Here we can see, “Cryptocurrency Definitions: Everything You Need to Know About Cryptocurrency”
Table of Contents
Cryptocurrencies are digital currencies that run on blockchains, which are decentralised computer networks. Bitcoin, Ethereum, Tether, Cardano, Binance Coin, and USD Coin are the most popular and generally acknowledged cryptocurrencies.
Cryptocurrencies are growing in popularity, with new ones appearing all the time, and they are here to stay. The biggest cryptocurrencies, Bitcoin and Ethereum, have proven reliable, and their popularity is growing.
This cheat sheet covers the important concepts you need to know and understand to be well-prepared for your crypto experience, whether you want to engage in cryptocurrencies or learn more about them. Consider this cheat sheet a set of road signs for navigating the cryptocurrency world.
The Glossary of Cryptocurrency Terms
|1||Block||A block is a computer file that retains a record, or ledger, of bitcoin transactions completed during a specific period and is worth a certain amount of coins. One block in the Bitcoin network, for example, is worth 6.25 Bitcoins, a value that will halve every four years until the last block is created in 2140. The size of a block varies according to the blockchain. The theoretical limit for Bitcoin is 4MB, but Bitcoin Cash enables anything from 8MB to 32MB.|
|2||Blockchain||A decentralized computer network consists of autonomous yet connected blocks, copies of which are distributed throughout the network. When one or more Bitcoin transactions are added to a block, a new block is formed, and the transaction is verified and updated across the blockchain.|
|3||Distributed Ledger||A blockchain is also known as a ledger.|
|4||Genesis Block||Unspendable coins are contained in the first block of a blockchain. The genesis block of Bitcoin was produced on January 3, 2009, with 50 Bitcoins.|
|5||Block Height||A blockchain’s total number of connected blocks.|
|6||Peer-to-Peer||The direct connection of two or more computers to each other without using a centralized third-party middleman. Blockchains are decentralized networks that function on peer-to-peer networks.|
|7||Protocol||The program connects the blocks and establishes the rules for adding new blocks to the decentralized network.|
|8||Algorithm||The algorithm or method for generating keys that keep transactions secure. Hash, Public Key, and Private Key are the three main keys that cryptocurrencies rely on (see below).|
|9||Encryption||An algorithm is used to turn legible text into illegible text, referred to as a hash or a key. The term cryptocurrency comes from this procedure, which is also known as cryptography.|
|10||Hash||A verified and a string of letters and numbers represents the submitted transaction. It’s commonly referred to as Hash or TxID.|
|11||Hash Rate||The rate at which a computer verifies and submits a transaction, creating a new Hash in the process. It is the average speed at which a blockchain generates new hashes, and it is measured in hash/second.|
|12||Public Key||A string of letters and numbers identifies the address of your wallet in the Blockchain. Like your email address or bank account number, this information can be shared with others to obtain cryptocurrency.|
|13||Private Key||A combination of letters and digits allows you to access your wallet. Like your password or PIN, this is private information that should never be shared.|
|14||Seed Phrase||A 12-, 18-, or 24-word phrase that only you and you alone know and that serves as a backup to your private keys. A seed phrase will help you recover your private key if you forget or lose it.|
|15||Wallet||A blockchain file that receives and keeps your bitcoin, similar to how your email inbox receives and stores emails. Both a Public Key and a Private Key are used to operate it.|
|16||Cold Wallet||The offline storing of your wallet’s Public and Private Keys by printing them on a piece of paper or putting them on an external hard drive that is not connected to the internet to avoid hacking loss. When you have a significant number of coins in your wallet, cold storage is recommended.|
|17||Hot Wallet||Your wallet’s public and private keys are saved on an app connected to the internet and used to access it. If your computer or phone is hacked, your keys could be stolen.|
|18||Mining||The process of a computer or a collection of computers verifying transactions. Two things happen when all of the computers accept the transaction on the network: a new block is added to the chain, and new coins are minted and added to the new block.|
|19||Consensus||The procedure for verifying and submitting transactions. Proof of Work (PoW), Proof of Authority (PoA), and Proof of Stake are the three basic forms of consensus algorithms (PoS).|
|20||Mempool||A “waiting area” for valid blocks is a group of validated and submitted transactions awaiting confirmation by all computers in the Bitcoin network. Congestion is indicated by a large mempool size, which signals a backlog of blocks waiting to be added to the blockchain.|
|21||Proof of Work (PoW)||Multiple computers in a blockchain compete to mine blocks using this algorithm. Before all other computers approve the new block in the blockchain, the first computer to mine a block must prove that it consumed a particular amount of energy to do so.|
|22||Proof of Authority (PoA)||An algorithm that grants authority to mine blocks to a trusted computer or a group of trusted computers. This method is substantially faster than PoW.|
|23||Proof of Stake (PoS)||A method that allows a computer to mine blocks based on the number of bitcoin it has. For example, a machine with 2% of the coins available can only mine 2% of all blocks.|
|24||Proof of Activity (PoA)||An algorithm verifies transactions using both Proof of Work (PoW) and Proof of Stake (PoS) after a block has been successfully inserted, the system shifts from PoW to PoS.|
|25||Proof of Burn (PoB)|
A method for computers to mine blocks based on the number of coins they “burn.” Sending coins to an unspendable address causes them to be burnt. The more coins that are burned, the more opportunities there are to mine.
What Does the Future Hold for Cryptocurrency?
The Matrix and Terminator films depict what might happen to societies when they achieve incredible technical power, centralise it, and lose it to an adversary. Because they run on decentralised computer networks, cryptocurrencies are meant to prevent a Matrix or Skynet scenario.
While cryptocurrencies can bring decentralised financial services to everyone on the planet, they still have a long way to go in terms of development and integration. During that time, fiat currencies and the centralised networks on which they are based will continue to have low volatility and a near-monopoly on global financial transactions.
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