Commonly used vocabulary terms in Cryptocurrency and Blockchain Technology
“cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency.”
Ex: Bitcoin and altcoin.
Bob: “Hey Sandy, I’ve been trading Cryptocurrency on the side, making some good money.”
Sandy: “What in tarnation is a Crypto Currency Bob? you mean like forex?”
Bob: “No Sandy. like Bitcoin and altcoins.”
“A code used to store/send/receive bitcoins and other cryptocurrency consisting of 26-35 alphanumeric characters. It is also the public key in the pair of keys used by bitcoin holders to digitally sign transactions.”
Ex Address: 175tWpb8K1S7NmH4Zx6rewF9WQrcZv245W
Bob: “Sandy, what’s your address so I can send you some bitcoin?”
Sandy: “It’s 88 PIne Street.”
Bob: “No Sandy, not your home address, your bitcoin address! It has to be accurate or your coins will be lost, double check it!”
Sandy: “oh, it’s 175tWpb8K1S7NmH4Zx6rewF9WQrcZv245W”
“Any form of digital crypto currency that isn’t Bitcoin, an alternative coin.”
Ex: Ethereum, Steem, Litecoin.
Bob: “Hey Sandy, buy any good altcoins today?”
Sandy: “You betcha Bob, bought some litecoin, some dogecoin, and a fuckload of POTcoin.”
“Do you know that there are some crypto coins that are doing airdrops to owners of Bitcoin? This means that if you are holding BTC in a wallet that allows you to sign messages (local or online one) you can get free money in the form of crypto coins. Below are some of these coins that send to you an amount of their tokens based on how much Bitcoin you have in your wallet, there could be some more, so if you know of some other one that is missing please point to it in the comments below. A word of warning though, you need to be careful with such coins and more specifically what they ask you for in the form of confirmation you are the owner of a given BTC wallet. Signing a message or doing a micro transaction from a Bitcoin wallet is fine as confirmation, but if they ask for a private key or wallet file or some sensitive data like that, then just avoid them! Examples of airdrops..
Bitcore made a Snapshot of the Bitcoin Network at Blockheight 463604 and captured every Wallet with a Balance bigger than 0.01 BTC, all wallets containing BTC at that point can claim free BTX coins by signing a message from your wallet (exchanges are not supported). Furthermore after you claim your free coins if your wallet has at least 10 BTX you will receive a 3% bonus payment on a weekly basis.
With Bytecall for every 16 BTC you receive 1 GB (1 gigabyte = 1 billion bytes), furthermore for every 5 GB you receive additional 1 GB. To prove your Bitcoin wallet balances you need to install the Byteball wallet and chat with the Transition Bot (you find it in the Bot Store in the wallet). The bot will help you link your Bitcoin and Byteball addresses by making a micropayment or signing a message. The next (8th) airdrop round is scheduled for the full moon of August (Aug 7, 2017 at 18:10 UTC).
Stellar Lumens (XLM)
The current round of XLM giveaway will be for up to 16 BILLION Lumens to Bitcoin holders or 16% of the initial Lumens. On June 27th, 2017 the next airdrop of Lumens will be made available to any Bitcoin holder who wants them, including those that received Lumens during the first giveaway round. Lumens will be available for exchanges that support the giveaway as well as for users with their own Bitcoin wallets. The snapshot of the Bitcoin blockchain will be taken on June 26, 2017 and the Lumen distribution will be held on the next day with 974.957961 XLM per Bitcoin owned in wallet. Participating exchanges for the moment include: Kraken, BTC38, Deribit, Yuanbao, NaoBTC and Bit-Z.” – source: http://cryptomining-blog.com/tag/airdrop/ and altcoins airdrop
ASIC mining is a crafty method of mining various coins at a much faster rate than any normal desktop or laptop might allow. Essentially what an ASIC, or Application Specific Integrated Circuit is, is a chip specifically created to execute one task. Enter ASIC mining. An example of one such model is an ASIC miner created to ONLY process SHA-256, which is the problem offered by the Bitcoin blockchain to mine new coins. There are also ASIC’s script which specifically solves the mathematical code in relation to altcoins such as Litecoin. Though in recent years there has been a good amount of dialogue surrounding the longevity of mining this way and we’ve even seen coins making it so that it’s impossible to mine with an ASIC.
All time high, the highest the price has ever been.
Bitcoin is a worldwide cryptocurrency and digital payment system called the first decentralized digital currency since the system works without a central repository or single administrator. It was invented by an unknown programmer, or a group of programmers, under the name Satoshi Nakamoto and released as open-source software in 2009. The system is peer-to-peer, and transactions take place between users directly, without an intermediary.These transactions are verified by network nodes and recorded in a public distributed ledger called a blockchain.
Besides being created as a reward for mining, bitcoin can be exchanged for other currencies, products, and services in legal or black markets. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment. Bitcoin can also be held as an investment. According to research produced by Cambridge University in 2017, there are 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin. – Wiki
An acronym for “Bitcoin Improvement Proposals” which can be submitted by anyone who wants to improve the Bitcoin network.
A prolonged downward trend of a traded commodity. This is the opposite of a bull market.
A prolonged upward trend of a traded commodity. This is the opposite of a bear market.
“A full list of all the blocks that have been mined since the creation of Bitcoin.” A digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly. The blockchain serves as a historical record of all transactions that ever occurred, from the genesis block to the latest block, hence the name blockchain.
A reward that is given to a miner after successfully hashing a transaction block.
Bob: “I’m making almost $2 a day mining ethereum on genesis mining!”
Sandy: “Better upgrade those mining contracts Bob. I’m making 10x that on DASH.”
Blocks are packages of data that carry permanently recorded data on the blockchain network.
“This number determines how difficult it is to hash a new block. It is related to the maximum allowed number in a given numerical portion of a transaction block’s hash. The lower the number, the more difficult it is to produce a hash value that fits it.”
A ledger maintained by a central agency.
Storing crypto away from the internet. Meaning on a paper wallet, in a hardware wallet, or on an air-gapped machine. This would be the opposite of a hot wallet or hosted wallet, which is connected to the web for day-to-day transactions. The purpose of using cold storage is to minimize the chances of your cryptocurrency being stolen from a malicious hacker and is commonly used for larger sums of cryptocurrency.
A transaction is confirmed when it has been verified by miners on the blockchain. It is the successful act of hashing a transaction and adding it to the blockchain.
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.
ICO stands for Initial Coin Offering. They are the cryptocurrency equivalent of an IPO. Either all or some of a currency is sold at a certain time to raise money for development. Other rules and things apply and it varies from ICO to ICO. Be wary of ICOs, many ICOs have little to no work done yet and don’t deserve your money – please do a proper assessment before buying in to an ICO.
Decentralised Autonomous Organizations can be thought of as corporations that run without any human intervention and surrender all forms of control to an incorruptible set of business rules.
A decentralised 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.
“A distributed denial of service attack uses large numbers of computers under an attacker’s control to drain the resource of a central target.”
Sandy: “Bob! I can’t get my coins off the exchange and the value is plummeting!”
Bob: “That’s because some one is DDoS’ing it Sandy, always remember to store your coins in a safe and secure wallet.”
“A transaction for an extremely small amount of bitcoins, which offers little financial value, but takes up space in the blockchain.”
ex. 1 satoshi worth of bitcoin
Sandy: “Bob Bitcoin is too expensive to buy!”
Bob: “you don’t have to buy a whole bitcoin sandy, just buy a few Satoshis worth.”
Distributed & Central Ledger
A distributed ledger is an agreement of shared, replicable and synchronized data, in this case spread across multiple networks, across many CPU’s. A central ledger is the opposite in that all of the data, while being synchronized and replicable is controlled by a singular network or individual.
“The act of holding funds or assets in a third-party account to protect them during an asynchronous transaction.”
A transaction in which a spender and receiver place funds in a 2-of-2 (or other m-of-n) multisig output so that neither can spend the funds until they’re both satisfied with some external outcome.
Ethereum is an open-source, public, blockchain-based distributed computing platform featuring smart contract (scripting) functionality. It provides a decentralized Turing-complete virtual machine, the Ethereum Virtual Machine (EVM), which can execute scripts using an international network of public nodes. Ethereum also provides a cryptocurrency token called “ether”, which can be transferred between accounts and used to compensate participant nodes for computations performed. “Gas”, an internal transaction pricing mechanism, is used to mitigate spam and allocate resources on the network.
Ethereum was proposed in late 2013 by Vitalik Buterin, a cryptocurrency researcher and programmer. Development was funded by an online crowdsale during July–August 2014. The system went live on 30 July 2015.
In 2016 Ethereum was forked into two blockchains, as a result of the collapse of The DAO project, thereby creating Ethereum Classic.
The value token of the Ethereum blockchain is called ether. It is listed under the code ETH and traded on cryptocurrency exchanges. It is also used to pay for transaction fees and computational services on the Ethereum network.
Tokens can be volatile per circumstances, such as ether’s plunge from $21.50 to $8 when The DAO was hacked on 17 June 2016. As of June 2017, the value of ether had risen to more than $400, a 5,000% rise since the beginning of the year. Volatility continued, however, including a “flash crash” triggered by a large sell order on one exchange which briefly dropped the price to $0.10, after which it recovered to more than $300. – Wiki
Where you buy and sell your traded commodity. Examples: GDAX, Poloniex, Kraken, etc.
Fiat – Fiat money is currency that a government has declared to be legal tender, but it is not backed by a physical commodity.
The point at which Ethereum’s market cap, and overall block chain dominance, overtakes Bitcoin’s.
“Any form of physical paper currency. Regulated and Centralized.”
Bob: “Sandy, I hope your trading your fiat for bitcoin.”
Sandy: “If I drove a Fiat, I would hang myself Bob.”
Bob: “touché Sandy, touché! but I was referring to Fiat Currency not the car.”
“Fear of Missing out”
Forks create an alternate version of the blockchain, leaving two blockchains to run simultaneously on different parts of the network.
“Fear, Uncertainty, Doubt”
“A technique used when first launching an altcoin. A set number of coins are pre-mined, and given away for free, to encourage people to take interest in the coin and begin mining it themselves.”
The very first block in a block chain.
Halving is the reduction of minable reward every so many blocks. For Bitcoin the reward is halved after the first 210,000 blocks are mined and then every 210,000 thereafter. In other words, Bitcoins have a finite supply, which makes them scarce. The total amount that will ever be issued is 21 million. The number of Bitcoins generated per block is decreased 50% every four years. This is called “halving.” The final halving will take place in the year 2140.
“An alteration to the block structure of bitcoin that changes the difficulty rules.” A type of fork that renders previously invalid transactions valid, and vice versa. This type of fork requires all nodes and users to upgrade to the latest version of the protocol software.
Ex: See segwit, btc unlimited, btc cash (BCC)
“A mathematical process that takes a variable amount of data and produces a shorter, fixed-length output.”
Hashrate is the speed at which a block is discovered and the rate at which the related math problem is solved. Certain tools have been created to allow for higher hashrates. See ASIC.
A cryptographically secure piece of hardware designed to keep wallet information secure. E.g. Trezor wallet, ledger nano, etc.
Hashrate – The number of hashes that can be performed by a bitcoin miner in a given period of time (usually a second)
Hodl – The act of buying and holding. A play on the word hold. It was originally coined by a trader who was drunk while chatting in a crypto coin forum.
Hot Wallet – A wallet that has an active connection to the internet. These are used for “everyday” transactions and should never hold large amounts of cryptocurency, since their connectivity reduces their security.
“An Initial Coin Offering, A way for a new cryptocurrency project to raise money for their project by offering a select amount of coins for sale to the public at base price.”
Ex. Bancor ICO, Civic ICO, DCORP ICO
Sandy: “Bob, Why is my BNT token worth less than what I bought it for in ICO?!”
Bob: “Sandy, you bought that hype, never buy that hype.”
Litecoin (LTC) is a peer-to-peer cryptocurrency and open source software project released under the MIT/X11 license. Creation and transfer of coins is based on an open source cryptographic protocol and is not managed by any central authority. While inspired by, and in most regards technically nearly identical to Bitcoin (BTC), Litecoin has some technical improvements over Bitcoin, and most other major cryptocurrencies, such as the adoption of Segregated Witness, and the Lightning Network. These effectively allow a greater number of transactions to be processed by the network in a given time, reducing potential bottlenecks, as seen with Bitcoin. Litecoin also has almost zero payment cost and facilitates payments approximately four times faster than Bitcoin. – Wiki
“The act of generating new bitcoins by solving cryptographic problems using computing hardware.”
Multisig, or multisignature refers to having more than one signature to approve a transaction. This form of security is beneficial for a company receiving money into their BTC wallet. If a company wants to keep it so that one employee doesn’t have sole access to a transaction, multisig allows for a transaction to be verified by two separate employees before it’s complete.
A node is essentially a computer connected to the Bitcoin network. A node supports the network through validation and relaying of transactions while receiving a copy of the full blockchain itself.
P2P is another way of saying Peer-to-Peer. Peer-to-peer has become a very large focus of blockchain as one of the biggest selling points is decentralization. Nearly every interaction on the blockchain can be fulfilled P2P, or without a centralized variable like a store, bank or notary.
Pump and Dump
“Inflating the value of a financial asset that has been produced or acquired cheaply, using aggressive publicity and often misleading statements.”
Sandy: “Bob, Parkbyte is going to the moon! buy it now!”
Bob: “Sandy, did you read that on poloniex trollbox?”
Proof of work
“A system that ties mining capability to computational power.”
Proof of Stake
“An alternative to proof of work, in which your exiting stake in a currency is used to calculate the amount of that currency that you can mine.”
In cryptography, a public key is a cryptographic key that can be utilized by any party to encrypt a message. Another party can then receive the message and using a private key that is only known to that individual or group, decode the message. In other words, a public address is your wallet address. This is the key you will share with people in order to have cryptocurrency sent to you or requested from you. They act as email addresses that can be published anywhere, unlike private keys where you keep safe and private and it is the key to your ownership of the coin(s). If you lose your private key and the recovery seed passphrase to your wallet, you have esssentially lost your crypto coin(s).
A two-dimensional graphical block containing a monochromatic pattern representing a sequence of data. Go to your App Store and serach for key words QR reader to install an app to read QR code via your phone’s camera.
Sandy: “Bob, I am afraid to invest in bitcoin, I heard people steal it often”
Bob: “just set up a QR code to be scanned by your phone when you login! It’s virtually impossible to hack a wallet this way.”
The smallest unit of bitcoin possible. There are 100 million satoshis in a single bitcoin.
The mysterious creator of Bitcoin. Known to possess over a million bitcoins, his/her/their/its identity is still unknown.
A signature is the mathematical operation that lets someone prove their sole ownership over their wallet, coin, data or on. An example is how a Bitcoin wallet may have a public address, but only a private key can verify with the whole network that a signature matches and a transaction is valid. These are only known to the owner and are basically mathematically impossible to uncover.
A soft fork differs from a hard fork in that only previously valid transactions are made invalid. Since old nodes recognize the new blocks as valid, a soft fork is essentially backward-compatible. This type of fork requires most miners upgrading in order to enforce, while a hard fork requires all nodes to agree on the new version.
A two-way smart contract is an unalterable agreement stored on the blockchain that has specific logic operations akin to a real world contract. Once signed, it can never be altered. A smart contract can be used to define certain computational benchmarks or barriers that have to be met in turn for money or data to be deposited or even be used to verify things such as land rights.
In a Proof of Stake system, this generally means leaving your coins in your wallet to increase their stake in an attempt to net rewards from block creation.
Selling a cryptocurrency In hopes of buying it at a lower price at a later time to gain profit.
Bob: “Sandy, I just shorted bitcoin at 2700$ yesterday, gonna make all kinds of money when it drops back to 2000$”
Sandy: “Bob you fool, have you checked the price today? it shot up to 10,000$ last night, I’m Rich!”
Acronyms stand for “Transmission Control Protocol”/“Internet Protocol” and is the connection protocol used by the internet
Technical Analysis (TA)
Financial analysis that uses patterns in market data to identify trends and make predictions. It is the use of past price information to identify trends and areas of supply & demand.
All cryptocurrency transactions involve a small transaction fee. These transaction fees add up to account for the block reward that a miner receives when he successfully processes a block.
Turing complete refers to the ability of a machine to perform calculations that any other programmable computer is capable of.
“The measurement of price movements over time for a traded financial asset.”
Sandy: “Bob, I just bought ethereum for 370$ on GDAX, and now it’s worth 10$”
A digital or physical address in which cryptocurrency can be stored/sent/received. Accessible through a private key.
Ex: Myetherwallet, trezor, Ledger nano
Someone who possesses a Majority percentage of a cryptocurrency. Referred to as a Whale.
Ex: The Winklevoss twins
A documentation describing a crypto currencies protocol in detail
Bob: “Sandy did you see the whitepaper for Bitconnect?”
Sandy: It doesn’t look like they have a whitepaper Bob.”
Bob: “Sandy you turd! Bitconnect is a scam. Always make sure to read the whitepaper before you invest in a cryptocurrency.” – All definitions in quotes were cited from Quizlet