In this article, we shed light on the most popular terms related to the digital currency market or encrypted assets in order to understand its nature and learn how to deal with it
1.What is ATH (All-Time High)?
The highest price ever reached by a digital currency, for example, the ATH of Bitcoin is currently $69,000 (as of writing this article in November 2021).
The all-time high was reached earlier exactly on December 26, 2017 at the $20,000 level.
The opposite of ATH is ATL, which is the lowest ever.
2.What are alternative digital currencies (Altcoins)?
Apart from the Bitcoin cryptocurrency, there are thousands of other digital currencies, which are also based on the blockchain technology. Each coin brings its own uniqueness and innovation with it.
The vast majority of altcoins are not recognized, especially those with relatively low daily trading volume and lower market capitalization. However, there are many examples of altcoins, such as Ethereum and Ripple, that are highly liquid and trade against fiat currency pairs.
Of the thousands of altcoins, many have bled in value and disappeared for good.
Who is the Bitcoin Maximalist?
Such a person believes only and categorically in Bitcoin and no other.
Usually, the extremist considers other altcoins to be unworthy and unnecessary, or to be "shitcoins".
What is Block Reward?
It is the reward and compensation miners receive for successfully verifying and recording new transactions on the blockchain.
What is Blockchain?
A blockchain can be described as a huge information file that lists all the transactions ever made.
The blockchain is the heart of the Bitcoin network and acts as a kind of database.
What is Centralized Cryptocurrency Exchange (CEX)?
A cryptocurrency trading platform is an online trading platform where cryptocurrencies and fiat money can be traded.
Centralization means that the trading platform is operated by a specific entity that maintains full control over it.
Most cryptocurrency trading platforms only allow cryptocurrency trading.
However, the larger ones also allow trading of cryptocurrencies against fiat currencies.
The most popular centralized trading platforms are:
Binance, Coinbase, Kraken, Bitstamp, and BitFinex.
What is a Decentralized Autonomous Organization (DAO)?
A DAO, or Decentralized Autonomous Organization, is an organization that operates without a central government, is usually run by shareholders, and has a transparent set of rules encoded in algorithms.
Famous DAO hacking incident:
In 2016, a hacker found a hole in the coding and used it to drain Ethereum.
Within a few hours, more than 3.6 million yttrium, or $70 million at the time, had been stolen.
In response, Ethereum fell by more than 30% in just one day.
What are decentralized applications "dApps"?
dApps, or decentralized applications, are applications built on blockchain technology, without a central authority.
What are Decentralized Exchanges (DEX)?
A DEX, or decentralized exchange platform, is a platform that operates without a central authority and no company running it.
Some of the advantages of DEX over CEX lie in the level of security as it is difficult to breach.
What is DeFi?
DeFi, or decentralized finance, is a new monetary system built on public blockchains without the involvement of a central institution.
What is a digital address?
A sequence of 27 to 34 letters and a number. Each address is unique.
Here is an example of a numeric address:
135sti2R9ZooiGrFFRJxYGeDvF5Uvjj7JK.
Digital addresses represent cryptocurrency wallets. To send cryptocurrency or money, we will need to use the digital address of the recipient.
What is a digital wallet?
A digital wallet is an application that is installed on a local computer (computer), mobile application, or remote server, which facilitates the storage of digital currencies. Most digital wallets are made to store bitcoins.
A digital wallet uses public addresses as well as private keys to hold funds.
The most secure digital wallets are cold storage paper wallets or hardware wallets, such as Trezor and Ledger.
WHAT IS FIAT BANK?
Any currency backed by the state or government.
Basically, it's all kinds of currencies that we know and use on a daily basis (Saudi Riyals, US Dollars, Euros, Canadian Dollars, etc.).
What is FOMO?
FOMO stands for "Fear of Missing Out", a term that describes one's fear of not entering a winning trading position.
What is doubt and uncertainty FUD?
FUD stands for Fear, Uncertainty, and Doubt.
It is a process of reporting bad news about cryptocurrencies, which is constantly circulated by the traditional press and aims to create a state of mass panic.
FUD can relate to Bitcoin regulatory issues, rumors about cryptocurrency bans, and more.
What is HODL?
"HODL" is the opposite of the English word "Hold".
Investors believe in Bitcoin and hold it all the time regardless of its price, for the long term, even forever.
HODL was first used during the bursting of the crypto bubble in December 2013.
What is the Bitcoin mining reward split (halving)?
A predetermined process that divides the rewards miners receive for recording and verifying transactions into the new blocks that will be added to the blockchain in half. Bitcoin forks happen once every four years.
The next halving will happen during the summer of 2024.
What is an Initial Coin Offering (ICO)?
An Initial Coin Offering is a method of fundraising in which crypto projects raise capital from the public, which is the fastest it has ever been in the past and that in order to fundraise, ICO investors are only eligible to receive digital tokens and are not equity holders with any voting rights.
The ICO bubble lasted from October 2017 to March 2018, each of those months saw hundreds of successful ICO fundraisers.
The vast majority of those ICOs were of the "ERC-20" type, built on the Ethereum blockchain.
Investing in an initial coin offering is risky. Many ICOs have turned out to be scams, wiping out investors' money completely.
The number of ICOs dropped sharply during 2018, and in January 2019, Binance was the first exchange to conduct an Initial Exchange Offering (IEO).
What is IEO?
An IEO stands for Initial Exchange Offering, which is a form of fundraising to create a new token that is conducted by a cryptocurrency trading platform.
The first IEO was “GIFTO” which raised $30 million on Binance during 2018. IEOs became popular in the first half of 2019, shortly after the number of ICOs dropped dramatically.
Just like an ICO, an IEO is a high-risk type of investment.
What is the Know Your Customer (KYC) procedure?
KYC stands for Know Your Customer, and it is a process where users are required to provide identification information due to regulations.
This includes but is not limited to passport check, proof of address and online webcam verification.
What is Market Cap?
The market cap, or capital value, is the current price of one cryptocurrency multiplied by the total number of digital currencies in the market (circulating supply).
Bitcoin is the cryptocurrency with the highest market cap.
What is mining? Who are the miners?
Mining is the process of creating new bitcoins.
Mining is done by "miners", who solve complex equations.
The miner that solves the fastest will get the reward (fee) for the transaction and add it to the block. On average, every 10 minutes a new block is added to the massively distributed public blockchain for existing transactions.
Bitcoin mining could be done with a personal computer (PC) in the early years of the cryptocurrency. These days, mining efforts are divided among giant companies such as China's Bitmain.
Mining is not limited to Bitcoin only, but there are many digital currencies that can be mined and work according to the PoW mechanism.
What does "To The Moon" mean?
Moon is a term used to describe an asset whose price is growing exponentially.
What is the Proof of Stake (PoS) mechanism?
This consensus algorithm allows users to decide who will validate the next block, depending on how many coins they have.
Token holders lock these tokens to secure the network and get rewards in return.
What is Proof of Work (PoW) mechanism?
The original consensus algorithm of the bitcoin network.
The algorithm is used to confirm transactions and add new blocks to the chain.
Miners compete with each other to get rewards when transactions are confirmed.
What is the private key? What is the term seed?
Each public or digital address contains a unique private key that is required to access funds.
Here is an example of a private key:
6AkL0TJAuKcucHGqWVfUIa4g1haE0ilcm7eWUDo..fd + PpzdCJf1s4WdsK.
The private key is usually represented in a more neat way, by a seed phrase. And seed phrases are a combination of 12 or 24 words.
What is the pumping and dumping process?
Pump and dump artificially inflates the price of an asset (the pump) over a short period before selling it in bulk (dump) faster, while the value drops to the price level before the pump.
The lower the trading volume and liquidity, the easier it is to pump and dump digital currency.
Hence, low-cap cryptocurrencies are usually chosen for the pump and dump.
What is a satoshi unit?
Satoshi is the cent unit of Bitcoin. Whereas, one satoshi is 0.00000001 Bitcoin.
It is named after Satoshi Nakamoto, the anonymous creator of Bitcoin.
The reason for having 8 decimal spaces is because Satoshi Nakamoto planned to use Bitcoin as the daily currency even when the Bitcoin price reaches over $1 million.
What is "chitcoin"?
Chitcoin is a nickname for alternative digital currencies that have no working product and no actual value.
Bitcoin fanatics often use the term "chitcoins" to describe most, if not all, altcoins besides Bitcoin.
What is the total market capitalization?
Total market capitalization, or capitalization, is the combined market capitalization of all cryptocurrencies.
Who is a bitcoin whale?
A person or entity that owns so much Bitcoin that it can single-handedly influence the price of Bitcoin by mass buying or selling.
What is a White Paper?
A white paper is an authoritative report or guide designed to inform readers about the specifications of a newly created crypto project.
It is the equivalent of a business plan in the traditional financial field.
The worksheet is written by the project team and usually contains chapters that discuss the problem solved, the token, the team, and the technical aspects of the project.