Hello dear community! As an official member of The BitCoin Theory (german language), I've translated our 4th part of the Beginner's Guide "Crypto Dictionary" into English. Have fun..
New in the crypto world? Flooded with a sea of information? With our beginner guide we want to provide you the most important links & information directly at first sight.
Who does not know it, you start to get interested in something new that you had nothing to do with before and suddenly you are confronted with new technical terms and do not understand a word. We want to provide you with our lexicon a simple introduction to the world of cryptocurrencies and present you in this sense the 4th part of our beginner's guide.
The first and best-known cryptocurrency.
Altcoin's are all other (alternative) cryptocurrencies.
Some examples: Monero, Bitcoin Cash, Litecoin, etc.
The blockchain is a common public booking system that provides the foundation for the information network. In this "booking system" all bookings that have been confirmed are saved.
Block
Each block is independent of the block chain and thus manipulation is very difficult. Anyone trying to manipulate or delete only part of the entire chain is forced to change or delete the subsequent blocks as well.
To maintain security, a new block is added every 10 minutes. Due to the enormous complexity of the block chains, it is an impossibility to manipulate the blockchain.
Smart contracts are computer protocols in which algorithms determine which actions lead to which decisions.
Proof-of-Stake (PoS)
This algorithm states that a person can dismantle or validate block transactions based on the number of coins he / she owns. This means that the more coins the miner owns, the more blocks will be allocated to him.
Proof-of-Work (PoW)
= a math problem that must be solved by miners in order to mine the respective crypto currency.
The word "decentralized" is used very often in the crypto world and therefore a short explanation is needed:
If we take the previously known currencies (FIAT currencies) for comparison, we know that e.g. the EURO is managed by the ECB (European Central Bank), or the dollar by the FED (Federal Reserve System). Thus, the administration is "central", as an institution alone has the ability to control the currency flow.
In contrast, e.g. Bitcoin "decentralized" - This digital coin is calculated by many people (so-called "Miner") world-wide with power of the computer ("Mining"), administered, as well as the transactions confirmed.
The bear beating down the price with his paws.
=> the symbol which stands for falling prices in the stock exchange language.
ATL — All Time Low
Describes the lowest value recorded since launch (emission).
FUD (Fear, Uncertainty, Doubt)
This refers to the spread of fear, uncertainty and doubt. Mostly, the information is not based on the truth and serves to push the price down.
HODL
This term describes that you keep a coin despite a current crash or a very strong increase.
The bull, who pushes the price up with his horns.
=> the symbol which stands for rising prices in the stock exchange language.
ATH — All Time High
Describes the highest value recorded since launch (emission).
FOMO (Fear of Missing Out)
Example: I'm afraid to miss a price rise and buy it too high a price, because I have fallen in blind.
Shillen
= if you praise something in high tones (hype).
The place where coins are traded (bought / sold). Basically the same scheme as on the stock market.
There are different types of exchanges
FIAT
state-approved means of payment (eg EURO, DOLLAR etc.)
Deposit
This way, you will get the deposit address of your wallet to which you can transfer your coins / tokens.
Withdraw
This way you can transfer your coins / tokens to another wallet.
A "fork" is a special event that can lead to drastic changes in digital currencies. Since digital currencies are still pretty much at the beginning and always evolving, from time to time it is necessary to change the original protocols, or more simply, the "future way". This can be minor (softfork), but also very big (hardfork) changes. As usual with changes, the whole community will never be in agreement, so the paths split / fork. One differentiates between the following two variants:
Hardfork
Example: Bitcoin/Bitcoin Cash
The protocol (bitcoin) is changed and is not backwards compatible. This means that all users (miners) who want to follow the new protocol (Bitcoin Cash) are forced to use the latest version of the software, otherwise the blocks will not be recognized. The remaining users, who are convinced of the old blockchain (bitcoin), stick with the old software.
Softfork
In this case, it's about changes where the majority of the community agrees. The changes will be made on the existing blockchain and no new coin will be created.
This is called the first issue of a coin / token before it will eventually be listed on stock exchanges. This is mainly used as a form of raising capital, also called crowdfunding.
ICO's are not a low-risk investment and should be treated with caution.
Before investing, you should be well informed and research extensively. Those who invest blindly can also lose their entire deposit.
Whitepaper
Is the first document describing the project or coin.
Roadmap
Shows the strategy / project plan based on a time span (usually 3-5 years)
Market Cap
Describes all volume (money) traded in the market (purchases / sales).
Calculation: current value * Coins currently in circulation.
Example:
Current available coins 5,000,000 pieces
Current Price 2.50 EUR
Market Cap = 12.500.000,00 EUR
KYC — Know Your Customer
Many exchanges and ICOs require identification of customers. This procedure is carried out for new customers in all areas. Wherever money is flowing or contracts are entered into between the company and the consumer, customers are identified by their identity card, etc. (for example, creating insurance, creating a bank account). It is used to combat money laundering, terrorist financing, fraud, etc.
Airdrop
Not to be confused with the data transfer program from Apple, "Airdrops" are used in the crypto world as a reward system. Companies give some of their coins / tokens to the community during the ICO / ITO phase.
Faucet
Is also a kind of reward system in which you have to do small tasks on a website or in an app, such as. click on a link. These are fairly simple tasks, so the reward is relatively small (around 0.00000001 BTC = which equates to a Bitcoin price of EUR 10,000.00 = EUR 0.0001).
SCAM
Other word for fraud / fake.
The mining process is the solving of mathematical tasks through certain calculations.
Put simply, as a gold miner mines gold, a miner generates any coins. Not every coin can be mined.
A miner is an investor who has the goal to generate some coins himself.
For the actual mining he needs an internet access and a powerful computer or graphics card. There are several ways to mine:
Hardware-Mining
from home possible - the stronger the graphics card, the faster can be mined
Mining-Rigs
Bundling multiple graphics cards to a standard computer to get more computing power
Browser-Mining
e.g. via Google Chrome - to sites offering the mining
App-Mining
e.g. Electroneum
Pool-Mining
e.g. AntPool - several miners who team up to gain more processing power together
Cloud-Mining
e.g. Hashflare - works like a subscription, which gives you more computing power just like pooling
Is the digital wallet in which you can store your crypto currencies - like a bank account for currencies (EURO, USD, etc.)
You can distinguish the following types
Online
Offline
Mostly on a specially converted USB stick secured by a PIN => Only you have the private key
The possibility to store coins on paper (not digital). A generator generates a private key and then prints it on paper.
Cold storage on paper or other materials (such as metal card) => Only you have the private key
Private Key
The "private key" is (simply worded) your access or user number. As with eBanking, you will need a disposition number to open your wallet / account so that the wallet provider knows what account it is or who owns the account. Furthermore, you need a freely selectable password. Both private key and the password should be stored in a safe place - preferably not digitally. Namely, if someone wants access to your private key, as well as password, he can freely dispose of your coins.
Public Key
This "public key" is (simply worded) the account number of your wallet. You need this if coins are to be transferred to your wallet. It does not matter if you send it to your wallet or someone else.
We come to the end of today's beginner's guide and hope our lexicon could help you.
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Until then in good old crypto style - let's fly to the moon!
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