Vocab, The Base Of Understanding

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Bitcoin: 

Bitcoin is a decentralized digital currency that can be transferred on the peer-to-peer bitcoin

network. Bitcoin transactions are verified by network nodes through cryptography and recorded in a

public distributed ledger called a blockchain.

Altcoin:

The term “altcoin” is shorthand for “alternative coins” and simply means cryptocurrencies

other than Bitcoin.

Blockchain: 

A digital form of record keeping, and the underlying technology behind cryptocurrencies. A

blockchain is the result of sequential blocks that build upon one another, creating a permanent and

unchangeable ledger of transactions (or other data).

Block: 

Groups of data within a blockchain. On cryptocurrency blockchains, blocks are made up of

transaction records as users buy or sell coins. Each block can hold only a certain amount of information. Once it reaches that limit, a new block is formed to continue the chain.

Coins:

Coins are digital assets that are native to their own blockchain, like Bitcoin, while tokens are digital assets that are built on top of an existing blockchain, for example, Chainlink, which is built on the Ethereum blockchain.

Cold wallet/Cold storage: 

A secure method of storing your cryptocurrency completely offline. Many cold

wallets (also called hardware wallets) are physical devices that look similar to a USB drive. This kind of wallet can help protect your crypto from hacking and theft, though it also comes with its own risks – like losing it, along with your crypto.

Decentralization: 

The principle of distributing power away from a central point. Blockchains are

traditionally decentralized because they require majority approval from all users to operate and make

changes, rather than a central authority.

DeFi/ Decentralized finance: 

Financial activities conducted without the involvement of an intermediary,

like a bank, government, or other financial institution.

DApps/ Decentralized applications: 

Applications are designed by developers and deployed on a blockchain

to carry out actions without intermediaries. Decentralized finance activities are often completed using

decentralized apps. Ethereum is the main network supporting activities in decentralized finance.

Exchange: 

A cryptocurrency exchange is a digital marketplace where you can buy and sell

cryptocurrency.

Fiat: 

Fiat money is a legal tender, which is a currency declared legal by the government, and its value is

backed by the issuer (the government).

Fork: 

When a blockchain’s users make changes to its rules. These changes to the protocol of a

blockchain often result in two new paths — one that follows the old rules, and a new blockchain that

splits off from the previous one. (Example: a fork of Bitcoin resulted in Bitcoin Cash).

Gas: 

A transaction fee that developers and users have to pay to the Ethereum network in order to use the system. Gas is paid in ether, the native cryptocurrency of the Ethereum blockchain. (→ Transaction fees /Tx fees)

Genesis block: 

The first block of a cryptocurrency ever mined.

HODL: 

Stands for “Hold On for Dear Life” though the term originated from a user typo on a Bitcoin

forum in 2013. It refers to a passive investment strategy in which people buy and hold onto

cryptocurrency — instead of trading it — in the hopes that it increases in value. 

Halving:

A feature was written into Bitcoin’s code in which after a certain number of blocks are mined

(typically every four years) the amount of new Bitcoin entering circulation gets halved. The halving can

have an impact on Bitcoin’s price.

Hash:

A unique string of numbers and letters that identify blocks and are tied to crypto buyers and

sellers.

Hot wallet:

A software-based cryptocurrency wallet connected to the Internet. While more convenient

for quickly accessing your crypto, these wallets are a bit more susceptible to hacking and cybersecurity attacks than offline wallets — just as files you store in the cloud may be more easily hacked than those locked in a safe in your home.

ICO/ Initial coin offering: 

A way that funds are raised for a new cryptocurrency project. ICOs are similar

to Initial Public Offerings (IPOs) of stocks.

Market cap:

Cryptocurrency market capitalization refers to the total value of all the coins that have

been mined. You can calculate a crypto’s market cap by multiplying the current number of coins by the

current value of the coins.

Mining: 

The process whereby new cryptocurrency coins are made available and the log of transactions

between users is maintained. 

Node: 

A computer that connects to a blockchain network.

NFT: 

Non-fungible tokens are units of value used to represent the ownership of unique digital items like

art or collectibles. 

Privet Key: 

The encrypted code allows direct access to your cryptocurrency. Like your bank account

password, you should never share your private key. 

Proof of Assignment/POA: 

Proof of Assignment (PoA) is a cryptographic consensus algorithm used to

confirm agreement on a distributed and decentralized network.

Proof of Stake/POS: 

cryptocurrency owners validate block transactions based on the number of coins a

validator stakes. While PoW mechanisms require miners to solve cryptographic puzzles, PoS

mechanisms require validators to simply hold and stake tokens.

Proof of Work/POW:

Proof of Work is a more traditional method to award miners for their effort. It

requires miners to show their effort by tying a variable to the process of hashing a transaction. A hashed

block proves work was completed and awards the miner. 

Public Key:

A public key is a string of characters used to purchase cryptocurrency. If a content creator,

for example, wants to receive cryptocurrency instead of fiat for his or her content, they can list their

public key. It acts like a mail box to send and receive crypto.

Satoshi Nakomoto:

The pseudonymous creator of Bitcoin. No one knows the true identity of Nakomoto or if it’s more than one person.

Seed/Keys:

A seed phrase, also known as a recovery phrase or mnemonic phrase, is a set of words that can be used to restore a cryptocurrency wallet. Most seed phrases are 12 or 24 words long. It is a backup of the wallet and should be kept safe and secure.

Smart Contract: 

An algorithmic program that enacts the terms of a contract automatically based on its

code. One of the main value propositions of the Ethereum network is its ability to execute smart

contracts. 

Stablecoin:

A  stablecoin pegs its value to some other non-digital currency or commodity. A digital fiat

represents a fiat or government-backed currency on the blockchain. (Example: Tether, which is pegged to the U.S. dollar)

Token:

type of cryptocurrency that represents an asset or specific use and resides on its own

blockchain. Tokens can be used for investment purposes, to store value, or to make purchases.

Transaction/ Tx fees:

A transaction in crypto is a transfer of value between two wallets. It is recorded on the blockchain and is visible to all users. Transaction fees in crypto are fees paid to miners for processing transactions on the blockchain. They are usually a small percentage of the total transaction amount and may vary depending on the amount of tx's which are currently demanded. 

Wallet: 

A place to store your cryptocurrency holdings. Many exchanges offer digital wallets. Wallets may

be hot (online, software-based) or cold (offline, usually on a device).

White Paper: 

Throws light on two major aspects of a crypto project – its purpose and the technology

behind it. It contains historical performance and other data about cryptocurrency.