Cryptocurrency terms and definitions

James Rodriguez James Rodriguez updated on 2022-08-08

Cryptocurrency can be confusing for first-time investors. This cryptocurrency dictionary will help you to understand the most complicated terms. After that, just pick a crypto exchange to get started with cryptocurrency investing today.

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Altcoin

Altcoin is a portmanteau of "alternative" and "coin". It may refer to any cryptocurrency other than Bitcoin.

ATH

ATH stands for "all-time high" or the highest ever price for a given cryptocurrency.

Bear market

A bear market means a declining market. Usually, this means a prolonged price decline of 20% or more from a recent high and indicates pessimism among investors.

Blockchain

The blockchain refers to a shared, unchangeable ledger which records transactions made in Bitcoin, cryptocurrency, NFTs or other assets. It is shared across a peer-to-peer network providing security, transparency and decentralization.

Bull market

A bull market refers to a financial market where prices are increasing for an extended period of time. This may occur in the stock market, cryptocurrency, the housing market or elsewhere.

Bull trap

A bull trap is a false signal where the value of an asset shows signs of temporary, often sharp, recovery after a period of decline when in reality the asset's value will soon decline again.

Bull run

A bull run is a period characterized by a sharp rise in market price.

Candlestick charts

Candlesticks charts are a visual indicator of a cryptoasset's price trend. They will tell you if a price increased or decreased (usually in green or red) and show the highest and lowest price point over a specific time period.

Capitalization

Market capitalization, or market cap, is the total value of a cryptocurrency. It is calculated by taking the price of a cryptocurrency and multiplying it by the total number of coins in circulation.

Correction

A market correction is a drop in the price of a specific asset from a recent peak. This usually refers to a drop of at least 10 to 20%.

Cryptocurrency

Cryptocurrency is a decentralized digital asset based on blockchain technology.

DeFi

DeFi stands for decentralized finance. It refers to peer-to-peer public financial services often operating on the Ethereum blockchain. Its advantages are being open, pseudonymous, flexible, fast and transparent.

Fiat

A fiat currency is a currency issued by a central bank that is not backed by a commodity (often gold). Examples include the Canadian and US Dollars, the Euro and the Japenese Yen.

Hold

Holding is an investment strategy aimed at keeping assets over the long term regardless of price fluctuations. In crypto, one also sees it spelled hold, which was first a misspelling of "hold", and later became an acronym for "hold on for dear life"

Holder

A holder, or hodler, is someone who uses the hold investing strategy.

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NFTs

NFT stands for non-fungible token. These tokens are proof of ownership, which is recorded in the blockchain

Fungible means that you may trade an item for an identical item. For example, you could exchange one Bitcoin for another Bitcoin or one Canadian Dollar for another. They are exactly the same. Non-fungible tokens, on the other hand, cannot be easily be traded for one another because each one is unique and the value less certain.

Interested in investing? Compare the best NFT marketplaces now.

Private key

A private key is composed of a sequence of numbers. It is the key that allows you to access your crypto wallet, the cryptocurrency and NFTs it contains and to "sign" transactions when sending cryptocurrencies.

Never share your private key! You may share your public key to receive payments.

Public key

A public key is like an address and is comprised of a sequence of numbers or a QR code. It allows you to receive cryptocurrencies. One can think of it as the crypto wallet equivalent to a bank account routing number.

Proof-of-stake

Proof-of-stake, abbreviated PoS, is a consensus mechanism used for processing transactions and creating new blocks on a blockchain.

Users are encouraged to use their coins as collateral in order to secure the network and reduce the computational work required on the blockchain. In exchange, those users may be rewarded by being chosen to create a new block and receive crypto assets. This is seen as more energy efficient than proof of work protocols.

Proof of work

Proof of work, abbreviated PoW, is a consensus protocol used in the operation of a blockchain. It is famously employed in Bitcoin and requires users to solve mathematical calculations with their computers in order to validate transactions and to mine (create) new blocks. The complexity of the calculations is very energy-intensive.

Shorting

A short sale is when someone borrows cryptocurrency, sells it and then repays the borrower once the price has dropped. They make money based on the difference between the price difference between buying and selling, minus any interest owed.

Smart contact

A smart contract is a computer program stored on a blockchain that automatically runs when specific conditions are met to perform traceable and irreversible transactions. They allow users to trust that their transactions are secure without a government or bank's oversight.

Staking

Staking is making one's cryptocurrency available for use in proof-of-stake validation. This allows crypto holdings to earn money.

For a deeper dive, check out our guide to crypto staking.

Wallet

A digital wallet used to hold cryptocurrency. It has both a public key and a private key.

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