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  • Address -

    An address is a blockchain equivalent to a bank account number in the traditional financial system, or an email address. You can share your address with anyone who should be able to send funds to you. Every cryptocurrency has a different type of address: for example, BTC addresses start with 1, 3, or bc1; but Ethereum addresses start with 0x.

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  • Bitcoin - Bitcoin is the first decentralized digital currency. It was created in 2009, by an anonymous founder or group of founders going by Satoshi Nakamoto.
  • Block - A collection of cryptocurrency transactions. Every few minutes (or seconds, depending on the blockchain) one miner or validator verifies the transactions order of one block. The block is then added to the blockchain, which keeps the history of all blocks. Every new block added to the blockchain increases the difficulty of rewriting this history of past transactions.
  • Blockchain - Blockchain is a type of database storing an immutable set of data, verifiable to anyone with access to it —through the Internet. The Bitcoin blockchain solely stores currency transactions, while other blockchains like Ethereum also store smart contract code: shared rules automating financial transactions. Check more here.
  • BTC - An abbreviation for Bitcoin.
  • Business-to-Business (B2B) - Refers to the process by which two companies exchange goods or services. It’s very common in the cryptocurrency world. Check more here.
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  • Central Bank Digital Currencies (CBDCs) - They’re cryptographic currencies issued and controlled by central banks. Very similar to cryptocurrencies, but they’re centralized and fully controlled by the issuer. Check more here.
  • Cold Storage - A private key that is not accessible from the Internet. Typical cold storage is a USB stick, an offline computer, or a paper wallet (see below).
  • Cold Wallet - A cryptocurrency wallet in cold storage (offline from the Internet).
  • Confirmations - In Bitcoin and other cryptocurrencies, a transaction is confirmed (valid) when it’s included in a block. Each new block adds a new confirmation and increases the cost of reversal. Different merchants might require a different number of confirmations. In Bitcoin, three confirmations are usually required.
  • Cryptocurrency -

    A digital currency running on a blockchain and built with cryptography. Contrary to central-bank issued currency, cryptocurrency issuance rules are public for everyone to verify and the prices depend on supply and demand. Check more here.

  • Cryptography -

    Cryptography is the mathematical basis for secure communication that allows only the sender and intended recipient of a message to view its contents. Cryptographic methods in Bitcoin proof each transaction as well as the whole history of transactions.

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  • Decentralization -

    The transfer of control from one central entity to numerous smaller entities. Generally, cryptocurrencies are decentralized. Every crypto transaction is verified by a decentralized network of computers around the world. No one, company or government, can stop a transaction or change the blockchain history.

  • Distributed -

    A distributed system is made of components that are running on different networked computers, which communicate and coordinate their actions by sharing messages. Bitcoin is a distributed system.

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  • Hash -

    A hash is a mathematical function that turns a set of data into a short string of random numbers and letters. Hashes in cryptocurrencies serve as unique identifier for transactions.

  • Hot Wallet -

    A cryptocurrency wallet that is connected to the Internet. Typical mobile or browser wallets are hot wallets.

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  • Ledger -

    A ledger is like a spreadsheet keeping track of which addresses own how many bitcoins. The Bitcoin blockchain is a distributed, decentralized ledger. It shouldn’t be confused with “Ledger”, a company behind hardware wallets.

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  • Miner -

    Miners secure some blockchain networks by ordering crypto transactions into blocks and verifying the blocks of other miners. For this work, miners get rewarded with transaction fees and newly issued coins, if the global supply is still on process. Anyone with a computer, Internet, and electricity can be a miner.

  • Mining pools -

    Thousands of miners compete on the reward which is only paid once per block. Miners who join a mining pool promise each other to share the reward equally, making the reward more predictable. Several companies offer mining pool platforms for miners worldwide.

  • Multi-Signature -

    Also “multisig”. While normal crypto wallets need only one private key to make a transaction, multisig wallets need keys from multiple parties. It’s comparable to shared bank accounts. Other blockchains, like Ethereum, provide advanced multisig features, like setting different permissions per users and apps.

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  • Node -

    A blockchain node is a server that downloads the history of transactions and shares it with other nodes in the network. Every miner or validator is a node in the network.

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  • Open Source -

    Software that is open for anyone to modify, copy, share or build upon. The code for blockchains like Ethereum and Bitcoin is Open Source, for anyone to verify and improve it.

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  • Paper Wallet -

    A piece of paper (or another material, sometimes) containing a private key or mnemonic phrase to unlock a cryptocurrency wallet.

  • Peer-to-Peer -

    A peer-to-peer (P2P) network or service works with interconnected nodes ("peers") that share resources with each other without the use of a centralized administrator. The Bitcoin network is peer-to-peer.

  • Private Key -

    A cryptographic key that is used with an algorithm to encrypt and decrypt data. A cryptocurrency private key lets you access funds in a wallet. The usual mnemonic phrase (12 or more random words) offered by wallets to recover your funds in other devices is a “summary” of this private key. Check more here.

  • Proof of Stake -

    Proof of Stake (PoS) was created as an alternative to Proof of Work (POW), supporting cheaper and faster transactions. It requires a certain number of coins from validators to be locked up, in order for the network to reach consensus. PoS is seen as a greener alternative than PoW, since it doesn’t need energy to work. Check more here.

  • Proof of Work -

    Proof of Work (PoW) lets one party proof the execution of an algorithm to another party. In the Bitcoin PoW system, miners proof the validity of the transaction in a block. This way, the PoW consensus algorithm solves the 'double-spending problem' making it impossible for one party to create new Bitcoin without the agreement of the other participants. The work, in this case, uses electricity to solve these complicated algorithms. Check more here.

  • Public Key -

    A public key can be used by anyone to encrypt messages for a particular recipient. In cryptocurrencies, this key enables anyone to receive bitcoin.

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  • QR Code -

    A graphical representation of a public or private key. Scanning QR codes is a simple way to share keys between devices, especially desktop computers and mobile phones.

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  • Satoshi Nakamoto -

    The inventor of Bitcoin, which might be one person or a group of people who released the original Bitcoin whitepaper in 2008. Check more here.

  • SHA-256 -

    The hash function used in the bitcoin mining process to verify transactions. Average users don’t need this knowledge to use cryptos.

  • Signature -

    Signature in Bitcoin or other blockchain protocols are used to provide a proof about private key ownership without having to reveal the key.

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  • Transaction -

    A cryptocurrency transaction is an entry on the blockchain ledger, noting sender, receiver and number of coins transacted.

  • Transaction Fee -

    To reward miners or validators for the work of ordering transactions and verifying blocks, a certain cost must be paid by users on every transaction. This fee may vary over time, as it is defined by the demand for transactions. However, it’s usually very low, even less than $1. No matter the amount transacted.

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  • Wallet -

    A crypto wallet is a user-friendly software or hardware used to manage private keys. There are software wallets for desktop computers, mobile phones and browsers; and hardware wallets with different prices and features. They enable users to manage funds and interact with smart contract blockchains like Ethereum. Check more here.


 

Hey! Do you want to know some crypto slang and abbreviations?

Check our article about classic crypto terms: FOMO, DYOR, HODL, and more!

Crypto terms you should know
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