Bitcoin Glossary: Every blockchain and cryptocurrency phrase you need to know
Despite the difficulties, blockchain technology has become mainstream. Bitcoin has become a household word, and financial institutions around the world have invested in cryptocurrencies or allowed their customers to do so. At the same time, NFTs have attracted the participation and appreciation of various celebrities.
But despite this, blockchain technology is still very mysterious. Only talented engineers can truly understand this — many of whom are early adopters of cryptocurrencies like Bitcoin and Ethereum— and can still be difficult for the layman.
Below is a glossary of blockchain terms that you might find useful. (All phrases are in alphabetical order)
Airdrop
Airdrops are when companies put cryptocurrencies or NFTs directly into your wallet. The blockchain service will launch tokens and airdrop them to users who have used the service instead of an initial public offering. There are several reasons for this: it can be pure marketing, as airdrops raise awareness of tokens that people can invest in, or can provide governance tokens for the DAO.
A recent example: The Ethereum name service allows users to change their wallet number to a wallet name (such as CNET.eth). Last December, it launched its own ENS token, airdropping a certain amount of money to all those who use the service. The more people who serve under the Ethereum name, the more tokens they'll be airdropped — worth tens of thousands of dollars in some cases.
Altcoin
Any cryptocurrency that is not Bitcoin or Ether is called Altcoin. Sometimes referred to as "shitcoins." ”
Binance
The world's largest cryptocurrency exchange where people buy and trade cryptocurrencies. It is under investigation into tax evasion and money laundering by the U.S. Department of Justice and the IRS.
Blockchain
Blockchain is a "distributed database." Simply put, it is a decentralized ledger that records information in digital "blocks." Once a block is mined and added to the chain, it cannot be changed, so the blockchain provides a public record of unchangeable data.
There are many different blockchains with varying degrees of decentralization, efficiency, and security. Many people have their own cryptocurrencies – For example, Ethereum is a cryptocurrency built on the Ethereum blockchain.
Bitcoin
Bitcoin is the first cryptocurrency, built on top of the Bitcoin blockchain. It was created in 2009 by one person or group of people under the pseudonym Satoshi Nakamoto. Only 21 million pieces can be minted, of which about 18.9 million are already in circulation.
Burning
Cryptocurrencies are "burned" by sending them to wallets that can only be received but not sent. The destruction mechanism is often used to create deflationary effects: the fewer tokens in circulation, the scarcer the tokens held by investors.
买跌（Buy the dip）
This refers to buying more assets after the price has fallen. For example, if the price falls by $10,000, a Bitcoin holder might "buy on dips."
Cold Wallet
Cryptocurrency wallets that are not connected to the internet. These wallets are safer and less susceptible to fraud.
Cross-chain
The ability to send data, tokens, or assets from one blockchain to another. This is different from "multi-chain" services built to work on multiple blockchains.
Cryptography
A form of information encryption in which data can only be decrypted using a key. Blockchains that use proof-of-work protocols rely on solving extremely complex cryptographic puzzles in order to mine and validate new blocks.
Cryptocurrency
Cryptocurrencies are blockchain-native tokens. Cryptocurrencies are usually minted with the mining of each new block. For example, for every new Ethereum block mined, two Ethers are awarded as compensation to miners.
Cryptocurrency is a token. Their birth was their decisive factor: other tokens were created using platforms and applications built on top of the blockchain, while cryptocurrencies are built into the protocols of the blockchain.
Decentralized Applications (Dapps)
Abbreviation for decentralized application.
Dao (DAO)
A decentralized autonomous organization. The DAO is an organization that makes decisions through consensus: all holders of governance tokens get voting rights in the organization's decisions, and the solution with the most votes is the DAO's course of action. Imagine a decentralized investment bank, but instead of fund managers making investment decisions, it's up to the holders of its governance tokens to vote on how to invest the money in its treasury.
Decentralized exchange
Decentralized exchanges are used to buy and trade cryptocurrencies. Unlike typical exchanges, these exchanges use peer-to-peer trading that bypasses any centralized authority. These include Uniswap and Sushiswap.
Decentralized Finance (DeFi)
Abbreviation for "decentralized finance". DeFi is the use of blockchain technology to bypass any financial instrument of a centralized institution, such as a smart contract or DAO.
Diamond Hands
A diamond hand is a person who holds financial assets for a long period of time or during periods of price turmoil.
DYOR
Abbreviation for "Do Your Own Research".
Ether (ETH)
A cryptocurrency mined on the Ethereum blockchain. Ether is second only to Bitcoin in market capitalization, but is a more commonly used cryptocurrency. Most altcoins are also built on Ethereum and are therefore pegged to Ether. Most NFTs are also built on Ethereum, which is why Ether is the primary token used in NFT transactions.
Ethereum
A blockchain that competes with Bitcoin. It aims to take the blockchain technology pioneered by Bitcoin developers and use it for more complex financial instruments such as smart contracts.
Flash loan
Lightning Loan is a DeFi tool that allows loans to be made without collateral. Lightning Loan allows you to borrow money to buy an asset, but only if you can buy the asset and repay the interest within the same block. Imagine using a loan to buy a $1 million house, but only if you've lined up another buyer who is willing to pay enough to pay you back the loan and interest, the loan will only be approved.
These loans use smart contract technology.
ACROSS
Abbreviation for "fear, uncertainty and doubt". This may be legitimate, such as concerns about the security or legality or security of tokens or NFT projects, such as organized moves to encourage people to sell and lower the price of assets.
Gas
Gas is the price you pay to use the Ethereum network. Every transaction requires a gas fee, depending on how overloaded the blockchain is. The price per transaction is usually between $50 and $500, but the price can spike when the network load is too heavy.
Governance token
Governance tokens are cryptocurrencies that give owners the right to vote on a given project. See also: DAO.
GWEI
The cost of gas is expressed in GWEI. As a rough guide, gas is cheap when gwei is below 50 and expensive when gwei is above 100.
HODL
A deliberate misspelling of "hold" is used to encourage people to hold their tokens during periods of price drops.
Layer 1和Layer 2
If you're dabbling in cryptocurrencies, you've heard about Layer 1 and Layer 2 solutions. Layer 1 is the blockchain architecture itself, while Layer 2 refers to an architecture built on top of the blockchain.
For example, take Ethereum's high gas cost problem as an example. The Layer 1 solution is to make the Ethereum blockchain more efficient, for example by adopting a proof-of-stake protocol. An example of a Layer 2 solution is Immutible X, an exchange built on Ethereum that uses smart contract technology to allow gas-free, carbon-neutral transactions.
Liquid Market
A liquid market is a market with a large number of buyers and sellers, which allows buy and sell orders to be completed almost immediately. The cryptocurrency market is liquid, while the NFT market is not. Most legitimate cryptocurrencies can be bought and sold at any time, as NFT traders need to list items for sale and want buyers to buy them manually.
Mainnet
A blockchain protocol for public use will be placed in the mainnet. This sets it apart from the testnet, which is more like a beta release of the blockchain protocol.
Memecoins
Many cryptocurrencies are designed to provide utilities or services for the purpose of providing them. Memecoins does not provide a practical outlook and exists purely as a speculative asset. Dogecoin is the most well-known, but there are many, many more.
Dogecoin, the original memecoin
Metamask
A browser-based online digital wallet primarily for transactions on the Ethereum blockchain.
Mining
Mining is the process of verifying transactions and adding blocks to the blockchain. This usually involves a powerful computer that solves complex password problems. Crucially, this is also how new cryptocurrencies are added to circulation.
Mining Rig
A powerful computer set up for the specific purpose of mining cryptocurrencies.
Mining Farm
Mining equipment warehouses (or rooms) that run throughout the day for mining cryptocurrencies.
Mint
On a blockchain, minting means validating information and treating it as a block on the blockchain.
"Casting" an NFT means buying it from its creator during a public sale. The "coinage price" refers to the price at which its creator sold it — for example, the "mint price" of the Boring Ape Yacht Club is 0.08 ether. After all the NFTs in a collection have been minted, traders who want to touch the collection need to buy them from secondary markets such as OpenSea.
Multi-chain
Design an application or service for multiple blockchains. This is different from cross-chain applications and services, which are designed to send data or assets from one blockchain to another.
Moon
The sharp spike in prices is called "mooning" or "a moon". "To the moon" is a common phrase.
NFT
Non-fungible token. These are digital contracts that prove ownership of digital assets. Currently, they are associated with art, but NFTs can prove ownership of any number.
Off-Chain/On-chain
Off-chain refers to things that exist on the blockchain, and off-chain refers to things that exist outside the blockchain. Cryptocurrencies are on-chain currencies and fiat currencies are off-chain currencies.
OpenSea
It is the largest NFT market and specializes in Ethereum-based NFTs. (NFTs built on different blockchains are usually sold on specialized marketplaces.) For example, Solana NFT is sold on Solanat. ）
Play to Earn（P2E）
Play to Earn (P2E) games integrate blockchain and reward players with in-game cryptocurrencies. Cryptocurrencies in these games can be exchanged for Bitcoin or Ether. The most prominent example is Axie Infinity, where players get Smooth Love Potion ($SLP).
Proof of Work
Proof-of-Work (POW) is a consensus mechanism through which blocks are added to the blockchain. Proof-of-work requires miners to solve complex cryptographic puzzles, which require powerful mining equipment to provide a lot of energy to validate new blockchain transactions.
Proof-of-work is a secure and decentralized consensus mechanism, but inefficiencies are notorious. This is how the Bitcoin and Ethereum blockchains work, although Ethereum will soon move to a more efficient Proof of Stake.
Proof of Stake
Faced with the huge energy demands of proof-of-work, Proof of Stake (POS) is a newer consensus mechanism that mines blocks more efficiently. Proof-of-stake allows cryptocurrency holders to verify new blocks on the relevant blockchain.
They do this by staking their cryptocurrency. Web users pledge their cryptocurrency, and if their shares are selected through a random algorithm, they have the opportunity to validate a new block – for which they will receive a reward in the form of more cryptocurrency. The more cryptocurrency you stake, the greater the chance that you will choose a new block for user verification.
Proof of Work rewards those who spend the most computing power solving cryptographic puzzles, while Proof of Stake rewards those who have invested in cryptocurrencies for a long time.
Pump and dump
Pumping and dumping schemes involve artificial stimulation of products, which causes people to buy and raise their prices. Pumping and dumping coordinators then sell their assets at high prices, causing prices to fall sharply.
These exist in traditional markets, but are more common in cryptocurrency trading because the low liquidity of micro-market capitalization cryptocurrencies makes their prices easier to manipulate.
Rug pull
Carpet pulling refers to the disappearance of the creator of the cryptocurrency and the taking of the funds. A recent example is counterfeit Squid Game coins, although these coins are far from rare. "Carpet" is essentially a shorthand for "scam".
Satoshi Nakamoto
Pseudonym of the creator of Bitcoin. A white paper explaining the need for decentralized finance and explaining how Bitcoin works was signed by Satoshi Nakamoto, but no one knows who the real people are. Presumably, Satoshi Nakamoto was actually a few people.
Seed Phrase
When you create a cryptocurrency wallet, you get a 12-word seed phrase. Every time you sign in to your wallet on a new device, you'll need to use mnemonic words. Never give your mnemonics to anyone.
Sharding
Shards distribute the network load on the blockchain, allowing more transactions to be processed per second. It sounds boring, but it's very important. Ethereum will integrate shards next year, which will make it cheaper to use and less environmentally damaging.
Shitcoin
Shitcoin is an altcoin that does not offer any utility, either memecoin or invalid altcoin.
Silk Road
Silk Road is an online black market that was shut down by the FBI in 2013. This is where many people first come into contact with cryptocurrencies, as Bitcoin is a popular payment method for illegal goods on the site.
Smart contract
A smart contract is a digital contract that executes itself when the required conditions are met. For example, if Wallet X sends 0.08 ether to Wallet Y, Wallet Y sends NFT Z to Wallet X. They are most commonly used for automated trading, but can also be used for more complex uses, such as quick loans.
Stable coin
Stablecoins are cryptocurrencies pegged to the US dollar. These include Tether and USDC. Their aim is to allow cryptocurrency traders to keep their tokens in the crypto ecosystem without experiencing fluctuations in bitcoin and ether price fluctuations.
Staking
Equity pledge is the locking of held funds in cryptocurrency wallets to support the operation of blockchain networks. Essentially, it involves locking in cryptocurrencies to get rewards. In most cases, the process requires users to participate in blockchain activities using a personal crypto wallet.
The concept of pledge of interest is closely related to the proof-of-stake (PoS) mechanism. It is used in many other blockchain systems based on PoS or similar.
TLT
Abbreviation for "think long term".
Token
Tokens are blockchain assets in many forms. Cryptocurrencies like Bitcoin are a token. Other types include governance tokens, which grant holders voting rights in the DAO or service, or utility tokens, in which access to a service is granted based on the number of tokens held.
TXN
The abbreviation for transaction.
Utility Token
Tokens designed to provide some kind of functionality. These can be access to applications, services, or games. Examples include Filecoin, which grants access to blockchain-based digital storage, and Link, a smart contract that connects off-chain types of data.
Vanity Address
Personalized wallet addresses provided by companies such as Ethereum Name Service. It allows you to change the wallet address to a word or phrase of your choice, such as CNET.eth.
Vaporware
A product that promises but never really hits the market. The term became popular in the late 90s with the initial internet boom and was revived by shady cryptocurrency creators.
Vitalik Buterin
The creator behind the Ethereum blockchain.
Wallet
Cryptocurrency wallets are where you can store cryptocurrencies and NFTs. These wallets can be hot or cold wallets – browser wallets connected to the Internet or physical hardware that is not connected to the Internet. Wallets can be read and written, which means they can receive information, as well as signatures or online IDs.
Web 3
Web3 is the next iteration of the Internet imagined by blockchain enthusiasts. From the invention of the Internet until around 2005, Web1 was read-only to the Internet. Web2 refers to the emergence of users being able to produce content and upload it to the Internet. Web3 will be an internet with an integrated blockchain. Imagine having your social media posts as NFT, using cryptocurrencies like Ether as the universal currency, and your wallet as a form of ID instead of an email/password combination.
Whale
People who hold large amounts of cryptocurrency.
Whitelist
Pre-sale list of cryptocurrencies and NFTs. Whitelisted investors can purchase assets prior to a public offering, sometimes at a discounted price.
WAGMI
“we're all going to make it”的缩写。