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Cryptocurrency Glossary of Terms

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51% Attack
A 51% attack occurs then more than half of the mining hash rate or computer power is controlled by an individual or a group of people. The attacker can then censor transactions and take control of mining operations, having full control of the network. Additionally, the attacker can create a double spend, where a coin is reused.

A

Address
An address is a string of text denoting the location of a digital asset on the blockchain. The address is communicated from payee to payor for the payor to send funds to that address. The address specifies where the digital asset’s ownership data is stored and it’s where changes are registered upon trade.

Altcoin
Any cryptocurrency that is not Bitcoin. Since Bitcoin was the first decentralized digital asset, all subsequent digital currencies are known as altcoins.

Atomic Swap
The direct exchange of one cryptocurrency for another at current rates, powered by smart contract technology, without a centralized intermediary like an exchange.

B

Bitcoin/bitcoin

Bitcoin, the first decentralized digital asset or cryptocurrency, launched in 2009. Bitcoin established a distributed ledger using blockchain technology, which enables the digital asset to be managed across a network of computers instead of a central administrator. This is the Bitcoin (upper case) network. A bitcoin (lower case), the virtual coin created by the network, is its unit of value. Due to its longevity and popularity, bitcoin is the standard cryptocurrency; other cryptocurrencies, such as Ethereum and Litecoin, are known as altcoins.

Block
A block is a collection of transactions recorded on the blockchain.

Block Height

The block height specifies the number of blocks created to date. The first block in a blockchain is the genesis block, which has a height of zero.

Block Reward

A block reward is given to the first miner to calculate a valid hash, or proof-of-work puzzle, during mining. The reward is an incentive for miners to continue contributing to the security of the blockchain.

Blockchain
A blockchain is a permanent, decentralized digital ledger that records transactions in blocks. These blocks are cryptographically linked as they’re mined, creating a chain.

BTC

BTC is the original currency code used for bitcoin, used by cryptocurrency exchanges as an indicator linked to the current value of bitcoin. (Some organizations use XBT as bitcoin’s currency code, because the International Organization for Standardization [ISO] denotes currency not connected to a country with an X.)

C

Cold Storage
Cold storage is the offline storage of cryptocurrencies, typically using offline computers, USBs, hardware non-custodial wallets, or paper wallets that are safeguarded in secure locations.

Cryptocurrency
A cryptocurrency is a digital or virtual asset that is issued, stored, and transferred electronically.

Custody
A service in which a financial institution or other entity holds property on behalf of a customer.

Custodian
Custodians hold property or assets on behalf of a client, ensuring the security of those holdings. BitGo is a qualified custodian.

D

DAO (Decentralized Autonomous Organization)
DAO’s exist entirely on a blockchain and are governed by protocols. A DAO is a unison of many long-term smart contracts between many people.

Digital Asset
A cryptocurrency or virtual asset, usually valued in coins or tokens.

Digital Signature
A unique alphanumeric “code” that is generated for every transaction. Just like your signature provides the proof of ownership on a document, similarly, a digital signature provides the proof that the transaction is genuine. Unlike a handwritten signature, a digital signature is unique for every transaction.

Double Spend
In a double spend, an asset is spent more than once in conflicting transactions. Double spends are prevented by algorithms within the blockchain, but can occur in combination with a 51% attack, if the attacker controls more than half of the hashrate. See 51% attack.

E

Ether

Ether tokens are the digital asset created in the Ethereum network. Ether tokens incentivize the completion of smart contracts, where a transaction takes place when specific conditions are met.

Ethereum

Ethereum is a distributed, public blockchain-based platform that facilitates smart contract technology.

Exchange

A cryptocurrency exchange is a platform that allows its customers to trade cryptocurrencies for other cryptocurrencies or fiat currency.

F

Fiat Currency

Fiat currencies are issued and backed by governments, such as the U.S. dollar and the eurozone euro.

Fork
Forks occur when an alternate version of a blockchain is created by changing its rules, which creates a second blockchain running simultaneously. See Hard Fork and Soft Fork.

G

Genesis Block

A genesis block is the first block in a blockchain.

H

Halving

Halving is when the bitcoin reward that miners receive per confirmed block is cut in half, which occurs every 210,000 blocks mined. This controls the number of new bitcoins in circulation.

Hard Fork

A hard fork occurs when the rules of a digital asset’s blockchain change, creating a separate, backward-incompatible blockchain. This results in two cryptocurrencies, one that follows the old protocol and another that uses the new protocol. Examples include Bitcoin and Bitcoin Cash, and Ethereum and Ethereum Classic.

Hash or Hash Function

A hash or hash function occurs when data of variable size is mapped in a fixed size, with an output that looks random and requires a cipher to decode.

Hash Rate

A hash rate is the unit of measurement for how many hashes a miner computes in a given period of time, measured in kH/s, MH/s, GH/s, TH/s, etc.

HODL

Originally a typo, HODL is a shorthand call for investors to hold a digital asset instead of trading it, regardless of market fluctuations.

I

Initial Coin Offering (ICO)

An initial coin offering is a type of crowdfunding that uses the sale of digital assets to provide capital for a new venture.

K

Keys

Keys are the alphanumeric codes that facilitate cryptographic digital asset transactions using. A public key is used to encrypt a message, and a private key decrypts that message.

L

Ledger

A ledger tracks the movement of assets. Blockchain technology creates a decentralized, permanent, public, unalterable ledger of all transactions recorded.

M

Market Capitalization, or Market Cap

Market capitalization of digital assets is determined by multiplying the total coin supply by the current market value of that particular coin.

Maximum Coin Supply

The maximum coin supply is the total number of coins that can be created for a specific digital asset. For example, bitcoin’s maximum coin supply is 21 million. Some coins do not have a fixed maximum coin supply.

mBTC

One-thousandth of a bitcoin, or 0.001 BTC. Also known as a millibitcoin.

Merkle Tree

A Merkle tree, or binary hash tree, contains cryptographic hashes in a data structure used to summarize and verify the integrity of large amounts of data.

Mining

Mining is a process that adds blocks to the blockchain, verifying transactions, as well as minting digital assets and releasing them into circulation. The process involves miners trying to solve a proof-of-work puzzle, and if they are successful, they publish a block of new transactions to the blockchain and earn new coins.

Mining Pool

A mining pool, also known as group mining, is when miners band together and agree to share winnings if one of the miners in the pool solves a block.

N

Node
Nodes are participants on a blockchain network that maintain a copy of the network’s ledger by communicating with other nodes on the network, therefore ensuring the integrity of the blockchain.

Nonce
A nonce is an arbitrary number used to vary the input to a hash function, to change its output in an unpredictable way.

O

Off-Chain Transaction
Off-chain transactions occur off a given blockchain network, but may later be submitted to the chain to be recorded. This method increases the speed of and the blockchain’s capacity for transactions.

P

Private Key

A private key is a secret piece of data held by a person or entity that is used to decrypt information hashed with the public key.

Proof of Stake (PoS)
This concept states that a person can mine or validate block transactions according to how many coins he or she holds. This means that the more bitcoin or altcoin owned by a miner, the more mining power he or she has. The first cryptocurrency to adopt the PoS method was Peercoin.

PoW (Proof of Work)
Proof of work is a consensus mechanism that involves solving complex puzzles to validate transactions and create new blocks on the blockchain. The high expense of the proof of work, in computing power and time, creates a cost of production for the asset.

Public Key
A public key is a shareable piece of data computed from a private key. Public keys are used with digital signatures to authorize transfers of digital assets.

R

Ring Signature
A ring signature is a type of digital signature used to increase privacy. A ring signature fuses the input of multiple signers with the original sender’s, to protect the identity of the actual signer.

S

Satoshi
A satoshi is the smallest unit of bitcoin, valued at 0.00000001 BTC.

Satoshi Nakamoto
Satoshi Nakamoto is the person or group of people who created Bitcoin. Nakamoto’s identity has never been confirmed.

Segregated Witness, or SegWit

Segregated Witness was a soft-fork upgrade to the Bitcoin network that moved certain transaction data (signatures and scripts) outside of the main block, in an attempt to fix transaction malleability. A side effect was increasing the number of transactions that fit on a block.

Smart Contracts
A smart contract is a computerized transaction protocol that executes the terms of the contract. When running on the blockchain, a smart contract becomes like a self-operating computer program that automatically executes when specific conditions are met.

Soft Fork
Soft forks change the rules of a digital asset blockchain, but unlike hard forks, soft forks are backward-compatible, and do not split the blockchain into two separate digital assets.

Staking
Staking is participating in a Proof of Stake system by using your tokens as a validator on the blockchain so you can receive rewards.

T

Total Circulating Coin Supply
The total number of coins that a given digital asset has in circulation.

Total Coin Supply
The total number of coins minted for a digital asset, though not necessarily in circulation.

Transaction Fee
A transaction fee is a payment made by a user for using the blockchain for their transaction.

U

uBTC
One millionth of a bitcoin, or 0.000001 BTC. Also known as a microbitcoin.

V

Virtual Currencies
Virtual currencies is another term for cryptocurrencies or digital assets.

W

Wallet
A cryptocurrency wallet is software that manages addresses and maintains keys for a user.

Z

Zero-Knowledge Proof

A zero knowledge proof allows a party to cryptographically prove an action, such as evidence of a transaction or event, without revealing details of the transaction or event.