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The Cryptocurrency Dictionary: HODL And 25 Other Terms Explained

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The Cryptocurrency Dictionary: HODL And 25 Other Terms Explained
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Sometimes, the worst part about investing in technology stocks is understanding the complicated terminology, which can seem like a foreign language to someone who isn’t an expert.

With cryptocurrencies becoming all the rage on Wall Street these days, Benzinga compiled an investor glossary of a number of crypto terms that can help investors understand what the heck is going on and why.

  1. Address - Sometimes referred to as “ADDY,” an address is an online location that serves as a destination for a cryptocurrency payment. An address is similar to a bank account number, except crypto addresses are typically different for each unique transaction.
  2. Altcoin - The entire cryptocurrency craze started with bitcoin back in 2009, but thousands of other currencies have followed in bitcoin’s footsteps. These currencies, particularly newer or less popular currencies, are often referred to as “altcoins.”
  3. ATH - Stock traders might recognize this acronym, but tech enthusiasts may not. ATH is short for “all-time high,” a place many cryptocurrencies have routinely visited in recent years.
  4. Bitcoin - Bitcoin was the first cryptocurrency created on the blockchain system back in 2009. It's decentralized and operates on a peer-to-peer system. It remains the largest and most valuable global cryptocurrency.
  5. Block - A block is a group of cryptocurrency transactions that are grouped together and recorded on a blockchain after they have been verified. Once a block enters the blockchain, it is publicly available and permanent.
  6. Blockchain - Blockchain is the underlying decentralized ledger that keeps cryptocurrency transactions secure. The blockchain is a public system of verifying cryptocurrency transactions using a peer-to-peer network of miners.
  7. BTC - An abbreviation for bitcoin. XBC is another popular abbreviation.
  8. Coinbase - Coinbase is one of the largest and most popular cryptocurrency exchanges. Investors use the website and app to buy and sell cryptos and to monitor market prices.
  9. Cold storage - Cold storage refers to storing cryptocurrency offline for security reasons. Coins held in cold storage are much more difficult for hackers to access, but it comes with its own set of risks if storage hardware is damaged, lost or stolen.
  10. Cryptocurrency - A digital currency that runs on blockchain technology and a peer-to-peer verification system. Cryptocurrencies are decentralized and do not rely on banks or governments.
  11. Cryptography - The art of writing and solving codes. Cryptography is used to protect cryptocurrency security and validata transactions.
  12. Decentralized - In a decentralized system, no single source carries the critical data and record of transaction histories. Each device connected to a blockchain network has its own unique copy of the information stored on all the other nodes rather than a copy of the information stored on a central device, such as a server.
  13. Fiat - While traditional government-backed currencies can certainly be used to make digital transactions, crypto investors refer to these traditional currencies as “Fiat” money. Cryptos are decentralized, but Fiat currencies, such as the U.S. dollar and the Euro, and printed, managed and controlled by governments.
  14. FOMO - FOMO, an acronym for “fear of missing out,” can be applied to stocks as well, but some see FOMO as the true driving force behind the massive inflow of cash in the cryptocurrency market.
  15. Hard fork - A hard fork is a major change in the software of a particular currencies that results in the splitting of its blockchain. Bitcoin Cash is a popular cryptocurrency that was created as a result of a hard fork in the original bitcoin blockchain.
  16. Hash - A cryptographic hash is a mathematical function that takes a file and creates a code that can be used to quickly and easily identify the file. Each hash is unique and can't be reverse-engineered.
  17. Hash rate - Hash rate is a measure of how much computing power a cryptocurrency miner is generating. The higher the hash rate the more powerful the mining machine.
  18. HODL - HODL is popular acronym in the crypto investing community which stands for “hold on for dear life.” The term is a nod to the extreme volatility and unpredictable nature of cryptocurrency markets.
  19. ICO - ICO stands for “initial coin offering” and is the crypto version of a newly-public company’s initial public offering. ICO investors are hoping to get in on the ground floor of a new currency.
  20. Ledger - A list of financial transactions for record-keeping purposes. The bitcoin blockchain ledger is publicly available and cannot be altered.
  21. Mining - Mining is the process by which people use advanced computers to process blockchain transactions. Because of how much time, power and expertise are required to process cryptocurrency transactions, mining rewards miners by paying them a small amount of cryptocurrency for their efforts.
  22. Node - Any computer connected to a currency’s blockchain is referred to as a node. Each node maintains its own copy of the blockchain.
  23. Open Source - A software with publicly available code. Bitcoin is open source project.
  24. Private key - A private key is a personal password to access a digital wallet. A digital wallet is only as secure as a user’s private key is.
  25. Public key - A wallet address is a hashed version of a public key which allows users to send cryptocurrency to your wallet. Private keys are mathematically related to cryptocurrency wallet addresses, but they are encrypted to prevent reverse engineering.
  26. Wallet - Hopefully everyone knows what a traditional wallet is, and a digital wallet works in a similar way. A digital wallet is simply a (hopefully) secure way for people to store their cryptocurrencies.

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