A Glossary of all the Cryptocurrency Terms you need to know
Scrolling reddit, this site or other cryptocurrency related forums on the internet and having no clue what people are talking about? Well, nor was I when I first started getting involved into cryptocurrencies. Therefore I thought it would be useful to have a glossary of all the terms you may come across.
A 51% attack is a situation where more than half of the computing power on a network is operated by a single individual or concentrated group, which gives them complete and total control over a network. Things that an entity with 51% of the computing power can do include, but are not limited to:
- Halting all mining.
- Halting and manipulating all interpersonal transactions.
- Use singular coins over and over.
A bitcoin address is essentially the same thing as your home address. It’s the location from which you would receive, send or hold your currency. These addresses generally manifest in a long string of alphanumeric characters and will look something like:
A wallet address is the public portion of the two encrypted keys necessary for a holder to accept or verify a transaction.
An altcoin is the community accepted name for any coin that isn’t Bitcoin. Altcoins that we’ve previously discussed include Dash and Monero.
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 for scrypt 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.
A blockchain is a data system that allows for the creation of a digital ledger of transactions on a non-centralized network. Cryptography is the main operator that allows for users to engage with the ledger without the need for any central figurehead. In layman’s terms, this means that people and computers all over work together to create a network instead of a network being made by one single person or company. This network is enabled and protected through cryptography! We have seen this used in currency, data transfer and on. The blockchain is comprised of “blocks” and is constantly growing as each new record, datum, or block is added onto the chain for everyone to see.
Blocks are essentially pages in a ledger or record keeping book. Blocks are the files where unalterable data related to the network is permanently stored. Forever. Like eternity.
Block height is the number of blocks preceding the genesis block (first block) on the chain. A genesis block will always have a height of zero because nothing precedes it. It’s a metric used to create a bearing on time in the programming world as well as a few other functions such as maintaining counter-party and betting in the crypto world. Considering that a new Bitcoin block is made every 10 minutes, you can work out certain time related pieces of information if you have the total length of the chain.
Block reward is the reward allotted for hashing, or solving the mathematical equation related to a block. The reward for mining a Bitcoin block is 25 bitcoins per block mined, which will halve every 210,000 blocks!
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.
A fork is the permanent divergence of an alternative operating version of the current blockchain. Forks come into existence when a 51% attack occurs, a bug in the program, or more commonly a new set of consensus rules come into existence. These happen when a development team creates and inserts notably substantial changes into the system. The successful fork is decided by the height of their blocks.
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.
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.
Mining is the term used for discovering and solving blocks along the blockchain. A reward is given for solving the algorithm and lengthening the chain, called a mining reward. The mining reward for the Bitcoin blockchain is Bitcoin.
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.
Proof of work was a concept originally designed to sieve spam emails and prevent DDOS attacks. A Proof of Work is essentially a datum that is very costly to produce in terms of time and resources, but can be very simply verified by another party. The proof of work for Bitcoin is referred to as a “nonce,” or number used only once. This has been considered an energy intensive alternative to proof of stake as the computers unfortunately have to be on and running, which also drives the market towards centralization of hashing power… which is what the blockchain aims to defeat!
Proof of stake has been considered the greener alternative to PoW. Where PoW requires the prover to perform a certain amount of computational work, a proof of stake system requires the prover to show ownership of a certain amount of money, or stake.
19. Public/Private Key
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 key that is only known to that individual or group, decode the message.
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 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.
Exchange (see collection)
Websites where you can buy and sell crypto-currencies. Some popular exchanges in North America are:
Government-issued currency, such as the US dollar.
Someone that owns absurd amounts of crypto-currency.
Limit order / limit buy / limit sell
Orders placed by traders to buy or sell a crypto-currency when the price meets a certain amount. They can be thought of as ‘for-sale’ signs. These orders are what are bought and sold against when traders place market orders.
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
Market order / market buy / market sell
A simple purchase or sale on an exchange at the current price. Market buys purchase the cheapest ETH available on the order book, and market sells fill the most expensive buy order on the books.
The act of ‘magnifying’ the intensity of your trades by risking your existing coins. (NOTE: Very risky, only for experienced traders and only on certain exchanges even then)
A margin trade that profits if the price increases.
A margin trade that profits if the price decreases.
An expectation that price is going to increase.
An expectation that price is going to decrease.
All-Time-High. We’ve gotten a lot of these the past couple months.
Generally any crypto-currency other than Bitcoin or Ethereum. (Though some Bitcoin folks would probably still say Ethereum is an altcoin)
Refers to the ‘currency’ of projects built on the ethereum network that have raised money via issuing their own tokens. Examples:
GNT – Golem
REP – Augur
BAT – Basic Attention Token
ICN – Iconomi
Initial Coin Offering, somewhat similar to an IPO in the non-crypto world. Startups issue their own token in exchange for ether. This is essentially crowdfunding on the ethereum platform.
Shilling / pumping
Someone essentially advertising another crypto-currency. If a coin is promised to cure cancer or be the second coming of Jesus, it’s being shilled.
A crypto-currency with extremely low volatility that can be used to trade against the overall market.
Taking advantage of a difference in price of the same commodity on two different exchanges. Often mentioned when it comes to comparing ETH prices on Korean exchanges against US exchanges.
Fear Of Missing Out. The overwhelming sensation that you need to get on the train when the price of something starts to skyrocket.
Fear, Uncertainty, and Doubt. Baseless negativity spread intentionally by someone that wants the price of something to drop.
Someone that is spreading FUD.
Pump And Dump
The recurring cycle of an altcoin getting a ton of attention, leading to a fast price increase, and then of course followed by a huge crash.
Someone still holding an altcoin after a pump and dump crash. Can also just refer to someone holding a coin that is sinking in value with few future prospects.
The total value held in a crypto-currency. It is calculated by multiplying the total supply of coins by the current price of an individual unit. This site shows a great run-down of each coin’s market cap: http://coincap.io/
Return on Investment. The percentage of how much money has been made compared to an initial investment. (i.e., 100% ROI means someone doubled their money).
Trend Analysis or Technical Analysis. Refers to the process of examining current charts in order to predict which way the market will move next.
Moving Average Convergence Divergence. A trend indicator that shows the relationship between two moving averages of prices. More info: http://www.investopedia.com/terms/m/macd.asp
A margin around the price of a crypto that helps indicate when a coin is overbought or oversold. More information available at: http://www.investopedia.com/terms/b/bollingerbands.asp
General Cryptocurrency Terms
blockchain The classification of technology that Ethereum falls into. Blockchains are distributed ledgers, secured by cryptography. They are essentially public databases that everyone can access and read, but the data can only be updated by the data owners. Instead of the data residing on a single centralized server, the data is copied across thousands and thousands of computers worldwide. More detailed information available at: https://en.wikipedia.org/wiki/Blockchain
Node A computer that possesses a copy of the blockchain and is working to maintain it.
The process of trying to ‘solve’ the next block. It requires obscene amounts of computer processing power to do effectively, but is rewarded with ether.
A computer especially designed for processing proof-of-work blockchains, like Ethereum. They often consist of multiple high-end graphic processors (GPUs) to maximize their processing power.
Fork A situation where a blockchain splits into two separate chains. Forks generally happen in the crypto-world when new ‘governance rules’ are built into the blockchain’s code. Some more information available at: https://en.wikipedia.org/wiki/Blockchain#Hard_forks
Proof-of-work. The current consensus algorithm used by Ethereum.
Proof-of-stake (not piece of shit). The proposed future consensus algorithm to be used by Ethereum. Instead of mining in its current form, people that own ETH will be able to ‘lock up’ their ether for a short amount of time in order to ‘vote’ and generate network consensus. The plan is that these stakeholders will be rewarded with ETH by doing so.
A scaling solution for blockchains. Typically, every node in a blockchain network houses a complete copy of the blockchain. Sharding is a method that allows nodes to have partial copies of the complete blockchain in order to increase overall network performance and consensus speeds.
Storage for crypto-currency that exists purely as software files on a computer. Software wallets can be generated for free from a variety of sources. MyEtherWallet (MEW) is one of the popular. (more on MEW below)
A device that can securely store crypto-currency. Hardware wallets are often regarded as the most secure way to hold crypto-currency.
Ledger Nano S / Trezor
Two of the most popular hardware wallet models.
The process of moving crypto-currency ‘offline’, as a way of safekeeping your crypto-currency from hacking. There are a variety of ways to do this, but some methods most commonly used:
—Printing out the QR code of a software wallet and storing it somewhere safe, such as a safety deposit box.
—Moving the files of a software wallet onto a USB drive and storing it somewhere safe.
—Using a hardware wallet.
Ethereum Specific Terms
Code that is deployed onto the Ethereum blockchain, often directly interacting with how money flows. Not my quote, but: “A normal transaction allows you to send money from A to B. Smart contracts allow you to send money from A to B, on the condition that C happens.”
Decentralized Application. This refers to an application that uses an Ethereum smart contract as it’s back-end code.
A potential future event wherein Ethereum’s market cap surpasses Bitcoin’s market cap, making Ethereum the most ‘valuable’ crypto-currency. This site shows the progress of the Flippening in real-time: http://www.flippening.watch/
A measurement of how much processing is required by the ethereum network to process a transaction. Simple transactions, like sending ether to another address, typically do not require much gas. More complex transactions, like deploying a smart contract, require more gas.
The amount of ether to be spent for each gas unit on a transaction. The initiator of a transaction chooses and pays the gas price of the transaction. Transactions with higher gas prices are prioritized by the network.
The smallest denomination of ether. 1 Ether = 1000000000000000000 Wei (1018)
Another denomination of ether. Gas prices are most often measured in Gwei. 1 Ether = 1000000000 Gwei. (109)
More somewhat common denominations of ether. The full denomination chart: https://ethereum.stackexchange.com/questions/253/the-ether-denominations-are-called-finney-szabo-and-wei-what-who-are-these-na
An upcoming protocol change to Ethereum that will enable high-speed transfers across the network. It is similar in some aspects to Bitcoin’s planned Lightning Network. The name, I assume, comes from the Mortal Kombat character named Raiden that can shoot lightning. More reading available at: https://themerkle.com/what-is-the-raiden-network/
Frontier, Homestead, Metropolis, Serenity
The four planned stages of the Ethereum development roadmap. We are currently in the Homestead phase. The Metropolis update is likely to be available sometime in the next year.
MyEtherWallet. A free site that can generate ethereum software wallets for you.
Enterprise Ethereum Alliance. A coalition of startups and corporations trying to figure out the best way to use this dang thing.
One of the primary co-founders of Ethereum (and certainly the most well-known). A brief biography is available at: https://en.wikipedia.org/wiki/Vitalik_Buterin
Decentralized Autonomous Organization. An investor-directed venture capital fund built on the Ethereum network that was hacked in June 2016. The hack stole about a third of the DAO’s funds and led to Ethereum being hard-forked the following month. The DAO is often cited as one of Ethereum’s biggest stumbles thus far.
Long ago, someone on a bitcoin forum got drunk and made a post with this typo in the place of ‘hold’. A meme was born. https://bitcointalk.org/index.php?topic=375643.0
This is gentlemen
“This is it, gentlemen”. Used to point out positive things that are currently happening. http://www.urbandictionary.com/define.php?term=This%20is%20gentlemen
In the crypto-world, this does not mean exposing your buttocks. It is referring to a price going up astronomical levels.