeks ago



Welcome my CryptoComics Compatriots. Thank you for joining us today. There have been a ton of new terms related to NFTs and CryptoCurrencies that many of you are pretty unfamiliar with. Today, we are going to collect these new terms and break them down into easy-to-digest and understand explanations. I will be adding these terms to our already existing glossary soon. It turns out that the Crypto Community uses a TON of acronyms. These will be added to the list below as well.


ALTCOIN

Dictionary Definition for the term Altcoin

Any cryptocurrency other than Bitcoin or Ethereum.

Layman’s Definition for the term Altcoin

A Cryptocurrency generally based on either Bitcoin or Ethereum. The main Altcoins that you’ve most likely heard of are Ripple, Tether, and Dogecoin.


BITCOIN

Dictionary Definition for the term Bitcoin

A digital currency created in 2009 in which a record of transactions is maintained and new units of currency are generated by the computational solution of mathematical problems. This currency operates by self-governing and is free of any centralized banking system.

Layman’s Definition for the term Bitcoin

This is the first cryptocurrency. It doesn’t need a bank to run and is managed by mathematical formulas only and not any one group of people.


BLOCK

Dictionary Definition for the term Block

A file of information pertaining to the bitcoin transaction is permanently stored and verified within a certain amount of time.

Layman’s Definition for the term Block

This little file contains everything about a certain transaction made on the “blockchain”. It can’t be tampered with, without changing all the other blocks down the line. This is the building block of the blockchain. Think of it as a link in a chain. Without it, the chain won’t hold any weight.


BLOCKCHAIN

Dictionary Definition for the term Blockchain

A series of blocks that act as an unalterable, permanent ledger which details the history of the cryptocurrency.

Layman’s Definition for the term Blockchain

As stated in the previous definition of “Block”, a block is a link in a chain. The blockchain is basically the entire chain. It is built by creating new blocks that can’t be altered without breaking the chain itself. This creates new opportunities on the internet that can revolutionize how we do business online.


COLD STORAGE

Dictionary Definition for the term Cold Storage

A method of storing a private key for a cryptocurrency that is not connected to the internet.

Layman’s Definition for the term Cold Storage

Storing your private key to access your Crypto wallet on something that is not connected to the internet; external hard drive, flash drive, a piece of paper with a handwritten note, magnetic letters stuck to your fridge door. This keeps it safe from any online hackers.


CONSENSUS MECHANISM

Dictionary Definition for the term Consensus Mechanism

The method used to ensure the security of a blockchain when verifying new blocks.

Layman’s Definition for the term Consensus Mechanism

On the Bitcoin blockchain, the consensus mechanism is known as Proof-of-Work (PoW), which requires the exertion of computational power in order to solve a difficult but arbitrary puzzle in order to keep all nodes in the network honest. In other words, this is extra work designed to keep the blockchain honest.


CRYPTO WALLET

Dictionary Definition for the term Crypto Wallet

An app or device where one can store their cryptocurrency transitions. These will allow you to send or receive cryptocurrency by providing an internet address where tokens may be sent.

Layman’s Definition for the term Crypto Wallet

This is an online wallet, but for cryptocurrency. There is nothing special about this, it is just a digital wallet, much like any other banking app, except this only handles cryptocurrency.


ERC-721 STANDARD

Dictionary Definition for the term ERC-721

A token standard found on the Ethereum blockchain. This can be used in a variety of ways due to its uniqueness, which allows different values from another token on the same smart contract. All NFTs have a uint256 variable called tokenId, so for any ERC-721 Contract, the pair contract address, uint256 tokenId must be globally unique.

Layman’s Definition for the term ERC-721

An ERC-721 is what creates an NFT. This is what turns a comic book into an NFT. It basically tells the world that “This comic book is unique, therefore has value.”


ETHEREUM

Dictionary Definition for the term Ethereum

Ethereum is a decentralized, open-source blockchain with smart contract functionality. Ethereum was conceived in 2013 by programmer Vitalik Buterin.

Layman’s Definition for the term Ethereum

Ethereum is a type of blockchain that allows you to do a lot more than simply buying and selling. By using the ERC-721 standard on the Ethereum blockchain, you can do more than simply buy and sell goods. You can create stuff that actually does things. Think of this as bitcoin on steroids.


FIAT CURRENCY

Dictionary Definition for the term Fiat Currency

Legal currency issued by various governments.

Layman’s Definition for the term Fiat Currency

This is your standard “money” that the governments around the world recognize. In the US, we use USD or the dollar, in Japan we have the Yen. Russia uses the Ruble. China issues the Renminbi. Fiat currency is not to be mistaken for the crappy car.


FUD

Dictionary Definition for the term FUD

An acronym for Fear, Uncertainty, and Doubt. When dealing with a cryptocurrency, it is still such a new technology and not widespread as far as a basic understanding, that any little thing can trigger the general public to mistrust it and try to distance themselves from it.

Layman’s Definition for the term FUD

Every time a public figure (Elon Musk during his SNL appearance) either makes fun of or gives any false information concerning a cryptocurrency, the public freaks out and the price drops resulting in a loss for investors. Just like the stock market, if trust in a product (or in this case a cryptocurrency) drops, so does the price for each individual stock. So, if you have a lot invested and some idiot says something bad about it publicly, you could lose your investment. Just FYI, the opposite effect can (and has) happen.


   

HODL

Dictionary Definition for the term Hodl

An acronym for Hold On for Dear Life. This common term on various forums indicates the owners of certain coins, reluctance to sell during a potential collapse in value.

Layman’s Definition for the term Hodl

If you have a cryptocurrency, you don’t want to sell it. HODL means that you will hold onto it hoping for the best. Its like owning stock in a company and hoping that they will make good decisions resulting in that stock rising in value.


HOT WALLET

Dictionary Definition for the term Hot Wallet

A storage device that holds secret keys that is connected to the internet. This can either be an app that offers a digital wallet. Also known as “Hot Storage”.

Layman’s Definition for the term Hot Wallet

An online wallet containing your password. Not as trusted by Crypto Enthusiast as Cold Storage. This is typically used by those new to cryptocurrency who have not invested hundreds of thousands of dollars into any digital currency.


ICO

Dictionary Definition for the term ICO

An acronym for Initial Coin Offering. A method by which new startup cryptocurrencies may raise funds to launch said new currency. These are , as of now, unregulated, and act much like IPOs for stock.

Layman’s Definition for the term ICO

An ICO is basically someone out there in the wilds of the internet saying “I created a new cryptocurrency. Give me money to fund this and I will give you a certain amount of this new currency.” It is up to you to risk your actual money in hopes that this new cryptocurrency will become a mainstay.


MINING

Dictionary Definition for the term Mining

Crypto mining is the process by which new crypto coins are entered into circulation; it is also the way that new transactions are confirmed by the network and a critical component of the maintenance and development of the blockchain ledger.

Layman’s Definition for the term Mining

When a change is made on the blockchain, someone must verify that the change is authentic. As a reward, you are given a small piece of the pie. This is done by completing a math problem to verify that everything is on the up-and-up. This means that you can slowly get your own cryptocurrency without having to “purchase” it with your own money. Many people lose money as the cost to mine such cryptocurrencies often cost more in electricity than what you will stand to gain. However, with the right equipment and a little bit of luck, you can earn a substantial amount of said digital commodities.


NODE

Dictionary Definition for the term Node

A device that helps maintain a blockchain by participating in the transaction verification process.

Layman’s Definition for the term Node

This is any computer or device that basically connects to the blockchain. Any individual device used by a miner is called a Node.


NFT

Dictionary Definition for the term NFT

An acronym for Non-Fungible Token. This is a unique cryptographic token used as a way to verify ownership of an intangible asset such as a digital file, through blockchain technology.

Layman’s Definition for the term NFT

As Lyndsey said in her blog entry NFTs on CryptoComics, and “A fungible token is exchangeable currency, like a dollar. If we exchange dollars, we end up with the same thing. But a non fungible token is something original that cannot be exchanged, like the Mona Lisa. Prints can be made, but the original is still the one and only Mona Lisa.” These are the comics that you publish to our Marketplace. 


PRIVATE KEY

Dictionary Definition for the term Private Key

Also known as a Secret Key. Unlike the public key (see below), the private key is a secret key known only by its owner, although the owner will never see it for safety and privacy reasons. When you receive an encrypted message the private key will decrypt it allowing you to read the original message. A private key is like a password that allows you to access and manage your crypto funds.

Layman’s Definition for the term Private Key

A private key is like a password that allows you to access and manage your crypto funds. You just log into your account and let the private keys do their thing. You never even have to worry about them.


PUBLIC KEY

Dictionary Definition for the term Public Key

A sharable string of numbers and letters allowing users to send and receive cryptocurrency. Public keys are available from a certificate authority, which issues digital certificates that prove the owner's identity and contain the owner's public key.

Layman’s Definition for the term Private Key

The public key consists of a string of random numbers and can be used to encrypt a message, which can only be decrypted using the Private Key of the person receiving the message.


PoS

Dictionary Definition for the term PoS

An acronym for Proof of Stake, meaning that owners of the cryptocurrency can stake their coins, which gives them the right to check new blocks of transactions and add them to the blockchain. This is far more energy efficient than PoW (see below) which make it far more popular with Crypto Miners.

Layman’s Definition for the term PoS

This is the process that involves committing your crypto assets to support a blockchain network and confirm transactions. Your coins are locked up while you stake them, but you can unstake them if you want to trade them. You will earn interest on “staked” coins, instead of simply mining them as you would in a PoW environment.


PoW

Dictionary Definition for the term PoW

An acronym for Proof of Work. This is a decentralized consensus mechanism that requires members of a network to solve an unpredictable mathematical puzzle to prevent anybody from cheating the network.

Layman’s Definition for the term PoW

Proof of work requires miners to compete to solve complex mathematical problems. The first miner to solve the problem gets to add a block of transactions and earn rewards. Since all the nodes around the world are competing to solve the math problem, it results in a HUGE use of power. PoS eliminates the need for such a huge power loss.


SIGNATURE

Dictionary Definition for the term Signature

This is a cryptographic value that is calculated from the data and a secret key known only by the signer.

Layman’s Definition for the term Signature

This is simply the method by which the owner of a private key proves that they approve the transaction.


SMART CONTRACT

Dictionary Definition for the term Smart Contract

A program, stored on a blockchain, that runs when predetermined conditions are met.

Layman’s Definition for the term Smart Contract

This is the computer program that handles everything on the blockchain. Think of this as the program that makes everything work. Much like the code behind any other computer program, this one just handles blockchain technology.


STABLE COIN

Dictionary Definition for the term Stable Coin

A cryptocurrency that is pegged to a fiat currency.

Layman’s Definition for the term Stable Coin

This is just a crypto coin that matches 1 to 1 with a regular dollar like the USD of the Euro. If the value of the regular currency goes up or down, the “stable coin” goes up or down to match.


TOKEN

Dictionary Definition for the term Token

A single unit of any given cryptocurrency.

Layman’s Definition for the term Token

One token for Ethereum is 1 Eth, and as of the writing of this article is equal to $4,511.38 and will fluctuate depending on the market value. Basically a token is 1 coin.


UTILITY COIN

Dictionary Definition for the term Utility Coin

A digital token of cryptocurrency that is issued in order to fund development of the cryptocurrency and that can be later used to purchase a good or service offered by the issuer of the cryptocurrency sold utility tokens as a method of fundraising for the start-up.

Layman’s Definition for the term Utility Coin

Initially, when an ICO (see above) is offered, they will sell these coins. You can purchase these coins, giving the creators financial backing to finish their program or platform, or new cryptocurrency. If the investment pans out, you can use these coins to purchase things on the new blockchain.


WHALE

Dictionary Definition for the term Whale

A group or person who holds an exceptional large amount of cryptocurrency. A whale’s decision to buy or sell can greatly affect the value of the various cryptocurrencies.

Layman’s Definition for the term Whale

This is an old investment term meaning someone that has a ton of money. Various groups of people watch them to see if the whale will invest their time and fortune into a particular cryptocurrency, thereby validating that currency in the eyes of other potential investors.


To Be Continued


So, now that we have started updating the list, we can add these terms into the glossary. If you run into any new term not yet defined by us; either on our videos, in our blogs, or during your own research, please feel free to mention it to us so we can further add to our glossary.


We want to keep you as absolutely informed as possible because G.I.Joe said it the best, “Knowing is half the battle.”