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Glossary of Cryptocurrency Terms

Are you new to Bitcoin, Ethereum and cryptocurrencies?  Is your head spinning trying to understand confusing new terms?

Don’t worry, we’ve put together a short glossary explaining the most important concepts  – all in plain-English.

Address

An address is used to send and receive transactions on a network (e.g. Bitcoin).  Usually an address is a very long string of numbers and letters.   Typically there are two parts to each address – the Public Key (often just called the “address”) and the Private Key.  While generally you can receive assets (incoming transactions) using only your Public Key, you cannot spend assets (outgoing transactions) unless you have the Private Key.  See Public Key and Private Key below.

Altcoin

Any cryptocurrency that isn’t Bitcoin.   Examples include ether, dash and litecoin.

AML

Acronym for “Anti-Money Laundering”.  Laws and regulations designed to prevent the proceeds of criminal activity being converted into (“laundered”) money that appears to come from legitimate sources. 

Bitcoin

The most well-known cryptocurrency.  Bitcoin was the first decentralized cryptocurrency to run on a global peer to peer network, without the need for middlemen and a centralized issuer or backer.

Block

Blocks are chunks of data that carry permanent records of action on the blockchain network.

Blockchain

A record of all transactions that ever occurred.  The record or “ledger” grows with each transaction by the addition of new “blocks” to the end.  Learn more about the Blockchain here.

BTC

An acronym for Bitcoin.  A BTC is a single unit of the Bitcoin currency.

Cold Storage

This refers to the practice of storing cryptocurrency offline to increase security.  Common examples include a hard drive or USB drive, a hardware wallet and a paper wallet.  Contrast storing your digital currencies in online wallets or at exchanges.  Here is a good explanation of cold storage.

Cryptocurrency

Also known as tokens, cryptocurrencies are representations of digital assets where encryption is used to regulate the generation of currency units and verify the transfer of funds.

Dapp

An abbreviation for “decentralized application”.  A Dapp is an application that is open source, has no central point of control with its consensus data stored on a blockchain.

Distributed Ledger

Distributed ledgers are ledgers in which data is consensually shared and stored across a decentralized network of decentralized nodes. A distributed ledger may be public, private or permissioned.  

Double Spending

Where a single token (a bitcoin for example) is spent twice.    This problem is unique to digital currencies because such information can be reproduced with relative ease.

Ethereum

Launched in 2015, Ethereum is open-source, public, distributed computing platform and programming language based on blockchain technology.

Fiat

A government issued currency with status as legal tender, but is not backed by a physical commodity (e.g. gold).

Initial Coin Offering (ICO)

An unregulated means by which a new cryptocurrency project sells its own tokens in exchange for legal tender or other cryptocurrency.   

Key

See Private Key and Public Key.

KYC

Acronym for “Know Your Customer”.  KYC is the due diligence process of a business identifying and verifying the identity of its clients. KYC typically applies financial institutions and other regulated entities.

Market Cap

Market capitalization of a cryptocurrency is the price per unit for the currency, multiplied by the current number of outstanding units in the market. This gives the overall ‘value’ of the cryptocurrency.

Mining

Mining is the process where new units of currency are generated by rewarding computers for solving highly complex math problems. This is a computer intensive task and most users join mining pools to combine processing power of multiple machines.

Node

A node is any individual computer that connects to a cryptocurrency network.  Typically, the more nodes a network has, the safer the network.  Unlike mining, where users receive bounties for successfully confirming transactions, running a node does not provide any financial incentive.

Public Address

This is the address used to publicly receive cryptocurrency. In the same way that your email address is public, anyone in the world can know your public address in order to send you tokens (e.g. Bitcoin).  

Private Key

A Private Key is a string of letters and numbers that allows you to access (and spend) the tokens or currency in a specific wallet. Private Keys act a lot like passwords to be kept hidden from anyone but the owner of the wallet.  Read more here.

Proof of Stake (POS)

An algorithm that rewards users 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 Work (POW)

An algorithm that rewards users based on the amount of computational power the user provides.

Public Key

A cryptographic code that allows a user to receive cryptocurrencies into his or her account.

Satoshi Nakamoto

The name used by the unknown person or group persons who created bitcoin.  Bitcoin was launched in 2008 and by 2011, Nakamoto vanished with his frequent forum posts and e-mails going silent. Claims in 2016 by Craig Wright, an Australian entrepreneur, that he was Nakamoto were met with skeptisim.

Smart Contracts

Smart contracts are self-executing contracts with the terms directly written into lines of code. Smart contracts typically exist across a distributed ledger which allows contracts to be carried out between anonymous parties without the need for a central enforcement authority. 

Token

A “token” is a representation of an asset, usually for something that has a value. The most common example is coins but crypto tokens can represent a wide variety of assets ranging from shares in a company to voting rights of an entity.

Vitalik Buterin

A Russian-Canadian programmer and writer primarily known as a co-founder of Ethereum.  You can follow Buterin on Twitter here.

Wallet

A software program that stores Private Keys and enables the user to view and create transactions on a specific blockchain.

Whale

A “whale” is a very wealthy investor or institution active in the cryptocurrency markets.

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7 Articles You Must Read if You’re New to Bitcoin

Unless you’ve been hiding under a rock in Outer Mongolia, you’ve heard of Bitcoin. The once-marginalized digital currency may have started as an anonymous way to buy and sell contraband, but over the past few years, it’s become a hot investment vehicle. So what articles do you need to read to familiarize yourself with Bitcoin?

Here’s a list of 7 that should be a huge help in your journey toward Bitcoin expertise.

1. What is Bitcoin?

A super basic summary of the main gist of Bitcoin. This will start you off and walk you through some of the most basic ideas surrounding Bitcoin. It’s also helpful because it’s done through infographics, so it’s a simple introduction. Very simple but very useful.

2. Bitcoin

The old standby, Wikipedia, strikes again. But this time, the article is really informative and has links to every detail of Bitcoin life, from fundamentals to where to spend. It’s helpful to understand some of the deeper thinking around Bitcoin, as well as some of the history. Worth a read.

3. How Does Blockchain Work?

The underlying fundamental of Bitcoin that keeps it safe and protected from fraud is blockchain technology. Blockchain technology is a distributed ledger, or database, that requires consent from all parties to verify a transaction. Therefore it is inherently free from It’s worth understanding the basics in order to feel safe.

4. What is a Digital Wallet?

If you’re going to buy Bitcoin, you’ll need a wallet, and not just any wallet, but a digital wallet that will store your Bitcoin. Sound funny? It’s ok – this article will help you understand what a digital wallet is and how it works. You’ll need to have a pretty strong grip on this concept before diving into Bitcoin.

5. Cryptocurrency Exchanges

Cryptocurrency is a fancy name for digital currencies, rather than fiat currency issued by a government. While the ways to spend cryptocurrencies like BTC are growing (see the article below), it’s also important to find a way to exchange your Bitcoin for fiat currency like dollars or euros. To do that, you’ll need a cryptocurrency exchange. It’s important to understand cryptocurrency exchanges. The best way to do that is to read some pages, and pick one exchange and open an account. The exchange allows for the purchase and sale of Bitcoin and converts the sale into other fiat currencies.

6. Bitcoin Price Analysis

This site offers weekly price analysis. Just go to the link above and search the author’s name, and you’ll find an up to date price analysis of Bitcoin. It’s worth keeping track of where the market has been in order to know where the market may go from here.

7. Getting in Deep

If you’re really wanting to understand what’s going on with Bitcoin down to its very roots, this site is the place to go. The author has compiled an incredible series of articles on the programming roots of the blockchain that is the foundation for Bitcoin. It’s worth taking time to read through the articles, but only if you’re really into understanding everything there is to know about Bitcoin. It’s the equivalent of understanding the complexities of printing a $100 bill, rather than just understanding the value of $100.

With these seven articles, you should be able to go from Bitcoin zero to 60 in a relatively short time. Bitcoin is here to stay, so learning all you can is a good decision.

How to Explain Bitcoin to Your Grandparents

Bitcoin continues to set new all time high prices. And it seems like the media is bombarding us with all things Bitcoin. It’s no surprise then that friends and relatives will start asking questions.

While it may be a hot topic, many people really struggle to grasp what Bitcoin is. This seems to be particularly true for older generations, less familiar with the digital and online world in general.

So, are you sick of having to explain what Bitcoin is and how Bitcoin works to friends and relatives?

Well, thanks to the guys at  Visualistan.com you can just send them this helpful “What is Bitcoin” infographic.

how to explain bitcoin to your grandparents infographic

Are you interested in learning more about crypto and Bitcoin?  Check out our free Bitcoin for Beginners course here.