Crypto Terms: A Guide to Jargon Using Bitcoin and Digital Assets

Crypto terms are important terminology and jargon. Understanding these terms is essential for a successful trading journey.

Just as association football has terms such as goal, corner, free kick, brace, and hattrick, so does crypto.

Ensure you understand terms like “wallet address” to avoid confusion when encountering them.

In the same way, you do not want to miss opportunities to brighten your portfolio due to being crypto illiterate.

This is why CryptoGuide GH has taken it upon itself to educate all of our readers about the essential crypto terms they’ll come across.

The following is a comprehensive list and definition of the crypto industry’s terminologies.

The most important crypto term you should know

Before you learn how to invest in Bitcoin or expand your knowledge about Ethereum, familiarize yourself with the following cryptocurrency term:

Address (Wallet Address): This is a unique string of characters used to receive cryptocurrency payments. Crypto wallet addresses comprise alphabets and numbers. Kindly take note that every blockchain produces a unique wallet address. Here are examples of wallet addresses from different blockchains.

0xC059ceb9647849b7A23A463F0Bfe867287BA687B (This is an Ethereum wallet address.) Always remember that “0x” is the prefix for Ethereum addresses. 40 characters, a mix of numbers and letters, follow it.

1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa (This is a Bitcoin wallet address.) Always remember that Bitcoin addresses normally start with “1” or “3” and are 26–36 characters long. Like Ethereum, the address is a mixture of letters and numbers. According to our research, we have found out that there are three types of Bitcoin addresses.

1. P2PKH (Pay-to-PubKeyHash) addresses, which start with “1” and are the most common type of address.
2. P2SH (Pay-to-ScriptHash) addresses, which start with “3,” are used for more complex transactions.
3. Bech32 addresses, which start with “bc1,” are a newer type of address that offers improved security and functionality.

bnb1x4xszm2tk0zszk4x4szm2tk0zszk4x4szm2 (This is a Binance wallet address.) Like Bitcoin and Ethereum, it comes with a blend of numbers and letters. Remember, the Binance wallet address for sending or receiving Binance Coin always begins with bnb.

BNB is the ticker symbol for Binance Coin, the native asset that powers transactions on the Binance Smart Chain.

Some of the other crypto terms you should pay attention to

Altcoin: You will be seeing this more often due to the numerous articles being published about them. Altcoin is the short version of an alternative coin.

Aside from Bitcoin, other digital currencies in the industry are alternative coins. There are more than 2.4 million altcoins as of this writing.

Some of the most popular altcoins include Ethereum, Binance Coin, Polkadot (DOT), Solana (SOL), ApeCoin (APE), and Tron (TRX). Algorand (ALGO), Internet Computer (ICP), Cardano (ADA), and Ripple (XRP) are altcoins with impressive market capitalizations.

ASIC (Application-Specific Integrated Circuit): You probably won’t encounter this term frequently. This is because many projects are currently interested in making their protocols Proof-of-Stake (PoS) instead of Proof-of-Work (PoW).

That said, ASICs are specialized computer chips for cryptocurrency mining. They are extremely expensive and do not fit the price range of ordinary cryptocurrency traders.

While some individuals can afford them, institutional miners are the ones who normally use them.

Miners rely on ASICs to provide power for Bitcoin transaction validation and verification.

They receive cryptocurrency in return, which serves as their primary source of income.

Riot Blockchain, Hive Blockchain, Hut 8 Mining, and Marathon Digital are among the companies that use ASIC to mine Bitcoin.

Blockchain: This is a decentralized, distributed ledger technology for recording transactions. For years, many innovators have thrown around the idea of blockchain.

Fortunately, Bitcoin emerged as the first blockchain in the technology world in 2008.

A man with the pseudonym Satoshi Nakamoto is the brain behind the technology.

There are more crypto terms you should take notice of

Bitcoin (BTC): When you encounter a term like Bitcoin (BTC), it’s important to remember that Bitcoin refers to the blockchain. BTC is the cryptocurrency that manages transactions on the Bitcoin blockchain.

Bitcoin’s whitepaper was published in 2008, but the project zoomed into breaking the barriers of traditional finance in 2009. Bitcoin is a crypto term you cannot ignore since it’s the most popular cryptocurrency in the market. BTC records the best metrics in the crypto finance space despite negative market sentiments.

BTC continues to record the biggest daily trading volume. The digital asset also has the largest market capitalization in the decentralized finance market.

Cold Storage: Cold storage in crypto has nothing to do with your fridge or food preservation. The crypto term is associated with the use of crypto wallets.

Cold storage, therefore, is when you store your cryptocurrencies offline. This led to the development of hardware wallets, also known as cold wallets. The transaction verification requirement and the shield (enhanced security) against computer viruses are advantages of storing your digital coins in a cold wallet.

Thousands of hackers continue to spread malware and other viruses online. With cold wallets, you are not vulnerable or susceptible to any hacking attacks that may hit the World Wide Web.

Cryptography: Studying techniques for secure communication in the presence of third-party adversaries is what cryptography is about.

Cryptography has made it possible for millions of individuals and organizations to use algorithms and protocols to protect their messages. It has become an important tool for those who value authenticity, integrity, and confidentiality.

Cryptography’s applications extend beyond communications and cryptocurrencies. It is also used in digital rights management and secures online transactions.

Pay close attention to these crucial crypto terms in the future

Decentralized: In our time at school, we learned about centralization and decentralization. The definitions learned there still hold true here.

The main theme of crypto is the financial world’s decentralization. It is a known fact that central banks across the globe control all aspects of our financial lives.

Decentralization in crypto refers to the existence of distributed networks that operate independently of traditional financial houses. These are central banks, clearinghouses, and insurance companies.

Decentralization has made it possible to process transactions within minutes, whereas inter-continental transactions could take at least three business days to clear.

DEX (Decentralized Exchange): This is one of the key crypto terms you should uphold should the crypto world dump centralized exchanges (CEXs) in the future. Decentralized exchanges are not in anyone’s hands. The people who interact with them are in control.

While CEXs require verification using ID cards, DEXs thrive on extreme anonymity to operate. They are basically peer-to-peer (P2P) cryptocurrency trading platforms.

Ethereum and Binance Smart Chains house some of the best DEXs. They are Uniswap, SushiSwap, PancakeSwap, and ShibaSwap.

Fiat Currency: These are the representative dollars we’ve been using for our daily activities. They lack the backing of tangible assets. Instead, their value comes from the faith that global citizens have in them.

Simply put, governments issue fiat currencies, such as the United States Dollar (USD).

Others, such as the Great Britain Pound (GBP), Euro (EUR), Ghana Cedis (GHS), Nigerian Naira (NGN), and South African Rand (ZAR), are also fiat currencies.

Fork: This is not part of the cutlery you use at home. A new version of a cryptographic protocol and its associated digital coin emerge from this split from the original blockchain.

Conclusion

This list is not exhaustive, but it covers some of the essential crypto terms in the industry today. Understanding them will be highly valuable to your journey through the world of blockchain technology and cryptocurrency.