Common cryptocurrencies terms

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.

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

ASIC 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.

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.

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.

Key pairs

Public and private keys together. When you create a wallet, you get a pair of keys — one of them is private. You should backup it and never show to the third parties.

Legacy address

The old format of Bitcoin crypto-addresses, which started with “1”. The same format was present in Litecoin and Bitcoin Cash, but they started with different numbers. The new formats appear as the result of SegWit or the need to differ from other cryptocurrencies.

Market cap

The shorthand of “market capitalization” — this term implies the total value of the entire asset traded in the market. For cryptocurrencies, the market cap is the total value of each coin, it is calculated as the number of coins in circulation multiplied by the price of one coin.

Mempool

A set of all transactions waiting to be confirmed on the network

Mining

The process of calculating complex cryptographic tasks that are necessary to confirm transactions on the blockchain.

Miner fee

Payment received by the miner for the fact that his equipment is used to maintain the network — to include the transaction into the block.

Multisignature

Multisignature allows users to sign a document digitally to confirm a transaction. Multisignature is a condition for a transaction to be executed only if it is signed by several private keys.

Node

Node is any computer with the full downloaded blockchain that helps other components to communicate with each other in the network and to disseminate information about transactions and blocks.

Payment ID

A number consisting of letters and numbers that confirms that the transaction in Monero will pass to the correct recipient. Not all Monero wallets require you to enter a payment ID, but many of them have this option. Some other cryptocurrencies also have their equivalents for payment ID.

Phishing

Cheating users when a fraudulent website or app disguises itself as a real one but actually steals money or information.

Private key

A private cryptographic key that only the user knows. The key is used to decrypt messages generated by the public key.

Public key

A cryptographic key used to encrypt messages that are then decrypted using a private key.

Refund address

The address that the user specifies if the funds are intended to be returned.

Replay attack

An attack on the authentication system by recording and playing back previously sent valid messages or parts thereof.

Satoshi

A satoshi is a small amount of bitcoin. One bitcoin contains 100,000,000 satoshis.

Satoshi Nakamoto

The alias of the creator of bitcoin, who wants to remain unknown.

SegWit

SegWit stands for “Segregated Witness”, it is a superstructure over the existing cryptocurrency protocol, which helps to “boost” the network, to improve network throughput, while not breaking main-chain blocks.

SHA-256

SHA-256 is the cryptographic hash algorithm. It uses 256-bit signature.

Smart contract

A computer algorithm designed to conclude and maintain commercial contracts in blockchain technology. Smart contract is a digital protocol written with the help of computer code. Its purpose is to transfer information and ensure the execution of the contract by both parties.

To the moon

This phrase expresses a sharp jump in the value of cryptocurrencies. For the first time, they began to say so when Dogecoin increased in its price abruptly.

Transaction fee

The commission, which is taken for each operation on the transfer of cryptocurrencies.

TXID/hash

The TXID (transaction ID) or the hash is a memo consisting of numbers and letters, marking each transaction in the blockchain.

UTXO

A UTXO stands for “unspent transaction outputs”. This is used for validation via nodes on the network. The sum of these outputs is the user’s total balance.

Wallet

E-wallet, which stores cryptocurrencies

Whitepaper

The main document, which is written by those who launch a new crypto-coin. This document explains all aspects and importance of this coin: how will it be used, for what purposes, why will it grow in price.

Withdrawal address

The address that the user specifies to get his money after the exchange.