Welcome back to The Bluffer's Guide to Cryptocurrency - a layman's approach to understanding Bitcoin and Blockchain Technology!
The previous and colossal blog went through how you can buy Bitcoin and use exchanges to trade between other cryptocurrencies. I think we all needed a break after that one but in case you wanted to review the steps, you can read it here.
Now that we know how to buy our cryptocurrencies, it's probably a good idea to start familiarising ourselves with some of the common phrases used in this exciting arena so we don't get left behind! Don't worry, this won't be as full on as the previous blog, I promise!
Before I begin, I want to emphasise that this is a highly simplified version of what I have learnt from my own research and I'm sharing my learning with you. If you do know this topic inside out, be nice to those who are still learning about this (myself included) and we can grow together.
Furthermore, this is not financial advice and I am not a financial advisor. I am a crypto-enthusiast and wanted to create a guide to help total beginners understand what this is all about. Please seek financial advice from a qualified professional if you have any doubt about how to spend your money.
So with that said, brace yourselves, you might learn something! Shall we begin?
These words are like, not English?
Yep, I know, it's like it's a different language concocted from English words but not actually keeping their original meaning! When I first started out, I was being taught by someone who trades Forex on a regular basis and was slinging words at me as I was sitting there saying, "Yep, totally get what you mean". Whilst on the inside I was weeping like a kid who just lost their ice cream, "What happened?!"
Don't worry, I figured a few things out and have put together this list of terms I've seen dancing around forums and soon, you'll be dropping them in casual conversation without weeping inside!
The List (in alphabetical order)
2FA - Short for 2 Factor Authentication. This adds an extra level of security by giving you a unique code from an Authenticator app on your phone to prevent unauthorised log-in or sending crypto. A must if you are using exchanges!
Bear Market - No, this is not a place where bears are traded for cash (phew)! Instead, "bear market" is when the prices of things drop in value. Not everyone's favourite as you can imagine but some enjoy this as it can provide a cheaper price to buy cryptocurrencies.
Blockchain - If you've come this far and still don't know what blockchain is, go back to the beginning of the series and read this. Honestly :P
Bull Market - No, this is not a place where bulls are traded for cash (phew)! Instead, "bull markets" are when the prices of everything steadily rise in value. Most people like this of course!
Consensus - When a majority of computers in the network can verify and agree on all the transactions on the ledger, then consensus is achieved. Awesome!
Crypto - Shortened way of saying "cryptocurrency" or anything relating to the general crypto-sphere. You'll be using this one a lot!
Cryptography - The act of encrypting any data transaction that happens across the internet or blockchain. This isn't just limited to cryptocurrencies though, for example, when you see the green padlock in the top of your browser... that's using cryptography to make sure it's secure.
Dapps - Short for Decentralised Apps, these work with smart contracts by automating the role of the middle man.
Exchanges - This is where you can trade and exchange different cryptocurrencies. For a full break down of a couple of exchanges, click here
Faucets - Another word for a tap (pronounced "four-sets"), these sites literally give you free cryptocurrencies. Admittedly not a lot, you can think of it like a dripping tap with a very small leak. There'll be more on this in a future blog.
Fiat - £, $, € - any currency that isn't crypto and is recognised as legal tender in whichever country you are.
Fork - Don't stick it in the toaster! Oh, wrong fork. Consider a "fork in the road" scenario. A blockchain is going along its merry way until two sets of ledgers disagree with each other. One goes one way, the other goes the other (for example, Bitcoin and Bitcoin Cash). This is actually called a Hard Fork. A Soft Fork is not quite as drastic. There is still a disagreement but miners have to choose which one to follow as they cannot work for 2 chains in the same blockchain ecosystem.
FUD - Short for Fear Uncertainty Doubt. You'll see this a lot either in crypto news outlets, mainstream media or any company looking to cause a mass sell-off and an ensuing bear market. If you believe in a project, it's always better to get the information from source rather than media but be aware of what's in the news.
HODL - What the hell is this?! It's in fact a misspelling of "hold" as in, hold on to what you have got, don't buy, don't sell, do nothing! Mainly advice that long term investors do as they get in on a project early on and simply wait or when in a bear market.
ICO - Short for Initial Coin Offering. Effectively the crypto equivalent of crowd funding but most ICOs are done without a platform in place, thus relying on trust. There's been a sharp rise in the last 12 months in these, with reports that over 80% are scams so be careful and do thorough research!
Ledger - Where every transaction on the blockchain is recorded. You may want to refresh your memory on this if you have forgotten, here's an earlier blog explaining all
Mining - When a computer solves the complex equation to validate transactions and monitor the ledgers, it uses up a lot of power. As an incentive, the computer receives a payment plus the transaction fee. A slightly more detailed description of mining is given here.
Moon - In every day conversation, it orbits the Earth. In crypto-world, it means that the price of a coin suddenly skyrockets in value for whatever reason. On charts, you'll see a spike in green when something "moons", a bit like what Bitcoin did at the end of 2017.
Portfolio - This is a list of all the coins you have, usually in an app or spreadsheet. When you buy them, make sure you put in the price at which you bought them so you can see how you are doing. If you mined, earned or got sent them, the price you paid would be 0 and you'll be up whatever - hurray!
Proof of Work - What Bitcoin uses as its technology. Computers across the network solve complex equations that require computing power to verify the transaction history - further information can be found here.
Proof of Stake - What Ethereum uses as its technology. One computer in the network is chosen to solve the complex equations and the other computers will verify. More information is here
QR Code - This is a patterned square that you can scan, for example, if you use a mobile app for wallets, the QR code will give your public address for anyone who wants to send you money.
Sh_tcoin - Ah, yes, plenty of those around but the literal definition is a coin that has consistently fallen in value over a long period of time or one that doesn't really serve a purpose - in other words, sh*t. Funny resource here if you're interested to see if you own one!
Smart Contracts - Used to cut out the middle man in any contract on the blockchain where two parties agree to something. A more in depth look at smart contracts is here
Tangle - No, I'm not talking about what happens to spaghetti! It's a technology where any computer can verify the transactions as long as it verifies 2 or more previous transactions on the network. More detail on that here.
Telegram - Useful chat app that is allegedly more encrypted than Whatsapp but a lot of new start-ups use it to communicate with investors or those interested in a project.
UBI - Short for Universal Basic Income. UBI projects are attempting to work towards a basic living income for wherever you are around the world. Nice idea, still early days.
Wallets - Where your cryptocurrencies are held, stored, received or sent from - more information about wallets is from an earlier Bluffer's Guide blog here
Whale - These creatures sometimes make a splash in the ocean in the natural world, they also make a splash in the crypto oceans as well! Whales are people/investors that have a huge influence on the price of something whenever they make a move in the market place. Look out for them.
No, this is a cat, not a whale! That means it's time for a timeout!
Well, who doesn't like a glossary list?! These are the terms I can think of at the moment and should help you navigate through the various forums out there but if you know any more that I've missed then drop them in the comments below!
Also, if you are enjoying the series so far, I'd love to hear from you! Thanks to those who have sent in some donations, it's much appreciated and certainly not expected! My Bitcoin wallet address is:
or if you prefer - use the QR code:
In the next section, we'll be going through some common phrases that pop up in the cryptosphere that will help you become fluent in the language!
Now though, it's your turn.
Did you enjoy the article or find it useful?
I'd love to hear from you and if you learnt something new, feel inspired to do some of your own research or felt I didn't cover something well enough, let me know and when I finalise the pdf, I'll make it right!
For now though, take it easy and catch you soon!
The history and technology of Bitcoin
2.1 How and why did Bitcoin come in to existence?
2.2 How does Bitcoin & blockchain actually work (Part 1)?
2.3 How does Bitcoin & Blockchain actually work (Part 2)?
Definitions of common phrases (you are here)
Cryptocurrency News Outlets
Fluctuations in price
Blockchain Platforms for Musicians & Music Fans
8.1 Atom Collector Records