Cryptocurrency Glossary: Dictionary of Cryptocurrency and Bitcoin Terms
5-02-2018, 21:01 2303
The cryptosphere is getting more crowded than ever. More and more people are joining the space every day with the hopes of making quick money.
However, in the process, they are bombarded with numerous terminologies and crypto jargons that makes most of them feel out of the sink.
Needless to say, it might seem overwhelming at first, but you will get used to it with time. If you intend to stay in the game, it is very important that you understand the terms used in the cryptosphere.
A SATOSHI - The smallest unit of bitcoin possible. There are 100 million satoshis in a single bitcoin.
AML - Anti-Money Laundering techniques are used to stop people converting illegally obtained funds, to appear as though they have been earned legally. AML mechanisms can be legal or technical in nature. Regulators frequently apply AML techniques to bitcoin exchanges.
Address - Sometimes referred to as “ADDY,” an address is an online location that serves as a destination for a cryptocurrency payment. An address is similar to a bank account number, except crypto addresses are typically different for each unique transaction.
Altcoin - The entire cryptocurrency craze started with bitcoin back in 2009, but thousands of other currencies have followed in bitcoin’s footsteps. These currencies, particularly newer or less popular currencies, are often referred to as “altcoins.”
ATH - Stock traders might recognize this acronym, but tech enthusiasts may not. ATH is short for “all-time high,” a place many cryptocurrencies have routinely visited in recent years.
APPLICATION SPECIFIC INTEGRATED CIRCUIT (ASIC) - A specific computer chip which has been created for the sole purpose of, for example, mine data blocks.
ASYMMETRIC KEY ALGORITHM - The algorithm used to generate public and private keys. These keys are needed to support cryptocurrency transactions. Both sender and receiver have this key, and can send secure information.
BIP - An acronym for “Bitcoin Improvement Proposals” which can be submitted by anyone who wants to improve the Bitcoin network.
BIP148 - BIP148 is a User Activated Soft Fork (UASF) that was designed to cause the existing SegWit MASF deployment to cause activation in all existing SegWit capable node software (which currently is 80% of the network nodes)
Bitcoin - Bitcoin was the first cryptocurrency created on the blockchain system back in 2009. It's decentralized and operates on a peer-to-peer system. It remains the largest and most valuable global cryptocurrency.
BITCOIN ATM - A cash point where people can trade fiat currency and bitcoins
Bitcoin ETF - A bitcoin ETF is one that mimics the price of the most popular digital currency in the world. This allows investors to buy into the ETF without going through the complicated process of trading bitcoin itself. Moreover, because holders of the ETF won't be directly invested in bitcoin itself, they will not have to worry about the complex storage and security procedures required of cryptocurrency investors. ( Bitcoin ETFs Explained | Bitcoin ETF News )
BITCOIN CASH (BCH) - A hard fork of Bitcoin led by Bitcoin mining pool ViaBTC that supports ‘big blocks’ of up to 8MB and removes SegWit. It’s launch date was 1 st August 2017 to coincide with the BIP148 SegWit signaling activation. ( Latest Bitcoin Cash News )
BITCOIN NETWORK - The decentralized, peer-to- peer network which maintains the blockchain. This is what processes all Bitcoin transactions.
BITCOIN PROTOCOL - The open source, cryptographic protocol which operates on the Bitcoin network, setting the “rules” for how the network runs.
BITCOIN TRANSACTION - A transaction is a file that says, “Bob gives X Bitcoin to Alice“ and is signed by Bob‘s private key. After signed, a transaction is broadcasted in the network, sent from one peer to every other peer. The transaction is known almost immediately by the whole network. But only after a specific amount of time it gets confirmed. As long as a transaction is unconfirmed, it is pending and can be forged. When a transaction is confirmed, it is set in stone.
Block - A block is a group of cryptocurrency transactions that are grouped together and recorded on a blockchain after they have been verified. Once a block enters the blockchain, it is publicly available and permanent.
Blockchain - Blockchain is the underlying decentralized ledger that keeps cryptocurrency transactions secure. The blockchain is a public system of verifying cryptocurrency transactions using a peer-to-peer network of miners.
BTC - An abbreviation for bitcoin. XBC is another popular abbreviation.
Coinbase - Coinbase is one of the largest and most popular cryptocurrency exchanges. Investors use the website and app to buy and sell cryptos and to monitor market prices.
Cold storage - Cold storage refers to storing cryptocurrency offline for security reasons. Coins held in cold storage are much more difficult for hackers to access, but it comes with its own set of risks if storage hardware is damaged, lost or stolen.
CONFIRMATION - The incorporation new transactions into the blockchain. For bitcoin, this occurs on average every 10 minutes when a miner solves a block.
CONSENSUS - Consensus is achieved when all participants of the network agree on the validity of the transactions, ensuring that the ledgers are exact copies of each other.
CONSORTIUM BLOCKCHAIN - A blockchain where the consensus process is controlled by a pre-selected set of nodes; for example, a consortium of 15 financial institutions.
CROWDSOURCING - The pooling of resources such as information or money contributed by the general population, to a goal. This is usually done online via websites where people can donate.
Cryptocurrency - A digital currency that runs on blockchain technology and a peer-to-peer verification system. Cryptocurrencies are decentralized and do not rely on banks or governments.
Cryptography - The art of writing and solving codes. Cryptography is used to protect cryptocurrency security and validata transactions.
DAO - An acronym for “Decentralized Autonomous Organization”, a theoretical company that could exist in the cloud and carry out business according to preset algorithms, needing no human management. Also known as “DACs”
DAPP - A decentralized application (DApp) is an application that is open source, operates autonomously, has its data stored on a blockchain, incentivised in the form of cryptographic tokens and operates on a protocol that shows proof of value.
Decentralized - In a decentralized system, no single source carries the critical data and record of transaction histories. Each device connected to a blockchain network has its own unique copy of the information stored on all the other nodes rather than a copy of the information stored on a central device, such as a server.
DESKTOP WALLET - A wallet that stores the private keys on your computer, which allow the spending and management of your bitcoins.
DETERMINISTIC WALLET - A wallet based on a system of deriving multiple keys from a single starting point known as a seed. This seed is all that is needed to restore a wallet if it is lost and can allow the creation of public addresses without the knowledge of the private key.
DIFFICULTY - This refers to how easily a data block of transaction information can be mined successfully.
DIGITAL ASSET - Anything that exists in a binary format and comes with the right to use. Data that do not possess that right are not considered assets. Digital assets include but are not exclusive to: digital documents, audible content, motion picture, and other relevant digital data that are currently in circulation or are, or will be stored on digital appliances.
DISTRIBUTED DENIAL OF SERVICE (DDOS) - A very dangerous threat for cryptocurrency users. Often this comes with a severe attack on the network, creating an army of ‘zombie’ computers who simultaneously flood a targeted website or network with requests. This can cause a sustained downtime on said network or even make them crash completely.
DOGECOIN - An altcoin first started as a joke in late 2013. Dogecoin, which features a Japanese fighting dog as its mascot, gained a broad international following and quickly grew to have a multi-million dollar market capitalization.
DOUBLE SPENDING - A common flaw in some cryptocurrency blockchains where the system of rules is not in motion properly, allowing malicious users to try and spend their unique codes in multiple places. This causes coins spent that are already spent somewhere else, making one of the receivers end up with nothing.
ETHER - Is the native token of the Ethereum blockchain which is used to pay for transaction fees, miner rewards and other services on the network.
ETHEREUM CLASSIC - A split from an existing cryptocurrency, Ethereum after a hard fork.
EXCHANGE - A place where buyers and sellers can trade bitcoins or other cryptocurrencies.
EXCHANGE RATE - Normally, money issued by the government, such as the Dollar, will have a fluid exchange rate based on the country it is spent in. Cryptocurrency does not have this issue as it is digital. However, the exchange rate is based on two things; how it compares to a traditional currency, or how it stacks up against another type of cryptocurrency.
Fiat - While traditional government-backed currencies can certainly be used to make digital transactions, crypto investors refer to these traditional currencies as “Fiat” money. Cryptos are decentralized, but Fiat currencies, such as the U.S. dollar and the Euro, and printed, managed and controlled by governments.
FOMO - FOMO, an acronym for “fear of missing out,” can be applied to stocks as well, but some see FOMO as the true driving force behind the massive inflow of cash in the cryptocurrency market.
FORK - A split in the blockchain where there are temporarily two different blockchains which miners can work on. These can occur if software updates to a Bitcoin client are incompatible or if developers decide that changes must be made to the programming of a coin. This deliberate change is called a “Hard fork”. It can also be used to describe a separate cryptocurrency which has been split from the main blockchain, such as Namecoin being a “fork” of Bitcoin.
GENESIS BLOCK - The very first block in a block chain.
Hard fork - A hard fork is a major change in the software of a particular currencies that results in the splitting of its blockchain. Bitcoin Cash is a popular cryptocurrency that was created as a result of a hard fork in the original bitcoin blockchain.
Hash - A cryptographic hash is a mathematical function that takes a file and creates a code that can be used to quickly and easily identify the file. Each hash is unique and can't be reverse-engineered.
Hash rate - Hash rate is a measure of how much computing power a cryptocurrency miner is generating. The higher the hash rate the more powerful the mining machine.
HODL - HODL is popular acronym in the crypto investing community which stands for “hold on for dear life.” The term is a nod to the extreme volatility and unpredictable nature of cryptocurrency markets.
IPFS - The InterPlanetary File System (IPFS) is a hypermedia distribution protocol, addressed by content and identities. It is a peer-to-peer distributed file system that seeks to connect all computing devices with the same system of files.
ICO - ICO stands for “Initial Coin Offering” and is the crypto version of a newly-public company’s initial public offering. ICO investors are hoping to get in on the ground floor of a new currency.
IRREVERSIBLE - After confirmation, a transaction is unable to be reversed. By nobody. There is no safety net for that situation.
KYC - Know Your Client/Customer rules force financial institutions to vet the people they are doing business with, ensuring that they are legitimate.
Ledger - A list of financial transactions for record-keeping purposes. The bitcoin blockchain ledger is publicly available and cannot be altered.
Mining - Mining is the process by which people use advanced computers to process blockchain transactions. Because of how much time, power and expertise are required to process cryptocurrency transactions, mining rewards miners by paying them a small amount of cryptocurrency for their efforts.
Node - Any computer connected to a currency’s blockchain is referred to as a node. Each node maintains its own copy of the blockchain.
Open Source - A software with publicly available code. Bitcoin is open source project.
Private key - A private key is a personal password to access a digital wallet. A digital wallet is only as secure as a user’s private key is.
Public key - A wallet address is a hashed version of a public key which allows users to send cryptocurrency to your wallet. Private keys are mathematically related to cryptocurrency wallet addresses, but they are encrypted to prevent reverse engineering.
Wallet - Hopefully everyone knows what a traditional wallet is, and a digital wallet works in a similar way. A digital wallet is simply a (hopefully) secure way for people to store their cryptocurrencies.
This article will be updated and new terms will be added