Glossary

If you cannot find a term listed here, contact me & I’ll be sure to add it!


A B C D E F G H I J K L M N O P Q R S T U V W X Y Z #

A


Address:

A string of letters and numbers that are used to receive cryptocurrency. Works similar to a traditional bank account number and can be shared publicly with others.


Algorithm:

A set of calculations that creates a model from data. To create a model, the algorithm first analyzes the data you provide, looking for specific types of patterns or trends. Additionally, the specific hash function used for Bitcoin mining is SHA256 applied twice while Litecoin uses the scrypt algorithm – originally named as s-crypt, but pronounced as ‘script’. This algorithm incorporates the SHA-256 algorithm, but its calculations are much more serialised than those of SHA-256 in bitcoin.


ATH:

All-Time-High. This is the point where a coins price is at its highest. *Important* – I do not recommend investing when a coin is at an all time high unless the plan is to hold for a very long time. Its uncommon but does happen from time to time with small cap or medium cap coins.


Altcoin:

A combination of two words: “alt” and “coin”; alt is short for alternative and coin signifies currency. Thus, together they imply a category of cryptocurrency that is alternative to the digital currency Bitcoin.


Arbitrage:

Taking advantage of the price difference of an asset on two different markets or exchanges, often internationally. The price difference is used for a quick profit.


ASIC:

A type of computer chip. For cryptocurrencies, it’s used to mine new coins efficiently (see mining). Short for Application Specific Integrated Circuit.


B


Bear:

A person who is pessimistic about market prices and expects them to go down. This person is also known to be “bearish” about the market and price expectations.


Bitcoin:

The first of many new digital currencies to be used as a form of payment, much like the numbers you find in your average online banking website, Bitcoin is digital money. Click here for more info.


Block:

Blocks are packages of data that carry permanently recorded data on the blockchain network.


Blockchain:

An open source (for all to see), ledger system designed to keep a record of transactions made with digital assests permanently. A more in-depth answer can be found here.


Block Explorer:

An online tool to view all transactions, past & current, on the blockchain. It provides info like network hash rate and transaction growth.


Block Height:

The number of blocks connected on the blockchain.


Block Reward:

A form of incentive to mine cryptocurrency with the rewarding of an amount of coin when a miner successfully calculates the hash in a block. Verification of the transaction on the blockchain generates new coins in this way. Reward comes from some of these newly minted coins.


Bull:

A person that is optimistic and confident that market prices will be going up. This person is also known to be “bullish” about the market and price expectations.


C


Central Ledger:

A ledger maintained by a central entity.


Cold Storage:

The storage of Bitcoin private keys in any fashion that is disconnected from the internet. Typical cold storage includes USB drives, offline computers, or paper wallets.


Cold Wallet:

A Bitcoin wallet that is in cold storage (not connected to the internet).


Consesus:

Consensus is attained when all participants of the network agree on the validity of the transactions, making sure that the ledgers are exact copies of each other. (This is a security measure)


Cryptocurrency:

A revolutionary new system of commerce using digital assets to transfer funds. Learn more by clicking here.


D


ĐApp:

[Decentralized] Applications that run without the control of a central authority (like a software company or government). Ethereum is the first and largest decentralized application platform.


Decentralized:

Without a central authority or controlling party. Bitcoin is a decentralized network since no company, government, or individual is in control of it.


Decentralized Autonomous Organization (DAO):

An investor-funded and directed venture capital crowd-fund built on the Ethereum network that was hacked in June 2016 and subsequently shut down.


Difficulty:

A measure of how difficult it is to find a hash below a given target. The Bitcoin network has a global block difficulty. Valid blocks must have a hash below this target. Mining pools also have a pool-specific share difficulty setting a lower limit for shares.


Distributed Ledger:

Ledgers in which data is stored across a network of decentralized nodes. A distributed ledger does not have to have its own currency and may have permissions and be private.


Distributed Network:

A type of network where processing power and data are spread over the nodes rather than having a centralized data center.


Distributed Signature:

A digital code generated by public key encryption that is attached to an electronically transmitted document to verify its contents and the senders identity.


Double Spending:

Double spending occurs when a sum of money is spent more than once.


E


Encryption:

The use of mathematics and computer code (cryptography) to protect sensitive data like digital wallets, private keys, and personal information from unauthorized access.


ERC-20 Token:

The Ethereum token standard is use for Ethereum smart contracts. Developed in 2015, ERC-20 defines a common list of rules that an Ethereum token has to implement. Giving developers the ability to program how new tokens will function within the Ethereum ecosystem. This token protocol became popular with crowd-funding companies via Initial Coin Offering (ICO).


EVM:

The Ethereum Virtual Machine is a Turing complete virtual machine that allows anyone to execute arbitrary EVM Byte Code. Every Ethereum node runs on the EVM to maintain consensus across the blockchain.


Exchange Traded Fund:

A security that tracks a basket of assets such as stocks, bonds, and cryptocurrencies but can be traded like a single stock. Bought and sold on traditional stock exchanges.


F


Fiat:

A term used to describe traditional government-issued and backed currencies like dollars, Euros, and Yen. Not backed by physical commodities but by legal tender laws.


FOMO:

Internet culture term that stands for Fear of Missing Out. Describes actions taken by investors based on emotions and the fear of not benefitting from a price rise or drop.


Fork:

A change to the software and rules of a cryptocurrency that creates two separate versions of the currency’s blockchain.


FUD:

Internet culture term that stands for Fear, Uncertainty, and Doubt. It means negative information that is being purposefully spread about an asset to make people sell.


G


Gas:

To run decentralized applications and smart contracts on the Ethereum network, apps calculate their usage using an internal pricing unit called Gas. Fees are paid in Ethereum.


Genesis Block:

The very first or first few blocks of a blockchain that are or were created.


H


Hard Fork:

Some people use term hard fork to stress that changing Bitcoin protocol requires overwhelming majority to agree with it, or some noticeable part of the economy will continue with original blockchain following the old rules. See Fork and Soft Fork for further discussion.


Hash:

The act of performing a hash function on the output data. This is used for confirming coin transactions.


Hashrate:

The speed at which a compute is completing an operation in the Bitcoin code, or other altcoin.


HODL:

Internet culture term that stands for the resolve to hold assets over a longer period without selling. Became popular after an internet user misspelled the word hold.


Hybrid PoS/PoW:

A hybrid PoS/PoW allows for both Proof of Stake and Proof of Work as consensus distribution algorithms on the network. In this method, a balance between miners and voters (holders) may be achieved, creating a system of community-based governance by both insiders (holders) and outsiders (miners).


I


Initial Coin Offering (ICO):

A public, crowdfunded sale of cryptocurrency tokens to raise money for a project. Typically, company-specific tokens are offered in exchange for Bitcoin and Ethereum.


J


K


Know Your Customer (KYC):

Laws and regulations that require banks and other financial institutions to keep and report many details of their customers’ personal information and transactions.


L


Lightning Network:

A proposed change to Bitcoin’s blockchain that’s designed to fascilitate faster transactions and better scaling. Involves bi-directional payment channels and other changes.


Ledger:

A physical or electronic log book containing a list of transactions and balances typically involving financial accounts. The Bitcoin blockchain is the first distributed, decentralized, public ledger.


M


Miner:

A computer or group of computers that add new transactions to blocks and verify blocks created by other miners. Miners collect transaction fees and are rewarded with new bitcoins for their services.


Mining Pool:

The pooling of resources by miners, who share their processing power over a network, to split the reward equally, according to the amount of work they contributed to the probability of finding a block.


Multi-Signature:

Multi-signature addresses provide an added layer of security by requiring more than one key to authorize a transaction.


N


Node:

Node, or client, is a computer on the network that speaks Bitcoin message protocol (exchanging transactions and blocks). There are full nodes that are capable of validating the entire blockchain and lightweight nodes, with reduced functionality. Wallet applications that speak to a server are not considered nodes.


O


Open Source:

Software whose code is made publicly available and that is free to distribute. Bitcoin is an open source project and arguably the first open source money.


Oracles:

Oracles work as a bridge between the real world and the blockchain by providing data to the smart contracts.


P


Paper Wallet:

A type of cold storage wallet where private keys are printed on a piece of paper or other physical medium.


Peer to Peer:

A type of network where participants communicate directly with each other rather than through a centralized server. The Bitcoin network is peer to peer.


Private Key:

A string of letters and numbers that can be used to spend bitcoins associated with a specific Bitcoin address.


Proof of Stake (PoS):

Because proof of work requires substantial computer resources and electricity, it’s environmentally unfriendly. An alternative is PoS which is based on ownership of coins.


Proof of Work (PoW):

A piece of data that requires a significant amount of computation to generate but requires a minimal amount of computation to be verified as being correct. Bitcoin uses proof of work to generate new blocks.


Protocol:

When discussing blockchains, the term “protocol” is typically used to refer to the set of crypto-economic rules that maintain distributed consensus across a peer-to-peer network. In this sense of the term, there is one protocol per blockchain and one native per protocol (with a few exceptions).


Public Address:

A public address is the cryptographic hash of a public key. They act as email addresses that can be published anywhere, unlike private keys.


Pump & Dump:

Investment scheme that advertises the benefits of a certain asset, with the hope that a lot of people buy it and raise the price. The asset is then sold by the originator for profit.


Q


QR Code:

A digital representation of a bitcoin public or private key that is easy to scan by digital cameras. QR codes are similar to barcodes found on physical products in that they are a machine-friendly way to embody a piece of data. For cryptocurrencies, often used to easily share wallet addresses with others.


R


Return on Investment (ROI):

The percentage gain that was made with an investment or asset. For example, a 100% ROI means that the price of the asset or investment has doubled in value.


S


Satoshi:

The smallest divisible unit of one bitcoin. There are 100 million satoshis (8 decimal places) in one bitcoin. One satoshi = 0.0000001 bitcoins.


Satoshi Nakamoto:

The inventor of Bitcoin.


Scrypt:

Scrypt is a type of cryptographic algorithm and is used by Litecoin. Compared to SHA-256, this is quicker as it does not use up as much processing time.


SegWit/Segregated Witness:

SegWit is the process by which the block size limit on a blockchain is increased by removing signature data from Bitcoin transactions. When certain parts of a transaction are removed, this frees up space or capacity to add more transactions to the chain. Segregate mean to separate, and Witnesses are the transaction signatures. Hence, Segregated Witness in short, means to separate signatures. The concept of SegWit was formulated by Dr. Pieter Wuille.


Sell Wall/Buy Wall:

Using a depth chart, traders can see the current limit buy and sell points. The graphical representation on the depth chart looks like walls: http://media.coindesk.com/uploads/2015/05/image-1.png


SHA-256:

The specific hash function used in the mining process to secure bitcoin transactions.


Smart Contract:

Self-running computer code that makes decisions based on pre-set rules that later cannot be changed. The most well-known implementation is the Ethereum system.


Soft Fork:

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.


Solidity:

Computer programming language that is used to develop smart contracts and decentralized applications on the Ethereum platform and other blockchains.


T


Testnet:

An alternative blockchain that is not public and live. It is used to test new code and doesn’t transact any real money or value. Allows developers to experiment and learn.


This is Gentlemen:

“This is it, gentlemen.” Used to point out positive things that are currently happening. https://www.urbandictionary.com/define.php?term=This%20is%20gentlemen


Token:

A unit of value for a blockchain system. Tokens can be used for payment, access, voting, and facilitating the overall blockchain infrastructure. Most tokens are based on Ethereum.


Transaction Block:

A collection of transactions gathered into a block that can then be hashed and added to the blockchain.


Transaction Fee:

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:

Turing complete refers to the ability of a machine to perform calculations that any other programmable computer is capable of. An example of this is the Ethereum Virtual Machine (EVM).


U


V


Volatility:

Created by the rapid and repeated move of an asset’s price in both directions (up and down). Volatility adds uncertainty and risk to a market, but can also present opportunity.


W


Wallet:

A digital wallet is where cryptocurrencies like Bitcoin are stored. More specifically, coins are actually stored in the Blockchain itself – to which the wallet merely gives access.


Wei:

The smallest fraction of an Ether coin (Ether is the native currency of the Ethereum network). One Ether is made of 1000000000000000000 Wei, making Ether very divisible.


Whale:

An investor that holds a very large amount of an asset. For cryptocurrencies, whales are often early buyers of a coin or large, institutional buyers that hold a massive stake.


When Moon/When Lambo:

Essentially begging the question of when is the price going to skyrocket to the moon? Another meme for you: https://imgur.com/uKKwhcf


Whitepaper:

A formal, scientifically-written description of an idea or project. Whitepapers cover the theory and practical applications of cryptocurrencies, as well as many technical details.


X


Y


Z


#


51% Attack

Also known as >50% attack or a double spend attack. An attacker can make a payment, wait till the merchant accepts some number of confirmations and provides the service, then starts mining a parallel chain of blocks starting with a block before the transaction. This parallel blockchain then includes another transaction that spends the same outputs on some other address. When the parallel chain becomes more difficult, it is considered a main chain by all nodes and the original transaction becomes invalid. Having more than a half of total hashrate guarantees possibility to overtake chain of any length, hence the name of an attack (strictly speaking, it is “more than 50%”, not 51%). Also, even 40% of hashrate allows making a double spend, but the chances are less than 100% and are diminishing exponentially with the number of confirmations that the merchant requires.

This attack is considered theoretical as owning more than 50% of hashrate might be much more expensive than any gain from a double spend. Another variant of an attack is to disrupt the network by mining empty blocks, censoring all transactions. An attack can be mitigated by blacklisting blocks that most of “honest” miners consider abnormal. Under normal conditions, miners and mining pools do not censor blocks and transactions as it may diminish trust in Bitcoin and thus their own investments. 51% attack is also mitigated by using checkpoints that prevent reorganization past the certain block.