Blockchain and Cryptocurrency are new concepts to many people, although this is changing every year now as we edge closer to mainstream adoption.
With every new technology comes the inevitable matrix of new terms, abbreviations, acronyms and concepts that at first can seem overly complex, confusing and overwhelming.
Just picture back to when the World Wide Web had been around for some time, but only just becoming a household term.
Back then everyone would have to have learned what the terms browser, URL, email, HTTP, HTML, Domain Name System (DNS), links, pages, Website, Search engine, and much much more.
However, now the above terms and concepts are second nature to many of us throughout the entire world and are used by almost all businesses on the planet.
This is comparable to where Blockchain and Cryptocurrency are now (2021)!
To help breakdown some terminology barriers we have compiled a glossary below to help explain what many of the common crypto terms, phrases or concepts actually mean.
Blockchain and Cryptocurrency terms
|1||Fiat money (or Fiat Currency)||Government issued currency and is legal tender whose value is backed by the government, or Central bank which issued it. Examples include Australian dollar (AUD), British pound (GBP), Euro, Japanese yen (JPY), South Korean won (KRW), United States Dollar (USD), etc.|
|2||Private Key||Cryptocurrency wallet Private Key, made up of letters and numbers, which is used to access your digital assets/cryptocurrency, and should never be disclosed to anyone. |
There is a saying in the industry that "If You Don't Own Your Private Keys, You Don't Own Your Crypto". I can't stress the importance of this point enough!
|4||Public Key||Cryptocurrency wallet Public Key is an address, made up of letters and numbers, where a person or business can receive digital assets/cryptocurrency.|
|5||Wallet (Cryptocurrency wallet)||A Cryptocurrency wallet is a device (physical/hardware, software or a service) which facilitates the sending and receiving of Cryptocurrency and gives ownership by storing vital information such as the private and/or public keys plus owners balance. |
In addition to this basic function of storing the keys, a Cryptocurrency wallet more often also offers the functionality of encrypting and/or signing information. Signing can for example result in executing a smart contract, a cryptocurrency transaction, identification or legally signing a "document". Source: Wikipedia - Cryptocurrency wallet
|6||White paper||The developers of a Cryptocurrency, normally publish a "White paper" which informs readers concisely about the issue or problem they are looking to solve, presents the issuing body's philosophy on the matter, present comprehensive information on the digital asset and it's underlying technology. |
White papers are generally meant to present a complex issue into material for the reader to make an informed decision on the need, scope and technology of the project before becoming involved or investing in it.
|7||Token||A Token is a Cryptocurrency which requires another blockchain to operate on, and therefore does not have it's own native blockchain. A Token benefits from the technology of the blockchain it runs on, without the cost, complexities and need to build their own blockchain. |
Examples include 0x (ZRX), Bancor (BNT), and ERC-20 tokens which run on the Ethereum network.
Many crypto projects run as a token before developing and migrating to their own blockchain (mainnet).
|8||Coin||A Coin is a Cryptocurrency which operates it's own native blockchain. Examples of crypto coins include Bitcoin (BTC), Ethereum's Ether (ETH), Polkadot (DOT), Cardano (ADA), Stellar (XLM), EOS (EOS), Tezos (XTZ), etc.|
|9||Proof of work (PoW)||PoW is a type of consensus mechanism by which a Cryptocurrency blockchain network achieves distributed consensus. Bitcoin is the largest of all Cryptocurrencies that uses Proof of work.|
|10||Proof of stake (PoS)||PoS is a type of consensus mechanism by which a Cryptocurrency blockchain network achieves distributed consensus.|
|11||Consensus||Coordinating processes to reach consensus in the blockchain. Consensus algorithms are designed to achieve reliability in a network which may have one or more unreliable nodes.|