What is 51% Attack? 51% attack refers to an attack on a blockchain – usually bitcoin's, for which such an attack is still hypothetical – by a group of miners controlling more than 50% of the network's mining hashrate, or computing power. The attackers would be able to prevent new transactions from gaining confirmations, allowing them to halt payments between some or all users. They would also be able to reverse transactions that were completed while they were in control of the network, meaning they could double-spend coins. Learn more about 51% Attack here: What is 51% Attack?
What is a cryptocurrency address? Cryptocurrency addresses are used to send or receive transactions on the network. An address usually presents itself as a string of alphanumeric characters.
What is an Airdrop? An Airdrop is a method of distributing cryptocurrency among a population, first attempted with Auroracoin in early 2014.
What is an Algorithm? An Algorithm is a set of mathematical instructions or rules that need to be followed in problem solving.
What does AML mean? AML stands for Anti-Money Laundering. AML laws are a series of regulations designed to prevent money being converted from criminal activity to what appear to be legitimate assets.
What is an Altcoin? (Alternative coin) – An Altcoin is a collective name given to all other cryptocurrencies that are not bitcoin. These include Ethereum, Golem, MOnero, Ripple, Dash, Litecoin, Dogecoin, Reddcoin, StratisCoin, Blackcoin, yocoin and MANY MANY others. There are over 1000 recognized cryptocurrencies, tokens and assets today.
What is an Angel Investor? An Angel Investor is a wealthy individual who provides startup businesses with capital in exchange for debt or equity in the business.
What is Arbitrage? Arbitrage is the generation of risk free profits by trading between markets which have different prices for the same asset.
What is an ASIC? ASIC is an acronym which stands for Application Specific Integrated Circuit. Often compared to GPUs, ASICs are specially made for mining and may offer significant power savings.
What is an ASIC Miner? Hardware that houses Application Specific Integrated Circuit chips and used to mine for bitcoins. Such devices may connect directly to a computer or to a network with the use of an ethernet cable or wireless link.
What is a Bear Market? A Bear Market is a market that is in a downtrend (prices are going down). The term relates to the direction that a bear attacks. Bears attack by swiping downwards with their claws.
What is a Bear Trap? A Bear Trap is a manipulation of a stock or commodity by investors. Traders who “set” the bear trap do so by selling stock until it fools other investors into thinking its upward trend in value has stopped, or is dropping. Those who fall into the bear trap will often sell at that time, fearing a further drop in value. At that point, the investors who set the trap will buy at the low price and will release the trap, which is essentially a false bear market. Once the bear trap is released, the value will even out, or even climb.
What is a Bit? A Bit is a unit of information expressed as either a 0 or 1 in binary notation. Bit is also used regarding Bitcoin as a common unit used to designate a sub-unit of a bitcoin – 1,000,000 bits is equal to 1 bitcoin. This unit is more convenient for pricing tips, goods, and services.
What is Bitcoin? Bitcoin is the first decentralized, open-source cryptocurrency that runs on a global peer-to-peer network, without the need for middlemen and a centralized issuer. Bitcoin was founded in 2009 and is the most widely used cryptocurrency. It was supposedly created by the mysterious Satoshi Nakamoto, whose true identity is unknown and has yet to be verified. Bitcoin is not controlled by a centralized government or agency. The Bitcoin network is designed to mathematically generate no more than 21 million Bitcoins and was designed regulate itself to deal with inflation.
Bitcoin Days Destroyed
What is meant by Bitcoin Days Destroyed? Bitcoin Days Destroyed is an estimate for the “velocity of money” within the Bitcoin network. This is used because it gives greater weight to bitcoins that have not been spent for a long time, and better represents the level of economic activity taking place with bitcoin than total transaction volume per day.
What is Bitcoin Protocol? Bitcoin protocol refers to the open source, cryptographic protocol which operates on the Bitcoin network, setting the “rules” for how the network runs.
What is the Bitcoin Network? The Bitcoin Network is the decentralized, peer-to-peer network which maintains the blockchain. This is what processes all Bitcoin transactions.
What is BitcoinQT? BitcoinQT is an open source software client used by your computer. It contains a copy of the blockchain and once installed it turns your computer into a node in the Bitcoin Network. BitcoinQT also acts as a “desktop wallet”.
What is a Block? Blocks are packages of data that carry permanently recorded data on the blockchain network. Each block contains and confirms pending transactions. Blocks are digital files where data pertaining to a cryptocurrency network is permanently recorded. A block records some or all of the most recent transactions that have not yet entered any prior blocks. Thus a block is like a page of a ledger or record book. Each time a block is ‘completed’, it gives way to the next block in the blockchain. A block is thus a permanent store of records which, once written, cannot be altered or removed.
What is a blockchain? A blockchain is a shared ledger where transactions are permanently recorded by appending blocks. The blockchain serves as a historical record of all transactions that ever occurred, from the genesis block to the latest block, hence the name blockchain. The blockchain verifies the authenticity and permanence of all Bitcoin transactions and prevents double spending. A series of linked databases which form the backbone of the Bitcoin backbone. It is a digital ledger in which transactions made in bitcoin are recorded chronologically and publicly.
What is a block explorer? Block explorer is an online tool to view all transactions, past and current, on the blockchain. They provide useful information such as network hash rate and transaction growth. It is a search engine for a cryptocurrency. Block explorers allow you to query transactions, addresses and other information.
What is block height? Block Height refers to the number of completed blocks in the blockchain.
What is a block reward? A form of incentive for the miner who successfully calculated the hash in a block during mining. Verification of transactions on the blockchain generates new coins in the process, and the miner is rewarded a portion of those. The coins that are paid to the computer (or pool of computers that finds a working hash to complete a block in the mining process of cryptocurrencies.
What are Bollinger Bands? Bollinger Bands are bands that use historical data in a market to indicate possibly volatility.
What is BTC? The official abbreviated form of the word ‘bitcoin’.
What is a Bull Market? A Bull Market refers to a market that is in an uptrend; prices are going up. The term relates to the direction in which a bull attacks; horns low to the ground, a bull strikes upwards.
What is a central ledger? A ledger maintained by a central agency.
What is a confirmation? A confirmation refers to the successful act of hashing a transaction and adding it to the blockchain. All transactions on the blockchain need to be verified by all nodes; each verification of the transaction is called a confirmation.
What is consensus? Consensus is achieved when all participants of the network agree on the validity of the transactions, ensuring that the ledgers are exact copies of each other.
What is cryptocurrency ? A form of non-tangible currency that is produced by mathematical problem-solving based on cryptology. Also known as tokens, cryptocurrencies are representations of digital assets. A cryptocurrency is a digital or virtual currency that uses advanced cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. A defining feature of a cryptocurrency, and arguably its most endearing allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.
Cryptographic Hash Function
What is cryptographic hash function? Cryptographic hashes produce a fixed-size and unique hash value from variable-size transaction input. The SHA-256 computational algorithm is an example of a cryptographic hash.
What is cryptography? A branch of mathematics utilized by cryptocurrencies that employs mathematical proofs in order to allow high levels of security. In the case of Bitcoin, cryptography ensures that others are unable to spend funds from another user’s wallet or to corrupt the blockchain. The process of using codes and ciphers to encrypt and decrypt sensitive information, messages, or data.
What is a Dapp? A Dapp, or Decentralized application, is an application that is open-source, operates autonomously, has its data stored on a blockchain, incentivised in the form of cryptographic tokens and operates on a protocol that shows proof of value. Dapps are renowned for having proven 100% uptime.
What is a DAO? Decentralized Autonomous Organizations can be thought of as corporations that run without any human intervention and surrender all forms of control to an incorruptible set of business rules. A blockchain technology inspires organization or corporation that exists and operates without human intervention.
What is Darksend? Darksend is Darkcoin’s decentralized mixing implementation, which was designed to give users of Darkcoin greater transactional privacy/anonymity.
DDoS or DDoS Attack
What is a DDoS attack? Abbreviated form of Distributed Denial of Service. A DDoS attack utilizes many computers under the control of an attacker to deplete the resources of a primary target. In the past, some Bitcoin exchanges, as well as many other websites, have come under DDoS attacks.
What is the Deepweb? The Deepweb is content online not indexed by search engines making it difficult to access. The majority of content on the internet resides on the deepweb and can be accessed using a program called TOR. This is also where illegal sites such as Silk Road exist.
What is Deflation? Deflation refers to a decrease in the general price level of goods in an economy. Traditionally this has taken place when a currency’s demand collapses, however it is a natural property of bitcoin.
What is Demurrage? Demurrage refers to the method by which certain currencies will penalize users for hoarding the currency. This is done by imposing fees on unspent coins. This fee will increase as time passes.
What is a Desktop Wallet? A Desktop Wallet is a wallet that allows users to store private keys on their computer, allowing for spending and management of bitcoin and other cryptocurrencies.
What is a Deterministic Wallet? A Deterministic Wallet is a wallet based on a system of deriving multiple keys from a single starting point known as a seed. This seed is all that is needed to restore a wallet if it is lost and can allow the creation of public addresses without the knowledge of the private key.
What is a distributed ledger? Distributed ledgers are ledgers in which data is stored across a network of decentralized nodes. A distributed ledger does not have to have its own currency and may be permissioned and private.
What is a distributed network? A type of network where processing power and data are spread over the nodes rather than having a centralized data center.
What is meant by difficulty? This refers to how easily a data block of transaction information can be mined successfully.
What is a digital signature? A digital code generated by public key encryption that is attached to an electronically transmitted document to verify its contents and the sender’s identity.
What is meant by double spending? The act of spending the same bitcoins twice. The blockchain and bitcoin mining exist in order confirm all transactions and thus to prevent such fraud. Nevertheless, users accepting zero-confirmation transactions remain vulnerable to double spending.
What are Dust Transactions? Dust Transactions are transactions so small that they are considered “spam” by the network. They are not relayed to stop people accidentally or deliberately clogging the blockchain.
What is Escrow? Escrow is the practice of having a third party act as an intermediary in a transaction. This third party holds the funds on and sends them off when the transaction is completed.
What is ETF? ETF stands for, Exchange Traded Fund. These are investment funds traded on stock markets that track the price index of an underlying asset.
What is Ethereum? Ethereum is a blockchain-based, decentralized platform for apps that run smart contracts, and is aimed at solving issues associated with censorship, fraud and third-party interference.
What is EVM? The Ethereum Virtual Machine (EVM) is a Turing complete virtual machine that allows anyone to execute arbitrary EVM Byte Code. Every Ethereum node runs on the EVM to maintain consensus across the blockchain.
What is an exchange? A central platform for exchanging different forms of currencies and assets. Typically, bitcoin exchanges are used to exchange cryptocurrency for traditional monetary units.
What is a Faucet? A Faucet is a website which gives away free bitcoins or other cryptocurrency to any IP address that connects to them.
What is Fiat Currency? A currency with no intrinsic value but deemed to have worth because a government has declared it to be so. Fiat currency is money that a government has declared legal tender by fiat (order or decree). It is not backed up by any physical or tangle commodity (something that can be bought or sold). It’s value is strictly established by supply and demand. The US Dollar, British Pound, Euro, etc. are fiat currencies which became so after the abolishment of the gold standard. The word ‘Fiat’ comes from Latin, meaning ‘Let it be done’.
What is FinCEN? FinCEN is an agency within the U.S. Treasury Department, The Financial Crimes Enforcement Network defines its mission as ‘to safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities’. FinCEN has been the primary group in the U.S. to impose regulations on exchanges trading in bitcoin.
What is FOMO? FOMO stands for, Fear Of Missing Out. FOMO is a mindset that causes people to purchase a stock based on the premise that they may miss out on a good thing.
What is a Fork? A fork is a change of the Bitcoin protocol that is not backwards-compatible. A blockchain fork occurs when nodes running the new version of the protocol create a separate blockchain incompatible with the older software. It is a split resulting in a new (updated) version of the original cryptocurrency. A Fork happens when there is a major update that requires a new version of software to be implemented.
What is meant by Frictionless? Frictionless, in reference to payment systems, is a system by which there are zero transaction costs or restraints on trading.
What is FUD? FUD stands for, Fear, Uncertainty, and Doubt. Rumors and misinformation that can have an affect on a stock or a cryptocurrency that causes people to sell their holdings. Sometimes distributed deliberately to cause confusion and lend an advantage to those who start the spread of information.
What is a Genesis Block? The Genesis Block is the first or first few blocks of a blockchain.
What is a GPU? GPU, or Graphics Processing Unit, is a specialized processor originally designed for the high graphics requirements of computer games. These are also used to mine cryptocurrency since they outperform CPUs.
What is a GPU Miner? A GPU Miner is a computer which is usually dedicated to mining cryptocurrency using one or multiple GPUs. Oftentimes, GPU Miners are "open air", meaning that they are not built inside of a case, but rather on a specially designed frame or rig which allows for better airflow, since GPUs tend to produce a tremendous amount of heat while performing a lot of calculations.
What is Halving? Halving refers to the practice of cutting the reward for successfully mining a block of bitcoin in half every 4 years. For instance, the initial reward for mining a BitCoin Block was 50 BitCoins, which was reduced to 25 in 2012 after the first “halving” and half again to 12.25 bitcoins after the next halving. This mechanism ensures a finite amount of coins are created for a crypto currency. The actual time span is not 4 years, but rather the amount of time taken to mine 210 000 blocks.
What is a Hard Fork? A Hard Fork refers to a complete change to the protocol used for a particular cryptocurrency. It is a complete divergence from the previous software version of the Blockchain for a cryptocurrency, and nodes running previous versions will no longer be accepted by the newest version.
What is a Hash? A Hash is a mathematical process that converts inputted data into a fixed length string, usually 32 characters. In the world of bitcoin, a hash must follow certain rules and formats and is formulated using very specific information, and must contain the previous hash and block information within itself together with some “dummy data” (a nonce) to produce a randomised hash. Not all hashes will be accepted. Even the slightest modification of the original input data would result in a completely different hash. A hash is “rehashed” thousands of times over per second until a suitable hash is found. The hash is created by the computers trying to find a suitable hash out of hundreds of thousands. Once a hash is created, it is then stored at the end of the blockchain. The computer that is responsible for submitting a working hash is allocated a reward in the form of bitcoin.
What is Hash Rate? Hash Rate refers to the measuring unit of the processing power of the whole Bitcoin network. The network must make difficult mathematical operations for the purpose of security. For example, when we speak about a hashrate of 1 Th/s, it means you are producing 1 trillion calculations per second.
What is a Hybrid PoS/PoW? A hybrid PoS/PoW allows for both Proof of Stake and Proof of Work as consensus distribution algorithms on the network. In this method, a balance between miners and voters (holders) may be achieved, creating a system of community-based governance by both insiders (holders) and outsiders (miners).
What is Inflation? Inflation refers to an increase in the general price level of goods in an economy.
What are Inputs? Inputs is a reference to an output of a previous transaction. Inputs to an address are added up, and this amount determines the amount a wallet can spend in outputs.
Kimoto Gravity Well
What is Kimoto Gravity Well? Kimoto Gravity Well refers to a mining difficulty readjustment algorithm, which was created in 2013 for Megacoin, an altcoin. The Kimoto Gravity Well allows difficulty readjustment to occur every block, instead of every 2016 blocks for Bitcoin. This was done as a response to concern about multi-pool mining schemes.
What is KYC? KYC stands for, Know Your Client, or Know Your Customer. KYC guidelines mandate that financial institutions must vet potential clients to ensure that they are legitimate and can verify their identities.
What is Laundry? Laundry, also known as a “mixing service”, combine funds from various users and redistribute them, making tracing the bitcoins back to their original source very difficult by mixing their “taint”.
What is Leverage? Leverage is often used to describe trading with borrowed capital (margin) in order to increase the potential return of an investment. Trading with “borrowed” bitcoins/money.
What is Litecoin? Litecoin is one of the first notable “altcoins”. Created by Bobby Lee to be a “silver to bitcoin’s gold”. Litecoin uses the Scrypt mining algorithm instead of SHA256, has a 2.5 minute confirmation times, and has a total coin supply of 84 million coins.
What is Liquidity? Liquidity is the market’s ability to buy and/or sell an asset combined with the extent to which pricing remains relatively stable and consistent between transactions.
What is Liquidity Swap? Liquidity Swap as a financial instrument on cryptocurrency exchanges, are contracts where investors offer loans to others to trade with in exchange for a set return.
What is Margin Trading? Margin Trading is trading of assets or securities bought with borrowed money. A trader usually contributes an initial amount which is then used as collateral for their debt.
What is a Market Order? A Market Order is a buy or sell order which gets executed at whatever the market price is at the time.
What is mBTC? mBTC is a bitcoin metric of 1 thousandth of a bitcoin (0.001 BTC).
What is Merged Mining? Merged Mining allows a miner to work on multiple blockchains simultaneously, contributing to the hash rate (and thus security) of both currencies being mined. For example, Namecoin has implemented merged mining with Bitcoin.
What is a Micro-Transaction? A Micro-Transaction is a financial transaction involving small to tiny sums of money. Traditionally, amounts under a dollar have been impractical due to transaction fees, however, cryptocurrencies have potential to change this.
What is Mining? Mining is the act of validating blockchain transactions. The necessity of validation warrants an incentive for the miners, usually in the form of coins. In this cryptocurrency boom, mining can be a lucrative business when done properly. By choosing the most efficient and suitable hardware and mining target, mining can produce a stable form of passive income. Bitcoin mining is the process by which transactions are verified and added to the public ledger, known as the block chain, and also the means through which new bitcoin are released. Anyone with access to the internet and suitable hardware can participate in mining. The mining process involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle or algorithm. The participant who first solves the puzzle gets to place the next block on the block chain and claim the rewards. The rewards, which incentivize mining, are both the transaction fees associated with the transactions compiled in the block as well as newly released bitcoin.
What is a Mining Algorithm? A Mining Algorithm is an algorithm used by a cryptocurrency to sign transactions. These vary across different cryptocurrencies. For example, Bitcoin’s mining algorithm is SHA256, and Litecoin & Dogecoin’s are Scrypt.
What is a Miner? A Miner is a computer participating in any cryptocurrency network performing proof of work. This is usually done to receive block rewards.
What is a Mining Pool? A Mining Pool is a group of miners who have decided to combine their computing power for mining. This allows rewards to be distributed more consistently between participants in the pool.
What is a Mining Contract? A Mining Contract is a method of investing in bitcoin mining hardware, allowing anyone to rent out a pre-specified amount of hashing power, for an agreed amount of time. The mining service takes care of hardware maintenance, hosting, and electricity costs, making it simpler for investors.
What is Minting? Minting is the process of rewarding users in proof of stake coins. New coins are minted as the reward for verifying transactions in a block.
What is Mixing Service? Mixing Service, also known as Laundry, combine funds from various users and redistribute them, making tracing the bitcoins back to their original source very difficult by mixing their “taint”.
What is a Mobile Wallet? A Mobile Wallet is a wallet which runs a mobile client, allowing people to have bitcoin wallets on their phones and tablet computers and pay on the go.
What is Money Laundering? Money Laundering is the act of trying to “clean” money earned from criminal activity by converting these profits to what appear to be legitimate assets.
What is Mt. Gox? Mt. Gox is a bitcoin exchange based in Japan that collapsed in February 2014 due to poor security practices and incompetent management. It was managed by Mark Karpeles.
Multi-Signature or Multisig
What is Multi-Signature or Multisig? Multisig – A contracted term for Multi-signature addresses which allow multiple users to partially seed an address with a public key. The ability to access funds from such an address requires multiple signers to access the account. As a result, multisig addresses are much more resilient to theft. This form of security is beneficial for a company receiving money into their BTC wallet. If a company wants to keep it so that one employee doesn’t have sole access to a transaction, multisig allows for a transaction to be verified by two separate employees before it’s complete.
What is Namecoin (NMC)? Namecoin is an altcoin which implemented a distributed DNS (domain name system) among other features. This distributed DNS helps people using the .bit domain to resist internet censorship. Namecoin can also be used to refer to the unit of currency NMC.
What is Network Effect? Network Effect refers to the increase in value of a good or service that occurs when its use becomes more widespread.
What is NFC? NFC stands for, Near Field Communication, and is a low power, short range method of wireless communication. This can be used to build upon RFID systems and is what contactless smart cards (oyster cards) and payment systems (paypass) use. Most recently implemented in the Apple Pay app.
What is a Node? A node refers to a computer running a full-client blockchain. It serves to share blocks and transactions across the network using the client-to-client infrastructure.
What is a Nonce? A Nonce is a random number used once when a miner attempts to hash a transaction block. The parameters of these numbers are set by the “difficulty”.
What are Off-Blockchain Transactions? Off-Blockchain Transactions are exchanges of value which occur off the blockchain between trusted parties. These occur because they are quicker and do not bloat the blockchain.
What is an Orphaned Block? An Orphaned Block is a valid block which is discarded by the network after the blockchain has “forked” and then re-achieved consensus on a single blockchain again. This usually happens after two miners simultaneously solve a block, temporarily resulting in two valid blocks in the blockchain.
What is Open-Source? Open-Source refers to the practice of sharing the source code for a piece of computer software, allowing it to be distributed and altered by anyone.
What are Oracles? Oracles work as a bridge between the real world and the blockchain by providing data to the smart contracts.
What is an OTC Exchange? OTC Exchange stands for Over-the-Counter Exchange. These exchanges are places where trading is done directly between the two parties involved in the transaction, allowing traders to escape some of the limitations set by trading on formalized exchanges.
What is meant by Output? Output is the part of the transaction which contains instructions for the sending of bitcoin.
What is a PSP? A PSP stands for Payment Service Provider. PSPs act as bitcoin agents for merchants that accept online payments.
What is a Paper Wallet? A Paper Wallet is a hard copy containing bitcoin wallet information such as bitcoin addresses and their corresponding private keys. Paper wallets are often used to store bitcoins securely in a non-software capacity. A form of “cold storage” where the private keys are printed onto a piece of paper and stored offline.
What is Peercoin? Peercoin was the first cryptocurrency to implement Proof-of-Stake alongside Proof-of-Work.
What is meant by Peer-to-Peer (P2P)? Peer-to-Peer (P2P) refers to the decentralized interactions between two parties or more in a highly-interconnected network. Participants of a P2P network deal directly with each other through a single mediation point. Peer to Peer Network is another way of saying Peer-to-Peer. Peer-to-peer has become a very large focus of blockchain as one of the biggest selling points is decentralization. Nearly every interaction on the blockchain can be fulfilled P2P, or without a centralized variable like a store, bank or notary.
What is Pre-Mining? Pre-Mining is the mining of a cryptocurrency by its developers before it is released to the public. This can be done with good intentions, however, it is also strongly associated with scamcoins.
What is a Price Bubble? A Price Bubble is an economic cycle in which the price of a security or asset will surge unsustainably, and then crash as a sell-off occurs. This is usually caused by speculation, and has been observable in bitcoin’s past prices. When done deliberately, this is known as a “Pump and Dump”.
What are Private Keys? A private key is a string of data that allows you to access the tokens in a specific wallet. They act as passwords that are kept hidden from anyone but the owner of the address. A secret series of letters and numbers kept by the owner of the crypto currency that allows it to be spent by the owner. This should be kept secret at all times.
Proof of Burn
What is Proof of Burn? Proof of Burn is a method of “burning” one Proof of Work cryptocurrency in order to receive a different cryptocurrency. This is a form of “bootstrapping” one cryptocurrency off another, and is done by sending coins to a verifiable unspendable address.
Proof of Existence
What is Proof of Existence? Proof of Existence is a service provided through the blockchain that allows anyone to anonymously and securely store a proof of existence for any document they choose online. This allows people to prove that a document existed at a certain point in time and demonstrate their ownership of it, without fear of that proof being taken from them.
Proof of Stake (PoS)
What is Proof of Stake (PoS)? Proof of Stake, or PoS, is a consensus distribution algorithm that rewards earnings based on the number of coins you own or hold. The more you invest in the coin, the more you gain by mining with this protocol. Proof of Stake is an alternative to Proof of Work, providing an alternative method for deciding who signs transactions into the blockchain. In Proof of Stake, the resource held by the “miner” is their stake in the currency. So someone holding 10% of a proof of stake currency is equivalent to controlling 10% of the network hash rate of a Proof of Work currency.
Proof of Work (PoW)
What is Proof of Work (PoW)? Proof of Work, or PoW, is a consensus distribution algorithm that requires an active role in mining data blocks, often consuming resources, such as electricity. The more ‘work’ you do or the more computational power you provide, the more coins you are rewarded with. This is the type of mining algorithm Bitcoin uses, and is a method of determining who signs transactions in the blockchain. The Proof of Work scheme used by bitcoin is SHA256, a cryptographic hashing function.
What is a Public Address? A public address is the cryptographic hash of a public key. They act as email addresses that can be published anywhere, unlike private keys.
What is a Public Key? A Public Key is a publicly known alphanumeric string that acts as a bitcoin address when hashed with a private key to sign a digital communication. This is the key that you can share with other people to receive bitcoins. A unique address consisting of numbers and letters that you give out to receive cryptocurrencies.
Pump and Dump
What is meant by Pump and Dump? Pump and Dump is a form of market manipulation usually performed on small market cap stocks (or cryptocurrencies). This occurs when traders artificially inflate the assets price and then exit their positions, causing a price collapse.
What is a QR Code? A QR Code, or Quick Response Code, is a two-dimensional block image containing a black-and-white pattern representing a sequence of data. The images are scannable and are often used to encode bitcoin addresses.
What is Quantitative Easing? Quantitative Easing is a monetary policy in which a central bank purchases government securities with cash that did not exist before. This is done in order to increase the money supply and lower interest rates.
What is Remittance? A Remittance is a sum of money being sent, usually internationally, as a payment or gift.
What is Ripple? Ripple (XRP) is an alternative payment network to Bitcoin based on similar cryptography. The ripple network uses XRP as currency, and is capable of sending any asset type.
What is a Satoshi? A Satoshi is an eponymous name for the smallest sub-unit of a bitcoin currently available (0.00000001 BTC).
Who is Satoshi Nakamoto? Satoshi Nakamoto is the supposed pseudonym used by the original inventor of the Bitcoin protocol. Said to possess over a million bitcoins, his/her/their/its identity is still unknown.
What is a Scamcoin? Scamcoins are created as get rich quick schemes by their developers. These coins usually have certain properties, such as being clones of an existing coin and being pre-mined.
What is Scrypt? Scrypt is a type of cryptographic algorithm and is used by Litecoin. Compared to SHA-256, this is quicker as it does not use up as much processing time. Scrypt is an alternative Proof of Work scheme to SHA256. This mining algorithm is used by Litecoin, Dogecoin and many other cryptocurrencies. Originally touted as being “ASIC resistant” due to its heavier memory requirements, ASICs have now been released for mining Scrypt.
What is a Seed? A Seed is the private key used in a deterministic wallet.
Self-Executing Contract aka Smart Contract
What is a Self-Execution Contract? A Self-Executing Contract, or Smart Contract, are protocols that facilitate or enforce the obligations of a contract without the need for human intervention.
What is a Segwit? Segwit, or Segregated Witness, is an improvement to the core way Bitcoin handles transactions in order to make the Bitcoin network approve more transactions with each block.
What is SEPA? SEPA stands for Single European Payment Area. SEPA was designed as a European Union payment integration agreement that would make it easier to transfer funds between nations in Euros.
What is SHA-256? SHA-256 is a cryptographic algorithm used by cryptocurrencies such as Bitcoin. However, it uses a lot of computing power and processing time, forcing miners to form mining pools to capture gains.
What are Sidechains? Sidechains are theoretical, independent blockchains which are “two way pegged” to the Bitcoin blockchain. These can have their own unique features and can have bitcoins sent to and from them.
What is a Signature? A Signature is the mathematical operation that lets someone prove their sole ownership over their wallet, coin, data or on. An example is how a Bitcoin wallet may have a public address, but only a private key can verify with the whole network that a signature matches and a transaction is valid. These are only known to the owner and are basically mathematically impossible to uncover.
What is the Silk Road? The Silk Road is an online marketplace where drugs and other illicit items could be traded for Bitcoin. Accessible through TOR, the Silk Road was shut down in October 2013 by the FBI.
What are Smart Contracts? Smart contracts encode business rules in a programmable language onto the blockchain and are enforced by the participants of the network. A two way smart contract is an unalterable agreement stored on the blockchain that has specific logic operations akin to a real world contract. Once signed, it can never be altered. A smart contract can be used to define certain computational benchmarks or barriers that have to be met in turn for money or data to be deposited or even be used to verify things such as land rights.
What is a Soft Fork? A soft fork differs from a hard fork in that only previously valid transactions are made invalid. Since old nodes recognize the new blocks as valid, a soft fork is essentially backward-compatible. This type of fork requires most miners upgrading in order to enforce, while a hard fork requires all nodes to agree on the new version. A change to the operating protocol for a cryptocurrency that is backward compatible, so older nodes that don’t upgrade will still function.
What is Solidity? Solidity is Ethereum’s programming language for developing smart contracts.
What is a Speculator? A Speculator is an individual who speculates on the price of bitcoin or any other form of asset. Aiming to make profits by buying and selling at different prices.
What is SPV? SPV stands for, Simplified Payment Verification, and allows mobile clients to make payments without needing a copy of the entire blockchain.
What is a Stale Block? A Stale Block is a block that has already been solved and thus cannot offer miners any reward for further work on it.
What is Taint? Taint is a measure of correlation between two addresses. The taint is used in attempts to track a coin’s history.
What is TCP/IP? TCP/IP stands for Transmission Control Protocol/Internet Protocol. TCP/IP is the connection protocol used by the internet.
What is Testnet? Testnet is an alternative blockchain on which developers can test and experiment with changes to a cryptocurrency without the risk of damaging or interfering with the real blockchain.
What is a Timestamp? A Timestamp is a proof that a piece of data existed at a certain point in time. For Bitcoin this is the cryptographic proof of when transactions have taken place.
What is TOR? TOR, The Onion Router, is a free web browser designed to protect users anonymity and resist censorship, allowing them to surf the web anonymously and access sites on the “deepweb”.
Total Coin Supply
What is Total Coin Supply? Total Coin Supply, for many cryptocurrencies, is a limit on the total number of coins that will ever come into existence. For example, Bitcoin’s total coin supply is capped at 21 million coins.
What is a Transaction Block? A Transaction Block is a group of transactions that are collected and hashed on the Bitcoin network by being added to the blockchain.
What is a Transaction Fee? A Transaction Fee is an amount of money users can choose to deduct from their transaction when sending money. This is optional and used to give miners incentive to quickly process their transaction, since they receive the fee as a reward for doing so. All 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.
What is Turing Complete? Turing complete refers to the ability of a machine to perform calculations that any other programmable computer is capable of. An example of this is the Ethereum Virtual Machine (EVM).
What is a Vanity Address? A Vanity Address is a bitcoin address which contains a desired word, pattern, or sequence of numbers. Vanity Addresses are similar to a customized license plate.
Velocity of Money or VoM
What is Velocity of Money or VoM? The Velocity of Money, VoM, is an indicator of how quickly money received is then spent again. For bitcoin, we use “bitcoin days destroyed” to measure its velocity, this can indicate whether people are hoarding or spending their bitcoins.
What is a Venture Capitalist? A Venture Capitalists can refer to an individual or organization that provide initial funding for start-up business ventures that cannot access public funding. This money is known as “seed funding”, and is usually exchanged for equity in the start-up.
What is Virgin Bitcoin? Virgin Bitcoin is a bitcoin that has been received by a miner as a block reward, and thus has never been “spent” before.
What is meant by Volatility? Market volatility reflects the measurement of price movement over a period of time for a traded financial asset, including bitcoin. A measure of fluctuations in price of a financial instrument over time. High volatility in bitcoin is seen as risky since its shifting value discourages people from spending or accepting it.
What is a Wallet? A Wallet is the conceptual cyber equivalent of a physical wallet on the Bitcoin network. A wallet contains the private keys associated with the bitcoin address. A storage facility for cryptocurrencies. There are a number of different kinds of wallets; web wallets, desktop wallets, hardware wallets, mobile wallets, paper wallets and brain wallets.
What is Whitepaper? Whitepaper is a report or guide made to understand an issue or help decision making. Satoshi Nakamoto released the whitepaper on Bitcoin, titled “Bitcoin: A Peer-to-Peer Electronic Cash System” in late 2008.
What is a Wire Transfer? A Wire Transfer is the act of electronically transferring funds from person to person. A wire transfer is often used to send and retrieve traditional (‘fiat’) currency from bitcoin exchanges.
What is Zerocoin? Zerocoin is a project aimed at implementing true anonymity into the Bitcoin network.
Zero Confirmation Transaction
What is a Zero Confirmation Transaction? A Zero Confirmation Transaction is a bitcoin transaction that has been relayed to nodes in the Bitcoin network but has not yet been incorporated into a block. Also known as “unconfirmed transactions”.