Glossary of Cryptocurrencies: Know the most important terms

The ecosystem of cryptocurrencies or cryptocurrencies is simple to understand when you understand each concept, that’s why its glossary of cryptocurrencies was created, and thus, to be able to understand terms and movements. Today, we show you the most important concepts to enter this world.

Remember that the investment of cryptocurrencies is the revolution of recent years within the trading world, so it is important that you know their vocabulary. Here is a list of the most important terms.

Digital Asset:

Any resource that exists digitally and that someone can own and, therefore, acquires full right to use it.

Being treated as a property, it can be sold, bought, or licensed. For example, graphics files, logos, video or sound files, websites, electronic files, and cryptocurrencies.

Address:

A string of alphanumeric characters that identify or recognize an entity within the blockchain network. Basically, it is used to send and receive transactions.

Altcoin:

It is an alternative to bitcoin. It is short for the term “alternative coin”.

Airdrop:

A method that is used in different projects for the free distribution of tokens to a number of wallets.

Algorithm:

Set of written instructions or parameters, well defined and ordered, which allow you to carry out an activity through successive steps that do not generate any doubt to who should execute them.

ASIC:

Acronym for “Application Specific Integrated Circuit”. They are chips developed with the aim of fulfilling a specific function.

In the case of bitcoin, such chips are designed to process SHA-256 hash problems (for mining), with the aim of earning new bitcoins.

ATH:

It is the acronym for “All-Time High”, that is, it refers to the historical maximum of a price.

Distributed Ledger:

It is a database distributed and maintained by each participant or node within a large network. There is no central administrator or centralized data warehouse.

In addition, it requires a peer-to-peer or peer-to-peer network(P2P), as well as a consensus algorithm to ensure that they can be replicated across nodes.

Bear Market or Bearish:

The expectation of price decrease within a market.

Bitcoin:

This term is used to refer to the network or protocol when the word starts with uppercase, but when written in lowercase, it refers to the cryptocurrency.

Bitcoin Cash:

It is a variant of bitcoin. It emerges on August 1, 2017, as a result of the division of the Bitcoin community around the debate on scalability.

Blockchain:

The security system created from a blockchain. It is a transactional database designed to prevent its modification once a data is published.

Genesis Block:

It refers to the first block that makes up a blockchain. The first blockchain published was on January 3, 2009.

Bull Market / Bullish:

The expectation of price increase within a market.

Public and Private Key:

The public key can be said to be the number of a bank account, while the private key is the PIN you require to log into your account.

The public key is used to receive the cryptocurrencies, and the private key is used to sign transactions to spend cryptocurrencies.

Open source:

A software development model that is based on open collaboration. Allows you to modify the source code of the program without license restrictions.

Coinbase:

Basically, it is an economic incentive or rewards that miners have for putting their computing capacity at the service of the network.

In the case of Bitcoin, it is the only way you can generate them. It is important not to be confused with the coinbase exchange, which bears the same name.

Cold Storage:

Keep the private key of a cryptocurrency on paper or with specific hardware, such as Trezzor to Ledger Nano.

Cryptocurrency:

Virtual currencies that can be exchanged and that move away from government control or a financial institution. Each person owns their currencies, allowing them financial access to all societies.

Confirmation:

It occurs when a transaction from a blockchain has already been processed by the network. Transactions from a blockchain receive confirmations once they are included within a block, which in turn has already been connected to the next block.

Smart Contract:

A computer program that runs on a blockchain in a decentralized way.

It is an application that runs exactly as scheduled without the possibility of downtime, censorship, fraud, or interference from third parties.

DAO (Decentralized Autonomous Organization):

An entity that exists on the internet autonomously, but relies heavily on people to perform certain tasks that automation itself cannot do.

Davies:

The cryptocurrency that is distinguished by being endorsed by an institution created in Estonia. Its creator, Daniel Garcia, points out that most cryptocurrencies were supported by teams of altruistic people, but they didn’t have a company behind them.

Its main feature is security and speed in transactions, in addition to being immediate and simple

Decentralization:

It means not having a central core, government, or financial institution that regulates these assets, which causes you to have greater power and control over your money.

DAPP:

They are decentralized applications that allow us to create services that are managed by a single entity. On the contrary, they can be all the operations you carry out through banks, but without their intervention.

Chain Difficulty:

It represents the level of difficulty that blockchain miners encounter in mining users’ transactions and adding them.

Double Expense:

Potential defect of cryptocurrencies where the same currency can be spent more than once within a decentralized system. It is said that no one has been able to solve this problem.

These are some concepts that you must handle within the world of cryptocurrencies, but if you are interested in knowing, even more, you can review our posts’ relationships.

Finally, we recommend you review the glossary of cryptocurrencies so that you follow your learning and become an expert within digital investments.