Crypto Glossary

Glossary of Cryptocurrency Terms and Acronyms

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What is Bitcoin?

The first and premier digital currency

What it is DeFi?

Complete decentralized finance ecosystem

What is Ethereum?

A smart contract digital currency platform

Cryptocurrency Glossary

Alt coins and tokens

What is Blockchain?

Immutable data recording open ledger system

A

Address
The alphanumeric code that represents a cryptocurrency wallet. All sending and receiving of cryptocurrency is done via a wallet address.

Airdrop
A form of token distribution often utilized by new cryptocurrency startups. These companies will “airdrop” cryptocurrencies to your wallet for free, bringing awareness to the project.

Altcoin
A term used to describe cryptocurrencies aside from Bitcoin. If Bitcoin is the “main cryptocurrency” all other coins are considered an “alternative coin.”

Anti-Money Laundering (AML)
A set of policies in place to prevent bad actors from money laundering via cryptocurrency services. 

Application-Specific Integrated Circuit (ASIC)
Computer chips designed for mining Bitcoin and other cryptocurrencies. Intended to work much better than traditional graphics cards.

B

Bitcoin
The world’s first cryptocurrency. The anonymous Satoshi Nakamoto created Bitcoin in 2009. It’s a decentralized asset that runs on a blockchain ledger, allowing for international transactions without the need for a third-party. 

Block
Used to store information on a blockchain. Entirely immutable, with each block added to the end of the chain after being validated.

Blockchain
A decentralized digital ledger of immutable data. Each block is committed to a blockchain via cryptographic technology. Most are publicly accessible, while some private blockchains require permissions.

C

Client
Similar to a web browser. The way users communicate and interact with a blockchain network.

Cloud Mining
A form of cryptocurrency mining with a focus on accessibility. While traditional mining is expensive and requires excessive amounts of electricity, cloud mining centralizes the process. A cloud mining company provides powerful mining equipment via cloud technology, with investors earning rewards in exchange for their funds. Unfortunately, cloud mining doesn’t reward nearly as much as traditional mining.

Coin

Another word for a digital asset on a blockchain network. 

Cold Wallet
A cryptocurrency wallet that isn’t connected to the internet. Often in the form of a paper or hardware wallet.

Consensus
A method of governance that circumvents the need for a central party. Requires a group of contributors to come to an agreement or a consensus on any changes to a network. 

Cryptocurrency
A virtual currency that allows users to interact with a blockchain network. Cryptocurrencies are digital representations of value. Examples include Bitcoin, Ethereum, Litecoin, and Tron.

Cryptography
A way to communicate information privately and securely. Cryptocurrencies are secured and transmitted thanks to modern cryptography, which comprises computer code and mathematics.

D

Decentralized
The movement from a centralized form of government to a distributed one. The idea is to encourage autonomy. Blockchain networks are entirely decentralized, circumventing the need for a controlling third party.

Decentralized Application (dApp)
An application that runs on blockchain technology, operating autonomously without a controlling third party. Decentralized applications (dApps) are powered by smart contracts - an innovation from the Ethereum network.

Decentralized Autonomous Organization (DAO)
A Decentralized Autonomous Organization (DAO) is an artificially intelligent group that enforces a set of rules on a network. Developers can program rules for the DAO to impose upon its userbase, ensuring a network’s security.
DAO’s are vulnerable to hacking and other forms of manipulation, making them a divisive form of enforcement in the cryptocurrency community.

Decentralized Finance (DeFi)
The blanket term representing financial applications built on a blockchain network. These apps circumvent a middleman’s need, allowing users to loan and store money, among other financial use cases.

Digital Asset
A virtual asset that represents some sort of value. That value is based on the network the asset correlates with.

Digital Signature
When a user transacts on a blockchain network, that transaction is verified by the holder’s private key. The private key signature validates that the transaction was intentional.

Distributed Ledger Technology (DLT)
The technical term for decentralization. Distributed ledger technology (DLT) is what allows a blockchain to be decentralized. The ledger data is distributed across various nodes connected to the network, decentralizing the information, and removing the need for a central authority. This process increases the security of said data, as well as transacts it faster.

Double Spend
The process of a bad actor trying to spend the same digital asset twice. This is prevented by miners validating the unique existence of each transaction.

E

Encryption
The act of converting information into code, ensuring it remains secure during a transaction. A recipient must decode the data before being able to read it.

ERC-20
This is the standard that most smart contracts on the Ethereum network abide by. ERC means Ethereum Request for Comment. If these rules are not followed, the transaction is deemed invalid.

ERC-721
Another token standard for the Ethereum network. Allows for unique, non-transferable assets on the blockchain.

Ethereum
A blockchain network that enables developers to build and deploy decentralized applications thanks to its support of smart contracts.

Ethereum Improvement Proposals (EIP)
Ethereum Improvement Proposals are standards on the Ethereum platform. These include API regulations, rules for protocols to follow, and more.

Ethereum Virtual Machine (EVM)
The Ethereum Virtual Machine (EVM) is a closed environment for developers to test their decentralized applications with smart contracts. It’s specifically designed to prevent denial-of-service attacks. 

Exchange
A platform in which users can buy, sell, and trade cryptocurrency.

F

Fiat Currency
Currency issued by a local government.

Fork
The creation of a parallel blockchain, utilizing the technology of the network it splits from. There are two types of fork: a hard fork and a soft fork.

G

Gas
A fee charged to users transacting on the Ethereum network. Gas represents the computer power it costs to validate a transaction.

Genesis Block
The origin block on a blockchain network.

H

Hard Fork
An alteration to a blockchain network that requires users to upgrade to this new version to continue using it. These changes are often drastic, involving new consensus algorithms or security protocols. Examples of this include Ethereum hard forking from Ethereum Classic or Litecoin hard forking from Bitcoin.

Hash
A unique value that validates each block on a blockchain network. Each hash value is unlike another, representing that block on the platform.

Halving
The process of cutting in half the amount of Bitcoin released into the network each time a block is validated. This ensures the scarcity of Bitcoin, stabilizing its value in the process.

Hardware Wallet
A USB device that stores your cryptocurrency private keys offline. 

Hot Wallet
A cryptocurrency wallet connected to the internet at all times. Useful for day traders and those who need constant access to their cryptocurrency. Less secure than an offline wallet.

HyperLedger
A group of blockchain-focused experts focused on improving and developing the technology for widespread use. Founded by the Linux foundation, HyperLedger has worked with IBM, Intel, and more.

I

Immutable
An attribute meaning unchangeable. Blocks on a blockchain are immutable once committed to the network. This ensures a constant, untamperable history to look back on.

Initial Coin Offering (ICO)
Similar to an Initial Public Offering (IPO), and Initial Coin Offering (ICO) is when a blockchain startup offers its token for potential users to invest in. That money then funds the project, while the token allows users to interact with it as the platform develops.

InterPlanetary File System (IPFS)
A protocol on the Ethereum blockchain that allows users to share media on the platform. The IPFS takes advantage of Ethereum’s decentralization, meaning users can host files without a central authority or the risk of a single point of failure.

K

Know Your Customer (KYC)
A policy where blockchain-related companies, such as exchanges, require users to reveal their identity. This is to minimize company involvement with theft and other crimes from occurring within the space.

L

Lightning Network
A protocol introduced to the Bitcoin network that allows for instantaneous transaction times. It enables two parties to transact multiple times before committing those transactions to the network. The idea is to solve Bitcoin’s scalability problem.

Liquidity
How quickly and easily an asset can be converted to cash without altering its price.

M

Mainnet
The main blockchain network where interactions and transactions occur. A mainnet is the real-world network in utilization.

Market Capitalization
The total value of a cryptocurrency project. Calculated by multiplying the current supply by the asset’s market price. As of this writing, Bitcoin’s market cap is $355 billion.

Mining
The act of committing a block to a blockchain network. A miner utilizes computer power to find the unique hexadecimal number that it correlates with to mine a block. This number validates the block as its own and confirms to the rest of the network that these transactions are authentic. 

Miners are rewarded for their efforts, though the amount varies based on the network.

Mining Pool
Mining takes an absurd amount of computer power. If a user doesn’t have enough to mine by themselves, they’ll join a mining pool. This pool is a group of miners who contribute their power to mine, dividing up the rewards for doing so.

N

Node
Any device connected to the blockchain network. There are two types of node: light node and full node. The former downloads some of the blockchain network and enforces its rules. The latter contains the entire network on its device. Full nodes in combination with light nodes are what allow a network to be decentralized.

Non-Fungible Token (NFT)
A non-fungible token (NFT) is a unique asset on a blockchain network. This token cannot be replicated and is unlike anything else the platform can offer.

O

Oracle
An oracle interacts with smart contracts within a blockchain, providing them off-chain information.

P

Peer-to-Peer (P2P)
A direct connection between two users, or peers. Peer-to-peer transactions are quite popular, for instance, as they circumvent the need for an exchange or other third-party.

Private Blockchain
While most blockchain networks are open source and public for anyone to examine, some corporations might hold private, permission-based blockchains. This allows them to take advantage of blockchain’s capabilities while keeping information limited.

Private Key
A cryptocurrency wallet comes with a private key that acts as a sort of password to access it. That private key represents ownership of the assets within the wallet and digitally signs any transactions before they’re sent, marking them valid. It is meant only for the wallet owner to see.

Proof of Stake (PoS)
Proof-of-Stake (PoS) is a consensus algorithm that requires users to stake their cryptocurrency into the network. These stakers must leave their wallets connected to the network as often as possible. In return, they’re given the privilege of validating transactions and earn rewards for doing so.

PoS circumvents the need for computer power, making it more accessible and environmentally friendly than Proof-of-Work.

Proof of Work (PoW)
Proof-of-Work (PoW) is a consensus algorithm that requires computer power and miners to validate transactions.
These miners are tasked with finding a specific code that identifies a unique block, validating the transactions within. The first to do so is rewarded in the network’s cryptocurrency.

PoW is expensive in terms of power and isn’t seen as eco-friendly. It’s also difficult to scale, with many PoW networks experiencing congestion.

Protocol
A set of rules for a blockchain network to abide by. These rules are hard-coded into the network and can be added to if consensus allows it.

Public Key
Meant to represent a user during a cryptocurrency transaction. A wallet address is derived from this public key, allowing users to send and receive funds.

S

Satoshi
The smallest measurement of Bitcoin. Equivalent to 0.00000001 Bitcoin. Named after the publisher of the Bitcoin whitepaper.

Satoshi Nakamoto
The anonymous founder of Bitcoin. Published the Bitcoin whitepaper in 2008, releasing the technology in 2009.

Scalability
The term referring to a blockchain network’s ability to run at scale. If it congests as more transactions are made, the network is said to scale poorly.

Sidechain
A second, smaller blockchain tied to the main one within a network. To help with congestion, the main blockchain might offload some tasks to the sidechain. That sidechain will process the tasks, sending the validated blocks back to the mainchain to set into the ledger.

Smart Contract
Essentially a digital if-then statement. Programmable, immutable contracts that allow users to transact value without the need for a third-party. 

For example, a freelancer might have a job with a client. The client will lock payment into the smart contract, with it set to release when a criteria is met. If the freelancer turns in work that meets the criteria, the funds will be released.

Soft Fork
An upgrade to a blockchain network that’s backward compatible with older versions of the client. Often representing a new but not a drastic change to the protocol, a softfork only requires most miners to upgrade and enforce the rules. 

Solidity
The programming language behind smart contracts. To build dApps on Ethereum, for example, developers must learn Solidity.
StablecoinA cryptocurrency backed by a physical asset. Examples include Tether, an asset tied to the value of the United States dollar. Cryptocurrencies that aren’t volatile.

T

Testnet
A safe environment for developers to test new features before committing them to the mainnet.

Token
A token represents value on a blockchain network. Tokens are how users interact with the network.

Transaction Fee
A fee charged for making a transaction on a blockchain network. These fees are given to miners who successfully validate blocks.

U

Utility Token
Tokens designed for users to interact with the network, rather than ones that hold value like Bitcoin.

V

Validator
A user on a Proof-of-Stake network that validates transactions. Generally, the users who stake the most are the ones who become validators.

W

Wallet
A space to store the private keys for your cryptocurrencies. It contains a wallet address for sending and receiving assets.

Whitepaper
Documentation detailing the technology and the intent behind a blockchain network.

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Have You Heard?

Coinberry is Now Backed by Financial Bonding Insurance!
We are now backed by a form of insurance that protects against financial losses due to dishonest acts and unethical behavior from Coinberry employees.