Hong's Payback Glossary of Coin Terms
Hello! This is Hong’s Payback, the transparent and convenient payback platform!
Hong’s Payback official website: https://hongs.io
Hong’s Payback will help you easily understand difficult and unfamiliar coin terms. If there are too many terms to go through, use the shortcut Ctrl+F to find the information you need!
1. Coin-Related Terms
On-chain:
A blockchain term referring to all transactions or activities that take place directly on the blockchain network.
On-chain transactions are transparently recorded for all participants in the blockchain and verified by the decentralized network.
The opposite concept is “off-chain,” which refers to transactions that occur outside the blockchain.
Altcoin:
A term derived from “alternative coin,” encompassing all cryptocurrencies other than Bitcoin.
Scamcoin:
Refers to fraudulent cryptocurrencies created to deceive investors.
Stablecoin:
Cryptocurrencies designed to maintain a relatively stable value by being pegged to a specific asset (usually the US dollar) or a basket of assets,
unlike typical volatile cryptocurrencies. Examples include Tether (USDT), USD Coin (USDC), and Dai (DAI).
Pegging:
The process of fixing the value of one asset to another asset’s value.
This is often used in cryptocurrencies, foreign exchange, and financial markets to maintain price stability.
A representative example of pegging is stablecoins.
Coupling / Decoupling:
Coupling refers to the situation where two assets or markets tend to move in the same direction,
meaning the price movement of one asset is closely related to the price movement of another.
Decoupling refers to the situation where two assets or markets tend to move in opposite directions,
meaning the price movement of one asset is not related to or moves opposite to the price movement of another.
Memecoin:
Cryptocurrencies inspired by internet memes. Notable examples include Dogecoin and Shiba Inu.
Initially created as jokes, these coins have gained significant market value due to community support and interest.
Darkcoin:
Cryptocurrencies that prioritize transaction anonymity and privacy, making it difficult to trace users and transaction histories.
Examples include Monero, Zcash, and Darkcoin (later rebranded as Dash).
Kimchi Coin:
Refers to cryptocurrencies developed in Korea or popular in the Korean market, usually involving high participation from Korean investors.
Examples include Klaytn, ICON, and Terra.
ICO (Initial Coin Offering):
A method used by blockchain projects to raise funds by selling new cryptocurrencies or tokens to investors,
similar to an IPO (Initial Public Offering) in the stock market.
White Paper:
An official document explaining a blockchain project’s concept, goals, technical details, roadmap, and economic model.
It aims to convey the project’s value and vision to investors, developers, and users, building trust.
Governance Token:
Cryptocurrencies that grant holders the right to participate in decision-making processes within a blockchain project
or decentralized autonomous organization (DAO). Examples include Maker (MKR), Compound (COMP), and Uniswap (UNI).
Airdrop:
The distribution of free cryptocurrencies by a blockchain project or company to promote engagement, user participation, or as a reward.
Snapshot:
The recording of the blockchain state at a specific point in time, including the balance of cryptocurrencies held by each address and other related data.
DAO (Decentralized Autonomous Organization):
An organization operated through smart contracts without central authority,
enabling self-governance and collaboration among members towards common goals, primarily using blockchain technology.
DeFi (Decentralized Finance):
A concept aiming to decentralize traditional financial systems using blockchain technology,
providing users with more freedom and control over financial services without intermediaries.
P2P (Peer to Peer):
A method of transaction directly between two individuals without a centralized institution or intermediary,
widely used in cryptocurrency transactions and decentralized finance (DeFi) ecosystems.
Proof of Work (PoW) / Proof of Stake (PoS):
PoW is a consensus algorithm where miners solve complex mathematical problems to create new blocks,
ensuring network security and integrity. PoS is another consensus algorithm where block creators are selected based on their cryptocurrency holdings.
Cold Wallet / Hot Wallet:
A cold wallet stores cryptocurrencies offline, providing high security, mainly for long-term storage or large assets.
A hot wallet stores cryptocurrencies online, offering easy access and convenience, mainly for daily transactions or small assets.
Hash Rate:
A measure of the network’s processing power and security, indicating the number of hash calculations performed per second in cryptocurrency mining.
Higher hash rates imply stronger network security and resistance to attacks.
Smart Contract:
A program based on blockchain technology that automatically executes transactions and agreements when predefined conditions are met,
enabling trustless and intermediary-free contracts in various applications.
Hard Fork:
A fundamental protocol change in a blockchain network that creates a new blockchain incompatible with the old one,
resulting in two separate chains. Hard forks can be used for various purposes such as improving functionality, enhancing security, fixing bugs, or introducing new features.
Layer 1 / Layer 2:
Layer 1 refers to improving the base blockchain protocol to enhance scalability, involving changes to the blockchain’s core structure and operation.
Layer 2 involves external protocols operating outside the base blockchain to improve scalability, reducing the main chain’s load and improving transaction speed and costs.
Web3:
A concept and technology aimed at building a decentralized internet, using blockchain and smart contracts to provide users with more control and privacy,
enabling direct interactions without intermediaries, contrasting with the centralized Web2.0.
2. Spot Coin Terms
Seed:
Refers to the investment amount.
Buy / Sell:
Buying refers to purchasing a specific cryptocurrency, while selling refers to selling a specific cryptocurrency.
Average Price:
The price calculated by averaging the purchase prices of a specific asset bought multiple times, important for portfolio management and investment performance evaluation.
Wallet:
A software or hardware device used to store, manage, and transfer cryptocurrencies.
Market Capitalization:
A measure of the total market value of a cryptocurrency, similar to the total value of stocks in the stock market,
indicating the overall value of a specific cryptocurrency.
Centralized Exchange (CEX) / Decentralized Exchange (DEX):
A CEX is an exchange operated by a central authority, where users deposit their assets and conduct transactions.
Examples include Binance and Upbit.
A DEX conducts transactions without a central authority, using smart contracts for direct transactions on the blockchain. Examples include Uniswap and SushiSwap.
Candlesticks:
Elements of a candlestick chart used in financial markets to visually represent price movements of stocks or cryptocurrencies over a specific period,
each candlestick indicating price changes within that period.
Bullish / Bearish Candles:
A bullish candle indicates a price increase within a specific period, typically shown in green or white.
A bearish candle indicates a price decrease within a specific period, typically shown in red or black.
Bear Market / Bull Market:
A bear market refers to a market condition where asset prices are continuously falling.
The term originates from a bear’s attack style, swiping its claws downward. In a bear market, investors are pessimistic, and selling pressure increases due to price decline concerns.
A bull market refers to a market condition where asset prices are continuously rising.
The term originates from a bull’s attack style, lifting its horns upward. In a bull market, investors are optimistic, and buying pressure increases due to price rise expectations.
FUD (Fear, Uncertainty, and Doubt):
Refers to intentionally spreading negative information or rumors to manipulate investor emotions
and cause price fluctuations in the cryptocurrency market or other financial markets.
Panic Sell:
Refers to investors rapidly selling assets due to fear or anxiety in the market, causing a sharp price decline,
applicable to various financial markets including stocks, cryptocurrencies, and forex.
FOMO (Fear of Missing Out):
A fear of missing opportunities, often leading to irrational investment decisions due to anxiety about missing out on significant opportunities,
particularly common in the cryptocurrency market.
Whale:
An individual or institution holding a large amount of cryptocurrency, having significant market influence due to their substantial assets.
Lock-Up:
A period during which cryptocurrencies cannot be sold or traded, used to maintain market stability and reduce price volatility
by preventing project teams, early investors, advisors, and developers from releasing tokens into the market.
Pending:
Indicates that a transaction is not yet completed, meaning the transaction has been propagated on the blockchain network but not yet verified and confirmed.
Staking:
The process of locking and holding cryptocurrencies for a certain period to participate in the operation of a blockchain network,
contributing to its security and operation in exchange for rewards.
Buy Back:
Refers to a project team or company repurchasing their tokens from the market.
Burning:
The process of permanently removing a certain amount of cryptocurrency, making it unusable,
typically used to reduce the total supply and increase token scarcity, aiming to increase long-term value.
Gas / Gas Fee:
A fee paid to process transactions or execute smart contracts on a blockchain network, commonly used in the Ethereum network and other blockchain platforms.
Delisting:
The removal of a specific cryptocurrency from a trading platform, meaning the cryptocurrency can no longer be bought or sold on that platform.
Profit Taking / Stop Loss:
Profit taking refers to selling held cryptocurrency to realize gains,
while stop loss refers to selling held cryptocurrency to prevent further losses when the price drops to a certain level.
Averaging Down / Averaging Up:
A strategy to lower the average purchase price by buying more when prices drop
/ A strategy to raise the average purchase price by buying more when prices rise.
Kimchi Premium / Reverse Kimchi Premium:
Kimchi Premium refers to the phenomenon where the price of cryptocurrency on Korean exchanges is higher than on foreign exchanges.
This usually occurs due to increased demand and capital inflow in the Korean market.
Reverse Kimchi Premium refers to the phenomenon where the price of cryptocurrency on Korean exchanges is lower than on foreign exchanges.
This typically happens due to decreased demand and capital outflow in the Korean market.
Arbitrage:
Arbitrage refers to the strategy of buying a cryptocurrency on an exchange where it is cheaper and selling it on another exchange where it is more expensive,
to earn a profit from the price difference.
This strategy aims to exploit market inefficiencies to generate profit with little or no risk.
3. Futures Coin Terms
KYC (Know Your Customer):
This refers to the process of identifying and verifying the identity of customers.
It is important for Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) purposes,
and it is an essential procedure for financial service providers, especially cryptocurrency exchanges.
UID:
“User ID” or “Unique Identifier,” refers to the unique number assigned to a user on an exchange.
Spot / Futures:
In cryptocurrency, “Spot” refers to the immediate purchase or sale of an asset, while “Futures” refers to contracts that agree to buy or sell an asset at a future date at a predetermined price.
Isolated Margin / Cross Margin:
Isolated Margin refers to assets that are allocated to a specific position.
The loss of an individual position is limited to the assets allocated to that position and does not affect the other assets in the account.
Cross Margin refers to a method where all assets in an account are shared and used across all positions. If one position incurs a loss, other assets in the account can be used to cover the loss.
Stop Loss / Take Profit:
Stop Loss is a type of order used to limit losses at a certain price level. If the asset price reaches the pre-set loss level, the position is automatically closed to prevent further losses.
Take Profit is a type of order used to secure profits at a certain price level. When the asset price reaches the pre-set profit level, the position is automatically closed to secure the desired profit.
Maker / Taker:
A Maker is a trader who provides liquidity to the market by submitting orders.
Maker orders do not get filled immediately but are added to the order book and wait until another trader fills them. Maker orders are usually Limit Orders.
A Taker is a trader who consumes liquidity by filling existing orders in the market immediately. Taker orders are usually Market Orders or Limit Orders that are immediately executed.
Leverage:
Leverage allows an investor to trade with an amount larger than their own capital.
For example, 10x leverage means the investor can trade an amount 10 times larger than their own capital.
Margin:
Margin, often used interchangeably with “collateral,” refers to the minimum capital required to maintain a position when trading with leverage.
By using margin, investors can trade larger amounts than their own capital. This can maximize potential profits but also significantly increase potential losses.
Hedging:
Hedging is a strategy used to reduce risk associated with price fluctuations of an asset.
Copy Trading:
Copy Trading is an investment method where investors automatically replicate the trading strategies of successful traders to achieve similar results.
This allows investors to follow expert strategies without making their own trading decisions.
Bot Trading / Algorithmic Trading:
This is the use of computer programs to automatically trade financial assets.
These programs, or trading bots, analyze market data based on predefined rules and algorithms and execute trades when specific conditions are met.
Bot trading is widely used in various financial markets, including stocks, forex, and cryptocurrencies.
Long / Short:
“Long” and “Short” refer to strategies where an investor bets on the price of an asset rising (Long) or falling (Short).
Funding Fee:
A funding fee is an amount periodically exchanged between traders to align the price of a futures contract with the spot price.
Funding fees are mainly used in perpetual futures contracts and help prevent the futures price from deviating significantly from the spot price.
Delivery:
Delivery refers to the process of actual asset exchange at the expiration of a futures or options contract.
This means that the actual cryptocurrency is delivered to the buyer at the end of the contract period.
However, most cryptocurrency exchanges typically settle contracts in cash rather than through actual delivery of the asset.
Margin Call:
A Margin Call occurs when the balance in an investor’s account falls below the maintenance margin requirement during leveraged margin trading.
This situation prompts the exchange to require the investor to deposit additional funds or liquidate their positions.
Margin calls usually happen when losses in the trade cause the account balance to drop below a certain level.
4. NFT Terms
NFT (Non-Fungible Token):
An NFT is a digital asset based on blockchain technology, characterized by its unique identification information, which makes it non-interchangeable with other tokens.
This means each NFT is one-of-a-kind and is commonly used to represent ownership of digital content such as digital art, collectibles, game items, music, videos, and more.
Minting:
Minting refers to the process of creating new tokens or coins and recording them on the blockchain to be issued.
This process is typically used when digital assets are first created and made public.
NFT minting is the process of creating a unique digital asset, where each NFT has unique identification information that makes it non-exchangeable with other NFTs.
It is commonly used to represent ownership of digital content like digital art, collectibles, game items, music, videos, and more.
P2E (Play-To-Earn):
P2E refers to a gaming model where players can earn digital assets like cryptocurrencies or NFTs by playing the game.
P2E games utilize blockchain technology to allow players to generate economic value through their in-game activities.
Whitelist:
A whitelist is a list of individuals who are allowed to participate in a specific event or sale.
It is commonly used in NFT projects, Initial Coin Offerings (ICOs), token sales, and similar events. Only those included in the whitelist can receive certain benefits.