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.
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.
Any cryptocurrency that isn’t Bitcoin. Examples include ether, dash and litecoin.
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.
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.
Blocks are chunks of data that carry permanent records of action on the blockchain network.
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.
An acronym for Bitcoin. A BTC is a single unit of the Bitcoin currency.
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.
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.
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 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.
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.
Launched in 2015, Ethereum is open-source, public, distributed computing platform and programming language based on blockchain technology.
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.
See Private Key and Public Key.
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 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 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.
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.
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).
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.
A cryptographic code that allows a user to receive cryptocurrencies into his or her account.
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 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.
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.
A Russian-Canadian programmer and writer primarily known as a co-founder of Ethereum. You can follow Buterin on Twitter here.
A software program that stores Private Keys and enables the user to view and create transactions on a specific blockchain.
A “whale” is a very wealthy investor or institution active in the cryptocurrency markets.
Was This Helpful?
If you found this resource helpful, please Share with someone who will also appreciate it.