Crypto Glossary: Bitcoin Terminology from A to Z

A Brief Introduction to Cryptocurrency Essentials

Bitcoin or any other cryptocurrency is fully virtual and there are no correlations with real money or banking system. Such coins are decentralized and no one from legal authorities can control this online money system.

Bitcoin started functioning in 2009. In order to be transparent with the clients, codes, and algorithms are open-source. And since then, the number of clients has been exponentially growing, and even those users who have never used crypto surely heard about it.

If starting from the very basis, then Bitcoin is stored in a wallet. This storage place is not something real, but a virtual address where with the help of a password you can create an account. Some of such wallets are online, others are located on the hardware which is considered to be more secure. Via this personal account, users can interact with the entire network.

Now it is clear, that there is a network of users who can exchange crypto with one another. But what is blockchain and how does it work? This is one of the distributed ledgers which is accessible to all in the network. If simply, it is like a list of all the online transactions that have happened starting from the first launch of the currency. It is accessible data and technically, it is possible to detect how many bitcoins are in a certain wallet. The anonymity of the users is possible because of the pseudonymous system.

Essential Bitcoin Glossary: Top 30 Terms

Node

This term is used in the context of blockchain and it is almost a synonym to a PC. In case this computer in the network stores and validates the transactions’ history, then it can be called a node.

Cryptography

This is a method of securing data in the cryptocurrency. It functions by transforming info that only intended recipients can read and process it.

Mining

Mining is like a process of solving a puzzle at the end of which you can receive a coin. The challenges in this process are connected with the time frame during which you can solve this puzzle. On average, every 10 min a puzzle is completed and a new block is added to the chain.

Altcoin

It is an alternative virtual currency to Bitcoin. It is the term for the group of cryptocurrencies that are other than Bitcoin.

Bitcoin

This is a cryptocurrency that is functioning without any control or management of the government. It is a specific money system where miners work to verify online transactions and the security of the process in general.

Block

It is a part of the data that is stored in the blockchain.

BTD

It is a financial approach when a user buys during the down period and sells when the prices increase.

Exchange

It is a virtual market where crypto can be bought and sold.

Fiat money

This currency is fully controlled by a certain government and there are no real physical commodities, for instance, silver value. They are derived between demand and supply, and of course due to the stability of certain governments.

Hard fork

This characterizes the process when one cryptocurrency code is divided into 2.

ICO

This is an acronym that stands for Initial Coin Offering. Here investors play an important role in the further development of a certain crypto.

Paper wallet

This means you are storing the coins offline as a physical doc.

Proof of work

It is proof of how secure the crypto network is. The so-called result of the competition among those PCs that are solving the “puzzle”.

Protocol

This is just a collection of some rules that secure the P2P network.

Satoshi Nakamoto

Satoshi is the name of the programmer who created the whole idea of Bitcoin. No one could guarantee the existence of this specific person or maybe a group of programmers, but it happened in 2008.

Satoshis

This term is used to specify the smallest unit of Bitcoin.

Security token

This is a specific device that is applied to get access to the resource. It can be also used instead of the word “password” and functions as a s key.

Smart contact

This is an automated process where due to some previous agreements, another result will be conducted. For instance, the payment transaction has been done.

Soft fork

Most of the users in the crypto network regularly upgrade the soft. However, for the others who are still using the old version, it will function.

Utility token

This token gives access to a specific service or product.

Address

This is a character string that is used for the receiving and sending of the cryptocurrency.

DYOR

This is an acronym that stands for doing your own research. This approach allows investors to perform their individual analysis for better profitability.

FOMO

This fear of missing out is connected with some concerns that users have while reviewing the prices. There is such a strong emotional belief that you will definitely lose unless you make a purchase.

FUM

This fear of doubt usually occurs after bad news or even potentially bad information. This is commonly a provocation for the investors to make irrational decisions.

Fungible

This means that every currency is interchangeable and that every unit of virtual or real money is the same.

Market Cap

This number is calculated by multiplying the price of the coin by the number of these coins on the market. For instance, 2 million coins at $50 means that the market cap is $100m.

Private key

This is a secure number that helps cryptocurrencies to be easily transferred or spent.

Proof of stake

This protocol helps to decide what user/users validate the newly-created block and get a reward for this.

Pump and dump

It is a characteristic of the market when after a rapid rise, it experiences a huge crash. Sometimes such situations can be explained by the intentional work of the special groups.

Tech analysis

The method of prediction during which investors analyze the prices and volumes before actually investing in something.

To Sum Up

This crypto glossary includes all the helpful info, for the new users of Bitcoin or already experienced ones. Now, you can easily use such terms as proof of stake, pump and dump, FOMO, FUM, and soft fork.

Frequently Asked Questions

What Happens If a Node Decides to Pause?

There is only one possible result of the code – it is like in math. When such a situation happens, and one node’s decision drastically differs from the majority, then it will be considered an invalid node. So, it will be ignored.

Is it Possible to Modify an Outdated Transaction?

This situation is totally impossible. Just imagine that a user decides to modify an old block, and then all the next blocks will be considered invalid. This process will be noticeable for all the users of the network and even create an unpredictable result for the chain in general.

Is Bitcoin Truly Impervious to Hacking?

Each individual in the network influences the blockchain and this network is really huge. It is almost impossible to imagine that one user can somehow hack the cryptocurrency unless this hacker has more than 51 percent of all accounts in the system.

How Do Bitcoin’s Eight Money Attributes Come into Play?

To understand this, let’s determine all of these attributes:

• Portability. Bitcoin is really portable virtual currency and that doesn’t need any additional explanation.
• Acceptance. Because of the security level, Bitcoin is on its way to general acceptance.
• Indestructibility. This crypto is considered to be indestructible because of the secure environment.
• Homogeneity of the system.
• Divisibility. This is characterized by the possibility of breaking large into smaller amounts of virtual money.
• Stability.
• Malleability.
• Recognizability.

Can I Join as a Node or Participate in Mining?

Sure, it is not a problem to become a node as well as mine for Bitcoins. As for mining, you just remember that there are lots of other users around the globe that you will need to compete with.

HODL? FOMO? FUD? Deciphering These Cryptocurrency Terms

There are some specific terms that are extremely popular in the crypto world and these 3 are top-rated. HODL means that you need to wait a little bit and don’t sell right now. The FUD and FOMO acronyms are connected with fear of missing and doubt.

How About the Myriad Other Cryptocurrencies Out There?

Of course, Bitcoin is the most widely-used currency that is now on the crypto market and everyone knows this word at least. Other hundreds of alternatives are called altcoins and are also applied by users around the globe.

Most of the cryptocurrencies were and are still being created with one aim to change some issues that are with Bitcoin. Either make the whole system easier or harder, invent something new, or improve the security. Sometimes, there is a plan to make a more user-friendly environment.

The main issue with Bitcoin as for now, is conned with speed. The average mining process will take 10 min and that sounds like a lot for users who want to get everything in a matter of seconds. However, that doesn’t look like a huge trouble if checking the value of this currency and lots of others. Bitcoin is still at the top despite all the concurrency on the market.