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cryptocurrency terms and meanings

cryptocurrency terms and definitions

Modern digital currencies are one of the latest technological phenomena that occupy most people, but these terms are still unknown to many people, and in the recent period, the Bitcoin currency has gained and experts have predicted the collapse of this digital currency.


cryptocurrency terms and definitions
cryptocurrency terms and definitions

In this article, I will address the most important terms of encrypted digital currencies, and I will try to explain and simplify them to be as easy to understand and clear as possible. After reading the article, you will know more about her world and in turn, be able to explain it to other people.


Cryptocurrency

cryptocurrency terms and definitions A cryptocurrency is a form of digital money that aims to obtain a high level of security; In order to protect the virtual transactions on which it is based, and to maintain the confidentiality of the identity of the sender and recipient, in addition to controlling the creation of new units of currency where it is difficult to counterfeit.

It is a form of digital money intended to obtain a high level of security; This is to protect the virtual transactions based on it, hide the identity of the sender and recipient, and also control the creation of new units of currency where it is difficult to counterfeit. For these, the cryptocurrency has important advantages such as a decentralized authority (that is, without a controlling intermediary such as Pay Pal, for example), and the presence of a public/republic ledger in which virtual transactions are recorded in an integrated form called the blockchain. Transactions between users in a peer-to-peer network are carried out directly without an intermediary through the use of encryption.


Cryptocurrency terms and meanings

Among the most important features of cryptocurrency:

  1. It is considered a decentralized authority where there is no intermediary that controls the transaction such as PayPal.
  2. There is a general or republican account register and virtual transactions are recorded in an integrated manner called blocks.
  3. The interaction between users occurs through the association of one person to another without the help of an intermediary, by using encryption.

cryptocurrency terms and meanings
cryptocurrency terms and meanings

Bitcoin

It is one of the first and most famous encrypted digital currencies. Bitcoin is considered the gold standard for cryptocurrencies and was developed in 2008 by Satoshi Nakamoto. Bitcoin can be compared to other commercial currencies such as the dollar and the euro, but there are many differences between them, the most important of which is that Bitcoin is a completely electronic currency and is traded through The Internet only, and Bitcoin is the first decentralized digital currency as it does not have a central regulatory body and can be cloned and made some modifications and then a new currency can be launched.


Blockchain

Blockchain is a technology for transferring and storing information securely and without any costs. It is a comprehensive record of all transactions of encrypted digital currency and is arranged chronologically and shared among all users and uses the blockchain in order to ensure the continuity of digital transactions and in order to ensure the validity of transactions for transfer and prevent double agreement The blockchain contains all the transfer procedures that have taken place and therefore it is possible to know the balance of each user on the Internet and this is called the chain description of the special interconnection between the blocks and each block contains a margin for the previous block and the operations continue until it reaches the first block and it is called the formation block.


Mining

Mining is intended to use the capabilities of computers and the Internet in solving problems and mathematical equations in addition to documenting transactions with the aim of extracting encrypted digital currencies. It can be said that the mining process is engaging in documenting and recording transactions in the blockchain through computers and the Internet. In order to solve a difficult mathematical equation or puzzle and the first person to succeed in solving the equation is rewarded through transaction fees or by giving him new units of currency that have been included in the blockchain and the currency is mined through the use of an algorithm called Hashing Algorithm.


Satoshi Nakamoto

Satoshi Nakamoto is the founder and inventor of the Bitcoin currency, and there have been many hypotheses about his identity, and it has not been confirmed whether this name is the actual name of the inventor or if it is a hypothetical name that was used to announce a new currency, and it has not been confirmed whether the name is for a man or a woman or even for a group of people are believed to have Satoshi Nakamoto in possession of about 1 million bitcoins.



Public Key Encryption

The public key is one of the types of encryption. Two encryption keys are given to the user, one is a public or public key, and the other is a private key, which remains secret to the user. The public key is distributed to all users. The two keys are associated with an arithmetic process that varies according to the algorithm used. One of the two keys cannot be reached through the other, and this system uses In encrypting messages by a secret key, it is also used in electronic signature.


Wallet

The wallet contains the basic information for executing transactions in cryptocurrency, and it stores the public and private keys that can be used to receive or exchange this currency. The wallet can contain several pairs of public and private keys, and the cryptocurrency itself is not stored in the wallet. There are several types of wallets, such as software wallets, which are software that stores keys on the user's computer, and online wallets, which are wallets provided by intermediary companies such as banks, or they can be physical / hardware wallets, which are usually a small device for storing Encryption keys, these wallets are considered the most secure.


Peer to Peer / P2P

The ability of the user to exchange data, or participate in the transfer of files or digital assets directly with other users on the network without the need to do so through an intermediary, or supervision by a central authority. One of the most important peer-to-peer applications is Bittorrents or cryptocurrency platforms such as Bitcoin.


Mandatory cash - Fiat Money

It is a legal currency with a nominal value with a government guarantee, announced by the government to be an alternative legal currency for financial commodities (such as gold for example) to be traded. This currency can be traded with other foreign currencies in the foreign exchange market, and thus this currency has a value in relation to other currencies.


Legal Currency - Legal Tender is an intermediary or means of payment that is legally recognized in a country and considered legal tender according to the criteria set forth in its laws without limitation of quantity. In other words, the law considered current transactions between individuals unlimited in the quantities and denominations they choose from this currency as long as it has acquired the legal status of issuance. Paper and coins are some of the most widely used legal currency forms in most countries.


Alternative Cryptocurrency – AltCoin

Any cryptocurrency other than Bitcoin, and sometimes Ethereum as well. There are thousands of alternative currencies at the moment, and the most important differences between Bitcoin and these alternative currencies are: Since Bitcoin is the most popular and widely spread currency, it is the hardest to mine and the most expensive, while the alternative currencies are less popular and widespread. Therefore, they can usually be obtained in an easier and cheaper way, and their price can be more stable than the price of the volatile Bitcoin, and many of these currencies were created to avoid problems in the Bitcoin system that was impossible to predict at the beginning of dealing with them.


Node

A blockchain system is a large and complex network of identical databases called nodes. These nodes contain all the previous transactions that took place on this chain. These nodes are computers on the network that organize and coordinate transactions between miners and cryptocurrency dealers.


Fork

Forking is a condition that occurs when a blockchain splits into two separate chains, temporarily or permanently. Forking occurs naturally during mining when two chains follow the same rules, have the same backlog of work and are both considered valid. It can also occur as a result of two different sets of rules being used in an attempt to obtain the same blockchain. Forks are used in cryptocurrencies to add new features to the blockchain, to fend off the effects of a hacking attempt, or to eliminate a flaw that has a serious impact on the blockchain. There are two types of branching: hard branching and soft branching.


Proof of Work PoW

It is to verify the validity of the work that took place during mining and to prove that it is correct by using the computing power of the computer. Bitcoin and many other altcoins follow this method of consensus and consensus to ensure the validity of the blockchain. For this, the method has some disadvantages such as the high cost of the hardware used, and the energy and effort spent to ensure the work, and users may decide to switch to mining an alternative currency if the reward they will get is higher, and as more and more coins are mined, it becomes more difficult to mine new coins of the same coin With time.


Proof of Stake PoS

An alternative method for transaction or block validation, where the quota amount (currency) and the age of that quota are emphasized when selecting the validator. This share can be considered as a bank deposit, the more its age and the commitment of the holder in addition to other factors, he will have a greater chance to verify the validity of the block and receive the transaction fee. So, if you move your stake from one address (or wallet) to another, the new stake age will be reset. This allows building a reliable network between users with authenticators. In this method, it is not “mining” that is important, but “authentication” is the most important for processing and adding a block to the chain, the most important features of the method: authentication speed, no need for expensive hardware, lower power consumption, The validators are more loyal, the higher their stake and the longer they commit, the more chance they have of validation.


What are the different terms in cryptocurrency?


What are the different terms in cryptocurrency?
What are the different terms in cryptocurrency?

It requires a lot of daring, as well as the need to investigate and be familiar with its various aspects in order to know everything one needs to succeed. Today, we will highlight a very important aspect for all cryptocurrency pioneers, both beginners and experts, as we will collect more cryptocurrency terms and abbreviations that must be known to take advantage of their significance and gather as much information as possible to invest correctly in this market.


Airdrop

A marketing campaign that distributes digital currency or tokens (tokens) to users. It is usually done by the founders of the digital currency in order to promote and market and encourage people to buy and deal with it, which makes it more popular.


There is no money for drop campaigns, but some simple activities that contribute to the promotion of the currency such as sharing currency news with friends and through social media or downloading a specific application and others.



ASIC

An abbreviation for the term Application Specific Integrated Circuit, which means ASIC, and this circuit is a mining machine dedicated to mining some currencies.


Compared to CPUs and GPUs, ASICs are superior to mining in terms of their significant improvements in mining, computer performance, and power savings.


ATH

An abbreviation for the phrase All Time High, which means the highest ever, and it refers to the highest price the currency has reached in the market since its launch until this moment.


ATL

An abbreviation for All Time Low, which means the lowest ever, which is the opposite of ATH, as it refers to the lowest price the currency has reached in the market since its launch until this moment.


51% Attack

When more than half of the computing power or mining hash rate on the network is concentrated in the hands of one person or a certain group of people, this situation is called Attack 51%.


This term indicates that this person or group has complete control over the network, and can exploit this control in a negative way, directly affecting the digital currency and possibly the entire system, for example, mining operations can be seized and transfers control such as stopping or changing them, as well as double-spending, which It means reusing coins.


Follow Cryptographic Hash Function

This method generates a specific and unique hash value from an input variable, and the SHA-256 cipher is an example of this method.


Cold storage

A term used to denote the storage of digital currencies without an Internet connection, as it can be in paper wallets, USB devices, computers that are not connected to the Internet, and other examples, but as a kind of security measure to avoid thefts and hackers as much as possible.


Cold wallet

A cryptocurrency wallet that uses the aforementioned initiative storage, that is, it does not need an Internet connection.


Consensus consensus

Consensus is achieved when all participants agree on the order and content of the blocks and the carriers that the blocks contain. This happens when a group of people wants to have the same copy of the code parts across the network because of the large amount of data that is stored on a certain block chain concurrently on multiple areas of the network.


DAICO

An acronym for Decentralized Autonomous Initial Coin Offerings, which stands for Decentralized Autonomous Initial Coin Offerings.


It is an indication of a method for decentralized project financing and incorporation of ideas from DAOs and ICOs. DAICO was proposed by Vitalik Buterin, founder of Ethereum.


This method provides a form of governance in the ICO process that allows backers to vote in order to get their money back if certain conditions are met.


DAO

DAO stands for Decentralized Autonomous Organizations. These regulators are self-operated and managed through blockchain practices such as cryptographic rules in smart contracts without recourse to a central authority.

Digital signature

A cipher or a digital code generated through an encryption key attached to a document transmitted electronically (over the Internet) to verify the identity of both the sender and receiver.


A digital signature in the blockchain world refers to a unique code, number, or identifier that is given to a user, token, or transaction.


FOMO

An acronym that goes back to Fear Of Missing Out, meaning the fear of losing or being lost. In the world of economics and investment, it indicates the fear of missing out on a potentially profitable investment opportunity and regretting it later.


This term includes people who risk some investments without studying in terms of imitating others, because many people do it out of fear of missing out on the potential profit opportunity.


Hash

A term that denotes the application of a hash function to any input size of data when storing information on a blockchain, and the output is a string of random numbers and letters, but with a fixed length (a standardized form for identifying blocks of code), and no data can be retrieved from it without encryption. An important property of hashing is that the output from applying the same algorithm to the same input will always be the same.


Hash Function

It is a function that is applied to any size of the input data to convert it into data of a fixed and specified size.


Hash Power/Hash Rate

A unit of measurement of the amount of computing power consumed on the network for its continuous and continuous operation.


The hash rate is estimated at more than one kH/s, MH/s, GH/s, TH/s, PH/s or EH/s, depending on the hash produced per second.


HODL

It is a type of passive investment strategy, where you hold the investment for a long period of time regardless of any changes in price or markets.


As for the acronym HODL, it came from the expression Hold On for Dear Life, which means holding on for life, and this strategy is often used in situations of recession, crises, and market downturns.


ICO

ICO is an acronym for Initial Coin Offering, which is a type of crowdfunding that has been used as a precursor to many cryptocurrency projects as a way to raise capital for start-ups launching a new cryptocurrency, for example.


These companies are exposed to great profits and successes, and at the same time exposed to greater losses in the event of the failure of the project or exposed to theft, fraud and market manipulators.


Ledger record

Ledger, an important cryptocurrency term, is a record of financial transfers that took place on a particular Blockchain and cannot be changed but only attached to new transfers and transactions, and anyone on the network can verify and review these transfers only.


Lightning Network Protocol

It is a Layer 2 solution or “Layer 2” payment protocol that runs on top of the Blockchain, and was designed to speed up and expand transfers between and across participating nodes. The main driver was to solve the Bitcoin scalability problem.


The protocol works by creating a P2P (peer-to-peer) network to process the transfers before they are broadcasted for registration on the main public registry of the block chain.


Liquidity

It indicates how easy it is to buy and sell digital currency (i.e. converting the digital process into cash or vice versa) without affecting the overall market price, and it is affected by many factors such as supply and demand times and transfer processing.


SegWit Upgrade Protocol

An acronym for Segregated Witness, this is a proposal to improve the flexibility of Bitcoin BIP transfers. Segwit also contributes to the improvement of Bitcoin by improving functionality without the need to create a new currency or the incompatibility of new and old network versions.


In the past, changing witness information (signatures) on blocks caused the transfer identifier to change and subsequent hashing, so Segwit was found to solve and fix this problem by separating the signatures from the content of the block or block, and this procedure and modification had other effects such as small block sizes and the ability to support layer solutions the second.

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