2017 has seen a boom in cryptocurrencies as interest from the public has seen a spike, for a new comer interested in this new phenomenom, getting intune with the concept could be challenging for someone looking to learn the ropes. Here are just a few crypto currency jargons and their meanings to get you started :
Blockchain : A blockchain is a type of distributed ledger, comprised of unchangable, digitally recorded data in packages called blocks (rather like collating them on to a single sheet of paper). Each block is then ‘chained’ to the next block, using a cryptographic signature. This allows block chains to be used like a ledger, which can be shared and accessed by anyone with the appropriate permissions.
Blockchain technology consists of a few cooperative mechanisms. Among the most valuable assets that blockchain has are immutability and decentralized information storage. When these two strengths come together in one package, the result is an incredibly strong information storage system. Blockchains store transactions in time-stamped segments known as blocks. Blocks are stored in the order they are verified by the rest of the network. )
Genesis Block : The very first block in the chain.
Cryptocurrency : A form of digital currency based on mathematics, where encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds. Furthermore, cryptocurrencies operate independently of a central bank.
Bitcoin : A form of electronic money independent of traditional banking.
Satoshi : The smallest possible fraction of cryptocurrency available for transactions. It refers to 0.00000001 Bitcoin, and is named after Satoshi Nakamoto, the enigmatic creator of the first publicly-available digital currency.
Altcoin: A term used to describe cryptocurrencies other than bitcoin, which is often regarded as the original cryptocurrency that used blockchain networking principles.
Initial Coin Offering (ICO) : An Initial Coin Offering (also called an ICO) is an event in which a new cryptocurrency sells advance tokens from its overall coinbase, in exchange for upfront capital. ICOs are frequently used for developers of a new cryptocurrency to raise capital.
Smart Contract : Smart contracts are coded, autonomously executed transactions which store funds or other assets in escrow until certain conditions are reached. Once the criteria are met, the funds and assets are released to the appropriate parties. Smart contracts are often used to regulate business actions and enforce security over ICO funds.
Hard Fork : A hard fork (or sometimes hardfork) is a radical change to the protocol that makes previously invalid blocks/transactions valid (or vice-versa), and as such requires all nodes or users to upgrade to the latest version of the protocol software. Put differently, a hard fork is a permanent divergence from the previous version of the blockchain, and nodes running previous versions will no longer be accepted by the newest version.
Soft Fork : A soft fork (or sometimes softfork) is a change to the software protocol where only previously valid blocks/transactions are made invalid. Since old nodes will recognize the new blocks as valid, a softfork is backward compatible. This kind of fork requires only a majority of the miners upgrading to enforce the new rules.
Mining : The process by which transactions are verified and added to a blockchain. This process of solving cryptographic problems using computing hardware also triggers the release of cryptocurrencies.
Orphan Block : Not a part of the valid block chain, but which was instead part of a fork that was discarded.
Confirmation : A confirmation means that the blockchain transaction has been verified by the network. This happens through a process known as mining, in a proof-of-work system (e.g. Bitcoin). Once a transaction is confirmed, it cannot be reversed or double spent. The more confirmations a transaction has, the harder it becomes to perform a double spend attack.
Hash : This is a random and complex mathematical formula used in the verification of blocks of transaction data in the process known as mining. Once a miner calculates the proper hash in a block, they're rewarded with coins and a percentage of the transaction fees embedded in that block.
Hashrate :The number of hashes that can be performed by a bitcoin miner in a given period of time (usually a second).
Block Reward : The reward given to a miner which has successfully hashed a transaction block. This can be a mixture of coins and transaction fees, depending on the policy used by the cryptocurrency in question, and whether all of the coins have already been successfully mined.
Address : Addresses are network values linked to wallets that are used to direct the transfer of funds between wallets. Addresses are randomly generated when a wallet is created on a network. It is recommended that users create alternative addresses within their wallets to carry out transactions from in order to protect their fund.
Wallet : Wallets are addresses that are used to hold cryptocurrency tokens for use at a later date. There are several types of wallets. The proper wallet can be determined for each situation by assessing the needs of an individual situation.
Wallets have a couple of vital parts that allow them to operate. The three main components of a wallet are their address, their public key which is used to send and receive funds, and their private key which is used to accept and sign transactions to release funds. Users should never publish their private keys, send them to other individuals, or share them in any other way.
Paper Wallet : is a physical piece of paper you print out that stores your altcoins in a secure, off-line environment. Paper wallets are inherently impervious to hacking and other forms of internet theft but vulnerable to acts of nature (fire and flood), burglary, and human error (simply losing your wallet). Basically, all a paper wallet contains is a printed public key and private key for a respective address. The data is NOT stored on a computer.
Multisignature : Used to describe cryptocurrency wallets that need two or more signatures to release funds. Multisignature wallets are commonly used to store funds for smart contracts and ICOs. Multisignature hardware wallets are becoming increasingly popular among users due to advances in fingerprint and other biometric technologies.
Offline Storage :This concept relates to how your cryptocurrency is stored. If your currency is online, on an active drive on a computer that's turned on, or accessible through cloud computing, that means it's also accessible by other computer users. Sometimes that access takes place without your knowledge. This can lead to hacking and theft, since cryptocurrency by design, isn't connected directly to any one person. As such, it's important to keep your unique currency information offline as often as possible; it's best to do so unless the currency is directly in use for a transaction. Two of the best ways to keep your investment info offline is to store it on an external drive that can be disconnected from your computer when it's not needed, or to print it out and store it in a paper wallet. If you decide to take advantage of a wallet service from a cryptocurrency exchange, one of the first questions you should ask them should be about offline information storage, since digital currency theft is usually untraceable and irreversible.
Private Key : A private key is a string of data that shows you have access to bitcoins in a specific wallet. Private keys can be thought of as a password; private keys must never be revealed to anyone but you, as they allow you to spend the bitcoins from your bitcoin wallet through a cryptographic signature. It is the key to the balance of the address. Whoever holds the private key owns the value of the address
Public Key : Is like the bank account for your personal digital currency. It is where you store your coins. If you have multiple types of coins, you must have a separate wallet for each type. A wallet is a collection of public keys. So a wallet can contain one public key or one hundred. How much you decide to put in each is up to you and there is no cost. An example of a Bitcoin public key : 14euyjBip1t2aWax5ZSg5YGHR8WW34CnEj. Anyone can send you coins or you can transfer coins to other address as long as you have the private key.
Proof of Concept : is a realization of a certain method or idea to demonstrate its feasibility, or a demonstration in principle, whose purpose is to verify that some concept or theory has the potential of being used. A proof of concept is usually small and may or may not be complete. POC is also known as proof of principle.
Proof of Work : A system that ties mining capability to computational power. Blocks must be hashed, which is in itself an easy computational process, but an additional variable is added to the hashing process to make it more difficult. When a block is successfully hashed, the hashing must have taken some time and computational effort. Thus, a hashed block is considered proof of work.
Proof of Stake : An alternative to the proof-of-work system, in which your existing stake in a cryptocurrency (the amount of that currency that you hold) is used to calculate the amount of that currency that you can mine.
Exchange : Centralized bodies which transfer currencies between blockchains and regular currencies are referred to as exchanges. Much like the various stock exchanges that exist, cryptocurrency exchanges act as an intermediary to move money and cryptocurrencies between users and networks
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