In 2023, the realm of Bitcoin vocabulary can still be perplexing for many. To simplify comprehension, a blockchain/crypto glossary proves indispensable, which encapsulates definitions for intricate terms, providing clarity. Explore this glossary to demystify prevalent blockchain terminologies and fortify your understanding.
Address
A string of characters composed of alphabets and numbers. The address functions similar to an email address. Instead, it’s the address of your crypto wallet that you can use to send and receive cryptocurrency.
Altcoins
Any currency other than Bitcoin is referred to as Altcoins. Examples include Ripple, Ethereum, Litecoin, Tether, etc.
Bitcoin
The first ever cryptocurrency created by a user(s) using the name Satoshi Nakamoto.
Decentralized Finance (DeFi)
Unlike traditional finance, where everything is regulated by one or many authorities, DeFi is a different take on this system. Using blockchain, DeFi eliminates the need for any financial governing body to make the system for the people and by the people.
Initial Coin Offering (ICO)
Similar to how many startups use Kickstarter campaigns, an initial coin offering is a way to invite investors to spend money on an up-and-coming cryptocurrency. Users who buy the coins during the ICO period receive additional features for their patronage.
Mining
With the use of computational power, crypto transactions are validated on the network. The result of this is a newly created cryptocurrency. As the process is time-consuming and similar to ore mining, it’s been named as such.
Non-Fungible Token (NFT)
A digital asset bearing a unique signature that cannot be duplicated. NFTs are always one of one. This means that the only way someone can possess the original copy is by purchasing it directly to gain ownership of it.
Private Key
This is the unique code that you use to access your crypto wallet and anyone who has access to the private key can gain access to all of the funds in the wallet. This should be kept secure at all times.
Proof of Stake (PoS)
This is a consensus algorithm where validators are chosen based on the number of tokens they own and want to use as collateral. It’s completely different from Proof of Work (PoW)
Proof of Work (PoW)
This consensus algorithm is the one used by miners. By using high computational power, miners try to solve complex mathematical problems to validate transactions.
Public Key
Derived from the private key, this address is used when you want to receive funds. In simple terms, it’s the address you give when you specify where the cryptocurrency should be sent by someone else.
Security Token Offering (STO)
Although compared to ICO, Security Token Offerings represent an investment in an asset. These are usually sold in security token exchanges.
Smart Contracts
Like a pre-defined block of code that serves a function under specific conditions, Smart Contracts are automatically enforced when certain conditions are met. The terms of the contract are coded into it, which also means there’s no way to violate or exploit the original terms.
Token
Tokens are the unit of measurement on any blockchain. These are not limited to just coins as they can also represent digital items and can also be associated with physical things. But in the blockchain space, they’re usually referred to as a share in any crypto venture or company.
Wallet
Wallets can be physical or digital, which can be used to store your cryptocurrencies. All wallets are secured with a unique private key that’s only accessible by the owner and no one else. Wallets can be used to send and receive cryptocurrencies quickly, easily, and anonymously.