You have probably heard of Bitcoin, right?
Cryptocurrency is a new way of dealing in financial transactions and has become immensely popular over the past decade. Even now there are many cryptocurrencies out there, Bitcoin is perhaps the most well known.
The price of Bitcoin went from $50 in 2013 to a figure today of around $7000.
Even though you have probably heard of cryptocurrency before have you heard of blockchain? What about FUD? Mining?
We’re going to show you the cryptocurrency terminology you need to know.
Most important cryptocurrency terms
Each coin has a unique address associated with it – this is how you can identify where it sits on the blockchain. It identifies the coins owner and they are usually over 30 characters long however this can change between cryptocurrencies.
While Bitcoin is the most successful cryptocurrency, it isn’t the only one. Other cryptocurrencies are known as Altcoins.
Acronym for “Anti-Money Laundering”
A set of international laws designed to curb people laundering money through cryptocurrencies.
Application Specific Integrated Circuit
Computer hardware that has been created to mine cryptocurrency.
Different exchanges can trade the same cryptocurrency at different rates. Arbitrage means buying it from one exchange and selling it on another exchange for a profit.
Allows people to exchange different cryptocurrencies without at the current rate without having to buy or sell first.
The first cryptocurrency which was created in 2008. Also the most popular on the market.
Blockchains are made up of blocks. These hold historical data of cryptocurrency transactions that are made until the Block is full. It is a record that can be viewed at any time.
This is the record of transactions in a particular currency and stores the full details of every transaction. It is made up of individual blocks that are tied together with a signature. When the blocks capacity is reached, a new one is added to make a chain. Blockchain is saved onto thousands of computers across the world and there is no ‘one copy’ so it adds to the decentralised concept of cryptocurrency.
This is the action of transferone one cryptocurrency to another as it needs to combine two blockchains to do so.
A privately owned and operated blockchain that is publicly visible.
This is a wallet that has been created by producing multiple keys from a seed. Your wallet key can be recovered from the seed and when you make cryptocurrency transactions then the seed is altered as opposed to a new key being produced each time.
This is to confirm that a document which is being sent over the internet is authentic.
Turning plain text into text that cannot be read to make it more secure.
A process where a third party holds funds during a transaction and then releases them when both parties are happy to do so.
Another major cryptocurrency that differs somewhat from Bitcoin in that it allows the development of dApps as well as smart contracts.
The place where cryptocurrencies are exchanged.
Money that is legal tender such as US Dollars or British Pounds.
When two versions of a blockchain run beside each other, it is known as a fork. There are both soft and hard forks and run on the same network.
Acronym for “Fear, Uncertainty, and Doubt”
When a node downloads the entire history of a blockchain it is known as a Full Node.
The first blocks in a new blockchain.
A physical device to store cryptocurrency which is generally considered the most secure what to do so.
Initial Coin Offering
In order to raise funds, the creator of a cryptocurrency will put an initial batch of its coins up for purchase. This is known as an ICO (Initial Coin Offering).
The record of financial transactions – this can’t be changed, only added to.
Some transaction requests come with rules such as when it can be processed at a certain time or with a particular block on the blockchain.
This is the process of adding of adding transaction records to the blockchain. It allows people to gain cryptocurrency without having to pay for it.
This is when a collection of miners put their computing processing power together to mine cryptocurrency.
A computer that is connected to a blockchain’s network is referred to as a Node.
When a miner hashes a transaction, a random number is generated called a Nonce. The parameters from which that number is chosen changes based on the difficulty of the transaction.
A program called an Oracle is used to access smart contracts that are stored on a blockchain.
This is when two computers connect to each other without a third-party intermediary.
This is what you use to access your wallet. It is the password that you need to sell or withdraw cryptocurrency.
This is the address of your wallet so you can receive cryptocurrencies. It is made up of a long string of numbers and letters.
The smallest Bitcoin unit which is 0.00000001 BTC.
A seed is generally a phrase or series of words that are used to regenerate your wallet ID.
This splits up a full blockchain history so that each node doesn’t have the full copy of it. It is a way of streamlining the process and freeing up network performance.
A Smart Contract is a contract which has been written in computer code as opposed to traditional legal language. The smart contract is added to the blockchain so both parties can agree to its contents and it is a way of cutting out any third parties that would otherwise need to be involved in the process.
A fraction of a cryptocurrency coin is known as a token.
This is where your cryptocurrency is kept whether it is in hardware, software or paper form. It has a unique code which is public and a Private Key which is used to gain access to the wallet contents.