Bitcoin (BTC): The first decentralized digital currency created by an anonymous person or group of people under the name Satoshi Nakamoto in 2009.
Blockchain: A digital ledger where transactions made in Bitcoin or another cryptocurrency are recorded chronologically and publicly.
Cryptocurrency: A digital or virtual currency that uses cryptography for security and operates independently of a central bank.
Decentralization: The distribution of power away from a central point. In cryptocurrencies, it refers to the transfer of control and decision-making from a centralized entity (individual, organization, or group thereof) to a distributed network.
Mining: The process by which transactions are verified and added to the blockchain ledger. It also involves releasing new cryptocurrency into the system as a reward to the miners.
Public and Private Keys: A cryptographic pair of keys that allows users to receive and spend cryptocurrencies. The public key is shared and used to encrypt data or verify signatures, while the private key is kept secret and is used to decrypt data or create digital signatures.
Wallet: A digital or physical medium, program, or device that stores the public and/or private keys for cryptocurrency transactions.
Exchange: A platform where cryptocurrencies can be traded for other digital currencies or traditional currencies.
Altcoin: Any digital currency other than Bitcoin. Examples include Ethereum, Ripple, Litecoin, etc.
Fiat Currency: Government-issued currency that is not backed by a physical commodity, like gold or silver, but rather by the government that issued it.
Initial Coin Offering (ICO): A fundraising mechanism in which new projects sell their underlying crypto tokens in exchange for bitcoin and ether.
Smart Contract: Self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code.
Token: A unit of value issued by a project, representing a stake in the network or a utility that allows holders to use the network by potentially giving a right to use the network or participate in the network.
Hash Rate: The speed at which a computation is completing an operation in the Bitcoin code. A higher hash rate is better when mining as it increases the opportunity of finding the next block and receiving the reward.
Satoshi: The smallest unit of the Bitcoin cryptocurrency, named after its pseudonymous creator, Satoshi Nakamoto. One Satoshi is equal to one hundred millionth of a single Bitcoin (0.00000001 BTC).
Peer-to-Peer (P2P): A decentralized communications model in which each party has the same capabilities and either party can initiate a communication session.
Consensus Algorithm: The process used to achieve agreement on a single data value among distributed processes or systems. Bitcoin uses a consensus model called Proof of Work (PoW).
Proof of Work (PoW): A consensus algorithm that requires a not-insignificant but feasible amount of effort in order to deter frivolous or malicious uses of computing power, like sending spam emails or launching denial of service attacks.
Proof of Stake (PoS): An alternative to the Proof of Work, this consensus algorithm requires users to show ownership of a certain amount of cryptocurrency (their “stake”) in order to get the right to validate transactions and earn transaction fees.
Hard Fork: A permanent divergence from the previous version of the blockchain, and nodes running previous versions will no longer be accepted by the newest version.
Cold Storage: The storage of Bitcoin offline in a physical cold wallet. It is considered more secure than keeping Bitcoin in a hot wallet on an online computer.
Whale: A term used to describe individuals or entities that hold large amounts of cryptocurrencies.
Address: An alphanumeric identifier that represents a possible destination for a Bitcoin payment.
Block: A file in the blockchain that records some or all of the most recent transactions, and once completed, goes into the blockchain as a permanent database.
Node: Any computer that connects to the Bitcoin network is called a node. Nodes that fully enforce all of the rules of Bitcoin are called full nodes.
51% Attack: 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 control over the network, including the ability to halt transactions, reverse transactions, and double-spend coins.
ASIC (Application-Specific Integrated Circuit): A type of hardware used for Bitcoin mining that is designed to perform only a specific set of tasks, which in this case is to solve hash algorithms for block rewards.
Atomic Swap: A smart contract technology that enables the exchange of one cryptocurrency for another without using centralized intermediaries, such as exchanges.
Bear/Bull Market: Terms used to describe the trends in market prices. A bear market refers to a decline in prices, often for a few months, in a single or numerous cryptocurrencies, while a bull market is the opposite, with sustained price increases.
Block Explorer: An online tool to view all transactions, past and current, on the blockchain. They provide useful information such as network hash rate and transaction growth.
Block Height: The number of blocks connected together in the blockchain. For example, Height 0, would be the very first block, which is also called the Genesis Block.
Block Reward: The reward given to a miner which has successfully hashed a transaction block. Block rewards can be a combination of coins and transaction fees.
Chain Linking: The process of linking two blockchains together, allowing transactions between the chains to take place.
Confirmation: A confirmation means that the blockchain transaction has been verified by the network. This happens through a process known as mining in a Proof of Work system. The more confirmations a transaction has, the harder it becomes to perform a double-spend attack.
Cryptographic Hash Function: A mathematical algorithm that maps data of arbitrary size to a bit string of a fixed size. It is a one-way function, meaning a function which is practically infeasible to invert.
DAO (Decentralized Autonomous Organization): An organization represented by rules encoded as a computer program that is transparent, controlled by the organization members and not influenced by a central government.
DApp (Decentralized Application): An application that is run by many users on a decentralized network with trustless protocols. They are designed to avoid any single point of failure.
Digital Signature: A mathematical scheme for demonstrating the authenticity of digital messages or documents. A valid digital signature gives a recipient reason to believe that the message was created by a known sender (authentication), and that the sender cannot deny having sent the message (non-repudiation).
Double Spending: Double spending occurs when a blockchain network is disrupted and cryptocurrency is essentially spent twice.
DYOR (Do Your Own Research): Often mentioned in crypto communities and forums, it advises investors to do their own thorough research before making any investment decisions.
ERC-20: A technical standard used for all smart contracts on the Ethereum blockchain for token implementation and provides a list of rules that all Ethereum-based tokens must follow.
Escrow: A financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction.
Fork: A change to the software of the digital currency that creates two separate versions of the blockchain with a shared history. Forks can be temporary, lasting for a few minutes, or can be a permanent split in the network creating two separate versions of the blockchain.
Gas (Ethereum): A measure of computational effort required to execute operations in the Ethereum network. Each operation in the network requires gas, and gas prices are denoted in Gwei.
Genesis Block: The first block of a blockchain. Modern versions of Bitcoin number it as block 0, though very early versions counted it as block 1.
Halving: A feature written into Bitcoin’s code which cuts the reward given to miners for processing transactions in half every four years, thereby reducing the rate of new Bitcoins entering circulation.
Hot Wallet: A crypto wallet that is always connected to the internet. While it allows for easier transactions, it is also more susceptible to hacking compared to a cold wallet.
Immutable Transaction: Once a transaction is entered in the blockchain, it cannot be erased or altered, meaning the records are permanent and unchangeable.
KYC (Know Your Customer): The process of a business identifying and verifying the identity of its clients. In the cryptocurrency world, this often refers to exchanges and trading platforms verifying the identity of their users.
Layer 2: A secondary framework or protocol that is built on top of an existing blockchain system. The main goal of these protocols is to solve the transaction speed and scaling issues.
Liquidity: The ability to buy or sell an asset in the market without causing a drastic change in the asset’s price.
Margin Trading: The practice of using borrowed funds from a broker to trade a financial asset, which forms the collateral for the loan from the broker.
Market Cap: The total value held in a cryptocurrency. It is calculated by multiplying the total supply of coins by the current price of an individual unit.
Merkle Tree: A data structure used in computer science applications. In bitcoin, the Merkle tree is used to encode the block transactions in such a way that there is a fast and efficient way to verify the consistency and contents of the block.
Multisig (Multisignature): Multisignature addresses provide an added layer of security by requiring more than one key to authorize a transaction.
Nonce: A nonce is a “number only used once” and is typically a random or semi-random number issued in an authentication protocol to ensure that old communications cannot be reused in replay attacks.
Oracle: In the context of crypto, an oracle is a way for a blockchain or smart contract to interact with external data.
P2PKH (Pay To Public Key Hash): The most common form of payment in Bitcoin. It is a script that provides evidence that the spender knows the private key corresponding to the public key hash.
Paper Wallet: A type of cold wallet where the private keys to cryptocurrencies are printed from an offline computer and stored physically.
Pump and Dump: A manipulation scheme involving inflating the price of an owned stock or cryptocurrency and then selling at the increased price.
Rekt: A slang term for severely damaged or completely destroyed, often used in the context of someone who has experienced significant losses.
SegWit (Segregated Witness): Implemented as a soft fork to the way data is structured in Bitcoin blocks. It is intended to increase the block size limit by separating signature data from transaction data.
Sharding: A proposed scaling solution for blockchains. Each node in the network only holds a part of the data, reducing the burden of processing and storing data.
Stablecoin: A type of cryptocurrency that is designed to minimize the volatility of the price of the coin, relative to some “stable” asset or basket of assets.
Staking: The act of locking cryptocurrencies to receive rewards. In most cases, you’ll be able to stake your coins directly from your crypto wallet.
Tangle (IOTA): A proposed alternative to the blockchain used by the IOTA digital currency, featuring a structure of nodes that is not sequential.
Testnet: A test blockchain used by developers to prevent expending assets on the main chain.
Transaction Fee: A fee that is charged to users when they make transactions on the blockchain.
Unconfirmed: A transaction is unconfirmed until it is verified by the blockchain network and included in a block.
Validator: A participant in the blockchain network responsible for verifying transactions and creating new blocks in the chain.
Vanity Address: A personalized Bitcoin address that contains specific letters and numbers chosen by the user, typically for the purpose of having an address that is easier to remember or share.
Volatile/Volatility: Refers to the fluctuation of price in cryptocurrency within a short period of time. It’s a measure of how much the price of an asset varies over time.
Wallet Address: An alphanumeric identifier that represents a possible destination for a cryptocurrency transfer.
Zero-Knowledge Proof: A method by which one party can prove to another party that they know a value x, without conveying any information apart from the fact that they know the value x.
