8 min read

Regardless of whether you have been trading for years or have just started trading, from time to time you will most likely come across phrases or terms that you are not yet familiar with. When it comes to cryptocurrency, there is a wide range of jargon and technical terms that you could learn by looking at the offers of other traders or starting to create your own.

Altcoin

Since bitcoin was the first major cryptocurrency to become popular, all other cryptocurrency projects are usually called altcoins.

Block Explorer

If you are looking for an Ethereum or ERC-20 transaction using TXID, you can easily find it using Etherscan. If it is a Bitcoin transaction, you can detect it using a Bitcoin network explorer such as Blockchain, which also supports a number of other cryptocurrencies.

Centralized Exchange

Sometimes referred to by the abbreviation CEX or CEXs (plural), this type of exchange platform, as a rule, operates entirely on storage conditions and uses hot and cold wallets for depositing and withdrawing funds by users. Most large order-book exchanges are fully centralized.

Chargeback

The term "chargeback" is important to understand when working with more risky payment methods that require additional caution, such as PayPal. The risk of a chargeback occurs only when you are on the sale side of the transaction. Payment methods with a higher margin are sometimes a sign of the risk of a refund.

Custodial

Wallets or exchanges that are considered custodians control your funds when using the platform or wallet. Some old P2P exchanges are completely custodial, while new exchanges, such as LocalCoinSwap, are moving further away from this model, offering non-storage trading opportunities on the platform.

Double Spending

When the cryptocurrency is not confirmed or confirmed only a minimum number of times, you risk doubling the costs when the transaction can be performed twice. This is one of the reasons that unconfirmed or one-time confirmation transactions are rarely accepted on the bitcoin network (or almost any blockchain). As confirmations increase, the transaction's security and immutability are typically increased, especially when dealing with something with a large established network like bitcoin (BTC).

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Escrow

In P2P trading, the part of the process that ensures that both parties fulfill their part of the transaction is called escrow. Usually, the cryptocurrency is placed in escrow until the buyer either confirms that he has successfully received the payment, or a dispute arises, and the moderator does not intervene to transfer the cryptocurrency to the legitimate party.

Fiat

A term that is commonly used in the crypto space, but which you may not have heard before if you are a relatively newbie, is fiat. Fiat simply refers to cash or legal tender in your (or another) region. For example, you may hear a cryptocurrency enthusiast refer to the fact that they do not like accepting fiat as payment and instead prefer crypto.

Gas

For users who are new to ethereum transactions, this is a common cause of confusion, but you can easily remember once you know what it means. Gas is the "fuel" used to perform a transaction on the ethereum network. This can be sending ETH to someone else or interacting with a smart contract. All these things require gas, which is paid for using ethereum.

Gas limit

Like gas, therefore, we are usually talking about ethereum transactions, and in terms of gas limits, this is the maximum amount that you are willing to spend on a transaction. When performing different types of transactions, you may need a higher gas limit for successful TX execution.

Gas Price

When performing an ethereum transaction, another term that you will encounter related to gas is the gas price. This is measured in Gwei, that is, in the amount of Ether/ETH that you are willing to pay for each required unit of gas. A higher gas price often determines how quickly your transactions with ethereum or tokens are confirmed.

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Liquidity

When it comes to liquidity, this indicator helps to determine how many cryptocurrencies can be bought or sold without having a significant impact on the market price of a digital asset. If you bought a coin with low liquidity, you may find that even a small buy or sell order can significantly affect the current market price on the exchange you use. Liquidity is most important to consider when using order book or DEX exchanges such as Uniswap, rather than P2P exchanges such as LocalCoinSwap.

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MFA/2FA

Multi-factor authentication (MFA) and 2-factor authentication (2FA) refer to the use of additional security features in your accounts. This is a great measure for any of your important accounts to enable MFA or 2FA, if they are supported. Common forms of additional authentication methods may include checking email, SMS codes, or using authentication applications such as Authy or Google Authenticator to generate a one-time password (OTP).

Non-Custodial

The opposite of custodial wallets or exchanges. Non-custodial wallets and exchanges leave you with far more control over your cryptocurrency. Trading in a non-custodial way reduces your exposure to platform risk and ensures you have as much control of your crypto as possible.

Oracle

Oracle is a term that you hear more and more often in the crypto space. The purpose of the blockchain oracle is to connect information or data sources from objects external to the blockchains.

Over the Counter

Most often, this term will be used as an abbreviation of OTC. Over-the-counter trading is a form of exchange that is carried out not using exchanges in the style of an order book, but rather in the P2P mode. The types of OTC exchanges vary, but the main goal, as a rule, is for large traders to buy and sell in large volumes, without worrying about available liquidity and price slippage with large order sizes.

Private Key

The private key is used to sign transactions with cryptocurrency. It is important to never share your private keys with anyone, since anyone who has them can sign transactions on your behalf. A secure and reliable backup of your private keys is incredibly important.

Public key

When you request a cryptocurrency from someone, you often provide them with your public key. However, during the P2P exchange, this is not necessary, since this is processed by the platform, since the funds are deposited into escrow, and not directly into the buyer's wallet. Public keys can be safely used together, but remember that the recipient is provided with information about who owns a particular wallet, so keep this in mind when transferring a certain public key. A public address is similar to a public key, except that this version is the hashed equivalent of a public key that you can use to request and receive payments to your wallet.

A few words about the ZenGo wallet.

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The ZenGo wallet does not have a private key. Instead, the responsibility for signing blockchain transactions is shared between ZenGo and the user, so that neither side sees the secret information of the other. 

This means that you will never have to worry about managing private keys again. This makes ZenGo the simplest and most secure wallet for bitcoins and cryptocurrencies, which is trusted by customers. With a ZenGo keyless wallet, you can buy Bitcoin, Ethereum and many other assets; earn interest, manage and track your crypto portfolio safely and easily. Zengo supports payments via credit card, Apple Pay, Google Play, Samsung Pay and bank transfers.

QR code

Perhaps made more popular by cryptocurrency, these square labels, similar to a barcode, are machine-readable addresses. They are often used to exchange wallet addresses, which can be scanned by many popular mobile wallets to ensure fast transactions without manually copying the address.

Tokens

When referring to tokens, you will generally be talking about a digital asset that leverages another primary blockchain to operate. The most common example of this you are likely to come across is in the form of ERC-20 tokens on the ethereum blockchain. Some tokens on Ethereum that are popular include Tether (USDT), USD Coin (USDC), and Dai Stablecoin (DAI).

Trading Pair

Currency pairs are common not only in cryptocurrency, but also in traditional financial markets. Just as you could see the Australian dollar trading pair against the US dollar (AUD/USD), you can find the Ethereum trading pair against Bitcoin (ETH/BTC); these are trading pairs. When it comes to cryptocurrency, you will see cryptocurrency paired with other cryptocurrencies, but also with a fiat pair such as BTC/USD.

Transaction ID

Commonly called a TXID for short, a transaction ID is an identifier for a specific on-chain transaction. For example, you could provide a TXID of a bitcoin or ethereum transaction to show that the transaction has occurred on the network. Commonly a TXID is useful when showing someone that you have indeed sent crypto while waiting for a confirmation or receiving help from the support team of a P2P exchange if you have an issue with a specific transaction.

Unconfirmed

Usually in relation to a transaction (TX) that has not been confirmed in the blockchain. If you have just sent a transaction that has not yet been confirmed, you can simply call it an unconfirmed transaction.

Volume

This term refers to the amount of cryptocurrency traded. Volume is a good indicator of liquidity, so if the volume is large, you will often find sufficient liquidity in the same place.

Vendor

A vendor is a trader who creates trading offers for buying or selling cryptocurrency on a P2P exchange. As a rule, these are traders who do this with relative consistency, unlike a regular trader.

Wei

The smallest dimension of the ether is called Wei. It is used to help when working with tiny amounts of Ether to avoid huge numbers with excessive leading zeros.


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