Categories
Crypto Daily Topic

Crypto Glossary: Most Popular Crypto & Blockchain Terms and Phrases

The crypto and blockchain worlds are oftentimes referred to as cryptoverse or blockchain verse for simply being an independent and relatively new financial ecosystem. From the concepts to the unique language, it can be overwhelming to play catch up with all the words and phrases, especially if you are new to the trade. For instance, what is a blockchain? What does “HODL” or “mooning” mean?

This crypto glossary helps you familiarizes yourself with the most common terms and phrases that you will almost certainly come across as you navigate the world of cryptocurrency and blockchain.

We cover everything – from the meaningful ones to the slang, and anything in between – here: 

51% Attack

A 51% attack is an attack on a blockchain involving a party taking control of over 51% of the network’s hash rate. This would render the blockchain vulnerable, allowing the party to double-spend coins, hijack transactions, prevent the verification and confirmation of transactions, and stop miners from completing transactions.

Block Height

Block height is the numeric reference to any block on a blockchain. The first-ever block is referred to as block height 0.

Halving

The Bitcoin protocol is programmed such that only 22 million coins will ever exist. To control the release of new coins, mining rewards are slashed in half after every 210,000th block. In the beginning, the reward for mining a new block was 50 BTC. That was halved to 25 in 2012 and again to 12.5 in 2016. It fell again to 6.25 a week ago. After the 64th’ halving’, no more bitcoins will be released. That’s estimated to happen around 2140.

HODL

HODL is a meme in the crypto sphere that refers to holding onto your crypto rather than selling. It came into existence in 2013 when a drunk crypto trader wrote ‘hodl” rather than ‘hold’ on the bitcointalk.org forum. See the original thread here.

Lambo

‘Lambo’ for Lamborghini is a popular phrase in crypto lingo. It symbolizes the ultimate dream for a crypto trader: to be rich enough to afford a Lamborghini!

Mooning

This refers to the phenomenon of a cryptocurrency shooting up massively in price, seemingly out of nowhere. It was coined in 2017 when this was a regular trend. The entire crypto market ballooned from $15 billion around January to a jaw-dropping $600 billion by December. Ripple benefited the most from the boom, gaining by 28,963% over the period.

Satoshi

Satoshi is the smallest unit of Bitcoin. It is the hundredth millionth of a single bitcoin (0.00000001).

Flippening

Flippening is when another cryptocurrency will topple Bitcoin from the top of the crypto market. Ethereum and Litecoin have been touted to be potential ‘flippeners.”

Whales

These are individuals or entities with significant holdings of a cryptocurrency. If they sell their holdings, the market will feel the effect – just as whales displace water when they move.

Exit Scam

This is a crypto scam in which scammers launch a promising crypto project. They will then raise funds through an ICO. The business will then exist for a while, all while demonstrating activity and progress in the roadmap. Soon, however, it vanishes into thin air, leaving investors in the lurch.

Shitcoin

This is a worthless cryptocurrency that has mostly failed to live up to initial craze or was never a big deal to begin with—a valueless or a copycat currency.

Cryptojacking

Cryptojacking refers to the act of a hacker using malware to utilize your computer to stealthily mine crypto.

Choyna

A distortion of China, a country with a love-hate relationship with cryptocurrency and one with the largest number of miners.

Shill

Shill refers to an individual who underhandedly promotes a digital currency project while pretending no to, and who is potentially paid to do so.

Weak Hands

Weak hands refer to inexperienced traders who make emotional trading decisions. These traders will usually sell whenever the market takes a bearish trend or in the event of bad news. It’s the opposite of strong hands who in turn, are uber-good in HODLing.

Arbitrage

This is the difference in the price of a cryptocurrency in different exchanges. It allows savvy traders to buy crypto at a lower price on one exchange and sell it at a higher price at another, making a profit.

Bug Bounty

This is a reward offered by software developers for people to identify software vulnerabilities or bugs in code. This allows developers to identify and eliminate any errors in a project before it’s officially released.

DApp

DApp or ‘decentralized app’ is an application that operates in a peer-to-peer, decentralized environment. It’s not controlled by third-parties, and it cannot be censored. Such an application is the polar opposite of applications such as Facebook and Google, which are institutionally-owned and thus controlled by third parties. Examples of DApps included decentralized Twitter alternative Mastodon, popular cat game Cryptokitties, and crypto exchange Etherdelta.

Fork

A fork is essentially a blockchain splitting into two branches. This can happen for any of several reasons: security update, a scalability update, part of the community wanting to go another direction, and so on. There are two types of forks. A soft fork is compatible with earlier versions of the chain. A hard fork is a radical and permanent offshoot that’s not compatible with earlier versions.

Mainnet

Mainnet is short for ‘main network’, and it refers to the actual network on which transactions and other operations will take place. A mainnet is the opposite of a testnet, on which trials are run.

Airdrop

This is a free distribution of tokens to a crypto community. The idea is to promote the project or to thank people for signing up.

Bitcoin Maximalists

These are people that are diehard Bitcoiners. Bitcoin maximalists believe with unwavering conviction that the currency is the most superior cryptocurrency and the only one worth caring about.

ICO

An ICO is short for ‘Initial Coin Offering’ and refers to the process of a cryptocurrency project raising funds by selling crypto. Interested investors can then buy the coins. ICOs are very much like Initial Public Offerings (IPOs) through which traditional companies raise money by floating shares and stocks.

Mining

Mining is the process of verifying, confirming, and adding transactions to the public ledger. The cryptographic nature of cryptocurrencies means this process will require massive computational resources. People who provide these resources are called miners. In exchange, a blockchain network rewards miners with crypto coins or part of the transaction fee for the services.

Permissioned Ledger

Permissioned ledger is another term for private ledger. These are blockchains in which only authorized participants can access and initiate transactions. Permissioned ledgers are mostly found in private organizations since they can’t store sensitive data on public blockchains such as the Bitcoin blockchain.

Private Key

A private key in cryptocurrency is like your bank passcode. It allows you to access, send, or withdraw coins. If someone gets their hands on your private keys, they can access your funds. Crypto transactions are irreversible, implying that if someone withdraws your funds, they’re gone forever. It also means you have to take every available safeguard to protect your private keys.

Public Key

A public key is an address through which you receive cryptocurrency, either from people or a crypto exchange. A public key is very much like your bank account through which people send you money. Sharing your public key does not compromise your funds.

Cold Storage

In the context of cryptocurrencies and the blockchain network, cold storage refers to the keeping of your private keys offline. This makes it immune from hacking, malware, phishing attacks, and other online vulnerabilities. Cold storage is by far the safest option for storing your crypto funds. It’s highly recommended to keep especially large crypto holdings in cold storage.

Blockchain

A blockchain is a cryptographically secured, distributed, immutable, and time-stamped series of data records. There are two types of blockchains – public and private. Public blockchains are publicly available, and anyone can participate. The Bitcoin and Ethereum blockchains are examples of public blockchains. Private blockchains are owned and managed by private enterprises.

Altcoins

Altcoins is the name given to all other cryptocurrencies apart from Bitcoin. An altcoin can have its own independent blockchain or be built atop a blockchain that supports smart contracts such as Ethereum, Stellar, and NEO.

Categories
Crypto Videos

Cryptocurrency Market Volatility Part 2 – Liquidity & manipulation

Crypto market volatility – part 2

 

Last time we talked about what volatility is and how it is maturing in the crypto markets. We also talked about bad press and fraudulent activity that envelops the industry. Now, we will continue talking about what affects volatility and go more in-depth.

Market size VS. volatility 

The cryptocurrency market has received a great deal of attention from both profit-seeking traders and technology supporters. However, the market as a whole is still quite young and not as big as it can be. If we take a further look at its size, it cannot even be compared to traditional markets. It is a fact that the market size does affect volatility significantly.
Small markets allow smaller investors to influence the price both ways in a greater way. Broader markets, on the other hand, handle bigger market orders with ease and without much of a price impact. However, the overall size of the crypto market on top of overleveraging greatly affected its volatility.


Liquidity is directly tied to the market size as well as market order size. Liquidity can be defined as the ease or difficulty of buying or selling an asset on a specific market at a certain price. Liquidity is often directly tied to the market volume, as more market makers provide bigger liquidity. If more people traded cryptocurrencies, cryptocurrencies would be more stable price-wise. However, the crypto market in its current state is not as liquid as it should be to support large market orders or possible market manipulations that occur. If we take a look at the altcoins market individually, we can come to the conclusion that they are tiny when compared to the Bitcoin’s market, let alone the individual fiat currency markets. Low liquidity markets often suffer from sudden and aggressive fluctuations in prices.

Market manipulation VS. volatility

When talking about liquidity problems of the crypto market, one has to mention the market manipulation that occurs. There is a way to influence the price and sway it in the desired direction by controlling the market sentiment. Traders with large enough capital can utilize such a strategy to influence the cryptocurrency market. This is colloquially called “spoofing.”
Spoofing is basically listing a big buy or sell order with no intention of it going through. Its sole purpose is to show up on the market order panel as a “wall” of buyers or sellers. This alone will affect the market sentiment in the short term, which is just enough time for the profits to be made. This way, the whales can guide the price whichever way they want. When the market participants acknowledge the large-sized position, the price moves the opposite way. As soon as the move in the other direction starts, the order is taken down.

Speculation VS. volatility

As the crypto market is still immature, and investors have no real price to anchor to, the market is mostly driven by speculation. Typically, we can determine the value of an asset by its utility and adoption (and various other factors), but crypto markets are currently not operating that way. Speculation is the main thing that extends the trend up or down. Therefore, the only way to invest in any cryptocurrency is to speculatively bet on its future use cases, adoption, and traction.
Markets guided by speculation are, in every single case, recorded so far, volatile by nature.

Lack of institutional investors VS. volatility

A survey done by Fidelity Investments shows that 22% of surveyed institutional investors already purchased cryptocurrency in some quantity. If this survey can be translated to the institutional interest as a whole, crypto markets can be proud to show a remarkable increase from near-zero institutional investment in 2016 to the current numbers. However, the funds invested by the institutional investors are negligible compared to how much they invest in traditional markets.
Even though institutions are increasingly more interested in crypto, lack of proper guidelines, and transaction mediums such as ETF’s made it harder for them to get ahold of a large amount of cryptocurrencies. As time passes, institutions will undoubtedly dip their toes in cryptocurrency markets on a larger scale.
As the market lacks institutional investors, price stability is lacking, as well. Institutions are often using trading algorithms to perform trades for them, which in turn increase the liquidity as well as the stability of the markets.


Misconceptions on volatility catalysts

Many little things influence the crypto market volatility. No one can calculate the impact of any single factor. However, we often see some misconceptions when talking about which factors do have an effect on the market. Some factors are portrayed as much more significant just because they are eye-catching.
One such factor is the lack of regulation and how it affects the volatility of the markets.

Lack of regulation VS. volatility

The crypto market is not regulated by any government or institution. However, this lack of regulation does not affect the volatility of the market itself. People often connect high volatility with the lack of regulation, which is not correct. Cryptocurrency markets are self-regulated by the consensus. They require no government regulation to operate efficiently. However, they could use the government’s approval, which will probably never happen as crypto can be considered a direct competitor to fiat currencies.
Is market volatility even that good?
After understanding which factors affect the volatility of the cryptocurrency markets, people are mostly unsure whether increased volatility is a good thing after all. Volatility represents different things to different kinds of investors. We can look at it from two major standpoints:

The trader’s perspective.
The investor’s perspective.

The trader’s standpoint says that the volatility is quite good as long as the markets are liquid enough. The level of volatility considered useful varies depending on the person’s risk tolerance. A risk-averse individual would avoid high-volatility trades as they value stable investments more. However, cryptocurrency traders are considered to be risk-takers in most cases.

An investor, however, might consider volatility as a bad thing when it reaches a certain threshold, which is extremely low when compared to one of the retail traders. An investor wants to preserve their wealth rather than turning a quick profit. Also, investors are mostly here in the long run because they support the underlying technology.

Conclusion

Cryptocurrencies are a fairly young asset class, and its concepts are already revolutionizing the world we are living in. However, until full adoption happens, the cryptocurrency markets remain volatile.