Crypto Dictionary: A-Z

A

Address

Also known as a public key, are a unique combination of letters and numbers corresponding to a person’s cryptocurrency wallet. This is where cryptocurrencies are sent to in a transaction. The closest comparison is that of an e-mail address.

Airdrop

A method of distributing cryptocurrency amongst a population. See here for more information.

Altcoin

A label given to any cryptocurrency that is an alternative to Bitcoin. They usually contain various tweaks and features such as confirmation time, total coin supply, and mining algorithm. Some examples of altcoins are Ethereum, Litecoin, and Filecoin.

ASIC

An Application-Specific-Integrated-Circuit is an integrated chip designed for a specific use. For Bitcoin, they process the SHA 256 algorithm in order to mine bitcoins.

Atomic Swap

A protocol allowing users to exchange cryptocurrencies with one another. It allows users to cross-trade different cryptocurrencies without relying on centralized parties.

B

Bitcoin

A decentralized cryptocurrency with a public blockchain.

Bitcoin Protocol

The open source, a cryptographic protocol which operates on the Bitcoin network, setting the “rules” for how the network runs.

Bitcoin Network

The decentralized, peer-to-peer network which maintains the blockchain. This is what processes all Bitcoin transactions.

Blockchain

A transparent, public ledger shared by all nodes participating in a cryptocurrency network. Every transaction is recorded on the blockchain in files called “blocks”. Each block represents the most recent transactions in the network.

Block Halving

The halving of the bitcoin reward that miners can receive for mining a block. This takes place approximately every 4 years (every 210,000 blocks).

Block Reward

The bitcoin rewarded to a miner for solving a block.

Brain Wallet

A bitcoin wallet which uses a long string of words (private key) to secure its coins. This “passphrase” is memorized with one’s brain, to keep wallets safe.

BTC

An acronym for bitcoin.

C

Client

The piece of software that transforms a computer into a “node” in the Bitcoin network. This is the interface of the Bitcoin network. Clients generate private keys and handle communication between wallets.

Cold Storage

Wallets that are kept offline (not connected to the internet). This could be in the form of USB drives, paper wallets, or brain wallets.

Colored Coins

Colored coins are protocols built on top of the blockchain. Bitcoins can be “colored” with specific attributes, used to represent various assets such as financial instruments, gold, or property.

Confirmation

A verified transaction on the blockchain.

Cryptocurrency

A digital asset designed as a medium of exchange using cryptography.

Cryptography

The study of storing and transmitting data securely through the use of encryption.

D

DAO

An acronym for “Decentralised Autonomous Organisation” (also known as DACs). The DAO is a company that could carry out business according to hard-coded rules, needing no human management. Examples of rules include setting aside a certain percentage of earnings for a cause or determining a process by which such a rule could be changed.

Desktop Wallet

A wallet that stores the private keys on your computer desktop.

Difficulty

A measure of the amount of computing power required to solve the hash of a block.

Double spend

The risk that a digital currency can be spent twice. Double-spending is a problem unique to digital currencies because digital information can be reproduced relatively easily.

E

ERC-20

A token standard describing the functions and events that an Ethereum token contract has to implement.

Escrow

The practice of having a third party act as an intermediary in a transaction. This third party holds onto funds sends them to the determined location when a transaction is completed.

Exchange

A place where buyers and sellers can trade cryptocurrencies.

F

Faucet

A website which gives away free bitcoins or other cryptocurrencies.

Fiat currency

Currency that a government has declared to be legal tender such as the U.S. dollar.

Fork

A split in the blockchain. This is caused by a change in the underlying software, creating two versions of a blockchain with a shared history.  It can also be used to describe a separate cryptocurrency which has been split from the main blockchain.

G

Genesis Block

The first block ever mined and the beginning of a blockchain.

H

Hardware wallet

A bitcoin wallet which stores a user’s bitcoins offline on hardware devices such as Trezor.

Hash function

A hash function takes an input such as a string of integers (the key) and outputs a value (the hash).

Hash Rate

A measure of the amount of computing power dedicated to solving blocks/mining bitcoin.

HODL

A misspelling of “hold. The term was coined by an early Bitcoin enthusiast. Meant to represent the belief of never selling your cryptocurrency holdings.

Hot Wallet

A wallet that is actively connected to the internet.

I

ICO

Initial Coin Offering. The pooling of cryptocurrency resources (usually Bitcoin and Ethereum) by investors to crowdfund a project. In an ICO a percentage of the newly issued cryptocurrency are sold to investors in exchange for these invested resources.

K

KYC

Acronym for “Know Your Customer”. This describes a series of laws and regulations which require businesses to know the identity of their customers such as requiring licenses.

L

Lightning Network

A P2P system for making micropayments of digital currencies such as Bitcoin or Litecoin through a mesh network of bidirectional payment channels without delegating custody of funds or trust to third parties.

Litecoin

One of the first “altcoins”. Created by Charlie Lee to be a “silver to Bitcoin’s gold”. Litecoin has shorter confirmation times and larger total coin supplies.

M

mBTC

0.001 bitcoins

Mining

The process of computers validating transactions in the Bitcoin network, adding blocks onto the blockchain.

Miner

A computer participating in any cryptocurrency network performing proof of work. This is usually done to receive block rewards.

Mining Pool

A group of miners who have decided to combine their computing power for mining. This allows rewards to be distributed more consistently among participants in the pool.

Minting

The process of rewarding users in proof of stake coins. New coins are minted as the reward for verifying transactions in a block.

Mobile Wallet

A wallet which runs on a mobile app.

Mt. Gox

A bitcoin exchange based in Japan that collapsed due to poor security practices and incompetent management, losing 850,000 bitcoins in the process.

Multi-signature transaction

A bitcoin transaction which requires signatures from multiple parties to authorize a transaction.

N

Node

See “client”

O

Orphaned Block

An orphan block, or detached block, is a valid block that is not part of a blockchain. This event occurs when two miners produce valid blocks similar time.

Open Source

The practice of sharing the source code for a piece of computer software, allowing it to be distributed and altered by anyone.

P

Paper wallet

A form of “cold storage” where the private keys are printed onto a piece of paper.

Peer-to-Peer network (P2P)

Any computer network where two or more computers are connected and share resources without going through a separate server.

Pre-mining

The mining of a cryptocurrency by its developers before it is released to the public.

Private Key

A secret number held by a user which entitles them to spend bitcoins assigned to a public address/wallet. These are the “passwords” to your wallet.

Proof of Burn

This is a method of “burning” one Proof of Work cryptocurrency in order to receive a different cryptocurrency.

Proof of Existence

A service provided through the blockchain that allows users to store a proof of existence for any document they choose online. This allows people to prove that a document existed at a certain point in time and demonstrate their ownership of it.

Proof of Stake

A method where the resources held by miners is their stake in the currency. Someone holding 10% of a proof of stake currency is equivalent to controlling 10% of the network hash rate of a Proof of Work currency.

Proof of Work

This is the type of mining algorithm Bitcoin uses and is a method of determining who signs transactions in the blockchain.

Public Key

See “Address”

Pump and Dump

A form of market manipulation where traders artificially inflate the prices of assets, encouraging the general public to buy in, and then selling their positions, causing a price collapse.

Q

QR code

Acronym for “Quick Response” code, these are 2d barcodes which can have data encoded onto them. Bitcoin addresses can be encoded into QR codes to transactions.

S

Satoshi

The smallest unit of bitcoin possible. There are 100 million satoshis in a single bitcoin.

Satoshi Nakamoto

The pseudonym for the unknown creator of Bitcoin

Scamcoin (Sh*tcoins)

Coins created as get rich quick schemes by their developers. The coins usually have no functioning features behind their protocols and some do not even exist beyond their whitepapers.

Seed

The private key used in a “wallet”

SegWit2x

A proposal for increasing the network’s block size of the Bitcoin blockchain from 1MB, to 2MB.

Self-executing contract

Also known as “smart contracts” these are protocols that facilitate or enforce the obligations of a contract without the need for human intervention.

Sidechain

Sidechain is a separate, independent blockchain that is “two-way pegged” to the parent blockchain. These can have their own unique features and can have bitcoins sent to and from them.

Signature

The combination of private and public keys that proves ownership of Bitcoin in a wallet.

Stale Block

A block that has already been solved and cannot offer miners any reward for further work on it.

T

Timestamp

A proof that a piece of data existed at a certain point in time.

Total Coin Supply

The limit on the total number of coins that will ever be in existence for a crypto protocol.

Transaction Block

A group of transactions that are collected and hashed on the Bitcoin network by being added to the blockchain.

Transaction Fee

An amount of money users can pay when performing transactions.

V

Velocity of Money

An indicator of how quickly money received and is then spent again.

W

Wallet

Wallets are where public and private keys are stored.

Whitepaper

A report or guide made that informs readers about a complex issue.

Z

Zero Confirmation transaction

A bitcoin transaction that has been relayed to nodes in the Bitcoin network but has not yet been incorporated into a block. Also known as “unconfirmed transactions”

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