Bitcoin Glossary

Altcoin
In general any crypto-currency other than Bitcoin. There are perhaps over 1500 different digital currencies created or developed. Bitcoin is the oldest and most popular.

Arbitrage
Taking advantage of a difference in price of the same commodity on two different exchanges.

ASIC

Acronym for ‘Application Specific Integrated Circuit’. ASICs are especially made for mining crypto currency and offer significant power savings in an expensive area.

ATH
An acronym for All-Time-High. Bitcoin has consistently reached an ATH.

Bear/Bearish

A term indicating the price or value of a stock, share or currency is dropping.

Bitcoin

Bitcoin is the first decentralised, open source cryptocurrency that runs on a global peer to peer network, without the need for middlemen and a centralised issuer.

Blockchain

Blockchain – This is the unchangeable digital ledger where every transaction lives forever. It is a chain of blocks of data recorded of transactions of the digital currency such as bitcoin.  Instead of a centralized ledger, such as a bank would hold, blockchain is a decentralized ledger in the form of a public database that everyone can access and read.  However the owners of each transaction are not known as they are performed anonymously rather like a movie idea of a Swizz bank account where the owner of the account is known by a number only.  The blockchain is a distributed ledger securted by cryptography.  The blockchain is duplicated across many thousands of nodes or computers so the data contained therein cannot be changed after the fact. Each block is a permanent record of the data in that block on the entire network.

 

Bollinger Band
A margin around the price of a crypto that helps indicate when a coin is overbought or oversold.

 

Bull/Bullish

Term used to indicate a rising market (values are increasing)

 

Capital Growth

The increase in the value or price of a currency or commodity

 

Central Ledger

A central ledger is where all the records of a company are kept. They form the complete record of a company’s finances including accounts payable, cash management, accounts receivable, projects and fixed assets. It is the source for the accounting system and will bear both the organization’s financial data and non-financial data. Every account in this ledger is referred to as a ledger account. It is also the source of financial position details and income statements. Every account will have a couple of pages and the entries are referred to as journal entries that include both credits and debits.

 

Centralized

In terms of financial databases, prior to blockchain all financial data bases were centralized. That is to say the information was kept on one database such as in a bank.  

 

Chain

Chain is the linking of two or more objects of a similar nature. In the case of crypto currencies it is the linking of a block of data to another block of data.  The very first block was called block 0

 

Chargebacks

A chargeback is a process whereby a transaction, usually of a credit card nature, is reversed and the funds returned to the original owner.  Does not apply in crypto currencies.

 

Code

Code is the language used to instruct a computer to perform specific functions ort activities.  There are many different types of code.

 

Cold Storage
Cold storage is the process of moving crypto-currency ‘offline’, as a way of safekeeping your crypto-currency from hacking. There are a variety of ways to do this, but some methods most commonly used:

Printing out the QR code of a software wallet and storing it somewhere safe, such as a safety deposit box
Moving the files of a software wallet onto a USB drive and storing it somewhere safe
Using a hardware wallet

 

Consensus

Consensus basically means, ‘all in agreement.’  Consensus is achieved when all participants of the network agree on the validity of the transactions, ensuring that the ledgers are exact copies of each other.

 

CPU

An acronym for Central Processing Unit.  That part of a computer or hardware machine that does all ther work, working things out, doing the calculations and generally providing and processing data.

 

Crypto Currency

Crypto currency is a developed currency that is not related to hard currency.  It is a digital or virtual currency and is assigned as such by the users. Bitcoin, Ethereum and Litecoin are examples of Crypto currencies. There are an additional 1500 or so more

 

Cryptocurrency addresses

Cryptocurrency addresses are used to send or receive transactions on the network. An address usually presents itself as a string of alphanumeric characters.

 

Cryptographic Hash Function

See Hash. Cryptographic hashes produce a fixed-size and unique hash value from a variable-size transaction input. The SHA-256 computational algorithm is an example of a cryptographic hash.

 

DAO

An acronym for Decentralised Autonomous Organizations which can be considered to be corporate entities that run with no human intervention is controlled by an incorruptible set of business rules.

 

Decentralized

Decentralized – In the case of cryptocurrencies it is a copy of the blockchain or digital ledger on every device connected to the network. An exact copy of the information is everywhere instead of in a central location like a government or companies servers.

 

Digital

Digital usually refers to something using digits, particularly binary digits as distinct to analogue relating to using signals or information represented by a continuously variable physical quantity such as spatial position, voltage, etc. Computers operate with a digital system of switches of off or on.

 

Digital Signature

A digital signature is a code for demonstrating the authenticity of digital messages or documents. A valid digital signature gives a recipient reason to believe that the message was created by a known sender and that the sender cannot deny having sent the message and confirmed that the message was not altered in transit. Digital signatures are a standard element of most cryptographic protocol suites, and are commonly used for software distribution, financial transactions, contract management software, and in other cases where it is important to detect forgery or tampering.

 

Distributed Ledger

Distributed Ledger – The basis for decentralization, a distributed ledger is a list of transactions that is cloned on every computer and software that is connected to the network. This ledger is updated in every location, all at once, each time a transaction is made.

Distributed ledgers are ledgers in which data is stored across a network of decentralized nodes. A distributed ledger does not have to have its own currency and may be permissioned and private.

 

Ethereum

Ethereum is a blockchain-based decentralised platform for apps that run smart contracts, and is aimed at solving issues associated with censorship, fraud and third party interference.

 

Exchange
An exchange is a website where you can buy and sell crypto-currencies such as bitcoin, Ethereum etc.

 

FIAT
FIAT is Government-issued currency, such as the US dollar, EURO or British pound for example. Fiat money has been defined variously as: Any money declared by a government to be legal tender but not backed by a physical commodity. 

 

Firewall

A firewall is a network security system that monitors and controls incoming and outgoing network traffic based on predetermined security rules. It is there to keep undesirables out (such as hackers) and to prevent computer viruses infecting a computer or server.

 

Fiscal

Fiscal comes from the Latin word fiscālis, and relates to the public treasury or revenues as well as money in general.

 

FOMO
An acronym for Fear of Missing Out. A often used marketing tactic to impel the desire to buy now. In crypto Land this is often use to describe an overwhelming sensation that you need to get on the band wagon when the price of a currency starts to skyrocket.

 

Fork

Fork A situation where a blockchain splits into two separate chains. Forks generally happen in the crypto-world when new ‘governance rules’ are built into the blockchain code and some nodes are not in consensus with the new rules and so split away.  See Hard Fork.

 

FUD
Acronym for Fear, Uncertainty, and Doubt.  Lies, rumour and other negativity spread intentionally in order to drop the price of a currency or asset.  A FUDster is a person that does this.

 

Genesis Block

A genesis block is the first block of a block chain. Modern versions of Bitcoin number it as block 0, though very early versions counted it as block 1. The genesis block is almost always hardcoded into the software of the applications that utilize its block chain.

 

Going long
A margin trade that profits if the price increases.

 

Going short
A margin trade that profits if the price decreases.

 

Hacking

Hacking is the activity of breaking into a secure area in order to obtain an asset of value from that area without authorisation.  Hacking can include finding out passwords that are insecurely kept, or tricking people into giving them their passwords or using software to break into or hack a secure area in order to obtain the asset contained within.

 

Hard Fork

Hard Fork is when the code or software that comprises a coin like Bitcoin changes in some significant way, typically for improvements. Then some of the nodes might fork away from the general nodes.  All nodes that agree on ther blockchain form a consensus. This that ‘break away’ do not. Bitcoin Cash is a hard fork from Bitcoin as an example. 

 

Hardware Wallet
A hardware wallet is a physical device to securely store crypto-currency and is considered the most secure way to hold crypto-currency.

 

Hash

cryptographic hash function is a hash function which takes an input or 'message' and returns a fixed-size alphanumeric string. The string is called the 'hash value', 'message digest', 'digital fingerprint', 'digest' or 'checksum' and will be very long, about 40 characters. Bitcoin makes heavy use of the cryptographic hash function SHA256, which stands for Secure Hash Algorithm 256-bit.  Incidentally, the SHA algorithms were originally developed by the NSA starting with SHA-1 and then -2 and so on.  The hash rate is the speed of the computing power used to mine a coin on a network and the larger the hash rate the better. The current hash rate used in cryptography is 256.

Hashgraph

Hashgraph is data structure and consensus algorithm that is fast: With a very high throughput and low consensus latency, highly, secure and faulty tolerant. Has equal fairness with fairness of access, ordering, and time stamps.  It is being touted as an upper echelon to blockchain technology

ICO
An acronym for Initial Coin Offering, somewhat similar to an IPO (Initial Public Offering) in the non-crypto world. A start-up will issue its own token in exchange for the crypto currency rather like a crowdfunding exercise in some ways.

 

Investment

Investment is where an asset is used to make a gain either through interest or by an increase of the value of the investment in itself. Strictly speaking bitcoin is not an investment but a currency used for transaction purposes but the continual rise in the value of bitcoin has initialled a perception that it provides a capital investment which, because of the confidence subscribed to it now has the perception of a capital investment.

 

Key

Something with which to lock or unlock a secure area such as a wallet. In crypto land, a key is required to send bitcoins to or extract bitcoins from a wallet. See Private and Public Key.

 

KYC

Know Your Customer. This is an acronym, but also a bank regulation to verify identity of their customers. It consists of 100 points which a person must supply in order to open an account. Various items of identity have a point value. Passports for example usually have something like 60 point value.

 

Lambo
Short for Lamborghini.  What you buy when you have thousands of bitcoins.

Limit order / limit buy / limit sell
Orders placed to buy or sell a crypto-currency when the price is at a certain level. One can set a sell at this price or buy when this price is reached.  

 

M1, M2, M3, M4

In the banking world the Ms series ere basically different measures of money supply. Money supply is the entire stock of currency and other liquid instruments circulating in a country's economy at any one particular time. It includes safe assets, such as cash, coins, and balances held in checking and savings accounts that businesses and individuals can use to make payments or hold as short-term investments. The various types of money in the money supply are generally classified as Ms, such as M0, M1, M2 and M3, according to the type and size of the account in which the instrument is kept. Not all of the classifications are widely used, and each country may use different classifications. M0 and M1, for example, are also called narrow money and include coins and notes that are in circulation and other money equivalents that can be converted easily to cash. M2 includes M1 and, in addition, short-term time deposits in banks and certain money market funds. M3 includes M2 in addition to long-term deposits. However, it is no longer included in the reporting by the Federal Reserve. MZM, or money zero maturity, is a measure that includes financial assets with zero maturity and that are immediately redeemable at par. The Federal Reserve relies heavily on MZM data because its velocity is a proven indicator of inflation.

 

MACD
Moving Average Convergence Divergence. A trend indicator that shows the relationship between two moving averages of prices.

 

Margin Trading
Definition of margin trading. Also called buying on margin. A method of buying an asset such as stocks or shares or crypto currency involving borrowing a percentage of the sum required for the purchase from the broker with whom one is initiating the transaction.   The collateral for this loan is invariably in the investors account.  This magnifies the investor’s ability to trade as he is trading with borrowed money rather than up fronting his own.  This is an extremely risky practice as of course if the value of the asset drops then the loan gets celled in and the investor has to pay of course.  This is an activity for the experienced practiced trader only.  

 

Market Cap
Market Cap is Market Capital or the total value held in a crypto currency.  It is calculated by multiplying the total supply of coins by the price of an individual unit.  E.g.  If one unit is valued at one dollar and the total coins held are 5 million then the market Cap would be five million dollars.

 

Market order / market buy / market sell
buying or selling at the market price. Simply a purchase or sale on a regular exchange at whatever the current price happens to be.  The sell price is always slightly less than the buy price.

 

Merkle Root

In cryptography and computer science, a hash tree or Merkle tree is a tree in which every leaf node is labelled with a data block and every non-leaf node is labelled with the cryptographic hash of the labels of its child nodes. Hash trees allow efficient and secure verification of the contents of large data structures.


 

Image result

 

Mining
Mining is how bitcoins are created. This is a process of creating a block for the recording and storage of transactions.  The process involves considerable computer power sand energy levels.  It is the act of validating blockchain transactions. The necessity of validation warrants an incentive for the miners, usually in the form of coins. In this cryptocurrency boom, mining can be a lucrative business when done properly. By choosing the most efficient and suitable hardware and mining target, mining can produce a stable form of passive income. The computers use multiple high-end graphic processors (GPUs) to maximize their processing power which require a lot of energy to perform ther complex task of creating a block on the blockchain.

 

Mooning
No this does not mean exposing your buttocks. In the crypto world it means the price of the currency is shooting up to astronomical levels.  One could say bitcoin has been mooning over the past 7 years.

Multi-Signature

A multi-signature addresses give an additional layer of security by requiring more than one key to authorize a transaction. A useful security feature especially where there are significant assets involved.

 

Node

A node is simply any software or computer that is connected to the Bitcoin’s (or other cryptocurrencies) network and, importantly, maintains a copy of the blockchain and works to maintain it. It is usually a computer.  There are millions of nodes around the planet.

 

Non-Reversible Transactions

One of the significant points about blockchain is the non-reversible transactions.  Once a transaction has gone through it cannot be reversed. It is recorded as having taken place and is then history. There is no way to hack into it and change it as it is recorded as established on a million or more nodes spread around the planet.  Of course a recipient of a transaction can initiate a transaction back to the original supplier of the same or different quantity of bitcoins but that would then be a new transaction.

 

Open Source

Open source basically means the code to perform a function or activity is available to anyone.  It is not copyright or hidden in any way.

 

Oracles

Nothing to do with the movie, The Matrix, Oracles are vital in crypto currencies as they work as a bridge or liaison between the real world and the blockchain by providing data to the smart contracts.  It is basically a translator for information provided by an outside platform. Oracles provide the information needed for smart contracts to be executed when the original terms of the contract are met. And are the only way for smart contracts to interact with data outside of the Blockchain environment.

 

Peer to Peer

You might as well say person to person. This refers to the interaction between two parties, such as a transaction or exchange of bitcoin for example, in an interconnected network.  The participants deal directly with each other and not through an intermediary.

 

POW = Proof of Work

Proof of work is the method of validating a transaction. It prevents an attack on the network by making mining calculations difficult and prevents multiple fake requests. It takes a long time for miners to calculate the block equations, but then they are rewarded when solving the block. 

 

Private Key 

You private key, which will look something like this, 3iihwfwififyr545s3hqlifby7r and is your access to your wallet and your bitcoin(s).  This is like a password or passphrase but, without going into the technicalities of the subject, much more secure.  You keep this secret and is the only way to unlock your wallet.  If you lose your private key you can kiss your bitcoin good bye. The chances of being able to access your wallet without your key are exactly zero so it pays to keep it in a safe place. In addition, as names and contact details are NOT attached to wallets if you incorrectly send bitcoins to the wrong wallet you have no hope of retrieving it. Usually when accessing or sending bitcoins to wallets one should use the copy/paste method rather than type out the entire key to ensure accuracy and that you can access your wallet without being locked out and send bitcoins to the correct wallet as there is no  way to get them back.  You never share your private key and you keep it safe. This is like your top secret password to unlock your wallet so you never share it. 

 

Public Key

The public key is a strong long list of characters which represents your wallet and to which others can send bitcoin to.  If someone sends a bitcoin to you they send it to your wallet.  The key will look something like this: 43845yowi38oq8qkewbw74o.  Example; If someone wants to send you a bitcoin (how nice of them) you would give them your public key to send it to. No one can access your bitcoin in your wallet with your public key. It is a one way street.

 

Pump & Dump

Pump and Bump is the activity of  building up an asset to improve its perceived value and getting others to do the same so the price rises dramatically, then selling off ones holdings in that asset.  This has been done with stocks and shares and other asset and of course those that perform that activity now jump on the crypto currency market and try to do the same. Or in other words, pumping up the price and then dumping the stock at a higher price and causing a crash.

 

Reversible Transactions

Reversible transactions are those transactions that can be reversed. Bank transactions can be reversed for example in some cases, the same applies to credit card transactions although these are called chargebacks.

 

ROI
Acronym: Return on Investment. The percentage of how much money has been made compared to an initial investment. For example 100% ROI means someone doubled their money.

Satoshi Nakamoto

Satoshi Nakamoto is the pseudonym for the mysterious creator of Bitcoin and proposer of the blockchain concept. No one TRULY knows who created Bitcoin.

 

Satoshi

Bitcoins can be bought and sold in tiny amounts! A Satoshi, named in honour of the creator, is the smallest sub-unit of a Bitcoin currently available (0.00000001 BTC).

 

Script

Script is the word given to the code used to make a computer perform a specific function. It is a list of commands that are executed by a certain program or scripting engine. Scripts are often used to automate processes on a local computer or to generate Web pages on a server.

 

Segwit

Segregated Witness

Segregate of course means to separate, and Witnesses are the transaction signatures. Segregated Witness then means to separate transaction signatures. SegWit is a process of increasing block size limit on a blockchain by removing signature data from Bitcoin transactions.  By removing parts of a transaction more space or capacity is freed up in a blockchain.

SHA-256

SHA-256 is a cryptographic algorithm used by cryptocurrencies such as Bitcoin.  It uses a tremendous amount of computing power and processing time, not to mention energy (electricity) forcing miners to form mining pools to capture gains.

 

Smart contract
Smart Codes encode or establish business rules in a programmable language onto the blockchain and are enforced by the participants of the network. For example, the code can be established to directly interact with how money flows. Whereas a normal transaction will allows you to send money from A to B, a smart contracts can set the criteria that you can only send money from A to B, on the condition that C occurs.  

Soft Fork

A soft fork is a change to the software protocol where only previously valid blocks and transactions are made invalid.  Old nodes will recognize the new blocks as valid making a soft fork backward-compatible.

 

Software wallet
Storage for crypto-currency that exists purely as software files on a computer. Software wallets can be generated for free from a number of sources

Solidity
A computer language popular for writing smart contracts.  It has some similarities to the Java script language.

Stable coin
A crypto-currency with extremely low volatility that can be used to trade against the overall market.

TA
Trend Analysis or Technical Analysis is the process of examining current charts in order to hopefully predict which way a market will move next, up or down.

Testnet

The act of performing a hash function (See Hash) on the data emitted or output data. Used to confirming coin transactions.

 

Timestamp

A timestamp works by taking a group or block of items and time stamping them.  This proves that those items, usually transaction(s) recorded occurred at that time and demonstrates that the information existed at that time.  Any time stamp also includes previous timestamps forming up a chain and reinforcing the previous timestamps before it.

 

Token 

A token is similar to and based on cryptocurrency, but its main function isn’t necessarily just transfer of value. They refer to the ‘currency’ of projects built on a crypto network designed to raise money.  This is usually done by the crypto organisation issuing their own tokens.
 

Transaction Block

A block of transactions

 

Transaction Fee

The fee one pays to effect a transaction.  Banks, money exchanges have transaction fees, sometimes very exorbitant.  Transferring or exchanging crypto currency on a crypto exchange also incurs a fee albeit much smaller.

 

Turing

Turing has two meanings essentially. 1. The ability of a computer to perform calculations that any other computer is likewise capable of.  2. The set of characters or confirmation of an image that has to be entered by hand to access an account.  This is to prevent robotic logins to a secure account.

 

Virtual Currencies

Virtual currencies are those currencies that are digital only and usually confined to the internet.  They cannot be held in the hand as fiat currency can. They are not cash. Bitcoin is a virtual currency.

 

Wallet

A Wallet is the digital container where you store your crypto currency.  A person can have several wallets and there are many different types of wallet.  

 

Whale

  1. A person or institution that owns vast quantities of a crypto currency

  2. Also used to define an investor or owner who owns a significant amount of a currency, such as Bitcoin or Ethereum for example to the degree that they can influence the market of that currency.

  3. An extremely large mammal that lives in the oceans of the world.

White paper

This is the formal write up, usually of a technical nature regarding that particular crypto currency. It usually gives a description of the currency, the structure and make up, the purpose and future plans.  Probably the first white paper on crypto currencies was the Satoshi Nakamoto paper entitled ‘Bitcoin: A Peer-to-Peer Electronic Cash System.’

 

~oo00oo~