Cryptocurrency is a blockchain-technology-based digital asset that is decentralized in nature, meaning, it is not issued by any central authority and is represented by ledger entries on a blockchain. Cryptocurrency has revolutionized the world of online trading and investment. Bitcoin was the first-ever cryptocurrency (launched in 2009) and today there are over 6,500 cryptocurrencies in operation. Cryptocurrencies facilitate hassle-free transactions between two parties (exchange of virtual tokens) without the need for any intermediaries. The transactions are secured using private and public keys and conducted on crypto exchanges like Coinbase.
Cryptography: What is Cryptography?
The word cryptography stands for hidden writing and is a method of encrypting or protecting data using codes. It ensures that no information is accessed by unauthorized third parties and creates a protective shield around sensitive data such as passwords and cryptocurrency transaction records. Cryptography involves the conversion of plaintext into ciphertext and is a major component of all crypto transactions conducted using blockchain technology.
Decentralization: What is Decentralization?
The term decentralization refers to the absence of centralization or the regulation of central authorities. Decentralization is a popular term in the crypto world which enables buyers and sellers of digital assets to negotiate, interact and engage in a transaction without the need for the approval or supervision of any central institution like a bank. Decentralized digital currencies like Bitcoin are used to conduct such transactions.
Decentralized Finance: What is Decentralized Finance?
Popularly known as DeFi, Decentralized Finance refers to the system of making financial products and services available for use without any centralized governing body or intermediaries like banks and brokerages. With DeFi, users don’t need to worry about having a valid ID or following office hours to conduct transactions. Decentralized Finance uses a public decentralized blockchain network to facilitate peer-to-peer interactions among buyers, sellers, borrowers, and lenders.
Bitcoin: What is Bitcoin?
Bitcoin is the most popular digital currency operated by decentralized authorities created in 2009. Bitcoin doesn’t have funds in the physical form but stores them in ledgers. Every Bitcoin transaction (BTC for short) involves a lot of computational processes called mining. Bitcoin has been widely criticized for its carbon footprint and its fraudulent transactions, but it also extensively opted for as an investment option.
Altcoin: What is Altcoin?
Short for alternative coin, Altcoin is an alternative to Bitcoin ensuring peer-to-peer transactions facilitated on blockchain technology. With most features similar to Bitcoin, some Altcoins also come with variations in consensus mechanisms for validating transactions or producing blocks and features like low-price volatility, smart contracts, etc. There are many types of altcoins like mining-based, stablecoins, utility tokens, stability tokens, etc. Some of the top Altcoins are Ethereum, Tether, Binance Coin, Uniswap, XRP, THETA, and Litecoin. Altcoins come with the same investment risks as Bitcoin and some of the well-established Altcoins like Ether and XRP, are even competitors to Bitcoin.
Block: What is a Block?
A block is a way of digital storing transaction details with zero scopes of infiltration. A block is a frequently occurring term in the crypto world as the whole blockchain system runs on blocks. All transactions conducted during a period of time are recorded in a block and once the block size limit is reached, a new block gets added to the chain to record the next set of transactions. Information once recorded, cannot be erased or altered from a block and hence it is an excellent means of recording decentralized transaction details.
Blockchain: What is Blockchain?
Blockchain, a digital database that stores information in groups called ‘blocks.’ These blocks have certain storage capacities. They can be linked to previously filled blocks, thus forming a chain of data. This union of blocks of data in the form of a chain is called ‘blockchain.’ It is the refined version of a database that doesn’t store data in grids of rows and columns (tables) but instead uses structures to store data into chunks or blocks which can be chained together. By nature, blockchains are decentralized and irreversible, which makes them transparent and unalterable.
A popular blockchain platform, Ethereum is a decentralized public ledger with its own cryptocurrency called Ether. Founded in 2015 by Joe Lubin, Ethereum comes second only to Bitcoin in market value and facilitates the creation of smart contracts and distributed applications (dApps). Initially created to facilitate transactions with the Ethereum network, the cryptocurrency Ether (ETH), like Bitcoin, is now widely accepted as a payment method. Ethereum also has its own programming language called Solidity and takes pride in being the world’s most programmable blockchain.
Public Key: What is a Public Key?
A public key is specifically used for encrypting data before sending it securely online. It is a software-generated large numerical value that is provided by a trusted authority and can be accessed by anyone through a public directory or repository. Often accompanied by a private key, a public key has a significant role in cryptocurrency transactions as it is used to check the legitimacy of token transactions conducted using blockchain technology.
Private Key: What is a Private Key?
A crypto user is assigned a public address or a public key and a private key or a secret key to send and receive tokens. While the public key can be accessed from a public repository, the private key is known only to the owner of a crypto asset and is a combination of alphanumeric characters. Since the private key is personal to a user, it is almost impossible for adversaries to compromise it. Private keys are usually stored in paper wallets (printed cards with the private key and QR code), smart cards, and USB devices.
Bitcoin Cash: What is Bitcoin Cash?
Created in 2017, Bitcoin Cash is a cryptocurrency that emerged from a fork of Bitcoin because there were limitations in Bitcoin’s blocks’ size. The 1MB block size limit in Bitcoin slowed down transactions, and the blocks could not handle the increasing transaction sizes. Therefore, it split to introduce Bitcoin Cash in 2017. Bitcoin Cash increased the block size to 8-32 MB and now processes over 25,000 transactions per block, thus improving scalability. However, in November 2018, it underwent a further split into Bitcoin Cash SV (Satoshi Vision) and Bitcoin Cash ABC.
Cardano: What is Cardano?
Like Ethereum, Cardano is also a decentralized, 3rd generation public blockchain platform developed based on peer-reviewed research. The Proof of Stake (PoS) is designed to be more efficient and resourceful than the Proof of Work (PoW) blockchain network. Created by Charles Hoskinson, the co-founder of the PoS blockchain platform, Cardano and its native crypto Ada were launched in 2017. Cardano is an intelligent blockchain platform. The developers deployed evidence-oriented methods to build this platform. It seamlessly blends sophisticated technology to ensure unparalleled sustainability and security to decentralized systems, societies, and applications.
Solana: What is Solana?
Solana is presently one of the world’s fastest blockchains. This platform has been developed, prioritizing smart contracts and other decentralized financial applications. Solana users can trade, borrow, leverage, or lend assets based on cryptocurrency. The primary competitor of Solana is Ethereum. Solana has an advantage over Ethereum, as it ensures faster and cheaper transactions. In addition, SOL is the native cryptocurrency of the Solana Proof pf Stake (PoS) and proof of history platform.
Staking: What is Staking?
Staking is the process of locking up or holding cryptocurrencies for a specific period. It gives back to the blockchain platform to validate network transactions and earn back some rewards. If you need to get a cash flow out of your cryptocurrencies, staking is the best option.
Lending: What is Lending?
Lending or crypto-financing is the process of borrowing loans by offering cryptocurrencies owned by you as collateral. Like gold loans, where you provide your gold as collateral for borrowing money, you remain the owner of the crypto during the lending period. Investors who feel that keeping the crypto locked up generates low interest can easily unlock the value of their crypto assets by using it as collateral for a loan.
Crypto Wallets: What are Crypto Wallets?
Crypto wallets are used for storing and managing cryptocurrencies. It stores all the public and private keys involved in your crypto transactions. When you become a member of a crypto exchange, a digital wallet is assigned, where you can securely store and maintain your cryptocurrencies.
Software Wallets: What are Software Wallets?
Software wallets are applications used to store and manage cryptocurrencies. Also called hot wallets, these wallets are considered less secure than hardware wallets because they are connected to the internet. However, even though they are more user-friendly and comfortable than hardware wallets, they are highly prone to security breaches and attacks.
Hardware Wallets: What are Hardware Wallets?
Hardware wallets also called cold wallets, are considered one of the safest ways to store cryptocurrencies. However, especially if you want to invest a huge amount in cryptocurrencies, a hardware wallet is the best option to store. Unlike software wallets, it is not connected to the internet. Hardware wallets are physical devices used for storing cryptocurrency offline.
Paper Wallets: What are Paper Wallets?
A paper wallet is another type of crypto wallet used for storing crypto information. It is just a piece of paper printed with all the information, including your secret keys and QR codes used in your cryptocurrency transactions.
Consortium Blockchain: What is Consortium Blockchain?
A consortium blockchain refers to a blockchain that is operated and owned privately. Here, the consortium provides certain information that is not available in general to the public. It relies heavily on the transparent and immutable properties present in the respective blockchain.
Cryptojacking: What is Cryptojacking?
Cryptojacking is a specific type of cybercrime designed to affect crypto trading. This process involves the use of a computer of another party for the mining of cryptocurrency. However, the offenders do not seek the consent of the authorized party, which makes it a crime. The criminals can use the servers, smartphones, tablets, and computers for mining cryptocurrency. Cryptojacking is done with the sole motive of making profits, but the act remains completely concealed from the victim.
Decryption: What is Decryption?
During the transmission of data on crypto networks, it gets encrypted into codes so that no unauthorized party can access it. When this data receives the user, it is decrypted or transformed to a format that a machine or a human can read. This mechanism of making data readable is called decryption.
Distributed Ledger: What is a Distributed Ledger?
In blockchains, the ledgers are distributed across several devices. Here, the data remains stored in different decentralized nodes or networks. A distributed ledger technology is necessary to record such information. This technology was initially devised to track transactions of Bitcoins.
Dynamic Coin Offering: What is a Dynamic Coin Offering?
A new model of crowdfunding, DYCO (dynamic coin offering), uses utility tokens. During the initial 16 months, they are backed by the USD. DAO Maker built the model. This backing has been devised to enhance accountability from the developers of the project.
Decentralized Applications: What are Decentralized Applications?
DApps or decentralized applications are those applications that developers design and deploy on blockchains. Their task is to execute different actions by eliminating intermediaries. Using such apps, one can seamlessly accomplish decentralized financial activities. The prime network that supports different activities in such finance is Ethereum. Decentralized applications can come in the form of social media websites, communication platforms, and mobile games.
HODL: What is HODL?
It is an abbreviation for ‘Hold on for Dear Life.’ However, the term’s origin can be traced back to a typological error on a forum for Bitcoins back in 2013. It indicates a passive strategy of investment, where the users purchase cryptocurrency and hold the same, rather than indulging indirect trading. Investors expect the value of these virtual currencies to rise. Notably, investors need to hold the coins during price vitality.
Halving: What is Halving?
In Bitcoin, halving happens to be one of the important events. This is a mechanism through which the Bitcoin mining rewards are halved when the mining of 210,000 blocks is completed. The process of halving typically takes four years. The process ensures that there is no exponential increment in the number of circulated Bitcoins.
Hash: What is Hash?
A hash refers to a single string of letters and numbers capable of identifying the blocks. These remain tied to the sellers and buyers of cryptocurrency. It happens to be an output of the hashing algorithm. The strings are of a fixed length and unique and can encrypt a particular segment of arbitrary data to secure the same.
Initial Coin Offering: What is an Initial Coin Offering?
When a new cryptocurrency project is launched, funds are raised through ICO (initial coin offerings). These are like IPOs (initial public offerings) in the case of stocks. It indicates that an organization is offering digital tokens to the public for money-raising purposes for the first time. When companies need to finance projects, they hold ICOs.
Mining: What is Mining?
Mining refers to the process of making new units of a digital currency available. During mining, there should be a log of transactions shared among the involved users. The process of verifications involves the use of electricity and hardware. Digital tokens are provided as rewards to the miners as they contribute the necessary resources.
Non-Fungible Tokens: What are Non-Fungible Tokens?
These are tokens that come devoid of the fungibility property. It is a digital asset that deliberates good virtual ownership. Most of the cryptocurrencies are fungible, which indicates that no meaningful distinction exists between different coins. For Bitcoin owners, there’s no need to find which coin exactly they are holding. However, NFT holders would verify the tokens.
Smart Contract: What is a Smart Contract?
A smart contract is a program based on algorithms capable of automatically enacting a deal’s terms and conditions based on its code. In the Ethereum network, executing these smart contracts is one of the prime value propositions. Users need to use computer codes rather than deal with complicated legal contracts. Before accepting the smart contracts, both parties can check them, ensuring complete transparency.
Stablecoin: What is a Stablecoin?
A blockchain or cryptocurrency-based token, the value of Stablecoin is attached to a different source of value. Normally, this happens to be a fiat currency. These are necessary to ensure cross-border finance and seamless trading of cryptocurrency.
Token: What is a Token?
A unit or a part of cryptocurrency, such as Bitcoin, is referred to as a token. You should note that certain tokens are to be used particularly in specific ecosystems. These are also termed utility tokens. Besides, there are security tokens available as well. Simply put, a token is a unit value on a specific blockchain that also has a value proposition besides featuring a value transfer.
Wallet: What is a Wallet?
A wallet is a virtual space where you can store your cryptocurrency holdings. In terms of functionalism, a cryptocurrency wallet is the same as a physical wallet. You can store your tokens here. In some exchanges, you can use digital wallets that might be cold (offline) or hot (online). Compared to hot wallets, cold wallets are safer. However, they are difficult for trading.
Fiat: What is Fiat?
Currencies issued by governments are defined as fiat. Examples are the Japanese Yen or the US dollar. Therefore, any currency governed by a central authority is termed as ‘fiat.’ Bitcoin, for instance, is not a fiat currency as it comes with a decentralized design. Therefore, a central bank can only mine fiat currencies.
Fork: What is a Fork?
Sometimes, the developers of a blockchain change its norms or rules. These changes are known as forks. From time to time, developers need to make updates to the protocol. Forks can be hard or soft. In the case of hard forks, the change in protocol makes their dissent with the new chain.
Gas: What is Gas?
Gas is a fee that developers need to shell out to the Ethereum network when they use the system. One can pay it through Ether, which is the native cryptocurrency of Ethereum. When transactions are completed on Ethereum, gas needs to be paid as the cost of computing power. The participants have to pay this charge in the form of fees.
Hash Rate: What is Hash Rate?
Hash rate is a parameter used to gauge the processing and computer power during the mining of cryptocurrencies. Specially designed software solutions are deployed in powerful computers for this mining. With a higher hash rate, it is possible to have a more powerful network.
Pump and Dump
This term refers to a scheme for investing in cryptocurrencies. Here, a singular or multiple participants in the market engage in inflating an asset price. They artificially increase the value and then sell it off. As a result of the organized effort of groups, the value of cryptocurrencies sharply rises before falling.
There are two meanings of Satoshi. Firstly, it might refer to Satoshi Nakomoto, who founded Bitcoin and then vanished. As a result, the project became collectively managed or decentralized. Secondly, this term also stands for a unit of exchange. Typically, this is equivalent to 0.0001 Bitcoins.
Shielded Transaction: What is a Shielded Transaction?
Sometimes, cryptocurrency transactions take place between two addresses that are both shielded. This indicates that the public would not be able to see the addresses, memo field, and transaction amount. These are known as shielded transactions.
Algorithmic Market Operations: What are Algorithmic Market Operations?
Through algorithmic market operations, the algorithmic Stablecoin supply can be automatically controlled. This is done to enhance transparency, scalability, and decentralization.
All-Time High: What is ATH?
ATH (All-Time High) refers to the record-high prices of digital currencies. It is used to track the markets of digital currency. Digital assets are volatile. Therefore, investors and traders need to consider ATH. A currency needs to hit many local high benchmarks to achieve an ATH.
All-Time Low: What is ATL?
This is just the reverse situation of ATH. During market capitalization, certain cryptocurrencies might hit their historically low values. This lowest point is termed as ATL or all-time low.
Allocation: What is an Allocation?
Allocation refers to the act of allocation of tokens or equity to the participants. A specific user or team might earn, purchase, or receive tokens of a cryptocurrency. Assets are also allocated to institutions and investors.
Amazon S3: What is Amazon S3?
Amazon S3 stands for Amazon Simple Storage Service. This web-oriented cloud storage service is inexpensive and scalable, also known to deliver high speeds. The users can retrieve stored data at any time of their convenience from Amazon S3.
Annual Percentage Rate: What is an APR?
Annual Percentage Rate (APR) refers to the interest rate that a borrower needs to shell out yearly. This rate is obtained by multiplying the number of periods in a particular year with the periodic interest rate. In the context of cryptocurrency, APR refers to the reward or monetary value that an investor can earn when they avail of loans with the help of their crypto tokens.
Annual Percentage Yield: What is an APY?
In general, APY (annual percentage yield) refers to the interest rate acquired for a particular investment over a year. APY encompasses compound interest that gets computed to the actual amount regularly. Investors often use cryptocurrency savings accounts that are similar to traditional APR accounts. Therefore, it denotes the amount that users receive on both the interest and the principal amount.
Anti-Malware: What is Anti-Malware?
This is a type of software or application designed to detect, secure, and remove malware from electronic devices and computers. Cryptocurrency users and investors need to use anti-malware tools to prevent cryptojacking. This type of malware can steal computing resources by hiding in your device and hinders the process of Bitcoin and other currency mining.
Anti-Money Laundering: What is Anti-Money Laundering?
AML (anti-money laundering) norms are a set of guidelines that are internationally prescribed and accepted. These norms aim to prevent individuals and groups from engaging in money laundering between real-world currencies and cryptocurrencies. This has also been enacted to prevent the funding of terrorist organizations.
Anti-Virus: What is Anti-Virus?
Antivirus refers to a software or program designed to secure computers involved in cryptocurrency mining and transactions from cyberattacks and malware. These tools offer a robust defense mechanism to crypto traders from malware, surreptitious viruses, attacks, and phishing links.
Apeing: What is Apeing?
Apeing refers to cryptocurrency traders purchasing a token immediately after the launch of a project. They do not conduct proper research before engaging in such dealings. Mostly, they act in this way as they are afraid of losing potential profits if they enter the trading late.
API: What is an API?
API (Application Programming Interface) refers to a set of tools, protocols, and routines that are necessary to develop software applications. As per these norms, the interaction style of software applications is decided. This largely encompasses the type of actions to be taken and the data to be used.
Arbitrage: What is Arbitrage?
While trading with cryptocurrencies, traders sometimes purchase and sell off a singular asset in different markets in a short span of time. In the process, they gain the difference in prices in the two markets. This practice is referred to as arbitrage.
Asset-Backed Tokens: What are Asset-Backed Tokens?
Digital claims made on a physical claim and getting the backing from an asset are known as asset-backed tokens. For instance, it is possible to tokenize real estate, crude oil, gold, equity, or anything else. The value of an asset-backed token is affected directly by the value of the actual asset that lies under it.
Asset Under Management: What is Asset Under Management?
AUM (Asset Under Management) refers to the overall market value of a currency that crypto networks manage at a specific point of time. This is incisive of the returns on investment and the initial capital available at the disposal for making fresh investments.
Authentication: What is Authentication?
During different transactions and dealings involving cryptocurrency, networks need to validate the identity of the users. Therefore, the users or traders need to authenticate their identities using SMS codes, passwords, fingerprints, or any other type of proof. Once they establish their ownership rights, the platforms grant them access to sensitive or personal information.
Banking as a Service: What is Banking as a Service?
Adopting cryptocurrency can enhance, streamline, or upgrade different financial services. Banks are using Baas (Banking as a service) platforms of cryptocurrencies. The APIs are being opened up for third parties so that they can develop new services.
Brute Force Attack: What is a Brute Force Attack?
BFA (Brute force attack) is a mechanism deployed by cybercriminals to hack into a system by cracking the password. They deploy an automated method of trial and error to crack the passwords. The attackers carry out an exhaustible hunt for the probable combinations to get into the system.
Casascius Coin: What is Casascius Coin?
A Casascius coin is a physical Bitcoin unit available in the form of silver, gold, or brass plated coins. Each coin is unpeeled, graded, and loaded with the respective Bitcoin value. Besides, they have carried each bitcoin fork ever since they were minted.
Composable Token: What is a Composable Token?
A composable token is a standard extension that any non-fungible token can have, i.e., ERC-998 token. This provides the ability to own other fungible and non-fungible tokens.
Financial Action Task Force: What is FATF?
The FATF (Financial Action Task Force) is an international organization responsible for establishing standards to prevent money laundering. They serve as a watchdog for preventing funding for terrorist organizations as well. Besides, the authorities take adequate measures to keep an eye on cryptocurrency dealings and trading so that the users do not involve in money laundering. The FATF is an inter-governmental organization.
What is an NFT?
NFT stands for non-fungible token. It is a unit of information that cannot be changed to or converted to another information form. NFTs use the blockchain to give value and ascertain ownership of the information to the user. Most of the Non-Fungible Tokens are based on the Ethereum network, where each may hold a different value of data. This is contrary to Bitcoin, a fungible token that can be interconverted to other Bitcoin blockchain data. NFTs are commonly used for digital art, games, other creative licenses, and cryptocurrency tokens that have had a sudden surge from 2020-2021.
What is DeFi?
DeFi is the abbreviation for Decentralized Finance. This is a practical application of the basic principles of blockchain that removes the control of financial transactions and decisions from major intermediaries and entities. DeFi looks to remove the middleman from the transaction between a buyer and a seller. The only transaction information is stored over multiple blocks of the chain and not visible to only one entity, which in most cases is your bank. Most of the Decentralized Finance is based on the Ethereum network as it provides a platform for smart contracts where a transaction is executed the moment certain conditions are met. This renders it to be more flexible.
What is DAO?
DAO can be expanded to Decentralized Autonomous Organization. It was created on Ethereum, and it is an organization that works on a set of provisions agreed by the members of the organization to execute financial transactions. This organization is independent, and it is not bound to or held accountable to the rules of any state or nation. Their rules are embedded into a computer program that executes decisions once the criteria to execute the trades are met. The transaction details are stored in the blockchain. This ensures that these command executions can be done without the presence of an entity and a middleman.
What is DEX?
DEX stands for Decentralized Exchange. It is a type of cryptocurrency exchange wherein token transactions occur without any intermediary organization or software. The only connection established is from one peer to another, and all the information is stored on the blockchain with no access to any third-party accessories. These exchanges reduce theft and fraud, and they also prevent tampering with trades to manipulate their rates. Due to the anonymity that they provide, they are more secure than Know Your Customer (KYC) based exchanges. However, the lack of KYC makes it vulnerable to hacks as the data cannot be reverted from this one-way street.
What is CEX?
CEX is the short form for Centralized Exchange. Currently, it is the most widely used form of exchange to trade cryptocurrency tokens, and it lies on the other end of the scope compared to DEX. In a CEX, the exchange takes control over your tokens when you wish to trade them and executes a trade according to the price and the number of coins you intend to profit from. The exchange has visibility of every trade from an account, and it converts assets into funds only when you choose to withdraw them. It offers swift transactions conducted by a valid body and is convenient for new users or people looking to trade with haste.