Vocabulary

Blockchain

Due to the viral nature of how information spreads across on the internet, scammers seek to take advantage of people by offering free giveaways of tokens or other digital currencies in exchange for sending a small amount to register, or by providing some personal information. When you see this on a website or social network, it’s best to immediately report the content as fraudulent, so that others don’t fall victim.

Block

Blocks make up a blockchain. Within each block are a series of transactions.

Decentralised

In cryptocurrency, decentralised means that there is no central point of the network. Instead, it is spread over a series of users (nodes).

Hard fork

Essentially a hard fork is a radical update to the blockchain that can make previously unvalidated blocks valid or the reverse.

Soft fork

A backwards-compatible change in the blockchain protocol. They are less extreme than hard forks.

Delegated proof of stake (DPoS)

A variation of Proof of Stake that uses supernodes or masternodes to validate transactions.

Smart contracts

Smart contracts are essentially digitalised contracts that are executed on the blockchain between different parties.

dApps

Stands for ‘decentralised application’, these are applications that are not centralised and work on top of the blockchain.

Distributed ledger

This is where all transactions are published and can be viewed by anyone. This makes using cryptocurrency to perform malicious transactions harder.

Wallet

This refers to if something can be interchanged with another. In cryptocurrency, if a coin is fungible it should have the same value everywhere.

Fungible (or fungibility)

An identifier typically made up of alphanumeric characters that signify where cryptocurrency will be sent.

White paper

A white paper is a document that outlines what a cryptocurrency is created to do and how it will achieve it. The first white paper was released by Satoshi Nakamoto for Bitcoin. Since then, almost every cryptocurrency has released one.

ICO

Stands for ‘Initial Coin Offering’, which is where a new cryptocurrency will give away some coins at a discounted rate in return for another cryptocurrency. This is usually done to finance the project.

Token

A token is the underlying digital asset of the cryptocurrency that can be used to make transactions or pay for other functions. Tokens can also be called ‘coins’.

Exchange

An exchange is where people can go to buy, sell or trade cryptocurrency.

Market capitalisation

A common cryptocurrency term that means how much a cryptocurrency is worth in total.

Stablecoin

A cryptocurrency that is supposedly tied to the value of something else, such as the US dollar, to make it more stable and less volatile in price swings.

Utility coin

A cryptocurrency that’s can be used for other purposes aside from transactions. For example, Binance Coin can be used on the Binance exchange to get a discount when purchasing other coins.

Block reward

The number of tokens a miner receives for mining a block. The reward can be increased to raise the likeliness of miners validating the transactions faster.

Node

A computer that works on the blockchain network and helps it stay decentralised.

Peer to peer

Connection between two or more computers. In the case of cryptocurrency, this would be nodes. What makes peer to peer so unique to cryptocurrency and blockchain is that there is no middleman between transactions.