Common cryptocurrency terms, part 1

If you’re new to cryptocurrency, you’re probably confused by the many terms that are used everywhere. We decided to help you and compiled a mini-dictionary for the novice cryptocurrency user.

Address

An address is a set of numbers and letters that together create a wallet number. This set is unique for each user. The address is needed to send and receive cryptocurrencies. Different address formats are used in different cryptocurrencies. Bitcoin address looks like this 1ExAmpLe0FaBiTco1NADr3sSV5tsGaMF6hd while Etherium address normally looks like this 0x123f681646d4a755815f9cb19e1acc8565a0c2ac.

Airdrop

Distribution of new tokens to some users on a certain blockchain either for free or for performing small tasks.

Algorithm

The algorithm is a way to solve the task using data processing and calculations. Modern programs all work on certain algorithms.

Altcoin

All cryptocurrencies that have emerged since bitcoin.

ASIC Miner

BASIC stands for”application-specific integrated circuit”. These are chips that are developed for a specific task — in our case it is mining. They are useless for other tasks but are ideal for mining on a certain algorithm.

Bitcoin

The first cryptocurrency, which became the most famous and the most expensive one.

Bounty program

Bounties are simply jobs, tasks, or projects that are created by coin developers. Participants receive rewards and payments in exchange for completing bounty tasks.

Block

The file in which the data is stored. Numerous blocks make up the blockchain.

Block explorer

Services where you can track transactions on the blockchain. The most famous block explorer is blockchain.info, it is used to track bitcoin. Also, there are etherscan.io chainz.cryptoid.info, dogechain.info, and many others.

Block height

The number of blocks that make up the distance between the actual block and the first block, called genesis block.

Blockchain

A network in which cryptocurrency transactions are tracked in sequential order.

Block reward

The cryptocurrency reward, which the miner receives for participation in the process of opening new blocks.

Cold storage

Storing cryptocurrency anywhere with no access to the Internet. This wallet can be of two types:

• Hardware wallet — a physical device with online access only when connected to a computer.
• Paper wallet — a sheet of paper that becomes a physical embodiment of cryptocurrency with keys.

Coin

In cryptocurrency topic, bitcoin is a digital token.

Confirmation

Confirmations are required to confirm the transaction. The number of required confirmations is based on the features of the network. The more confirmations, the more likely the transaction is legitimate. If the network has only a few confirmations, there is a possibility of double spending coins.

Contract address

This concept applies to Ethereum and ERC-20 tokens. Contract address is the address used by the smart contract at the end of the transaction.

Decentralized service

The service which uses a decentralized cryptocurrency and decentralized technology. For example, it can be exchanges and exchangers.

Destination tag

This is a shortcode used in Ripple (XRP). Most Ripple wallets require you to enter destination tag to confirm that funds are being sent to the right recipient.

ERC-20 token

ERC-20 is a standard for tokens issued on the Ethereum platform. The concept of ERC stands for” Ethereum Request for Comments “ and is intended to improve the system.

Ethereum

A network based on the Ethereum cryptocurrency used for decentralized transactions.

Exchange

A service that allows you to trade cryptocurrencies between users.

Exchange rate

The rate at which one cryptocurrency changes to another, or to fiat money and vice versa.

Fiat

Common, centralized currencies issued by central banks, such as the Dollar and the Euro.

Fork

Cryptocurrency, which is obtained as a result of the split of the blockchain.

Gas

Gas (wei) is what is used on the Ethereum network to send funds. A small portion of Ethereum is required to complete a transaction, and it is called gas. If the transaction does not have enough gas, it may not be confirmed.

Genesis block

The very first block on the blockchain.

Gwei

A single Gwei amounts to 10⁹ Wei or 10^-9 ETH. Gwei is used to measure gas price in Ethereum network.

HODL

Slang term, which means to hold cryptocurrency, instead of freely dispose of it.

Hot wallet

Wallet for cryptocurrencies, constantly connected to the Internet. There is a huge variety of such wallets, the most famous are Breadwallet, Jaxx, Exodus.

We hope our mini-dictionary will come in handy. This is only the first part of our list of terms because the world of cryptocurrencies is huge and very interesting. The second part of our dictionary will be released next week. Stay in tune!