Thank you for reading, I am Dukefish, an EOS advocate and this is a standalone article intended for my real life friends who have no idea what I have been talking about since posting here on Trybe and spamming them on social media. I hope it serves well as providing education and reference for those of us already in the crypto world. There is an amazing set of videos by TrybeTV to help educate those in more detail here.
So What is a “Cryptocurrency”?
A cryptocurrency is a financial system that exists without banks or an intermediary authority, built on a emerging new technology called blockchain. It is creating a new way for people to send a new type of money to one another. The digital money became known as cryptocurrency, taking the stem from the cryptographic process of math that underpins how it works.
And what the hell is “Blockchain”?
Just like traditional banking and database systems there has to be a ledger. A record of transactions and exchanges between accounts. Blockchain is a new type of distributed ledger, where it is stored across hundreds/thousands of computers and not just in one the hands of one big central entity. In the same was traditional ledgers work , blockchain creates a growing list, (or chain), of time-stamped transactions. But the advantage of this new medium is that due to the decentralized nature this ledger cannot be altered or tampered with in anyone. Each new transaction is added as a “block” to the chain. Blockchain has advantages to traditional methods due to it offering a verifiable, immutable and public records.
Okay, well I have heard of Bitcoin in the news before, what is it?
Bitcoin (BTC) was the first cryptocurrency brought into existence in 2009 by anonymous founder Satoshi Nakamoto. The vision was to create a “peer-to-peer electronic cash system”. Although bitcoin is the best known digital coin and has the largest dominance of all the other cryptocurrencies in the marketplace many other cryptocurrencies have been born since its initiation all those years ago. In January 2018 BTC made headlines as one bitcoin was worth in excess of twenty thousand US dollars!
So what now?
As with any new technology space it is important to learn and to discover this space for yourself. Yes it is a market where money can be invested and profits can be made, but it can also be a huge risk and you could lose it all. If you are looking to move into this world, proceed with caution and be prepared to risk only which that you can afford to lose.
Glossary of Common Terminology
- Address – A string of alphanumeric characters used to send or receive transactions on a blockchain. Unlike email addresses, these are often disposable and a user will often use many separate addresses in some blockchains.
- Airdrop – By owning a volume of one coin, you are ‘airdropped’ a value of another
- Algorithm – A set of computer code that act as rules to process or follow in strict order. Used as the basis for software programs.
- Altcoin – An altcoin is any other form cryptocurrency that isn’t Bitcoin. Derived from “alternative” and “coin”, and is often used collectively to discuss markets compared to Bitcoin.
- All Time High (ATH) – The highest price a given cryptocurrency has seen so far.
- ASIC – (Application Specific Integrated Circuit) Hardware developed by companies tailor-make ASICs for computing tasks including cryptocurrency mining.
- Bear – A bear market is when the price trend is stagnant or downward.
- Bitcoin – Bitcoin was the first decentralised, open source cryptocurrency.
- Block – A package of transactions on a blockchain.
- Block Explorer – An online tool to view all transactions on the blockchain.
- Block Reward – An amount of cryptocurrency given to a miner who successfully verifies a block of transactions by calculating its hash.
- BTFD – An acronym for “Buy the Frickin Dip.”
- Bull – A bull market is when the price trend is upward.
- Central Ledger – A single ledger maintained by an organisation such as a bank.
- Chain linking – The process of connecting two blockchains to allow transactions to occur between them.
- Confirmation – When a new block is added to the blockchain through mining the block verifies any new transactions. The process is called confirmation
- Cold storage – A secure way of storing cryptocurrencies offline, typically using secure hardware or a paper wallet.
- Correction – After hitting a high, a coin will likely enter a period of correction where it steadies out at a given price before rising again
- Cryptography – The process of encrypting/decrypting information. Used to verify and protect blockchain transactions.
- dApp – A decentralized application, one that runs and stores its data on a blockchain.
- DAO – (Decentralised Autonomous Organisations) Organisations that write governance structures or business rules into smart contracts. These are executed automatically on the blockchain.
- DEX – A Decentralized Exchange, a peer-to-peer exchange with no middleman.
- Distributed ledger – A ledger that stores data across a network of decentralised nodes. The backbone of Blockchain technology.
- Distributed network – A type of network where processing power and data are spread across a network of computers rather than having a centralised database.
- Digital signature – An encrypted code generated by private and a public keys. This code is attached to an electronically transmitted document and is used to verify identity and content.
- EOS – EOS is a proof of stake network created by Block.One
- Ethereum (ETH) – Ethereum is a blockchain-based decentralised platform that can run smart contracts created by Vitalik Buterin.
- ERC20 – A smart contract for for creations of new tokens on the Ethereum network.
- Exchange – A platform for users to trade and exchange tokens.
- Fiat – Traditional monetary systems, example USD, Yen, Euro, Gbp etc.
- Fork – A fork is where technical difference/update or ethic divergence creates alternate versions of a blockchain. Thus splitting the blockchain into new ones and/or running simultaneously on different parts of the network.
- Forging – Verifying transactions without a block reward, instead relying on transaction fees as the sole incentive. Common in proof of stake blockchains.
- FOMO – The Fear Of Missing Out. The emotional response that makes people impulse buy tokens at their all-time high.
- FUD – An acronym for “fear, uncertainty and doubt”, used in online forums when discuss negative news/media attention/commentators etc
- Gas – Smart contracts on the Ethereum network take computing power to run and Gas is the unit that they pay in. Transactions are accepted by miners to process them for the Gas.
- Genesis block – The first or first few blocks of a blockchain.
- Halving – When the number of coins produced in each cryptocurrency block divides by two, usually predetermined. A common function in networks with a finite number of coins that can be mined.
- Hard fork – A type of fork that renders previously valid transactions invalid, and vice versa. It requires all nodes and users to upgrade to the latest version of the protocol software.
- Hardware wallet – A physical device for storing cryptocurrency safely off your computer, essentially a sophisticated and secure USB stick.
- Hashing – The process by which you mine bitcoin or similar cryptocurrency, done by committing computer power to try to solve a mathematical problem within it.
- Hash rate – A measurement of computational performance in proof of work-based mining rigs. Expressed in hashes per second.
- HODL – Originally a typo on a cryptocurrency forum of the term HOLD. Now represents “Hold On for Dear Life”, the mentality that has time progresses the investment value will go up.
- ICO – A blockchain-based fundraising mechanism, typically used to sell tokens for new decentralized applications to investors.
- Lambo – Lambo is short for Lamborghini. A Lambo is sort of a status symbol, goal post, and/or meme and the hopes of an investor.
- Lightning Network – A decentralised network that attempts to solve the bitcoin scalability problem using smart contracts to enable instant payments.
- Long / Short – Going long means betting on the price going up, going short means betting on the price going down.
- Main Net – The main network a cryptocurrency and its blockchain live on, as opposed to the Test Net.
- Mining – The process of generating new bitcoins (or similar mine-able currencies), which involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle through hashing.
- Mining Rig – A computer specially built for mining cryptocurrencies.
- Moon – Where you want your coin to pass by on its way to Mars. Mooning is when a coin goes on a “run” (AKA bull run). That is when the price goes up quick.
- Multi-signature – Multi-signature addresses provide an added layer of security by requiring more than one electronic signature to authorise a transaction.
- Node – Any computer connected to a cryptocurrency network is called a node. These nodes validate and relay transactions while receiving a copy of the full blockchain.
- Paper wallet – A paper record of blockchain addresses and their private keys, often used by Bitcoin holders as a form of cold storage.
- Peer to peer (P2P) – Direct interactions between parties in a network without a central intermediary.
- Pool – A group of miners that collaborate to mine blocks and share the reward between them.
- Proof of Stake (PoS) – A consensus validation method based on the number of tokens held.
- Proof of Work (PoW) – A consensus validation method based on using computing power to mine transaction blocks.
- Public key / private key – A cryptographic code that allows a user to receive cryptocurrencies into an account. The public key is made available to everyone via a publicly accessible directory, and the private key remains confidential to its respective owner.
- Pump and Dump (PND) – Organised groups who buy tokens to inflate the price, and sell when others start to pile on.
- Ripple (XRP) – A currency transfer network that uses payment nodes and gateways to process payments.
- Sats – The smallest fraction of a bitcoin is called a “satoshi” or “sat”. It represents one hundred-millionth of a bitcoin and is named after Satoshi Nakamoto.
- Sidechains – Blockchains that are interoperable with each other.
- Smart contracts – Smart contracts are blockchain-based programs. They encode business rules in a programmable language onto blockchains like Ethereum & EOS.
- Software Wallet – A wallet is where you “store” your cryptocurrencies. A software wallet stores these on a third-party server, or you can choose to store them in a desktop wallet downloaded on to your computer.
- Soft fork – A fork that modifies a blockchain’s rules while still working with older blockchain mining clients. Old mining clients will accept blocks mined by upgraded ones, but the upgraded clients will reject blocks mined by the older clients.
- Stake – Staking simply stands for holding a cryptocurrency in your wallet for a fixed period, then earning interest on it. The reward that one earns from staking varies depending on the length of the time that they hold it.
- Testnet – A test blockchain used by developers so they don’t use assets on the main chain.
- Token – When a new cryptocurrency is created through an ICO , investors are given tokens in return for their liquid cash or liquid cryptocurrency.
- Transaction fee – In proof of work-based systems, cryptocurrency transactions involve a small transaction fee. These transaction fees add up to account for the block reward that a miner receives when he successfully processes a block.
- Transactions per second (TPS) – A measure of how many transactions a single node is capable of participating in.
- Wallet – A store of public cryptocurrency addresses and private keys. Software versions can view and create transactions on a specific blockchain.
- Whale – A cryptocurrency traders/investor/speculator who holds a huge amounts of crytpocurrency.
- Whitepaper – A report which articulates the problem and solution that the blockchain project/cryptocurrency is trying to solve.
Feel free to comment with additional phrases and words that I may have missed.