As more and more people get interested in cryptocurrency (or crypto-related stuff), new terms are appearing and being created every day. This glossary, while not comprehensive, is designed to help you understand some terms you may encounter when you are reading about crypto-related topics.
Cryptocurrencies are a new type of technology that is becoming mainstream. In order to make sure that you understand how cryptocurrency works, it’s important to have a good understanding of some basic terms like mining and wallets.
Crypto, as a term, has been around for quite some time. It has been used a lot in the media, though there hasn’t really been a concise list of every term that has been thrown around over the years.
There are many terms and acronyms associated with cryptocurrencies that many people new to cryptocurrencies have no idea what they mean.
In an effort to make understanding cryptocurrency more accessible to someone who doesn’t know much about it, I have compiled a list of some of the more common terms, their meaning, and some examples of how they can be used:
Cryptocurrency —It is a digital currency that is maintained by a peer-to-peer network (i.e., a network where no central server keeps track of transactions) and uses cryptography to secure and verify transactions.
Cryptocurrency wallet — stores the public and private keys which can be used to receive or spend coins. It can be an application that you install on your phone, your computer, or online.
Blockchain — is an immutable public ledger that records each and every transaction in chronological order. It is a technology for recording transactions in a way that has become well-regarded for its security and privacy.
Digital signature — is a digital product of a person’s private key. This is what allows one to send and receive digital information over the Internet.
Bitcoin is the largest and most well-known cryptocurrency and has become a mainstream press’s mainstay in recent years.
Cryptocurrency algorithm — is a string of code that creates the encryption methods and determines the issue of new coins.
Bitcoin mining — The process by which transactions are verified and added to the blockchain ledger.
Assets — A security that derives its value from the relative value of a digital good or coin. For example, a token that derives its value from the price of bitcoin.
Block — a record of new transactions or other data that’s been added to a blockchain or distributed ledger.
Fiat — The currency of a state that can be exchanged for goods and services, such as paper money, coins, and bank deposits.
Fork — A change in the blockchain protocol that leaves the network with two separate chains (forks can also be created without splitting the blockchain, although this is rarer).
Hodl — A term used in the Bitcoin community to say that they still hold a coin even though it has lost value.
Mining — is the process by which transactions are verified and added to the blockchain network. A mining rig collects transactions as they occur, solves an equation generated by the system for each block, and then broadcasts this information out to all nodes on the network so that they can verify the validity.
Wallet — is an online service where you can store cryptocurrencies, trade coins, and transfer funds.
Altcoin — A name for any coin that is not bitcoin.
Coin — one type of digital currency that’s been designated as legal tender through government regulation or the law (e.g., Bitcoin)
Arbitrage — short for the French word “arbitrage financiers” is trading on financial markets to make a profit relative to the price of a security or commodity.
Escrow — is the term used to describe the safekeeping of assets. It is a method of transferring assets to another person on the condition that a third party guarantees that the assets will be returned to the party that sent the assets. It is often used for financial transactions to make sure that both parties keep their end of the bargain.
White papers — is a document that describes a blockchain project and its goals. It is called a white paper because it is not written in the form of a novel or script but mainly in the form of a standardized document.