Peer-to-Peer Trading Glossary

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gingerbreadfork
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6 min read

Brush up on the latest cryptocurrency slang and trading terms you can experience while trading.

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Whether you've been trading for years or only just started trading, from time to time, you'll likely run into phrases or terms you aren't familiar with yet. When it comes to cryptocurrency, there's a wide variety of slang and technical terms you could benefit from knowing as you browse through offers from other traders or start to craft your own.

Altcoin

As bitcoin was the first major cryptocurrency to become popular, all other cryptocurrency projects are commonly called altcoins. While this is becoming less common to hear, it's a term that has stuck around and likely isn't going anywhere soon.

Block Explorer

If you are looking for an Ethereum or ERC-20 transaction using a TXID, you can find it easily usingEtherscan. If it's a Bitcoin transaction, you can find that using an explorer for the bitcoin network such asBlockchair, which supports a range of other cryptocurrencies as well.

Centralized Exchange

Sometimes referred to using the abbreviation CEX or CEXs (plural), this type of exchange platform is typically operated in a fully custodial manner and operates hot and cold wallets for user deposits and withdrawals. Most large order-book exchanges are fully centralized.

Chargeback

The term chargeback is an important one to understand when dealing with higher-risk payment methods that require extra care, such as PayPal. Chargeback risk is only a concern when you are on the sell-side of a trade. Higher margin payment methods are sometimes a sign of chargeback risk.

Custodial

Wallets or exchanges that are considered custodial have control of your funds while using the platform or wallet. Some older P2P exchanges are fully custodial, while newer exchanges like LocalCoinSwap are moving further away from this model by offering non-custodial trading options across the platform.

Double Spending

When a cryptocurrency is unconfirmed or only confirmed a minimum amount of times, you run the risk of a double-spend where a transaction can be performed twice. This is one reason that unconfirmed or single confirmation transactions are rarely accepted on the bitcoin network (or just about 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).

Escrow

When trading P2P, the part of the process that ensures both parties keep their end of the deal is called escrow. Typically the cryptocurrency is placed in escrow until the buyer has either verified that they've successfully received payment or a dispute is raised, and a moderator steps in to release the crypto to the rightful party.

To Learn More About P2P Escrow: Buy Bitcoin safely: How The Escrow System Protects You

Fiat

A term that is commonly thrown around in the crypto space, but something that you may not have heard used before if you are relatively new, 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 them not liking to accept fiat as payment and instead prefer crypto.

Gas

For users that are new to transacting with ethereum, this is a common cause of confusion but one that you can easily remember once you know what it means. Gas is the "fuel" used to perform a transaction on the ethereum network. This could 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, thus referring typically to ethereum transactions, and in terms of gas limits, this is the maximum amount you are willing to spend on a transaction. When performing different types of transactions, you may require a higher gas limit to have the TX performed successfully.

Gas Price

When performing an ethereum transaction, the other term you will come across related to gas is the gas price. This is measured in Gwei, which is the amount of Ether/ETH you are willing to pay for every unit of gas that you require. A higher gas price is often what controls how quickly your ethereum or token transactions are confirmed.

Find out the current recommended gas prices by checking out ETH Gas Station

Liquidity

When it comes to liquidity, this metric helps establish how much cryptocurrency can be bought or sold without dramatically affecting the digital asset's market price. If you were buying a coin with low liquidity, you might find that even a small buy or sell order can dramatically affect the current market price on the exchange you are using. Liquidity is most important to consider when using order-book exchanges or DEXs like Uniswap rather than P2P exchanges like LocalCoinSwap.

MFA/2FA

Multi-factor authentication (MFA) and 2-factor authentication (2FA) refer to using extra protections on your accounts. It's a great measure to take for any of your important accounts to enable MFA or 2FA where supported. Common forms of additional authentication methods can include email verification, SMS codes, or using authentication apps likeAuthy orGoogle 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

An oracle is a term you are starting to hear more and more from in the crypto space, but unless you have researched it personally, it can be quite easy not to know what it is or means. The purpose of a blockchain oracle is to connect information or data sources from things that are external to blockchains.

If you'd like to learn more about blockchain oracles, check out our article: Breaking Down Blockchain Oracles

Over the Counter

Most frequently, this term will be used as the abbreviation OTC. Over-the-counter trading is a form of exchange that isn't performed using order-book style exchanges but rather is performed in a P2P manner. Types of OTC exchange vary, but the primary goal is typically for larger traders to buy and sell at high-volumes without having to worry about available liquidity and price slippage with their large order sizes.

Private Key

A private key is used to sign cryptocurrency transactions. It is important to never share your private keys with anyone as anyone who has them can sign transactions on your behalf. Backing up your private keys safely and securely is incredibly important.

Public Key

When you are requesting cryptocurrency from someone, you will often provide them with your public key. However, during P2P exchange, this isn't necessary as it is handled by the platform as the funds go into escrow rather than directly into the buyer's wallet. Public keys can be safely shared, but beware that doing so does provide the recipient information about who owns a particular wallet, so consider this when handing over a specific public key. A public address is similar to a public key, except this version is a hashed equivalent of the public key, which you can use to request and receive payments to your wallet.

QR Code

Arguably made more popular by cryptocurrency, these square barcode-looking labels are machine-readable addresses. They are often used to share wallet addresses that can be scanned by many popular mobile wallets to allow for fast transactions without manually copying an 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 includeTether (USDT),USD Coin (USDC), andDai Stablecoin (DAI).

Trading Pair

Currency exchange pairs are common in not just cryptocurrency but the traditional finance markets as well. Just as you could see a trading pair for the Australian Dollar against the US Dollar (AUD/USD), you can find a trading pair for Ethereum against Bitcoin (ETH/BTC); these are trading pairs. When it comes to crypto, you will see cryptocurrency paired against other cryptocurrencies, but also against 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 reference to a transaction (TX) that has not been confirmed on the blockchain. If you have just sent a transaction that is yet to be confirmed, you could simply call it an unconfirmed transaction.

Volume

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

Vendor

A vendor is a trader that creates trade offers to buy or sell cryptocurrency on a P2P exchange. Typically these are traders that do this with a relative consistency as opposed to the casual trader.

Wei

The smallest measurement of Ether is called Wei. It's used to help when dealing with tiny amounts of Ether to avoid huge numbers with excessive leading zeros.

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