Terms & Definitions

Bitcoin is a decentralized digital currency that enables instant payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer technology to operate with no central authority: transaction management and money issuance are carried out collectively by the network.

 

Altcoins are cryptocurrencies other than Bitcoin. The majority of altcoins are forks of Bitcoin with small uninteresting changes. This page categorises different ways altcoins have modified Bitcoin.

 

A thousandth of a bitcoin or 0.001 BTC, equivalent to 1,000 bits or 100,000 satoshi.

 

A crypto wallet is a collection of private keys but may also refer to client software used to manage those keys and to make transactions on the Blockchain network such as Bitcoin.

 

A blockchain is a public ledger of all cryptocurrency transactions that have ever been executed. It is constantly growing as ‘completed’ blocks are added to it with a new set of recordings. The blocks are added to the blockchain in a linear, chronological order. Each node (computer connected to the Bitcoin network using a client that performs the task of validating and relaying transactions) gets a copy of the blockchain, which gets downloaded automatically upon joining the Bitcoin network. The blockchain has complete information about the addresses and their balances right from the genesis block to the most recently completed block.

A Bitcoin address, or simply address, is an identifier of 26-35 alphanumeric characters, beginning with the number 1 or 3, that represents a possible destination for a bitcoin payment. Addresses can be generated at no cost by any user of Bitcoin. For example, using Bitcoin Core, one can click “New Address” and be assigned an address. It is also possible to get a Bitcoin address using an account at an exchange or online wallet service.

A private key in the context of Bitcoin is a secret number that allows bitcoins to be spent. Every Bitcoin wallet contains one or more private keys, which are saved in the wallet file. The private keys are mathematically related to all Bitcoin addresses generated for the wallet.

Mining is the process of adding transaction records to Bitcoin’s public ledger of past transactions. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.

A hash algorithm turns an arbitrarily-large amount of data into a fixed-length hash. The same hash will always result from the same data, but modifying the data by even one bit will completely change the hash. Like all computer data, hashes are large numbers, and are usually written as hexadecimal.

A cryptocurrency is a digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. A defining feature of a cryptocurrency, and arguably its most endearing allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.

An unregulated means by which funds are raised for a new cryptocurrency venture. An Initial Coin Offering (ICO) is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, but usually for Bitcoin.

Also called an Initial Public Coin Offering (IPCO).

 

SegWit is the name used for a soft fork change in the transaction format of the cryptocurrency Bitcoin.

A hardfork is a change to the bitcoin protocol that makes previously invalid blocks/transactions valid, and therefore requires all users to upgrade.

 

A soft fork is a change to the bitcoin protocol wherein only previously valid blocks/transactions are made invalid. Since old nodes will recognise 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.

 

Cold storage in the context of Bitcoin refers to keeping a reserve of Bitcoins offline. This is often a necessary security precaution, especially dealing with large amounts of Bitcoin.

Proof-of-stake (PoS) is a type of algorithm by which a cryptocurrency blockchain network aims to achieve distributed consensus. … In PoS cryptocurrencies the blocks are usually said to be forged (in the blacksmith sense of this word), or minted, rather than mined.

An unregulated digital currency that can be used as a substitute for real and legally recognized currency. Convertible Virtual Currency usually has a measurable value in real money, but what makes it convertible lies in its ability to be exchangeable. Not all virtual currency can be exchanged for legal tender though, therefore, not all virtual currency is convertible.

Ethereum, the popular cryptocurrency and blockchain system, is based on the use of tokens which can be bought, sold, or traded. There are several different tokens which may be used in conjunction with Ethereum, and these differ from ether, which is the currency native to the Ethereum blockchain. Tokens, in this case, represent digital assets that can have a variety of values attached. They can represent assets as diverse as vouchers, IOUs, or even objects in the real world. In this way, tokens are essentially smart contracts that make use of the Ethereum blockchain. One of the most significant token standards of all for Ethereum is called ERC-20.

In cryptography, a zero-knowledge proof or zero-knowledge protocol is a method by which one party (the prover) can prove to another party (the verifier) that a given statement is true, without conveying any information apart from the fact that the statement is indeed true.

Also known as atomic cross-chain swaps, the technology essentially allows two people holding tokens on two different blockchains to trade directly – and instantly – without the risk of one party running off with the other’s money before the trade is complete.

 

A Bitcoin Kiosk is an internet machine that allows a person to exchange bitcoins and cash. Some Bitcoin Kiosks offer bi-directional functionality; these machines enable both the purchase of Bitcoin (or other Cryptocurrency) as well as the redemption of Bitcoin for cash.