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Cryptocurrency Terms

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Blockchain

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A distributed ledger technology that maintains a continuously growing list of records, called blocks, which are linked and secured using cryptography.

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Bitcoin

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The first decentralized digital currency, created by an unknown person or group of people using the name Satoshi Nakamoto in 2009.

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Ethereum

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An open-source, blockchain-based platform that enables developers to build and deploy decentralized applications (dApps).

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Smart Contract

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A self-executing contract with the terms of the agreement directly written into lines of code, which automatically enforces and executes the terms of a contract.

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Altcoin

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Any digital currency other than Bitcoin, often with various improvements or differing features such as transaction speed or hashing algorithm.

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Mining

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The process by which transactions are verified and added to the blockchain ledger, also responsible for releasing new coins into circulation within a cryptocurrency's network.

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Wallet

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A digital storage for cryptocurrencies that uses private keys to access and manage the assets.

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Public Key

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A cryptographic code that allows a user to receive cryptocurrencies into his or her account.

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Private Key

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A secure digital code known only to the owner that is used to send cryptocurrency transactions.

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Initial Coin Offering (ICO)

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A fundraising method that involves selling new cryptocurrency tokens to investors in exchange for capital, often used to launch a new cryptocurrency project.

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Decentralization

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The transfer of control and decision-making from a centralized entity (individual, organization, or group thereof) to a distributed network.

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Token

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A representation of a particular asset or utility, that usually resides on top of another blockchain.

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Satoshi

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The smallest unit of Bitcoin, named after the pseudonymous creator Satoshi Nakamoto, equivalent to one hundred millionth of a Bitcoin (0.00000001 BTC).

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Fiat Currency

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Government-issued currency that is not backed by a physical commodity, such as gold or silver, but by the trust and authority of the government issuer.

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Exchange

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A platform where buyers and sellers trade cryptocurrencies using different fiat currencies or other cryptocurrencies.

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Cryptography

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A method of protecting information through the use of codes, so that only the person for whom the information is intended can read and process it.

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Proof of Work (PoW)

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A consensus mechanism used by certain cryptocurrencies that require miners to perform computational work to validate transactions and create new blocks.

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Proof of Stake (PoS)

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A type of consensus mechanism for blockchains that selects validators in proportion to their quantity of holdings in the associated cryptocurrency.

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Hard Fork

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A permanent divergence in the blockchain that occurs when non-upgraded nodes can't validate blocks created by upgraded nodes that follow newer consensus rules.

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Soft Fork

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A backward-compatible upgrade to a blockchain protocol that makes only previously valid blocks/transactions invalid, with non-upgraded nodes still being able to validate new blocks.

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Hash Rate

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The speed at which a computer is completing an operation in the cryptocurrency code, a measure of mining performance.

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Cryptocurrency Address

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A string of letters and numbers where cryptocurrency can be sent to and from, acting as a digital location on the blockchain.

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Liquidity

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The ability to buy or sell an asset in the market without causing a significant price movement.

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Node

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A device on a blockchain network that enforces the rules of the network by maintaining a copy of the blockchain and sometimes processing transactions.

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Double Spending

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The potential problem in digital currencies where the same single digital token can be spent more than once, a risk mitigated by blockchain technology.

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Whale

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An individual or organization that holds a large amount of cryptocurrency, capable of manipulating the market.

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Fork

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A change in protocol that creates two separate versions of a blockchain, which can be either a hard fork or a soft fork.

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Gas

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A unit that measures the amount of computational effort required to execute operations like transactions or smart contracts on the Ethereum network.

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Confirmation

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The act of a transaction being included in a block and added to the blockchain; multiple confirmations indicate subsequent blocks have been added, increasing transaction security.

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Distributed Ledger

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A consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, or institutions.

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Decentralized Application (dApp)

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A type of software program that operates on a decentralized network, avoiding any single point of failure or control.

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Cold Storage

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A way of holding cryptocurrency tokens offline by using a physical medium like paper or hardware wallets, which increases security.

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Multi-Signature

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A digital signature scheme which requires several keys to authorize a transaction as opposed to a single signature from one key, providing extra security.

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P2P (Peer-to-Peer)

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A decentralized communications model in which each party has the same capabilities and either party can initiate a communication session.

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Market Cap (Market Capitalization)

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The total value of all coins or tokens that have been mined or created, calculated by multiplying the number of coins by the current price.

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HODL

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Originally a typo for 'hold', it has come to stand for 'Hold On for Dear Life'. It refers to the practice of holding onto cryptocurrencies rather than selling them, even in the face of market turbulence.

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51% Attack

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A potential attack on a blockchain network where a single entity or organization is able to control the majority of the hash rate, potentially causing network disruption.

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