Crypto Critic’s Trading Bible (Edit · Coins vs. Tokens The line between coins and tokens is...

Crypto Critic’s Trading Bible (Edition 1.0)

Table of contents

Introduction ............................................................................................................................................................................................... 1

Exchanges .................................................................................................................................................................................................. 1

Risk ............................................................................................................................................................................................................. 2

Regulations ................................................................................................................................................................................................ 2

Trading Time .............................................................................................................................................................................................. 2

Stablecoins ................................................................................................................................................................................................. 2

Moving Funds ............................................................................................................................................................................................. 3

Exchange Pre-Registration ......................................................................................................................................................................... 4

Coins vs. Tokens ......................................................................................................................................................................................... 4

Wallets ....................................................................................................................................................................................................... 5

Shorting & Margin Trading ......................................................................................................................................................................... 5

Coin Ranking Sites ...................................................................................................................................................................................... 5

Fundamental vs. Technical Analysis ........................................................................................................................................................... 5

Charting & Analysis Platforms .................................................................................................................................................................... 6

Mining ........................................................................................................................................................................................................ 6

ICOs ............................................................................................................................................................................................................ 6

Commissions .............................................................................................................................................................................................. 6

Spreads ...................................................................................................................................................................................................... 6

Forks ........................................................................................................................................................................................................... 7

Holding Base Pairs ...................................................................................................................................................................................... 7

Market Correlation .................................................................................................................................................................................... 7

Transfer Fees .............................................................................................................................................................................................. 7

Derivatives ................................................................................................................................................................................................. 7

Arbitraging ................................................................................................................................................................................................. 7

Hedging ...................................................................................................................................................................................................... 8

Test Runs .................................................................................................................................................................................................... 8

Performance Journal .................................................................................................................................................................................. 8

Crypto Glossary .......................................................................................................................................................................................... 9

About the author ..................................................................................................................................................................................... 17


www.cryptocritic.com - Page 1 of 17 -

Introduction With the recent global explosion of crypto, many investors are now familiar with the basics. However, most lack an in-

depth understanding of how to navigate through a complete crypto investment cycle. This e-book is designed to provide

investors with such a framework.

We wrote this e-book to be a guide with an institutional-grade approach that is typically utilized by banks, mutual funds,

hedge funds, funds of funds, CTAs (Commodity Trading Advisors), CPOs (Commodity Pool Operators) and other financial

institutions and not readily available to individuals. It is based on our own trading experience over the past 24 years but

applied specifically at the crypto market.

Presently, there are over 2,200 coins/tokens traded worldwide in multiple pairs. Choosing the right situation from such a

vast number of tradable instruments could be a daunting task. However, by breaking the investment cycle into small

digestible tasks, we hope to arm you with all the knowledge to make the right decisions. There is a myriad of approaches

to trading crypto. This e-book is about the approach that works best for us.

This e-book was written to be an easy read. However, we assume that you have the basic understanding of crypto and

trading in general. Even though we tried to pack this e-book with specific directions, for the most part, we only

scratched the surface. The intricate relationships between varieties of crypto entities are far more complex than

portrayed in this e-book. Furthermore, the crypto market is constantly changing and evolving. We urge you to do

continuous research for an in-depth understanding.

Exchanges Currently, there are over 200 crypto exchanges in the world. There are several exchange categories, but we will

concentrate on two important ones: the fiat onramp exchanges and altcoin exchanges.

Most fiat onramps (e.g. Coinbase) are regulated via KYC (Know Your Customer) and AML (Anti Money Laundering)

guidelines (relatively safe to trade). The altcoin exchanges (e.g. KuCoin) are typically unregulated. Many are domiciled

offshore (e.g. BVI or Malta). Most of them don’t accept fiat and investors must use BTC or ETH to trade. The altcoin

exchanges must be scrutinized for safety. For trading interactions between the two types of exchanges, see Moving

Funds below.

When picking an altcoin exchange, these are the first things we look at:

1. Is the exchange reputable (hacks, scandals, compliance)?

2. Does it accept clients from my country?

3. Does it provide sufficient volume?

If any of the items above do not meet our criteria, we would look for an alternative exchange or move on to another

investment altogether.

If you have doubts about an altcoin exchange, but still want to do a play, you should transfer tokens to an off-exchange

wallet (like MyEtherWallet) for extra security in-between plays (see Moving Funds below).

Interpretation: Do your due diligence before opening an account on a new exchange. Keep your funds as safe as possible

at all times (even short term).

http://www.cryptocritic.com/



Risk The crypto market has always displayed a high degree of volatility. For many coins, it is not uncommon to see daily

moves of 20% or higher in either direction. Currently, there are no other markets that display such degree of volatility on

a consistent basis.

Due to the violent nature of this market, we highly recommend not to hold any coins for a prolonged period. It is better

to come in and out within a short (typically one to six weeks) timeframe. Internally, we call these short-term, goal-

oriented investments plays.

Interpretation: Simply holding crypto investments or bags for a long time creates unsuitable risk for the vast majority of

investors.

Regulations Crypto regulations vary from country to country. As of now, crypto legal status has not been established, so there are no

sustainable regulation policies. Some countries restrict or prohibit crypto trading altogether (e.g. Algeria, Bolivia). Some

countries allow crypto trading, but only to institutions (e.g. China). And, some countries fully allow and tax crypto

trading (e.g. Israel). Most financial authorities recognize cryptos as an asset and not as a currency.

Interpretation: Always make sure you comply with your local crypto regulations.

Trading Time The trading time window for crypto is full 24 hours a day, seven days a week - since trading occurs on hundreds of

exchanges worldwide. Such non-stop trading cycle presents more opportunities than stock/futures/options markets

(most are around 6.5 hours/day, five days/week) or FX market (24 hours/day, six days/week). It also means that

fundamental events could affect the market at any time (e.g. overnight or over the weekend).

Interpretation: Since no one can monitor his/her portfolio 24/7 - certain portfolio management mechanisms must be set

in place. These mechanisms could range from simple mobile alerts to limit/stop loss orders pre-set at the exchange.

Stablecoins Stablecoins are coins that are pegged to fiat currency (e.g. US dollar) one-to-one. Today, there are a few choices

available:

Tether (USDT)

TrueUSD (TUSD)

Gemini Dollar (GUSD)

Paxos Standard (PAX)

USD Coin (USDC)

The first and most popular stablecoin (by far) is Tether. However, the new stablecoins are slowly gaining ground.

Stablecoins are a great way to keep your crypto funds away from high volatility. However, keeping funds in stablecoins

adds some risk – as they are backed by private companies (instead of fiat on a reputable exchange or bank).

Interpretation: It is too costly to move crypto into fiat and back in-between plays (see Moving Funds). Stablecoins

provide a great alternative but add marginal risk.




Moving Funds There are quite a few strategies to get the money in, out and about in the crypto market. However, we utilize a specific

five-step crypto investment cycle, which works best for us:

The first step is to bring fiat into the crypto market initially. It is also utilized for every subsequent fiat addition. The funds should be generally safe at an onramp exchange for an indefinite time.

In preparation for a play, BTC/ETH should be purchased on the onramp exchange and then sent to the altcoin exchange, where it should be converted to USDT (if available). This step should be done right before the play (preferably within 24 hours), to minimize exposure to the altcoin exchange & BTC/ETH.

At the altcoin exchange, USDT should be converted to the altcoin in play. If the USDT/altcoin pair is not available, then BTC/ETH should be purchased first. Upon the conclusion of a play, a reverse conversion should take place.

In-between plays, we prefer to keep our funds in USDT. While that carries some risk, converting it into fiat every time is pricey. Optionally, when you have money parked in USDT on an altcoin exchange, you can temporarily transfer it away from the exchange into a tether wallet for extra security.

The withdrawal steps are similar to the first two steps (Funding & Additions and Pre-Play), but in reverse.




The fees associated with moving funds around are primarily negligible, except when converting fiat into BTC/ETH and

vice versa on the onramp exchanges (see Transfer Fees).

Interpretation: Moving funds around in crypto seems daunting at first, but it is not that complicated once you get the

hang of it.

Exchange Pre-Registration It is a good idea to be pre-registered and pre-verified with a variety of top exchanges. As of today, we would start with

these (assuming they accept clients from your jurisdiction):

Exchange Name Location # of Tokens Traded Accepts Fiat Short Selling Margin Trading

Coinbase USA 4 Yes No No

Binance Asia 130+ No No No

OKEx Hong Kong 140+ Yes Yes Yes

Huobi Asia, USA 240+ Yes Yes Yes

Bitfinex Hong Kong 70+ Yes Yes Yes

KuCoin Hong Kong 70+ No No No

Bithumb South Korea 30+ Yes No No

UPbit South Korea 140+ Yes No No

HitBTC Hong Kong 20+ No Yes Yes

BitMEX Hong Kong 1 (BTC) No Yes Yes

Kraken USA 15+ Yes Yes Yes

Many exchanges require to verify your account before allowing you to trade/withdraw funds. This step is designed to

ensure that the exchange meets its AML (Anti-Money Laundering) and CTF (Counter-Terrorism Financing) obligations.

Verification requirements vary between exchanges, but most will ask you to provide:

Your Name

Your Email Address / Phone number

Your Address

Proof of ID

Proof of Address

A Photo of Yourself Holding a Signed Declaration

Even though it is time-consuming, once you are registered and verified you will be able to quickly move funds (BTC, ETH,

USDT, etc.) to the necessary exchange for a specific play.

Interpretation: Check all major changes to see if they accept clients from your jurisdiction. Then get pre-registered and

pre-verified to avoid costly delays.

Coins vs. Tokens The line between coins and tokens is blurry, as both are being used interchangeably. However, technically there are

several distinct differences:

1. Coins have their own blockchain. Good examples are Bitcoin, Litecoin, and Peercoin. Tokens typically require

another blockchain platform (e.g. Ethereum or Omni) to operate.

2. Coins are typically used to move funds around, while tokens are used as utility units.

3. Coins are usually initially distributed via mining (see Mining), while tokens are initially distributed via Initial Coin

Offerings (see ICOs).

Interpretation: Knowing the difference between the two is important because you should be crystal clear on what you

are trading.




Wallets A crypto wallet is a software application that stores private/public keys and interacts with one or more blockchains. It

enables users to send/receive/monitor their cryptos. Unlike traditional wallets, crypto wallets don’t store coins/tokens.

In fact, coins/tokens don’t get stored in any single location or exist anywhere in the physical form. All that exists are

records of transactions stored on the blockchain.

There are several types of wallets to store and access your cryptos:

Software Wallets

a. Desktop Wallets are downloaded and installed directly on your PC (only accessible from that single computer)

b. Mobile Wallets run on an app on your phone. They are useful because they can be used anywhere including retail stores

c. Online Wallets run on the cloud and are accessible from any computing device in any location

Hardware Wallets - store user private keys on a hardware device like a USB. Even though hardware wallets make transactions online,

they are stored offline for additional security

Paper Wallets - typically refer to the printout of your public and private keys. They are easy to use and provide a very high level of

security

Interpretation: Make sure that you keep your crypto in the most secure wallets, even if you sacrifice some of the

convenience.

Shorting & Margin Trading Shorting (selling short) and margin trading (using leverage) are only available on certain exchanges in crypto, unlike for

most other asset classes (e.g. stocks, futures, options, and FX). The exchanges (e.g. BitMEX) that do allow

shorting/margin trading do not accept traders from all jurisdictions (e.g. US).

Interpretation: For all intents and purposes, your plays should be mostly geared towards token price appreciation, which

is particularly challenging in bear markets.

Coin Ranking Sites There are many coin ranking sites that rate the majority of coins/tokens regarding their market cap, traded volume,

gainers/losers, dominance, etc. Some of our favorites are:

CoinMarketCap Coinranking CryptoSlate CryptoCoinRanking CryptoCompare

CoinGecko OnChainFx CoinCheckup Nomics CoinCall

These sites are quite useful when analyzing market trends, investor sentiment, and other important market factors.

Moreover, when a new token gets listed on one or more of these ranking sites, its visibility and popularity increase.

Interpretation: Pick one or two ranking sites and check them periodically to see what is happening in the market.

Fundamental vs. Technical Analysis After decades of trading and thousands of experiments, we have concluded that the fundamental (specifically event-

driven) analysis is far superior to technical analysis. The lion share of our plays is based on deep fundamental research.

However, technical analysis is still very useful for choosing the precise entry/exit zones. We use several platforms (see

Charting and Analysis Platforms) for the technical analysis.

Interpretation: Use a combination of fundamental and technical analysis to produce the best results.




Charting & Analysis Platforms There are a few solid charting and analysis platforms that accept crypto data feeds. We use such platforms primarily to

fine-tune our entry and exit points. Our favorite ones are:

TradingView

Coinigy

By utilizing these platforms, we can quickly see the overall price action and general support/resistance levels, which is all

that we use to improve our entries and exits (see Entry/Exit Points).

Interpretation: Choose one or two charting platforms to do all your technical analysis.

Mining There are several ways to invest in crypto. One of the ways is via mining. It involves two specific functions - adding

transactions to the blockchain and releasing new currency (via specialized hardware and software). However, mining

requires a lot of computer resources and electricity. While at some points during the last few years it was profitable to

mine certain coins, in today’s market mining cannot compete with intelligent investing.

Interpretation: Currently, coin mining is not profitable enough. Whether it is performed locally or as a part of a pool, the

return on the investment is relatively insignificant.

ICOs Initial Coin Offerings are similar to stock IPOs (Initial Public Offerings). In both cases, initial shares/tokens are allocated

to early investors, as companies raise the capital. However, with ICOs the management often provide various bonuses,

which often leads to selloffs during the first exchange listing.

A recent study revealed that 81% of the ICOs turned out to be scams. Another 6% fell into the failed category, and 5%

had gone dead, taking the total for failure group to 92% percent. Only around 8% went on to the trade on the

designated crypto exchanges. Of these 8% that traded, 4.4% were classified as dwindling, while 1.8% were labeled as

promising and only 1.9% turned out to be successful.

Interpretation: Simply investing in hand-picked ICOs (even with sizable bonuses) is not a profitable trading strategy in

the long term.

Commissions Unlike stock exchanges, most crypto exchanges today do not charge commissions, as they make their fees directly from

spreads (see Spreads).

Interpretation: Commissions are not being charged as of now.

Spreads Spread is the difference between the ask (buy) price and the bid (sell) price. While spreads vary greatly from one crypto

exchange/pair to another, for the most part, the spreads are negligible. Most fall in 0.01% to 0.5% range. While 0.5%

seems high in conventional markets, it is not very significant in crypto due to high market volatility (see Risk). Most

exchanges (including crypto) earn a good portion of their profits through spread padding.

Interpretation: Without high-frequency trading, spreads should not impair your profitability in a significant way.




Forks Crypto forks happen when a coin splits into two versions of itself. There are two major types of forks:

Hard forks represent a permanent divergence from the existing version of a blockchain with nodes on the new blockchain not-interacting

(acknowledging) nodes or transactions on the old blockchain. Hard forks represent a significant change and create a new blockchain with

no transaction compatibility between versions

Soft forks are backward compatible – the old transactions can be recognized by new nodes. Unlike a hard fork, non-upgraded nodes will

still see new transactions as valid

When a crypto forks, you want to be holding the original coins in a wallet (see Wallets) and not an exchange (as most

exchanges do not support forks). When the fork occurs, you will typically get the matching amount of new coins in your

wallet.

Interpretation: It is important to be aware of upcoming forks, as they might affect the existing coin pricing and add new

coins into your portfolio.

Holding Base Pairs Most new/small altcoins are traded only via BTC/ETH (not stablecoins like USDT). In many instances, even if the altcoin is

traded via a stablecoin, the liquidity for that pair is low. Thus, in many cases when purchasing certain tokens, you’re also

holding a base currency by default (which is not the case with stocks, futures/options or FX).

Interpretation: You might have to go through BTC/ETH on entry and exit (see Moving Funds) for plays based on newly

listed and smaller tokens.

Market Correlation Cryptos display no correlation to S&P 500, NASDAQ, Gold, Brent or any other mature market (three-year returns per

asset correlations are under 1% across the board, as of 2018).

Interpretation: By investing in crypto you are diversifying your stock/commodity/FX portfolio to a certain degree, as

other asset classes are moving completely independently of crypto.

Transfer Fees The transfer fees between wallets and the exchanges are typically negligible.

Interpretation: With regular frequency of trading, transfer fees should not impair your profitability.

Derivatives While some exchanges (e.g. Nadex) offer crypto trading via derivatives (futures), currently we recommend trading

directly on crypto changes. The derivative exchanges offer poor availability of altcoins, higher fees, and overall

undesirable trading conditions. There is one exception when derivatives could be utilized - when hedging (see Hedging).

Interpretation: The derivative crypto trading should be utilized only for specific purposes.

Arbitraging Crypto arbitrage is a strategy to take advantage of differences in prices across two or more exchanges. Most crypto

arbitrage variations require sophisticated software set up and carry a high level of risk. They should be utilized only by

sophisticated (institutional) investors, if at all.

Interpretation: Arbitraging requires a serious set-up and should not be your main trading strategy.




Hedging Most of the times, altcoins are traded via base currency (BTC/ETH). To eliminate exposure to a base currency, a hedge

could be constructed. This way, you would simulate an investment in a specific token. It could be accomplished by

opening a counter position on the exchanges that allow shorting of crypto derivatives (e.g. Nadex). For example, if you

hold one BTC worth of altcoin, you would short one BTC worth of futures on the crypto derivatives exchange.

NOTE: This is an advanced technique, so we typically recommended it for sophisticated (institutional) investors with

larger positions.

Interpretation: Even though the crypto market is relatively new, there are ways to minimize your exposure.

Test Runs If you are unsure that you are moving crypto around the right way, you can always try small (e.g. $20) test run - to see if

it works as expected.

Interpretation: Don’t transfer your whole balance to a new exchange/wallet when doing it for the first time.

Performance Journal Since most plays take place on different exchanges, you should keep a journal of your overall performance. Internally,

we use software by Edgewonk. It is easy to use and provides an eagle eye view of our performance.

Interpretation: You should have one centralized dashboard that aggregates your trading across all exchanges and

displays overall progress and stats in a visual manner.




Crypto Glossary

51% Attack

Occurs if more than 50% of the computing power of a crypto network is controlled by a single entity. Such an

entity could issue conflicting transactions to harm the network.

A Address

Used to send/receive transactions on the network. Typically represented by a string of alphanumeric characters.

Airdrop

A marketing campaign related to (typically free) distribution of tokens to a community to build token popularity.

Altcoin Any crypto other than Bitcoin.

AML

An acronym for Anti-Money Laundering.

Arbitrage

Taking advantage of a difference in price of the same coin/token on multiple exchanges.

ASIC

Short for Application Specific Integrated Circuit. Often compared to GPUs, ASICs are specially made for coin

mining.

Atomic Swap

A way of letting traders directly and cost-effectively exchange one crypto for another (without actually buying or

selling).

B Bag

A large quantity of certain crypto.

Bagholder

Someone who is holding a large quantity of certain crypto.

Bear/Bearish

Negative price sentiment/movement.

Bitcoin

The first decentralized, open-source cryptocurrency that runs on a global P2P (peer to peer) network.

Block

Packages of data that carry permanently recorded data on the blockchain.

Blockchain

A shared ledger where transactions are permanently stored by appending blocks. The blockchain serves as a

historical record of all transactions that ever occurred (from the genesis to the last block).


https://en.bitcoin.it/wiki/ASIC



Block Explorer

An online tool to view past and current transactions on the blockchain (e.g. network hash rate and transaction

growth).

Block Halving

Bitcoin's supply of new coins issued to miners is cut in half about every four years to keep it scarce. This 50% cut

is known as the halving. The next halving will be around 2020.

Block Height

The number of blocks connected on the blockchain.

Block Reward

A form of incentive for the miner that successfully calculated the hash in a block. Verification of transactions on

the blockchain generates new coins in the process (miner gets a reward).

Block Size

The file size of each block on a blockchain. For Bitcoin the current block size is 1MB.

Bug Bounty

A reward offered for finding vulnerabilities and other issues in computer code. Often offered by crypto

companies to prevent hacks.

Bull/Bullish

Positive price sentiment/movement.

Buy wall / Sell wall

A visual wall of buy/sell orders on the left and right of the current price.

C Centralized ledger

Some blockchains (e.g. Ripple) are using a centralized ledger controlled by a single entity that has ultimate

authority over its contents.

Cold Storage

Crypto kept offline for safekeeping. Some examples are printed QR code, USB drive, and hardware wallet.

Confirmation

The successful act of hashing a transaction and adding it to the blockchain.

Consensus

Achieved when all participants of the network agree on the validity of the transactions, ensuring that the ledgers

are exact copies of each other.

Crypto (Cryptocurrency)

Also known as coins/tokens - representations of digital cryptographic assets.

D Dapp

An open source autonomous application that has its data stored on a blockchain.




DAO

Decentralized Autonomous Organization is like a digital corporation that runs without any human intervention

and surrenders all forms of control to an incorruptible set of business rules.

Distributed Ledger

A ledger where data is stored across a network of decentralized nodes. A distributed ledger does not have to

have its own currency and may be permissioned and private.

Distributed Network

A type of network where processing power and data are spread over the nodes rather than having a centralized

data center.

Difficulty

The difficulty of a data block to be mined successfully.

Digital Signature

A digital code generated by public key encryption that is attached to an electronically transmitted document to

verify its contents and the sender’s identity.

Double Spending

Occurs when tokens are spent more than once.

E ERC-20

The standard to which each Ethereum token complies.

ETF

Exchange Traded Fund is a security that tracks a basket of assets such as stocks, bonds or cryptos, but can be

traded as a single instrument.

Ethereum

A decentralized computer network, also known as the Ethereum Virtual Machine (see EVM) that operates dapps

(see Dapps) and is fueled by Ether (ETH) tokens.

Ether

Often mistakenly called Ethereum, Ether is the crypto that powers the EVM (see EVM). Ethereum is used to

reward blockchain mining and dapp nodes for participating in the work of the EVM.

EVM

Ethereum Virtual Machine is a Turing Complete (see Turing Complete) virtual machine that allows anyone to

execute arbitrary EVM Byte Code. Every Ethereum node runs on the EVM to maintain consensus across the

blockchain.

Exchange

See Exchanges.

F Fiat

Government-issued currency (e.g. US dollar or Euro).




Flippening

A potential future event, where the total market cap of Ethereum surpasses the total market cap of Bitcoin -

making Ethereum the most valuable.

Fork

See Forks.

FOMO

Fear Of Missing Out - the overwhelming sensation of missing out right before the crypto market/coin/token

starts to skyrocket.

FUD

Fear, Uncertainty, and Doubt – baseless negativity intentionally spread to drop the price of crypto

market/coin/token.

Futures

Contracts to buy/sell assets (e.g. commodities, stocks, and cryptos) with an agreement for future delivery on a

regulated exchange.

G Gas

A measurement of how much processing is required by the Ethereum network to process a transaction.

Gas price

The amount of Ether to be spent for each gas unit of a transaction.

Genesis Block

The first or first few blocks of a blockchain.

H Hard Fork

See Forks.

Hash

The act of performing a hash function on the output data. Used for confirming transactions.

Hash Function

Produces a fixed-size and unique hash value from variable-size transaction input. The SHA-256 computational

algorithm is an example of a popular crypto hash.

Hash Rate

Measurement of performance for the mining rig (expressed in hashes/second).

HODL

Hold On for Dear Life - a slang term used in the crypto community referring to holding rather than selling.

Hot Storage

The online safekeeping of private keys which allow for the access to cryptos. Typically done through open-

source online wallets and digital asset exchanges.

Hybrid PoS/PoW

Allows for both Proof-of-Stake and Proof-of-Work as consensus distribution algorithms on the network.


https://blockgeeks.com/guides/what-is-hashing/

http://blockgeeks.com/guides/proof-of-work-vs-proof-of-stake/



I ICO

See ICOs.

K KYC

Know Your Customer - laws and regulations that require financial (crypto) institutions to keep and report many

details of their customers’ personal information and transactions.

L Lightning Network

A proposed change to Bitcoin's blockchain that's designed to facilitate faster transactions and better scaling

(involves bidirectional payment channels).

Limit Order / Limit Buy / Limit Sell

Orders placed by traders to buy or sell a crypto coin/token when the price meets a certain level.

Litecoin

LTC is the ticker symbol for Litecoin - an offshoot of Bitcoin with a focus on faster and cheaper transactions.

M Market Capitalization (Cap)

The total value of an asset. Calculated by multiplying the total number of outstanding coins/tokens by the price.

Margin Trading

Utilizing leverage when trading.

Market Order / Market Buy / Market Sell

Orders placed by traders to buy or sell a crypto coin/token at a current level.

Merkle Tree

A system that splits complicated hash code functions into smaller chunks. Allows faster verification on large-

scale blockchains.

MEW

MyEtherWallet – a popular free site for ETH and token wallets.

Miner

An important entity in the blockchain network. Bundles transactions and gets paid in new coins and transaction

fees in return for mining.

Mining

Mining is the act of validating blockchain transactions. The necessity of validation warrants an incentive for the

miners, usually in the form of coins.

Mining Rig

A computer system specially designed for mining proof-of-work blockchains (e.g. ETH). Often consists of multiple

high-end graphics processors (GPUs).

Mining Pool

An organization that pools together and shares their computer resources for crypto mining. After a block is

successfully mined, the pool participants split the rewards.


http://blockgeeks.com/what-is-bitcoin-mining-an-easy-guide/



Mining Reward

The payment resulting from providing computer resources to process crypto transactions. Often a mix of new

coins and transaction fees.

Moon / Mooning

Refers to a crypto price shooting way up.

Multi-Signature

Multi-signature addresses provide an added layer of security by requiring more than one key to authorize a

transaction.

N Node

A copy of the ledger operated by a participant of the blockchain network.

O Offline Storage

Crypto stored in wallets not connected to the internet.

Online Storage

Crypto stored in wallets connected to the internet.

Oracle

Works as a bridge between the real world and the blockchain by providing data to the smart contracts.

P Paper Wallet

A type of cold storage where private and public keys (often a QR code as well) are printed on physical paper to

prevent hacking and theft.

P2P

Peer-to-peer refers to decentralized interactions between two or more parties.

Permissioned Ledger

A ledger designed so that only a select group of entities have permission to access it.

Private (Secret) Key

A string of data (password) that allows you to access the tokens in a specific wallet.

POS

Proof of Stake - a consensus distribution algorithm that rewards earnings based on the number of coins held.

POW

Proof of Work - a consensus distribution algorithm that requires work in mining data blocks, often consuming

electricity.

Public Address

The crypto hash of a public key. Unlike a private key, acts as email addresses that can be published everywhere.

Public Key

A crypto key that can be used by anyone to encrypt messages intended for a particular recipient.


https://en.bitcoin.it/wiki/Multisignature



Pump & Dump

A manipulative technique to increase the price of certain crypto by using false information and

recommendations based on hyperbolic and inaccurate statements.

R Raiden Network

An upcoming protocol change to Ethereum that will enable high-speed transfers across the network. Similar to

Bitcoin’s upcoming Lightning Network.

Replicated Ledger

A ledger with one main copy of the data (master ledger) and connected to a set of sub-layers of the same data

(slave ledgers).

S Satoshi

Named after the creator of Bitcoin, a Satoshi is the smallest unit of measure of the cryptocurrency. Each Satoshi

is 0.00000001 Bitcoin.

Scrypt

A type of security crypto-algorithm utilized by Litecoin. Compared to SHA256, it is much quicker (requires less

processing).

SegWit

Segregated Witness - a proposed change to Bitcoin's blockchain that increases the block size limit from 1MB to

2MB for faster transactions (considered a fork - see Forks).

SHA-256

A popular security crypto-algorithm utilized by a variety of cryptos (e.g. Bitcoin).

Sharding

A scaling solution for blockchains. Allows nodes to have partial copies of the complete blockchain to increase

overall network performance and consensus speeds.

Shill/Shilling

Advertising crypto for the personal financial gain. Often to the detriment of others and while distorting the truth

(similar to pumping).

Smart Contract

Encodes business rules onto the blockchain via a programmable language (e.g. Solidity). Enforced by the

participants of the network.

Soft Fork

See Forks.

Solidity

Ethereum’s programming language for developing smart contracts.

Stablecoin

See Stablecoins.

Supply

A total amount of particular crypto. Divided into three terms: circulating, total and maximum.




T Testnet

A test blockchain used by developers to prevent expending assets on the main chain.

Tokenless Ledger

Refers to a distributed blockchain ledger that doesn’t require a coin/token to function and to facilitate

transactions.

Transaction Block

A collection of transactions gathered into a block that can then be hashed and added to the blockchain.

Transaction Fee

All crypto transactions involve a small transaction fee. Typically occurs when a miner successfully processes a

block.

Trezor

A popular hardware crypto wallet. Today it supports Bitcoin, Ethereum, Litecoin, Dash and others.

Trustless

Blockchains are trustless because no participant needs to trust any other participant for transactions to work out

(trust comes from the blockchain itself).

Turing Complete

Refers to the ability of a machine to perform calculations that any other programmable computer is capable of

(e.g. Ethereum Virtual Machine or EVM).

U Un-Permissioned Ledger

A ledger that doesn't require the approval of a central authority (e.g. Bitcoin).

Utility (User) Token

A token that grants owners access to specific crypto products or services (not intended to be an investment).

W Wallet

See Wallets.

Whale

An entity that owns very large amounts of crypto.

Whitepaper

A formal scientifically-written description of an idea or project.

Z Zero-Confirmation Transaction

Crypto transactions are confirmed at regular intervals. New transactions have zero confirmations, which means

they have not been verified yet and are less reliable.

Zero-Knowledge Proof

Enables one crypto party to provide evidence that something happened to another crypto party, without

revealing private details.




About the author

Timothy J. Maxwell (aka Crypto Critic) - is a leading trading system architect and trader.

Using both technical and fundamental analysis, he has been trading stocks, futures, options,

FX and crypto - manually and automatically for a total of over 24 years.

Mr. Maxwell has consulted dozens of small, medium and large financial firms, hedge funds

and banks (e.g. Bank of America, Wells Fargo & Bank of NY) on both technology and trading.

He is also a published author on trading methodologies. He can be reached directly via

www.cryptocritic.com.

Trading cryptocurrencies carry a high level of risk, and may not be suitable for everyone. The high degree of volatility can work against you as well as for you. Before getting involved in cryptocurrency trading you should carefully consider your personal venture objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial deposit and therefore you should not place funds that you cannot afford to lose. You should be aware of all the risks associated with cryptocurrency trading, and seek advice from an independent financial advisor if you have any doubts. The information contained in this document does not constitute financial advice or a solicitation to buy or sell any cryptocurrency contract or securities of any type. Crypto Critic and all of their respective affiliates, directors, officers, and agents will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Although the author has made every effort to ensure that the information in this document was correct at press time, the author do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause.



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