Cryptocurrency Glossary

Exploring the crypto industry? Learn the most important cryptocurrency and blockchain terms, acronyms, and some definitions.

Crypto glossary is a comprehensive online repository of cryptocurrency-specific terminology and jargon. 

Many people, even experienced ones might not know some terms in the digital assets industry, and that’s why the crypto glossary is even more important.

In addition, it provides definitions for popular terms and phrases in the crypto space, such as “blockchain,” “miner,” and “smart contract.” With its constantly evolving list of terms, the crypto glossary is an invaluable source of education and reference material for anyone involved with cryptocurrencies.

Let’s explore the most popular terms every person interested in crypto should know about.

Airdrop 

Airdrop is the distribution of cryptocurrency tokens or coins to multiple wallet addresses for marketing purposes, usually free of charge.

Atomic exchange

Atomic swaps are smart contract technology that allows one cryptocurrency to be exchanged for another one without the use of a centralized intermediary.

Bitcoin

Bitcoin is a type of digital currency that operates on peer-to-peer (P2P) networks without the need for a central authority or intermediary.

Block

A block is a collection of transactions not yet recorded in previous blocks.

Blockchain

A blockchain is a distributed public ledger that uses cryptography to record transactions between participating agents on a network. Transactions can be summarized into blocks and cryptographically recorded in chronological order on chain blocks

Make your ledger accessible to all users on your network. No central authority owns, controls, or maintains this distributed database.

Blockchain application

Blockchain application is his P2P system for validating, timestamping, and persistently storing transactions and contracts on a common ledger distributed to all participating nodes.

Byzantine Fault Tolerance (BFT)

BFT is a property of systems that can withstand a class of failures arising from the Byzantine general problem. This is a logical dilemma, showing how communication problems arise when a group of Byzantine generals tries to agree on their next move. 

Therefore, the BFT system can continue to operate even if some nodes fail or behave maliciously. Central Bank Digital Currency (CBDC)

A CBDC is the legal tender of a particular country or region and is issued and regulated by the country’s financial authorities. A CBDC is therefore a currency established and supported in virtual form by the government through the central bank.

Cold wallet

A cold wallet is a component of hardware or another type of physical device that allows investors to access their crypto assets

Consensus protocol (algorithm or mechanism)

A consensus protocol is a set of rules and mechanisms implemented on a blockchain.

Consolidate user preferences and choices and manage network decisions. It determines how users reach consensus on that blockchain and reach the necessary consensus about a single data value or the state of the network between distributed processes. consortium blockchain

A consortium blockchain is a “semi-private” system with controlled groups of users that works across different organizations. The protocol layer is under the control of a consortium of companies, which must be governed outside the blockchain code according to legal frameworks and agreements. 

Consortium blockchains are permissive, semi-decentralized, and have multi-party consensus.

Cross-chain

Cross-chain is interoperability between two relatively independent blockchains. Blockchains are built in a standardized way so they can communicate with each other.

Cryptocurrency

A cryptocurrency is a digital or virtual currency that uses cryptographic technology to regulate the generation of monetary units and to verify the movement of funds. It works independently of central banks. Many cryptocurrencies like Bitcoin are decentralized

A network based on blockchain technology.

Cryptocurrency agnostic

Being crypto-agnostic means that the project is built to work with a variety of tokens, cryptos, and altcoins, allowing users from different ecosystems to participate and allowing existing and new We will further expand our ability to build cryptocurrency projects. crypto economics

Cryptoeconomics uses incentives and cryptography to design new types of systems.

Applications and networks. It also examines economic interactions in hostile environments.

Cryptoeconomics

Cryptoeconomics uses incentives and crypto to design new types of systems.
Applications and networks. It also examines economic interactions in hostile environments.

Crypto hash

A cryptographic hash involves repeatedly inserting a string of random numbers into a hash expression until the desired output is found. Produces a single fixed-length output. Here are some hash function algorithm examples: MD5, MD4, and SHA-256.

Cypherpunk

A cypherpunk is the kind of person who believes in privacy-enriching technology.

Encryption

Cryptography is simply a mathematical algorithm used for encrypting and decrypting information. It’s used to create wallets, sign transactions, and verify blocks in the blockchain.

Crypto token

Cryptographic tokens, also known as cryptocurrencies or crypto assets, are a special kind of virtual currency token that resides on its own blockchain and represents an asset or utility.

Decentralized application (dApp)

A distributed application is a computer application that runs on a distributed computer system. Decentralized Autonomous Organization (DAO)

A DAO is a virtual organization embodied in computer code and running on a distributed ledger or blockchain.

Decentralized network

A decentralized network is a network in which anyone can use the ledger to conduct business. The network is decentralized in the sense that no centralized entity manages the network.

Delegated Shared Proof of Service (DPoS)

DPoS is a consensus protocol that enables reliable verification and authorization of transactions on the blockchain.

Distributed Hash Table (DHT)

A DHT is a key-value store where the keys are hashes and is commonly used to coordinate and manage metadata about P2P systems. Key-value pairs are stored in the DHT, and each participating node can efficiently retrieve the value associated with a particular key.

Double spending

Double spending is the result of multiple successful digital currency issuances. Blockchain prevents double spending by validating every transaction on the network. This ensures that the inputs to the transaction have not yet been consumed

Encryption

Encryption refers to the process of converting data into an unrecognizable or “encrypted” form. A common use of encryption is to protect sensitive information so that only authorized parties can see it.

Different blockchains use different encryption algorithms, but the Bitcoin blockchain uses the SHA-256 algorithm. It produces a 32-byte hash that has been proven to be resistant to hacking attempts to date.

Henesis block

The genesis block is the name of the first block in the blockchain. This is the prototype as the common ancestor of all other blocks in the blockchain. Tracing blocks back in time in the chain will eventually lead to the genesis block.

Hard fork

A hard fork occurs when a cryptocurrency on a distributed ledger undergoes a protocol change, resulting in a permanent distraction from the old or existing distributed ledger. This fundamental change in the protocol of the blockchain network makes previously invalid blocks/transactions valid and vice versa. A hard fork is therefore a non-backward compatible upgrade of a blockchain network.

Hashing

A hash is a mathematical function that miners perform on blocks to secure the network. So you can consider it as a transaction unique identifier.

Hash rate

Hashrate is the computational power that miners contribute to secure the network in exchange for block rewards and transaction fees. hot wallet

A hot wallet is an online portal that allows investors and traders to access their cryptocurrency holdings through online platforms and applications.

Hybrid blockchain

A hybrid blockchain is a combination of a public blockchain and a private blockchain. Host your application or service on an independent permission blockchain while leveraging a public blockchain for security and payments.

Hybrid Proof of Work (PoW)/Proof of Stake(PoS)

A hybrid PoW/PoS consensus mechanism uses elements of both the PoW and PoS models to determine the right to verify a transaction.

Hyper ledger

Hyperledger is an open-source blockchain project designed to facilitate the collective progress of blockchain projects, rather than different proprietary systems. 

Immutability

Immutability means that blocks on the blockchain cannot be deleted or changed.

Initial Coin Offering (ICO)

ICO is simply a way used by companies to get external funding.

Fundraising by issuing tokens in exchange for cryptocurrencies. Although it is often in the form of crowdfunding, private ICOs that do not require public investment are also possible

Interoperability

Interoperability refers to exchanging data and information in an interoperable manner between various complex systems.

Interplanetary File System (IPFS)

IPFS is a protocol and his P2P network for storing and sharing data in a distributed file system.

Lightning Network 

Lightning Network is a series of off-chain payments.

A channel that allows two people to complete a very quick and cheap transaction or a series of transactions that settle later in the chain. It adds another layer to the Bitcoin blockchain, allowing users to create payment channels between any two parties on that additional layer.

Merkle (Hash) Trees and Roots

A Merkle tree or hash tree is a tree-like structure.

Use hashes to organize large amounts of data. It consists of raw data, leaves, and roots. Blockchains use Merkle trees to encode data and verify it more efficiently and securely as blockchain signatures (hashes). A Merkle root is a hash of all hashes of all transactions that are part of a block on the blockchain network.

Miners 

Miners are nodes on the network that actively participate in the consensus process used to validate transactions before aggregating them into blocks. Miners participate in enforcing the block verification process by determining whether each transaction is legitimate. 

Miners are encouraged to participate in this process, with the opportunity to be rewarded by confirming blocks or processing transactions as they are added to the blockchain.

Mining 

Mining is the process of adding new transaction records to blocks and validating blocks created by other miners. This allows nodes to reach a consensus that is safe and tamper-proof. Miners charge transaction fees and get paid for their services.

Node

A node is any type of device that connects to a blockchain network, such as a computer, laptop, server, etc. Store, distribute and store blockchain data. 

All nodes of the blockchain network are interconnected and constantly exchanging the latest data with each other.

Nonce 

Nonce, short for one-time use number, is a pseudo-random number used as a counter during the mining process. This is a number added to a hashed or encrypted block in the blockchain that, when rehashed, satisfies the difficulty constraint. So a nonce is a number that a blockchain miner is trying to solve.

Off-chain transaction

Off-chain refers to cryptocurrency trading. Occurs outside the main blockchain and is not published there.

On-chain transaction

On-chain refers to cryptocurrency transactions that take place on the blockchain.

Oracle 

Oracles are how blockchains or smart contracts interact with external data. As a third-party service, blockchain oracles act as a bridge between the blockchain and the outside world.

Orphaned Blocks 

An orphaned block is a verified block that has not been included in the blockchain network due to the time lag before that block is incorporated into the blockchain.

For example, suppose two blocks are validated at the same time. When a block is accepted by a node, other blocks that are orphan blocks are discarded. 

Thus, orphan blocks are blocks that are valid and verified, but rejected by the chain.

Peer-to-peer (P2P)

In the blockchain, a P2P network is a network that allows peers to communicate and transact directly with other network members without relying on intermediaries or third parties to perform confirmation or other verification processes.

 

Private (Permissioned) Blockchain

Private blockchains are closed and invite-only, meaning that specific users or entities on the blockchain have approval authority.

Private key

A private key is encryption that allows a user to access cryptocurrencies or transactions. This is the equivalent of a password and helps protect users from theft and unauthorized access to their funds.

Proof of Activity (PoA)

POA is another hybrid of PoW and PoS and tries to combine the best qualities of both mechanisms.

Privateum

World’s first crypto platform owned by its token $PRI holders.

PRI Token

$PRI is a crypto token created by Privateum. It’s a utility token that is always in use & in demand.

Fire protection (PoB)

POB is an alternative consensus algorithm that attempts to address the problem of high energy consumption in PoW systems.

Proof of Capacity (PoC)

POC is a consensus mechanism that uses a process called plotting. Programmatic Proof of

Work (ProgPoW)

ProgPow is a blockchain protocol consensus algorithm designed to reduce the mining efficiency advantage of specialized hardware like ASIC miners over less advanced machines like standard CPUs.

Proof of Elapsed Time (PoET)

PoET is a consensus algorithm that prevents high resource utilization and keeps the process efficient by following a fair lottery system. 

For example, each node participating in the network must wait a randomly-chosen time, and the node that completes the specified waiting time first gets the new block. 

Each node in the blockchain network generates a random wait time and goes dormant for a specified period of time. The one with the lowest latency commits the new block to the blockchain and sends the necessary information across the peer network. The same process is then repeated to find the next block.

Proof of Retrievability (PoR)

PoR is a compact proof by the file system (Prover). Informs the client (verifier) ​​that the target file is intact in the sense that the client can fully restore it.

Proof of Storage 

Proof of Storage is a consensus protocol primarily used to verify the integrity of remote files.

Proof of Work (PoW)

PoW is the original consensus algorithm in blockchain networks. In the PoW algorithm, miners compete to verify blocks, and the first miner to provide block verification is rewarded. 

For example, miners repeatedly insert transaction data (blocks) and random strings of numbers (block nonces) into hash expressions until the miners find the desired result (PoW). Other miners can validate PoW by taking a suspect input string, applying it to the same formula, and seeing if the result matches what the first miner presented. Some consider PoW to be a controversial consensus algorithm due to the cost of electricity to perform the formula calculations.

Proof of use (PoS)

PoS is an agreement algorithm that requests users to prove their ownership of a certain amount of currency. This is the currency share. PoS provides miners holding coins (such as Bitcoin) with the ability to mine or verify transactions. In other words, mining power is proportional to the number of coins owned by miners. The PoS process thus rewards larger players in the network.

Public (permissionless) blockchain

A public blockchain, or permissionless blockchain, is a distributed ledger that is accessible to all users. Users do not need permission from anyone on the network to perform certain actions, such as participating in the network, sending and receiving transaction data, as well as participating in the consensus process to decide which blocks to add to the chain.

Public key

A public key is a cryptographic code or address used to enable transactions between players that allow users to get cryptocurrencies in their accounts. Agents have access to certain information equivalent to access codes.

Record

A record is a combination of transactions.

SHA-256

SHA-256 stands for Secure Hash Algorithm 256-bit and is used for cryptographic security. SHA-256 produces a nearly unique 256-bit signature over text. Bitcoin uses SHA-256 to mine and create addresses.

Sidechain

A sidechain is a mechanism that allows blockchain tokens and other digital assets to be safely used on another blockchain and back to the original blockchain when needed.

Smart contract

A smart contract is computer code that can operate within a blockchain to automatically move digital assets according to predetermined rules. A smart contract is therefore a piece of code embedded in software that enables the automation of certain work tasks or processes. soft fork

A soft fork is a change to the Bitcoin protocol that only invalidates previously valid blocks or transactions.

Stablecoin

A stablecoin is a crypto asset, usually in the form of a coin or token, linked or backed by an underlying asset such as a currency or shopping cart. The underlying goal of stablecoins is to support the development of alternative financial systems using monetary units that are not dependent on or controlled by governments or other centralized entities.

Staking

Staking is a method of earning rewards for holding specific cryptocurrencies.

Obsolete block

A stale block is a block that is no longer part of the best current blockchain because it has been overwritten by a longer chain.

Tamper-proof ledger

A tamper-proof or immutable ledger is a record

(data stored on the blockchain) is immutable due to the use of encryption and digital signatures. wallet

Wallets are the primary storage platform for crypto assets.

Albert.B

Albert.B

Albert B. has years of experience working with crypto companies. Currently, he cooperates with Privateum Global, leading their marketing strategies.