There is no shortage of acronyms, abbreviations and perplexing terminology in the crypto asset sector. The following survival kit covers the essentials for INVSTRs wishing to keep up-to-speed with the latest lingo.
Any crypto asset that is not Bitcoin. The EasyCrypto10 bundle consists of Bitcoin and 9 altcoins. See EasyCrypto10
The practice of taking advantage of price deviations across two or more markets. Arbitrage (or arb for short) is an investment strategy in which an investor simultaneously buys and sells a crypto asset on different exchanges to take advantage of price difference to generate a small profit. See DEX
Application-Specific Integrated Circuit. Specially designed chips which process SHA-256 algorithms (Bitcoins algorithm) in order to mine cryptocurrency efficiently and validate transactions and secure the network. See mining.
All Time High. When a crypto breaks its previous record price.
Someone holding onto a crypto that has dropped in price (Sometimes significantly), with the intent of holding until it increases in price.
When your belief is that prices are set to decrease. The phrase originates from the way in which a bear is said to attack its opponents. When a bear attacks they thrust their claws downwards. See bullish.
When your belief is that prices are set to increase. The phrase originates from the way in which a bull is said to attack its opponents. When a bull attacks they thrust their horns upwards. See bearish.
A cluster of transactional data on a blockchain. Each block can hold a specific amount of data depending on the type of crypto protocol. A block forms a small part of the bigger blockchain which typically contains confirmed transactions. See Blockchain.
The blockchain, which is a distributed ledger system, consists of a series of blocks. These blocks contain verified transactions. The blockchain was designed to be not only decentralised, but also immutable, meaning that entries could not be erased once placed on this distributed ledger. The idea of the blockchain was first introduced by the pseudonymous author, Satoshi Nakamoto, in a scientific article titled “Bitcoin: A peer-to-peer electronic cash system”. The blockchain offers a digital form of decentralized record keeping. Pro tip: when visualizing the underlying blockchain technology of cryptocurrency, picture the following network diagrams.
Blockchain networks (on the left) are decentralised, meaning they do not require an intermediary, or middle man, to facilitate and validate transactions. Instead, participants contribute in the transaction validation process. Participants are directly connected via nodes. Traditional networks (on the right) require an intermediary, or middle man, to facilitate transactions, such as a bank providing a central server for transactions. Traditional networks place all functional responsibility on a single node. Should the central node of a traditional network fail then the entire network is compromised. Blockchain networks continue to function regardless of whether individual nodes are compromised.
Cold Wallet / Cold Storage
An individual crypto asset. A coin serves as a representative store of digital value that lives on a given blockchain or cryptocurrency network. Some blockchains have the same name for both the network and the coin, like Bitcoin. Others can have different names for each, like the Stellar blockchain, which has a native coin called Lumen. Some coins extend on the protocol of other, for example, UniSwap is a decentralized finance protocol that is used to exchange cryptocurrencies on the Ethereum blockchain.
Cryptocurrency / Crypto asset
Cryptocurrencies are hybrid digital assets underpinned by cryptography. They serve as a medium-of-exchange, a store of value, and can also constitute development platforms for digital applications or software.
A distributed denial of service (DDoS) attack takes place when multiple parties work together to overwhelm a system by inundating it with either requests for information or malicious data. Basically, the nefarious parties involved in such an attack want to prevent participating nodes from validating transactions and seek to undermine the integrity of the network. Some digital currency networks, or exchanges, have suffered DDoS attacks from nefarious parties looking to cripple these marketplaces and hopefully take advantage of this vulnerability to steal cryptocurrency. While efforts to steal digital assets may not work, an exchange's users could become unhappy simply because they cannot make trades through the marketplace. DDoS attacks are more likely to occur on smaller exchanges or small cryptocurrency networks. DDoS attacks are very unlikely to compromise the networks of constituents in the EC as they are simply too large to infiltrate.
Financial activities conducted without the involvement of an intermediary, like a bank, government, or other financial institution. Decentralized Finance (DeFi) is empowered by blockchain technology and cryptography. It can be defined as a new financial ecosystem consisting of various financial tools, apps and services utilizing blockchain technology. It’s an umbrella term for all these projects combined and is growing daily. Examples of DeFi functionality are banking services in the form of StableCoins, decentralized exchanges, derivatives, prediction markets, or lending and borrowing systems. The last one can be either peer-to-peer or with a pool. It is a combination of replicating products and services in the traditional finance industry as well as innovative new ones only possible with blockchain technology.
Decentralized exchanges (DEX) are a type of cryptocurrency exchange which allows for direct peer-to-peer cryptocurrency transactions to take place online securely and without the need for an intermediary.
Investors in the crypto asset sector sometimes compare specific cryptocurrencies to real gold based on the way it can store and increase in value. Bitcoin is most commonly referred to as digital gold. Currently the value of altcoins are traditionally compared to the value of a corresponding fiat currency. For example, the price of Ethereum can be measured against the relative value of the USD or ZAR. However, scholars conjecture the value of altcoins in the future will be measured against the value of Bitcoin. In other words, it may become customary to measure 1 ETH = X BTC, instead of measuring it as 1 ETH = X Rand or Dollar. In a nutshell, Bitcoin is predicted to become the new global “gold standard” for value.
A distributed ledger is a system of recording information that is simply distributed, or spread across, many different devices (nodes). More specifically, it is a consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, or institutions. The blockchain, for example, is a distributed ledger that was originally created to keep track of all bitcoin transactions. See blockchain.
The EasyCrypto10 (EC10)
The EasyCrypto10 (EC10) is South Africa’s leading index tracking instrument of the crypto asset sector. It passively tracks the top 10 cryptocurrencies, exclusive of StableCoins, weighted by market capitalization. The EasyCrypto10 harnesses fundamental principles of modern portfolio theory by diversifying exposure to crypto assets. In other words, your eggs are not all in one basket. The EasyCrypto10 governance uses contemporary best investment practices for digital assets and carefully monitors material legislative developments in South Africa. For more information about the EC10, visit https://www.easycrypto.co.za/
Escrow refers to a third-party holding financial resources on the behalf of other parties. A third-party would hold funds in escrow when the other entities involved in a transaction may not trust each other.
Fiat currencies are currencies that have value because they are minted by a central bank. Fiat means "by decree," and these currencies have value because some central authority has decreed that they have monetary value. Examples of fiat currencies include the British Pound, Euro, US Dollar and Rand. Fiat currencies are essentially cotton and linen based paper. Fiat currencies can be printed by the national treasury of a country. In theory, they can be printed infinitely and thus are susceptible to value dilution. e.g. The excessive printing of Venezuelan Bolivars and Zimbabwe Dollars that led to hyperinflation. Since fiat currencies are not decentralized their value can be compromised by a single authority such as a tyrannical government.
When an altcoin surpasses Bitcoin in market capitalization. This is yet to occur.
The term "FOMO" stands for the phrase "fear of missing out." This occurs when investors start buying up a particular asset based on their expectations that it will rise in value. Market participants can easily flock to an asset should that asset experience sharp gains. FOMO relates to herding bias.
When a blockchain’s users make changes to its rules. These changes to the protocol of a blockchain often result in two new paths — one that follows the old rules, and a new blockchain that splits off from the previous one. e.g. a fork of Bitcoin resulted in Bitcoin Cash (BCH). A subsequent fork of BCH lead to Bitcoin Satoshi Vision (BSV).
Fear, Uncertainty, and Doubt. An “emotion” spread intentionally by the media or a group within the crypto sphere that are typically looking to cause a price drop.
Anyone who is intentionally spreading FUD. See FUD.
Gas fees are payments made by users to compensate for the computing energy required to process and validate transactions on a blockchain. "Gas limit" refers to the maximum amount of gas (or energy) that you're willing to spend on a particular transaction.
The date when the rate at which a block reward is mined halves. The most notable being Bitcoins halving events that occur approximately once every four years. See mining.
A unique string of numbers and letters that identify blocks and are tied to crypto buyers and sellers.
Cryptocurrency investors developed the term "HODL," which stands for "hold on for dear life." The acronym originally came from a misspelling of the world "hold”. The HODL philosophy goes back to 2013, whereby investors who adhered to this investment strategy for Bitcoin have since been rewarded with unprecedented price appreciation.
A hot wallet refers to a crypto asset wallet that is accessible online, and it facilitates cryptocurrency transactions between the owner and end-users. A collection of private keys stored on a program connected to the internet is used to store and send various crypto assets. Examples of hot wallets include MetaMask for Ethereum.
An initial coin offering (ICO) is a way that funds are raised for a new cryptocurrency project. ICOs are similar to Initial Public Offerings (IPOs) of stocks.
INVSTRs are the real MVPs. INVSTRs harness the EasyEquities, EasyProperties and EasyCrypto investment platforms to expand their investment portfolios.
KYC stands for "know your customer." Many jurisdictions have KYC regulations, which have come to affect startups holding ICOs. These regulations require companies holding these digital token sales to verify the identity of their investors. EasyCrypto requires an initial KYC process upon sign-up.
Mining is the process for creating new units of a digital currency for proof-of-work systems. For example, the bitcoin network releases new Bitcoins every time a block is mined. In this instance, mining involves confirming transactions and combining them in to blocks. This verification requires hardware and electricity, and miners are rewarded with digital tokens for contributing these needed resources. The process is essentially as follows: 1) Miners verify if transactions are valid, 2) they compile transactions in a block 3) then take hash of previous block and insert it into a new block, 4) they propagate blockchain to network, 5) when solution is found they add new block to the blockchain. See proof-of-work.
When the crypto price skyrockets, substantially, out of this world, literally to the moon.
A computer that connects to a blockchain network.
You may have heard of NFTs as a way for artists to buy and sell their digital art. However, the applications thereof extend beyond the horizon. Non-fungible tokens (NFTs) are a unique digital identifier that cannot be copied, substituted, or subdivided, that is recorded in a blockchain, and that is used to certify authenticity and ownership of digital assets. Stated differently, it is a protocol used to claim ownership of a digital asset on the blockchain. The applications of NFTs are rapidly expanding beyond ownership of digital art. Contemporary applications include GameFi, Metaverse, Sport, utilities extending to QR codes, and much more.
The Proof-of-Stake (PoS) consensus algorithm is introduced as an alternative to Proof-of-Work (PoW) without the energyconsuming aspect. In the case of PoS the creator of the next block is randomly chosen based on a combined selection of age and wealth, where the wealth is the ‘stake’ or amount of cryptocurrency that has been put to work. This is done by having it in an unlocked wallet for staking. The digital currencies that use this approach to verification frequently provide all their digital tokens up front, and miners are selected based on how many units they have (their stake). In these cases, users who confirm transactions, sometimes referred to as "forgers," receive transaction fees for their contributions. See proof-of-work.
Proof-of-work (PoW) is a system of proving that a digital currency's transactions have been verified. Many digital currencies, including Bitcoin, use PoW. Under such a system, miners must do "work" that is difficult for them to contribute, but easy for the broader network to verify. Miners are usually rewarded for verifying transactions by receiving units of a digital currency. The PoW consensus algorithm successfully came to life with the introduction of Bitcoin in 2009. It is the algorithm that is used to confirm transactions and the creation of new blocks in a blockchain. Specialised devices, computers or graphic cards can be used to do calculations. In PoW a new block is created or found by solving a mathematical puzzle. The process of trying to solve that puzzle is called mining. The miners are working hard and usually consuming a lot of energy to find the solution to the puzzle. This is basically where the definition ‘Proof-of- Work’ comes from. See mining.
The public key is only used to encrypt data and to decrypt the data, the private key is used and is shared. See private key.
Private keys are used to both encrypt and decrypt the data and are shared between the sender and receiver of encrypted data. Public and private keys can be a tad confusing to understand so here is a diagram summarizing what they do:
Satoshi Nakamoto is the pseudonym for the creator of Bitcoin, and more than one individual has claimed to be Nakamoto. However, none of these claimants have managed to convince the broader cryptocurrency community that they are, in fact, the creator of bitcoin.
Smart contracts are simply programs stored on a blockchain that run when predetermined conditions are met. They typically are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary’s involvement or time loss. They can also automate a workflow, triggering the next action when conditions are met. A smart contract came to existence with the launch of the Ethereum blockchain but has nowadays also been replicated in different forms on other blockchains. It can be seen as a protocol or computer program that is meant to autonomously and automatically execute pre- defined commands based on relevant events. The goal of this technology is to automate events and reduce the need for trusted third parties. This technology can be used for various purposes like the creation of tokens, facilitating DeFi, prediction markets and more. Oracles enable the usage of real-world data in smart contracts. The possibilities of this technology are endless.
A StableCoin pegs its value to some other non-digital currency or commodity. A digital fiat represents a fiat, or governmentbacked currency on the blockchain. e.g. Tether, which is pegged to the U.S. dollar.
The main idea is that participants can lock coins (their “stake”) at particular intervals, whereby the protocol randomly assigns the right to one of them to validate the next block. Typically, the probability of being chosen is proportional to the amount of coins – the more coins locked up, the higher the probability of validation. See proof-of-stake.
A unit of value on a blockchain that usually has some other value proposition besides just a transfer of value (like a coin). It represents a tradable asset or utility that resides on its own blockchain and allows the holder to use it for investment or economic purposes.
Vitalik Buterin is a programmer who invented Ethereum in 2015. He is regarded as a pioneer in the crypto sector, and among the greatest minds in IT.
The term "whale" is used to describe a trader who makes sizable bets. This term is a good one to know because market participants with the ability to execute very large transactions can potentially manipulate the market—or "make waves in the ocean."