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Cryptocurrency Technologies

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Blockchain

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A distributed ledger technology crucial for the operation of most cryptocurrencies; it ensures secure and transparent transactions.

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Decentralization

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Characteristic of cryptocurrencies, allowing them to operate without a central authority, reducing the risk of corruption and systemic failure.

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Miners

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Individuals or entities that use computational power to validate transactions and secure the network, often rewarded with cryptocurrency.

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Smart Contracts

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Self-executing contracts with the terms directly written into code; they automate, enforce, and facilitate contractual agreements.

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Wallet

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A digital tool that stores public and/or private keys for cryptocurrency transactions; it enables users to send, receive, and store cryptocurrencies.

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Public Key

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A cryptographic key that can be distributed widely; used in conjunction with a private key to securely interact with cryptocurrencies.

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Private Key

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A confidential cryptographic key that allows a cryptocurrency holder to access and manage their funds; necessary for initiating transactions.

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Hash Function

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A function used in cryptography to convert data into a unique string of characters; essential for blockchain integrity and security.

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Proof of Work

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A consensus algorithm requiring miners to solve cryptographic puzzles to validate transactions and create new blocks, consuming significant computing power.

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Proof of Stake

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An alternative consensus algorithm where validators are chosen based on the number of coins they hold and are willing to 'stake' as collateral.

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Fork

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A change in protocol causing the blockchain to split into two paths; can be planned (soft fork) or contentious (hard fork).

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Cryptocurrency Exchange

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A platform where users can buy, sell, or trade cryptocurrencies for other digital currency or traditional currency like USD or EUR.

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ICO (Initial Coin Offering)

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A fundraising mechanism where new projects sell their underlying cryptocurrency tokens in exchange for Bitcoin, Ether, or fiat currencies.

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Tokenization

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The process of representing real or virtual assets as digital tokens on a blockchain, often used to improve liquidity and transfers.

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Cryptography

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The practice of secure communication in the presence of third parties; vital to cryptocurrency for ensuring transaction security and integrity.

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Altcoin

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Any cryptocurrency that is not Bitcoin; they can offer different features, transaction speeds, and consensus mechanisms.

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Stablecoin

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A type of cryptocurrency that is designed to maintain a stable value by being pegged to a currency or other external reference.

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Non-Fungible Token (NFT)

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A unique token that represents ownership of a specific item or asset; these tokens are not interchangeable.

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Distributed Ledger

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A database that is consensually shared, synchronized, and distributed across multiple sites, institutions, or geographies.

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DEX (Decentralized Exchange)

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A peer-to-peer marketplace where transactions occur directly between crypto traders without an intermediary.

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Atomic Swap

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A peer-to-peer exchange of cryptocurrencies from two different blockchains without the need for a third party.

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Lightning Network

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A second-layer protocol designed to allow faster transactions between participating nodes, and a solution to Bitcoin's scalability issue.

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Gas (Ethereum)

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A unit that measures the computational effort required to execute operations on the Ethereum network, with costs paid in Ether.

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SHA-256

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A cryptographic hash function used by Bitcoin to encrypt blocks and secure the blockchain.

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Satoshi Nakamoto

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The pseudonymous creator(s) of Bitcoin, whose true identity has never been verified; introduced blockchain and digital scarcity.

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Cold Storage

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A way of holding cryptocurrencies offline to protect them from hacking; considered a more secure method of storage.

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Consensus Algorithm

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A process in computer science used to achieve agreement on a single data value among distributed processes or systems.

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Cryptocurrency Mining

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The process through which transactions are verified and added to the blockchain, also resulting in the release of new cryptocurrency.

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Digital Signature

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A mathematical scheme for demonstrating the authenticity of digital messages or documents, securing cryptocurrency transactions.

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KYC (Know Your Customer)

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A process for business entities to verify the identity of clients; in crypto, used by exchanges to prevent fraud and money laundering.

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