Cryptocurrency Glossary

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If you find yourself scratching your head thinking “what does that mean?” It may be a good idea to consult our cryptocurrency glossary and review some of the commonly used jargon and slang used in the cryptocurrency industry.

51% Attack

A malicious attack that is done by an individual or group who controls 51% or more of the computational power directed at a blockchain network. In Proof of Work systems, this means miners. In Proof of Stake, this means owning more than 51% of a staked token’s total supply.

Address

A string of alphanumeric characters which represents an account where funds can be sent and received. A private Key is where you store your funds (keep this private). A public key is where you receive funds.

ASIC

Also known as an Application Specific Integrated Circuit, basically its a computer that is very good at one thing, like Bitcoin mining.

Bitcoin

Bitcoin was the first decentralized cryptocurrency, invented by the anonymous figure Satoshi Nakamoto.

Block

Is a package of data, stored on the blockchain, which contains a set of data.

Blockchain

A blockchain is a shared distributed ledger. The ledger stores the blocks of information, each computer on the network stores a copy of that ledger which makes it nearly impervious to hacking.

Block Explorer

An online tool used to view transactions on the blockchain. In essence, it allows you to explore the blocks. This is a great tool to check your transactions and see how far they are in the verification process.

Block Height

The number of blocks connected on a blockchain. The number increases as the blockchain grows.

Block Reward

Miners would not do what they do if they were not rewarded by something. Miners are rewarded new blocks of a cryptocurrency in return for hte computational power they put into a network.

Central Ledger

The opposite of a distributed ledger, a central ledger is maintained by one centralized organization. Example: A bank ledger.

Confirmation

When a transaction is successfully confirmed by the network.

Consensus

A consensus is achieved when all participants on the network agree on the ledger. In some cases, less than all participants are needed to achieve consensus.

Cryptocurrency

Cryptocurrencies come in many forms, some are used as a digital cash, some are tokens that represent a utility or asset. The list of uses for cryptocurrencies is growing, so its hard to define exactly, for now, its best to look at them as the representation of your funds on the distributed ledger.

Cryptographic Hash Function

A cryptographic hash function is a hash function which takes an input (or ‘message’) and returns a fixed-size alphanumeric string. The SHA-256 computational algorithm is an example of a cryptographic hash.

DApp

Decentralized Application, is an application that runs on top of an existing blockchain. Think of this the same way you think of an app that you add to your phone. The phone is the platform and the app you instal adds functionality to the phone. Except, in this case, the phone is the blockchain and the DApp adds functionality to the blockchain. A great and super cute example of this is CryptoKitties.

DAO

Decentralised Autonomous Organizations is best described as an autonomous blockchain-based corporation which governs itself by a set of rules that is hardcoded into the DAO.

Distributed Ledger

The ledgers which are distributed across the blockchain.

Distributed Network

A network where the power is distributed over the entire network and not at a centralized computer. An example would be 5 computers working together to solve one problem.

Difficulty

A factor that changes so that miners performing work on a network receive blocks at a fixed rate. If the hashpower on a network doubles, then the difficulty doubles.

Digital Signature

An encrypted key that signs a transaction.

Double Spending

Spending the same digital funds twice.

Ethereum

Ethereum is a cryptocurrency that acts as a platform for DApp to run on top of.

EVM

The Ethereum Virtual Machine (EVM) is a Turing complete virtual machine. It allows programmers to execute EVM Bytecode.

FOMO

Fear Of Missing Out. Is when a trader chases after an investment as it rises. “oh no that asset has already gone up 200%, it may go up more I should buy it now” is a classic example of FOMO. Buyer beware if an asset is already on the rise.

FUD

Fear, Uncertainty and Doubt. Very similar to FOMO but in the other direction. People often use this term to describe the panic that ensues after hearing bad news comes out from a news outlet. Inexperienced traders often sell after tehFUD rather than sticking to their original plan, for fear that the bad news signals the end of their investment.

Fork

A fork is created when a blockchain splits. Often when changes are added to the original code some miners will opt to mine the old chain. Example Ethereum and Ethereum Classic.

Genesis Block

The first block of a blockchain.

Hard Fork

A major change to a cryptocurrencies code which needs all miners consensus or else results in a Fork.

Hash

Performance of hash functions on a set of data.

Hash Rate

Measurement of a miners performance or computational power applied to the network.

Hybrid PoS/PoW

A hybrid of Proof of Work and Proof of Stake.

Mining

The validation of transactions is known as mining. Miners are incentivised by mining rewards. The rewards are usually a portion of cryptocurrency.

Multi-Signature

These transactions take more than one signature and provide an added layer of protection to a transaction. An example would be two owners of one account.

Node

A computer acting on the network which contains a copy of the ledger.

Oracles

Provides data to smart contracts.

Peer to Peer

The decentralized network of two or more parties. An early example is file sharing programs like Napster.

Public Address

The address to a cryptocurrency account, which is used publicly to send and receive funds.

Private Key

The address of a cryptocurrency account that is held privately by the user. Losing ones private keys means losing one’s funds. Do not under any circumstances reveal your private key to anyone.

Proof of Stake

Proof of Stake is a proposed alternative to Proof of Work. Like proof of work, proof of stake attempts to provide consensus and doublespend prevention. Because creating forks is costless when you aren’t burning an external resource Proof of Stake alone is considered as an unworkable consensus mechanism

Proof of Work

A proof-of-work (PoW) system (or protocol, or function) is an economic measure to deter denial of service attacks and other service abuses such as spam on a network by requiring some work from the service requester, usually meaning processing time by a computer. Example miners on the Bitcoin network.

Scrypt

Scrypt is a type of algorithm used in mining coins like Ethereum. It is ASIC resistant.

SHA-256

SHA-256 Cryptographic Hash Algorithm. A cryptographic hash is a kind of ‘signature’ for a text or a data file.

Smart Contracts

A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties. These transactions are trackable and irreversible.

Soft Fork

A softfork is a change to a cryptocurrencies protocol wherein only previously valid blocks/transactions are made invalid. Since old nodes will recognize the new blocks as valid, a softfork is backwards-compatible.

Solidity

Ethereums programming language for smart contracts.

Spoon

‘Hard Spoon’ is when a new chain is created that takes into account the state from an existing chain. It does not compete with it but rather enhances it. This occurs when a new cryptocurrency is minted by duplicating the balance of an existing one.

 

Testnet

A test blockchain where new protocols and DApps can be tested without affecting the main network.

Transaction Fee

The fee paid to send funds on a network. Or the fee used to run a DApp.

Wallet

A place to store your private and public keys.

Thank you for visiting our cryptocurrency glossary. We hope that helped. If we missed any terms you do not understand lsend us a message and we will add it 🙂

Visit our news section for the latest cryptocurrency news.

 

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