Cryptocurrencies and Blockchain Dictionary


2 Factor Authentication (2FA):
Two Factor Authentication is an extra layer of security used by websites in addition to user id and password. Its usually a secret key or a google authentication code which is only known to the user and used for authentication.

Addresses are used to send or receive cryptocurrencies over the network. An address is a string made from alphanumeric characters which can also be represented by a scanable QR code.

Airdrop means a token is distributed to the community for free or for small tasks like for sharing/marketing ICO token sale on social media. This is done to ensure early distribution and closing of token sale target.

Any cryptocurrency coin other than Bitcoin.

Its an acronym for Application Specific Integrated Circuits. These are silicon based integrated circuits customized for a particular task. For example, Bitcoin ASICs are specifically optimized for mining Bitcoin.

ASIC Resistant:
Cryptocurrencies which cannot be mined by an ASIC or if ASICs do not have advantage over CPUs while mining. For example, Vertcoin (VTC).

All-Time High, means the highest historical price of a specific coin.

Atomis Swap:
Its a blockchain feature which allows for the exchange of one cryptocurrency into another without using a trusted third party like an exchange. For example, 1 Vertcoin was converted into equivalent Litecoin directly on the blockchain.

Bag Holder:
A term to refer to a trader who bought in at a high due to FOMO effect and missed opportunity to sell, leaving him with huge number ofLong coins.

Negative Price Movement Trend.

It is the first peer-to-peer, open source, decentralized cryptocurrency that uses blockchain technology.

A blockchain is a decentralized, public ledger which continuously grows when transactions are processed to make permanent blocks.

Block Explorer:
Block explorer is an online tool (usually a website) which keeps track of all the transactions that ever occurred on a cryptocurrency blockchain. Its used to retrieve crucial information about network hash rate, network difficulty, last block information, total coin circulation, transaction growth etc. Example,

Block Height:
Refers to the number of blocks created in the blockchain. Height 0 would be the first block on blockchain, also called Genesis block.

Block Reward:
Its a form of incentive rewarded to miners for successfully calculating hash for a block. Miners usually earn newly mined coins and transaction fees. Each cryptocurrency can have their own protocol which defines how many coins would be rewarded for each mined block.

Bounty Program:
According to Merriam-Webster dictionary a Bounty is a reward, premium or subsidy given to a person by an organization. In general terms a Bounty program is an offer by startups, websites or companies to passionate individuals in return of providing marketing services, blogging, bug finding, website hack-proofing, products reviews and product improvement to name a few. Technically speaking Bounty program is a marketing method used by blockchain startup companies to mass communicate their ICO project through the services of passionate individuals and supporters. Supporters usually get newly launched ICO tokens in return for the service.

Short form of ‘Buy The Fucking Dip’. When people are running around and selling because of fear, this is the time to buy.

Positive price movement in the market.

Chain Linking:
Its the process of connecting two different blockchains with each other so that inter-blockchain transactions can take place. For example, this will allow Bitcoin to communicate and transfer any assets with other sidechains.

Central Ledger:
A ledger maintained and managed by a central authority.

Cloud Mining:
Coin mining on the infrastructure provided by a mining company. Solo mining is expensive and not as much profitable any more. Individuals usually signup and invest money in a company with big mining data centers and infrastructure. Profits are distributed to individuals in proportion with their investment.

Acknowledgement that cryptocurrency transaction has successfully completed. In technical terms, when a transaction is successfully hashed and added to the blockchain. Usually, confirmed through mining.

Consensus on the blockchain network is a process through which network nodes agrees on the validity of the transactions. Algorithm also ensures that each node has exact copy of digital ledgers. Proof-of-Work (PoW) and Proof-of-Stake(PoS) are two well known consensus algorithms.

Process of deciphering encrypted messages without using private keys.

A form of digital currency created by implementing complex mathematical algorithms using computer programming languages. Cryptocurrencies employ various encryption techniques to make them decentralized, secure and fast. SHA-256 is a common encryption technique used by majority of cryptocurrencies. Also known as Tokens, cryptocurrencies are the main application of blockchain technology.

The art of encrypting and decrypting information.

dApp is an acronym for “Decentralized Application”. An application is called dApp if it’s code is completely open source, operates autonomously, and no entity should control majority of its tokens. dApp uses blockchain technology where all application data is cryptographically encrypted on a public ledger.

Decentralized Autonomous Organization (DAO):
As the name suggests Decentralized Autonomous Organizations can be thought of as organization that run without any human intervention and under the control of an incorruptible set of business rules.

Its the process of transforming encrypted information so that it is intelligible and useful again.

Distributed Exchange (DEX):
A system of exchanging digital assets where a central trusted authority is not required to verify transaction.

Its the measure of how much computation power is needed to mine transactions block in the blockchain network. Mining difficulty always increases with time.

Digital Identity:
A digital identity is a unique information about an entity stored in computers or on a public network like blockchain.

Digital Wallet:
A digital wallet is an electronic device or software, used to store digital assets like cryptocurrencies or tokens. A digital wallet is encrypted with a private key and allows users to make electronic transactions.

Distributed Ledger (DLT):
Distributed ledgers are accounting systems (ledgers) where data is stored on a network of nodes spread out across the globe. There is no central authority controlling the network operations in a Distributed ledger as its controlled by multiple nodes on a consensus scheme.

Distributed Network:
A distributed network is a type of computer network where data and processing power are spread across different networks/nodes without any central authority.

Digital Signature:
A digital code generated by public key encryption which is used to authenticate digital messages, documents or sender’s identity.

Double Spending:
Double spending occurs when same digital cash or cryptocurrency coins are spent more than once. It was a major hurdle in creating and implementing digital currencies and was first solved during Bitcoin implementation.

The process of converting a message (plaintext) into a random code (ciphertext), using an encryption algorithm (cipher) that can be read only when decrypted successfully.

ERC20 Token:
ERC is an abbreviation for Ethereum Request for Comments. Its an official protocol for proposing improvements to the Ethereum network and ’20’ is the unique proposal ID number. ERC20 defines a set of rules which every token needs to have in order to be accepted and called as ‘ERC20 Token’. Same rules apply to all ERC20 Tokens since these rules are required to interact with each other on the Ethereum network.

Ethereum or Ether:
Ether is the native token used for operating the distributed application platform Ethereum. It is a form of payment made by the clients of the platform to the machines executing the requested operations. It is used for rewarding transaction fees, miner rewards and any other services on the network.

Ethereum Classic:
Ethereum Classic is another cryptocurrency born after hard fork from Ethereum.

EVM (Ethereum Virtual Machine):
The Ethereum Virtual Machine (EVM) is a Turing complete runtime environment that allows anyone to execute arbitrary EVM Byte Code or smart contracts. Every node on Ethereum blockchain runs its own synchronized copy of EVM to maintain consensus across the blockchain.

Fiat Currency:
A form of money that is declared by the government as a legal tender. Example: USD, EUR, INR.

Fork is the creation of an alternate version of an existing blockchain, by creating two blocks simultaneously on different parts of the network. This creates two parallel blockchains, where one of them is the winning blockchain. Example, Bitcoin Cash (BCH) forked from Bitcoin (BTC).

Fear Of Missing Out

Fear, Uncertainty and Doubt

Gas is a unit of measurement equivalent to the computation steps needed for executing Ethereum transaction or contract. You must spend enough gas to cover the computational resources needed for executing transaction otherwise your transaction will fail due to an “Out of Gas” error.

Gas Limit:
Its the maximum amount of gas someone is willing to pay for a transaction.

Genesis Block:
The first block of any blockchain.

Halving is the reduction in block rewards awarded to a miner once a certain number of blocks have been mined. Bitcoin has a total supply of 21 million coins all of which will be mined by year 2140. After halving the number of Bitcoins rewarded per block decreases by 50% every four years.

A type of fork which executes a change to the blockchain protocol that makes previously invalid blocks/transactions valid. A hardfork requires all its users and nodes to upgrade to the latest version of blockchain protocol.

Hardwallet or Hardware Wallet:
Hardware device which enables sending, receiving and storage of cryptpocurrencies in a digital wallet on a computer. Hardware wallet is the safest way to store cryptocurrencies on computer away from hackers. Example: Ledger, Trezor.

A process of applying hash function to encode and decode data. It is used to confirm blockchain transactions.

Hashcash is a Proof-of-Work (PoW) algorithm used to block email spam and denial-of-service attacks. Hashcash is used in Bitcoin and other cryptocurrencies as part of their mining algorithm.

The number of hashes that can be performed by a cryptocurrency miner per unit time, usually second.

Hold On for Dear Life. A crypto trader who buys a coin and want to hold it for long time.

Initial Coin Offering (ICO):
According to Merriam-Webster dictionary a Bounty is a reward, premium or subsidy given to a person by an organization. In general terms a Bounty program is an offer by startups, websites or companies to passionate individuals in return of providing marketing services, blogging, bug finding, website hack-proofing, products reviews and product improvement to name a few. Technically speaking Bounty program is a marketing method used by blockchain startup companies to mass communicate their ICO project through the services of passionate individuals and supporters.

Joy of Missing Out

Lightning Network:
Its a “second layer” payment protocol that operates on top of a blockchain. It enables instant transactions between participating nodes and has been touted as a solution to the bitcoin scalability problem.

Litecoin is an open source, peer to peer decentralized cryptocurrency based on blockchain technology that enables instant, near-zero cost payments to anyone in the world. Litecoin was created by Charlie Lee in 2011 who is currently the Managing Director of Litecoin Foundation.

LONG: A Long position is the expectation that any bought asset will rise in value in the future.

Market Capitalization or total market value of the company

Its the process by which cryptocurrencies transactions on a blockchain are verified and appended to the blockchain. During minig special mining hardwares (ASICs) or computers are used to solve complex mathematical problems which rewards new coins to the miners.

Mining Pool:
A mining pool is a central hub where different miners group together and provide their computing power to collectively mine next blocks in the blockchain. Each user of the mining pool receives his/her share of minted coins in the proportion of their hash power.

Continuous and fast upward movement of crypto asset price

Multisignature or Multisig:
Multisig refers to requiring more than one account/key to authorize a cryptocurrency transaction. You can setup how many signatures will be needed to approve a transaction at the time of your account/address creation. Multisig addresses are much safer to crypto stealing and account hacking.

Any computer or device which is part of the blockchain network and participating in the network activities.

Oracles act as intermediaries between the blockchain and the outside world by providing data needed by smart contracts.

Peer To Peer (P2P):
Peer-to-peer (P2P) networking is a distributed decentralized application architecture that partitions tasks or workloads between peers. Peers are equally privileged, equipotent participants in the network. Each computer can act as a server for the others, allowing shared access to files and peripherals without the need for a central server. All cryptocurrencies work on a peer to peer blockchain network.

Private Key:
A private key is a unique secret number also called address that allows cryptocurrencies to be spent on the network. Every Bitcoin wallet contains one or more private keys, which are saved in the wallet file. The private keys are mathematically (through cryptography) related to all Bitcoin addresses generated for the wallet. You should never disclose your private key to anyone as hackers can steal all your coins.

Public Key:
A cryptographic key that can be used by anyone to encrypt messages intended for a particular recipient, such that the encrypted messages can be deciphered only by using a private key that is known only to the recipient. Public key act as your email address, you can disclose it to public without any concerns.

Pump and Dump:
The recurring cycle of Cryptocoins getting a spike in price followed by a huge crash. Such trends are often attributed to low volume, hence the ‘pump’. Traders who pump, buying huge volumes, may create artificial FOMO from the uninformed investors and then dump, or sell, their coins at a higher price.

Proof of Authority (PoA):
Its a consensus system implemented by a private blockchain where one client (or a specific number of clients) are provided particular private key that gives the right to create all of the blocks in the blockchain. Hence, all coins can be pre-mined.

Proof of Stake (PoS):
Its an algorithm by which a cryptocurrency blockchain network aims to achieve distributed consensus. The amount of cryptocurrency you can mine is directly proportional to amount of coins you own. Recently, different new approaches have been developed where the creator of next block is chosen via various combinations like random selection, wealth or age. Example: NEO, Qtum, Nxt. Soon, Ethereum will switch to PoS instead of PoW. PoW involves mining and consumes great amount of electricity power. Further reading.

Proof of Work (PoW):
Its an algorithm which defines the amount of coins you can mine, based on the total computation power or hashrate. Bitcoin and currently Ethereum deploys PoW method to keep their network running safe and smoothly. PoW method uses gigawatts of electricity power as mining difficulty keep increasing with time. Further reading.

Its a set of rules which define how unrelated objects or machines communicate with each other on a network.

QR Code:
QR code (short for Quick Response Code) is a type of matrix barcode which is used to identify a blockchain address. A QR code is a machine readable version of your wallet address. You can use QR code to send cryptocurrencies through your smartphones.

Ripple is an open source peer-to-peer decentralized cryptocurrency which employs RippleNet as a payments network and allows users to trade any currency in the world.

Relative Strength Index, a metric used for stock and crypto analysis.

Scalability is the capability of a blockchain network to handle the ever growing amount of transactions.

Scrypt is a type of cryptographic algorithm which utilizes Proof-of-work concept. Scrypt algorithm makes it difficult for ASIC and specially designed hardware to mine Litecoin as compared to Bitcoin which is mostly mined by ASIC farms. Scrypt algorithm also makes Litecoin safer and faster than Bitcoin.

Abbreviated for Secure Hash Algorithm 2, SHA-256 is a set of cryptographic hash functions used as the basis of Bitcoin or other cryptocurrencies Proof-of-Work system.

This is an act of crypto currency price push. Crypto investors who have invested in a currency invokes the public’s attention in that particular coi, thus shilling the coin.

Margin bear position

Smart Contract:
They are a kind of contracts implemented using a programming language and usually stored on a blockchain network. Smart contracts can be automatically executed when a pre-defined set of conditions are met. Smart contracts are the basis of Ethereum ERC20 token and usually used on a distributed ledger system.

A change to the blockchain network where only previously valid blocks/transactions are made invalid. Since old nodes recognize the new blocks as valid, a softfork is backward compatible. Softfork requires majority miners to upgrade.

Solidity is Ethereum programming language used for implementing smart contracts.

An alternative blockchain used by developers for testing and expanding new features.

Coin or cryptocurrency for a blockchain network. Example: Approx. 77% of ICO tokens are Ethereum ERC20 Token.

Sending and receiving of a cryptocurrency.

Transaction Block:
Its a collection of all recent transactions on the blockchain network which are hashed into a block and added to the blockchain. This is how blockchain keeps growing.

Transaction Fee:
These are small fees applied for the processing of a transaction on the blockchain network. These fees are rewarded to miners whenever they successfully hash a block, ensuring successful operations distributed ledger system.

Transaction Speed:
Its the measure of how fast you can send a cryptocurrency on its blockchain network. It usually involves block hashing and confirmation from multiple peer nodes.

A software client to store, send and receive cryptopcurrencies. Wallet also stores a user’s private keys, which should not be shared with anyone.

Weak Hands:
Those who cannot hold thier patience and sell at loss when the market is falling.

Extremely wealthy trader or a market mover.

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Sean is a passionate Blockchain and Crypto nerd. He has strong enchantment for blockchain technology, cryptocurrencies and geo-politics.

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