The blockchain is set to lead IT spending for 2018 and cryptocurrency trading has hit headlines for its dramatic spikes and crashes - in a way early investors of bitcoin might never have expected. But the scene carries its own jargon, from hot wallet to ICOs. What does it all mean? Read on for our A-Z of cryptocurrency terms and jargon.
A mixture of letters and numbers that is needed to receive cryptocurrency – in short, your address represents the public key part of the key pair (see below: Keys) you receive when you start using bitcoin.
An abbreviation for alternative currencies or tokens to bitcoin, such as ether or ripple.
Stands for "application-specific integrated circuit" – a circuit designed for a specific use in hardware often designed to mine bitcoin.
The first cryptocurrency that launched on the blockchain – and the highest ever valued. Prices have fluctuated widely since bitcoin first came onto the scene, peaking and crashing, but nowhere near the wild heights of nearly $20,000 per coin seen late in 2017.
A public, digital ledger. A blockchain is in essence a list of digital records – called blocks – with each of these secured by cryptography to create a ledger of these transactions. Once a record has been verified it enters the chain and cannot be amended. Cryptocurrencies are based on blockchain.
A number that multiplies the amount of existing tokens for a currency by that currency's price per coin – providing an overview of that token or currency's market health or resistance to volatility.
A bitcoin or crypto wallet that is completely offline for improved security. It can take the form of a paper wallet (see Coindesk for this guide on how to create one yourself or head here for a service that does it for you) or a hardware option, with the latter usually resembling a thumb drive - such as Trezor.
The term for a digital currency that makes use of encryption for generating new units and verifying the transferring of funds.
A relatively new kind of wallet that makes recovery possible – essentially a deterministic wallet generates keys from a 'seed' – this seed can later be used to restore all addresses and private keys from your wallet in case of a failure. Bitcoin Magazine has a good technical explanation here.
An altcoin originally created as a joke that somehow managed to surpass the $1 billion value point in total.
This is where you can buy and sell cryptocurrencies in a marketplace.
A specific public blockchain network that allows decentralised apps to run on it. The Ethereum token is called Ether – a tradable asset that rewards contributors to the network.
A wallet that is connected to the internet.
An 'Initial Coin Offering', the phrase is a play on the financial term 'Initial Public Offering'. It's a way to raise capital through cryptocurrency, with early backers of a venture awarded tokens – it's increasingly popular with startups, especially those that work with blockchain technology.
To get started with bitcoin you will need a pair of keys – one public, one private – which essentially look like long chains of numbers and letters. The public is derived from the private and is practically impossible to reverse engineer. Your 256-bit public key will be used to share money, while your private key will remain known only to the user, and will be used to send currency or make transactions. Think of your private key as your digital identity in the crypto world.
Crypto mining comes in different forms, but essentially it means verifying ledger transactions on the blockchain to release more currency. For bitcoin specifically, this means using hardware to compile recent transactions into blocks while solving a computational puzzle – and the first mining system that solves the puzzle gets the reward.
A system that is connected to a blockchain network eg. a bitcoin miner.
Proof of Stake / PoS
An alternative algorithm to the Proof of Work validation method that verifies transactions based on wealth rather than mining for reward – see this Medium post from Robert Greenfield for an in-depth explanation comparing the two.
Proof of Work / PoW
The algorithm that verifies a puzzle's validity for block generation used. See CoinTelegraph for an in-depth guide.
Intrinsically linked to your public key, this is known only to the user and will be used to make transactions.
Generated at the same time as the private key and mathematically derived from your private key, the public key is 256-bits long and is shared only to receive money. Thanks to powerful encryption, it can't be reverse engineered to discover your private key.
The hash that bitcoin uses for mining and the generation of addresses, originally developed by the American National Security Agency.
A digital program that arranges the transfer of assets between parties, for example on the blockchain.
If you're not mining coins, you're typically creating 'tokens' – which are generated on top of an existing blockchain that runs an application. See Ethereum. A percentage of tokens are typically created through an ICO as a means to fund that project.
The software where your bitcoins are 'stored' – in other words your public and private keys that are used to access or spend the cryptocurrency. The coins are in fact maintained on the blockchain, but a private key allows you to 'spend' the coins by writing on it. The wallet will also log all transactions linked to your address.
Someone who holds a seriously significant amount of a cryptocurrency – tens of thousands in bitcoin, for example.
When a group of miners on a blockchain controls over half of the network, they theoretically are able to obstruct other miners from completing blocks because they possess the majority of computing power, which could allow the controlling stake to dominate the creation of new blocks (and therefore cash).