DICTIONARY OF TERMS

If you’re new to cryptocurrencies then this is a dictionary of terms designed to help you navigate the terminology out there. All the way from ‘Altcoin’ through to ‘Wallet’.

Altcoin
Any cryptocurrency other than Bitcoin, literally alternative coin.

Bitcoin
The original and most prominent example of a cryptocurrency.

Blockchain
The underlying technology that are the foundation for cryptocurrencies.

Cryptocurrency
A digital currency in which public key encryption techniques are used to verify the transfer of funds and regulate the generation of units of currency.

Cryptocurrency Exchanges
Platforms that allow users to buy, sell or trade cryptocurrency.

Cryptography
A method used to encrypt, or scramble, the contents of a file in such a way that only those with the knowledge of how to decrypt, or unscramble, the contents can read them.

Hash
Also called a message digest, is a number generated from a string of text. The hash is substantially smaller than the text itself, and is generated by a formula in such a way that it is astronomically unlikely ( 1 in 10^60) that some other text will produce the same hash value.

Hashpower
Also known as “hash rate” is the speed at which transactions are verified on the blockchain.

Miner
A special node, usually a computer or device which collects transactions from the transaction pool into blocks then verifies them

Mining
The process of verifying transactions on the blockchain

Node
A site connected to the blockchain network holding a copy of the blockchain

Nonce
A field in a Bitcoin block whose value is randomly set by the node so that the hash of the block will contain a run of leading zeros. Many nonce values are tried and the hash is recomputed until the hash contains the required number of leading zeros.

Private Key
A long number (32 bytes) generated using a complex mathematical formula

Proof of Stake
The framework in which a user’s stake determines how much say they have in verifying each blockchain

Proof of Work
The process by which miners are rewarded for their work to verify the blockchain.

Public Key
A cryptographic key that can be obtained and used by anyone to encrypt messages intended for a particular recipient, such that the encrypted messages can be deciphered only by using a second key that is known only to the recipient (the private key ).

P2P (Peer-to-peer)
The process of passing information directly from one computer (peer) to another, without needing to pass through a central location

Tokens
Used to transfer or pay through cryptocurrency, and represent just about any asset that has worth and can be traded.

Wallet
A graphical software program that manages private keys and generates public keys (addresses) and can interact with the blockchain.

 

 

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