Money·4 min read

Skimm’tionary: Defining Crypto Words You've Heard

A woman looking at cryptocurrency prices on a laptop
Design: theSkimm | Photo: iStock
August 4, 2022

Crypto has taken group chats and the entire money world  by storm. So it's time to learn the lingo. We Skimm’d some key cryptocurrency terms you need to know to make sense of it all.

Altcoin: Any of the (thousands of) cryptocurrencies that aren’t Bitcoin. A couple examples: Dogecoin (more on that below) and Litecoin. 

Bitcoin: The OG. It was launched in 2009 by a person (or group of people?) under the pseudonym “Satoshi Nakamoto.” Very mysterious. Today there are thousands of cryptocurrencies, but Bitcoin is still the MVC (most valuable coin).

Blockchain: A (mostly) hacker-proof digital ledger. Bitcoin and other cryptocurrencies use the tech to publicly track transactions on a network of computers.

Cryptocurrency: Digital money that’s decentralized  aka not backed by the gov or other authority and uses cryptography to keep it secure. Kind of like virtual casino chips you can cash out. Or invest in. Or spend at certain retailers.

Crypto Exchange: Virtual marketplaces where you can buy and sell cryptocurrencies. Ones you might've heard of: Coinbase, Binance, Gemini.

Crypto Wallet: Where you can safely store your public and private crypto keys needed to trade and spend crypto. Some like 'em hot (as in, connected to the web, making them easier to access). But cold wallets (read: physical ones that exist offline) are long as you don't lose them.

Decentralized Finance: DeFi, for short, it's a system where financial transactions are handled directly on the blockchain, rather than through a bank or financial institution as a middleman.

Dogecoin: Based on the classic “Doge” meme, Dogecoin launched in 2013 as a joke. Then gained real momentum after some big names like Elon Musk and Mark Cuban started saying, 'So wow, much value.'

Ether: Everyone's second-favorite cryptocurrency (according to market cap). It runs on the blockchain network known as Ethereum and is a popular way to buy NFTs. Hint: non-fungible tokens represent ownership of unique digital assets like art, music, and real estate.

Fiat currency: Not related to the car manufacturer. Unlike cryptocurrency, this money has value because it's gov-issued. It's not backed by a commodity like silver or gold. Think: US dollars, euros, pesos, etc. 

Mining: How you get “free” currency by generating new coins and helping keep up the blockchain. It’s not rocket science, but it does take an extremely sophisticated computer that solves complex math problems. Psst...this consumes a lot of energy, which has raised environmental concerns. 

Privacy Coins: Extra-secretive cryptocurrencies like Zcash and Monero. They obscure info on the blockchain, making it impossible for any parties outside of the transaction to see details. That might make them particularly appealing for criminal activity — and heightened scrutiny. 

Private Key: A *very* important secret code that comes with a matching public key. (You need both to access your crypto.) Do. Not. Lose. It. Once it’s gone, knowing the street you grew up on (or other security Qs) won't get it back. So store it somewhere safe.

Satoshis: Named after Satoshi Nakamoto, the pseudonymous creator of Bitcoin, a satoshi is the smallest unit of a Bitcoin. Think: a penny to a dollar.

Smart contracts:Like a regular contract, it’s an agreement between two parties. But instead of a person making the contract happen, it’s code. Kind of like a vending machine. In the crypto world, these contracts are used for a number of purposes, including keeping stablecoins pegged to a certain value like the US dollar.

Stablecoins: The crypto old-school investors might prefer. Because they peg their prices to other assets like gold or the US dollar. Meaning they’re less likely to experience sharp price swings, but still have the privacy and security of a cryptocurrency.

Zero-knowledge proof: Aka ZKP, is a type of cryptography that allows one person (the prover) to convey to another (the verifier) that a piece of information is true without revealing exactly what that info is.

Updated Dec 15 to add satoshis and zero-knowledge proof.

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