Crypto Intro Guide Home

Welcome! In this guide I will give you a little introduction into the world of cryptocurrencies. My name is Bitcoinx (@bitcoinx2 on Twitter), also known as Gandalf86 on Bitcointalk.

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Vocabulary

• Address: An address is a public/private key-pair that is used to send and receive coins on the blockchain. The public key is encoded as a string that is the "address" you give to other people, to receive transactions. The private key is used to sign transactions so you can spend your balance. You can have an arbitrary amount of addresses. All addresses are stored in a wallet on your PC (or smartphone, tablet etc.).
• ANN: Short for announcement thread on Bitcointalk. An announcement thread is a topic in the announcement section of this wonderful forum. The term ANN is also used to refer to the OP.
• Bitcointalk: Currently the largest forum for cryptocurrency-related stuff. https://bitcointalk.org
• Block explorer: A website which provides an easy-to-use interface to browse the blockchain of a project. It displays the balance of addresses that are recorded on the chain, and the transactions that happened between these addresses.
• Block reward: A blockchain is a chain of blocks. The next block has to fulfill certain requirements. Finding the next block is either achieved through mining or staking. If you found the next block, you get a block reward, which is a certain amount of coins, just for you. :)
• CMC: Coinmarketcap, currently the most popular site for comparing cryptocurrencies. https://coinmarketcap.com
• Escrow: An escrow acts as a trusted intermediary between two people who want to make a trade outside of an exchange, so that neither of the two has to "send first", but both send it to the escrow and the escrow forwards it to each person.
• Exchange: An exchange is a site where you can trade Bitcoin against different cryptocurrencies (or more generally, different cryptocurrencies against each other). There are 2 types of exchanges, one that supports buying Bitcoin for fiat (like Euro or USD), and one that does not. Most exchanges do not support buying Bitcoin for fiat, so you have to buy Bitcoin from somewhere else first in order to be able to trade on the site. When you have Bitcoin, you can deposit it to the exchange and buy other cryptocurrencies for it.
• Forging: Also known as "staking", refers to the process of finding blocks in a proof-of-stake (PoS) setup and receiving the block reward. Read more.
• Hodl: Intentional misspelling of "hold", which means to not sell your coins but to keep them.
• ICO: Initial Coin Offering. Similar to an IPO in traditional business, an ICO is the first distribution of shares (coins in the case of cryptocurrencies) to the market. Concretely, the developer generates a certain number of coins within a few seconds, and then sells them to people for real money (usually Bitcoin, Ether etc.). This is usually used to raise funds for consecutive development and to give the currency its actual value.
• OP: The opening post of the announcement thread (ANN), the first post on the first page. In this post, the project is presented.
• Market cap: Short for market capitalization, which is defined as "Circulating supply x Price per coin". The market cap is used to compare the total value of blockchain projects (not the price, because the price depends on the coin supply).
• Mining: Solving difficult cryptographic puzzles in a Proof-of-work (PoW) setup in order to find the next block. The person who found the next block receives the block reward.
• Minting: Has multiple meanings:
  • A synonym for forging.
  • The process used to anonymize coins in certain anonymous cryptocurrencies, and generating anonymous "tokens" from it.
• Moon: Or "to the moon" means that the price will steeply increase.
• Polo: Short for Poloniex, a famous exchange.
• PoS: Proof of stake. In this consensus method, the probability of generating ("forging") the next block depends on the amount of coins someone holds.
• PoW: Proof of work. In this consensus method, the probability of generating ("mining") the next block depends on the speed at which someone calculates block hashes.
• PRE-ANN: Pre-announcement. This kind of thread is usually used to express the intention of the author to start a certain project, and to reserve a certain ticker.
• Premine: If starting a blockchain, you can define the initial balance of certain wallets. So the developer can define himself to have an arbitrary amount of coins prior to publishing the blockchain, either for his own advantage, in order to be able to fund himself (and maybe his team) in the future, or in order to sell these coins during an ICO. If a developer reserves a large amount of coins for himself, that is usually a bad sign.
• sat, satoshi: Used as a currency unit. Originally referring to 1e-8 BTC (0.00000001 Bitcoin, which is the smallest unit Bitcoin offers), sat is nowadays used to denominate 1e-8 of any currency that is the topic of the discussion. 0.00000001 = 1 sat, 0.00000100 = 100 sat etc. If you don't know maths, note that 0.00000100 is the same as 0.000001! What matters is the number of zeros before the final number (5 in this case).
• Satoshi Nakamoto: The alias of the dude who invented Bitcoin.
• Staking: The process of having the wallet of a PoS coin open in order to forge blocks and receive rewards.
• Supply: There are two kinds of coin supply:
  • Circulating supply: The number of coins in existence right now
  • Max supply: The maximum number of coins that will ever exist
• Ticker: This is a short character sequence, often embraced in squared brackets, like this: [BTC]. The ticker is a short handle for the cryptocurrency, e.g. BTC = Bitcoin, LTC = Litecoin etc. that is used on exchanges.
• Trex: Short for Bittrex, another famous exchange.
• Wallet: A program that you can use to send and receive money. It contains many addresses.
• Whale: Someone who has significantly more coins than the average market participant.