Here at ShapeShift, we oftentimes receive questions about the cryptoasset world and its many nuances. This list of definitions can help you understand all of the words you may run into on a daily basis. There is a lot to learn if you are new to digital assets, but ShapeShift is here to help you every step of the way.
An address is an alphanumeric string of letters and numbers that is unique to a wallet. It is what is used to route cryptoassets across the network to a particular destination. Different coins have unique address formats.
New tokens are sometimes given to a number of users that have assets on a particular blockchain, whether it be NXT or BTC. Essentially, when the new tokens are distributed, they are “airdropped” to the holders on the blockchain.
Algorithms solve problems using calculations and data processing. Most modern software depends on functioning algorithms.
Cryptocurrencies that came to be after Bitcoin was created are referred to as altcoins.
ASIC is the abbreviation for “application-specific integrated circuit”. They are created specifically for a certain use rather than to be multi-use. ASIC miners work best for mining cryptoassets.
The first internationally renowned digital payment network and protocol. It is not to be confused with “bitcoin” with a lowercase “b”.
The first internationally renowned digital asset /cryptoasset. It is not to be confused with “Bitcoin” with an uppercase “B”.
A block is the file where transaction data is recorded in the blockchain.
Block explorers display transactions on the blockchain. Some common block explorers include:
The block height is the number of blocks separating the current block and the genesis block.
The ledger that tracks cryptoasset transactions into sequential order.
New cryptoassets rewarded to a miner for participating in the mining process.
Cold storage is any kind of cryptocurrency storage that is not online at all times. There are two types of wallets that may be considered cold storage:
- Hardware wallets - A physical device that is only online when it is hooked up to a secondary device such as a laptop or desktop.
- Paper wallets - A physical piece of paper that is a physical representation of owned cryptocurrency.
In terms of cryptoasset, a coin is a digital token.
Confirmations are necessary for a successful transaction. The number of confirmations is based on the number of times that the network has accepted the transaction. The more confirmations, the more likely the transaction is to be legitimate. If there are only a few confirmations, the likelihood of coins being double-spent increases.
A contract address is an address that utilizes a smart contract. This is specific to Ethereum and ERC-20 tokens.
“DAO” stands for “decentralized autonomous organization”. These organizations are utilized through smart contracts.
To move power away from a specific authoritative body.
A decentralized exchange supports the trading of decentralized currencies, aka cryptoassets.
Destination tags are a short numeric string specific to Ripple (XRP). Most Ripple wallets will require a destination tag for the funds to be routed to the correct recipient.
Public-key cryptography sometimes uses data storage based on the algebra behind elliptic curves. This is because this type of data storage detects common corruption issues.
An ERC-20 token piggybacks off of the Ethereum network, but for an ERC-20 token to be accepted, the token must meet a certain set of rules. “ERC” itself stands for “Ethereum Request for Comments”, and it is meant to improve the Ethereum network.
The Ethereum network supports ethereum, a cryptocurrency that hopes to fully decentralize transactions.
An exchange is any service that allows someone to trade one cryptoasset for another.
The rate that a cryptoasset is exchange for another, or in some cases, fiat.
After a cryptoasset company (often an ICO) collects a number of investments, they may perform was is known as an exit scam. If they do this, they leave with all of the investments without offering the return that they promised the investors.
Fiat currencies are centralized currencies, such as the U.S. Dollar or the Euro.
A fork is when a cryptoasset splits into two different cryptocurrencies. Examples include:
- BTC and BCH
- ETC and ETH
Cryptocurrency traders sometimes use the term “gainz” or “gains”. This refers to how much their investment has earned them since they originally invested.
Gas is what is used to send ethereum across the network. A small amount of ethereum is necessary for a transaction to process, and this is referred to as “gas”. If a transaction does not have enough gas, it may not confirm.
A genesis block is the very first block on the blockchain.
GPU stands for “graphics processing unit”, but they do not only process graphics. GPUs are also used to mine cryptoassets, as they can make computations as well.
Gas typically is paid for using Gwei. A single Gwei amounts to 10^9 Wei or 10^-9 ETH.
HODL is a term that meant use when they are referring to holding to a specific cryptoasset. It originated when a man mistyped the word “hold”. It is now often used to mean “Hold on for Dear Life”.
A hot wallet is a wallet meant to hold cryptoasset that is always online. Some common hot wallets are:
An ICO, or an “initial coin offering”, is a new cryptoasset that offers a specific number of coins to initial investors.
The input is where a transaction is being sent from, or where a transaction starts.
A key pair is the pairing of a public and private key.
A legacy address is an older address format that begins with a “1”.
Litecoin is a decentralized, peer-to-peer cryptocurrency network featuring cheap transaction costs. Litecoin (LTC), as a cryptocurrency, is exchanged using said network.
“Market cap” is short for “market capitalization”, or the value of an asset being traded on the market. In the cryptocurrency space, it is referring to coin market capitalization.
The "memory pool" of unconfirmed Bitcoin transactions.
Mining is the act of confirming transactions on the blockchain using a series of advanced computations.
A miner fee is cryptocurrency that is provided to reward miners for enabling transactions to be sent across the network.
multiple output transaction
Any transaction that has several outputs is a multiple output transaction.
Multisignature allows several users to digitally sign the same document for a valid transaction.
Nodes are used to pass block data throughout the network. These nodes are able to validate transactions.
out of gas
When an ETH transaction runs out of gas, it has done so because not enough gas was provided for a transaction to fully process on the blockchain. This error is common with smart contracts.
This is where a cryptoasset transaction was sent.
An offline, paper representation of cryptoasset ownership.
A payment ID is an alphanumeric string that assures that a Monero (XMR) transaction reaches the correct recipient. Not all Monero wallets require this form of ID, but many do.
An act of fraud that pretends to be a particular entity to receive assets or information from the victim.
A privacy coin strongly focuses on anonymity and lack of traceability. A few examples of privacy coins are:
- Monero (XMR)
- Dash (DASH)
- ZCash (ZEC)
A private cryptographic key that should only be known to the user. This key can be used to decipher encrypted messages created by the public key.
A cryptographic key that can be used by anyone to encrypt messages that are decipherable by the private key.
pump and dump
Boosting the price of an asset by making vast exaggerations is a “pump”. A “dump” is when those that exaggerated this information then take all of their investments out at the heightened price.
Re-syncing a wallet occurs the blockchain is rescanned within a wallet. The re-sync button is often represented by two arrows in the shape of a circle.
Anyone that has been “rekt” in the cryptoasset world has been a victim of a scam or has lost a significant amount of their initial investment.
A replay attack is when one blockchain forks into two and results in an equal amount of coins existing on both blockchains.
A satoshi is a small amount of bitcoin. One bitcoin is equal to 100,000,000 satoshis.
Satoshi Nakamoto is the screen-name of the founder of Bitcoin.
SegWit stands for “Segregated Witness”, which is a newer form of address. It is forward compatible, meaning that no software updated need to take place for it to work.
SHA-256 is the cryptographic hash algorithm. It works by generating a 256-bit signature.
A “Shift” is the exchange of one type of cryptoasset for another by using ShapeShift.
A smart contract creates a certain set of conditions that a cryptoasset transaction must meet to be successful.
to the moon
The phrase “to the moon” refers to a coin’s value skyrocketing. This coin originated with Dogecoin (DOGE) when its value increased quickly. Some also refer to this as “mooning”.
A transaction fee is a fee that allows an entity to profit each time that a transaction is made.
The TXID (transaction ID) or the hash is the alphanumeric string that labels each transaction within the coin’s blockchain.
A UTXO stands for “unspent transaction output”. These occur to validate transactions via nodes on the network.
A wallet is a digital wallet, either hot or cold, that stores cryptoassets.
A whitepaper is written by those that are launching a new digital coin. It explains everything about the coin that a potential investor may want to know.