Blockchain 101: Blockchain terms from A-Z for new crypto investors
In the following, we've picked up key terms related to blockchain technology. If you are a new investor of crypto, we are going to make those complicated and professional knowledge simple for you to keep up with the crypto market.
The computer software that incorporates and carries out mathematical instructions to get a specified result.
All-time high (ATH)
The highes t price that a cryptocurrency has ever attained.
All-time low (ATL)
The lowest price that a coin has ever attained.
Anti-money laundering (AML)
International laws and rules are in place to stop criminals from using cryptocurrency as a form of money laundering.
Application-specific integrated circuit
Computer hardware, such as a graphics card or a CPU, is specifically built for mining cryptocurrencies. ASICs are designed specifically to tackle hashing issues successfully.
The process of purchasing from one exchange and then selling it to another exchange if there is a profit margin between the two. At any given time, the same cryptocurrency is traded on several exchanges, and the rates at which it is traded can vary.
A specific address indicates where cryptocurrency can be stored, sent, and received on the blockchain. The ownership information for the coin is kept at this location, and any modifications made when it is traded are also recorded there. Cryptocurrency addresses vary in appearance, but they are often a string of more than 30 characters.
A marketing effort that alludes to the quick circulation of a cryptocurrency among a group of people. It can happen when a cryptocurrency developer distributes its coin to novice traders or members of the existing community to increase usage and acceptance. They can be distributed at no charge or in return for easy activities like telling friends about the coin.
Any cryptocurrency that is an alternative to Bitcoin.
Automated Market Maker (AMM)
A system that offers liquidity for automatic cryptocurrency trading without a third party or order book. Utilized by Uniswap and other decentralized exchanges.
A cryptocurrency exchange that takes place outside of the exchange and without the help of a reliable third party. Instead, it makes use of the "smart contract" role included in the majority of cryptocurrencies to guarantee that each participant gets their money and cannot defraud their counterparty. Atomic swaps are supported by a technology called the Lightning Network.
A gang of traders used this approach to try to manipulate the price of a cryptocurrency. This group set the bear trap by tricking the market into believing a decline is imminent. Other dealers then sell their assets, further lowering the price. Those who create the trap then purchase the assets at a discount. The price eventually recovers as a whole, enabling them to turn a profit.
The first digital currency. It was developed in 2008 by a person or group of people going by the name Satoshi Nakamoto. A peer-to-peer, decentralized electronic cash system was what it was designed to be.
Blocks make up the blockchain. Until a block is full, a history database of all cryptocurrency transactions is stored in each block. It is a permanent record that can always be opened and seen, much like a bag of data.
An online application that allows you to view and follow all transactions taking place on a cryptocurrency's blockchain in real-time. Blockchain analysis tools like block explorers can offer data on the total network hash rate, coin supply, transaction growth, and other topics.
Block height is a measure used to describe the number of blocks that make up a blockchain network, such as Bitcoin BTC, starting from block #0, also known as the network's genesis block, which was mined during the initial round of updates.
A sort of financial incentive offered by cryptocurrencies every time a person successfully mines a block. Coins and tokens are made out of nothing. However, given that mining them effectively takes computer resources and electrical expenses, they must have already undergone mining before being granted as such. The labor required to ensure that suitable security mechanisms are put in place so that these tokens cannot easily be hacked or stolen from them is how miners make their money.
Block size limit
The maximum amount of data, expressed in bytes, that can be contained in a block. Ethereum recently grew to about 20% of that size (to roughly 12.66MB), with plans to increase it further over the future years. Bitcoin is hard-coded at one megabyte.
Buy The Dip (BTD)
This term stands for purchasing coins or tokens when their values decrease and they become affordable.
Bullish investors anticipate price increases in the future and are willing to purchase coins or tokens at the current prices because they think the price will rise further.
A market is in a bull market when prices are growing and investors anticipate even greater gains in the near future.
Tokens can be "burned" in order to make them disappear or make them inaccessible. This lowers the overall supply, which could result in higher prices if the demand is the same but the supply is lower.
To maintain a specific price for cryptocurrencies, buy and sell walls are put in place. Both a sale wall and a purchase wall will block the price from rising or falling too drastically.
BGB is the native token of Bitget. BGB token is an ERC20 standard token running on the Ethereum blockchain. BGB is a utility token that bridges the gap between DeFi, Web3, DAO and other blockchain protocols.
A blockchain is a network-wide, digitally distributed, decentralized public ledger. Blockchain is a decentralized, immutable database that makes it easier to track assets and record transactions in a corporate network.
A blockchain bridge, often referred to as a cross-chain bridge, joins two blockchains and enables users to transfer cryptocurrency between them. Essentially, you can use the bridge to spend bitcoin like Ethereum if you have it.
Centralized Exchange (CEX)
A virtual currency exchange where transactions between traders are overseen and coordinated by an organization.
A peer-to-peer (P2P) digital currency that uses cryptography for security and performs as a medium of exchange in an economy without centralized intermediaries like banks. Bitcoin is an illustration.
The quantity of a cryptocurrency in existence. This refers to the quantity that is available for trading at the moment. Due to factors like mining and lock-up times, this is not necessarily the same as the overall supply.
Putting cryptocurrency in an offline location that isn't connected to the internet. The most secure approach to keep cryptocurrency safe is in cold storage.
When a transaction is made, the network's nodes all check to see if it is genuine on the blockchain, and if it is, they reach an agreement.
Decentralized Applications (dapps)
Computer software that uses a blockchain for data storage is open source, runs autonomously, is not managed or controlled by a single body, and has its use rewarded with fees or tokens.
Decentralized Autonomous Organizations (DAOs)
An organization that is governed by an application (computer program) rather than by direct human input is referred to as a decentralized autonomous organization. Instead of having a single central authority, everyone has control over this application.
Converting plain material that has been encrypted into plain text.
When the price of a certain cryptocurrency's economy falls as a result of a decline in demand for that cryptocurrency.
Decentralized Exchange (DEX)
A virtual currency exchange where transactions happen directly between traders without any intermediary.
The requirements that each Ethereum token must meet. It specifies each token's behavior so that transactions can be predicted. The ERC-20 standard is utilized by other coins, which leverage the Ethereum network in the process.
Funds are held in escrow when an intermediary is used to hold them throughout a transaction. Between the sending and receiving entities, there is typically a third party in this situation.
One of the top three cryptocurrencies globally by market capitalization. It varies from Bitcoin in two significant ways while being open source and based on blockchain technology: it permits developers to make dApps and also write smart contracts.
The platform through which cryptocurrencies are exchanged with each other or with fiat currencies. Exchanges can vary widely in the currency conversions they enable and their fee structures.
A faucet is a website that offers to provide you free cryptocurrency in exchange for interacting with them. Most of these are con games.
Refers to a currency that is accepted by governments as a legal tender, such as the US dollar, British pound, Euro, and Australian dollar.
A shorthand for the phrase "fear of missing out."
A fork occurs when a new version of a blockchain is established, causing two copies of the blockchain to coexist. When a blockchain splits into two, both of them will continue to operate on the same network. Two types of forks are distinguished: soft and hard.
The term is used to describe the transaction costs associated with operating smart contracts on Ethereum and other comparable systems. The payment is made in Gwei units, which are one billionth of an Ether.
The first block in a blockchain. Bootstrapping a coin's network involves the first block in the Blockchain, which is typically hardcoded into the coin's protocol.
An additional name for a mining pool (see below).
The amount utilized to calculate the price of gas. Set the price of gas to 20,000 Gwei, for instance.
Hashing is the process by which a particular algorithm converts input data of arbitrary length into a string of a predetermined length. The Secure Hashing Method 256 bits (SHA-256), in particular, is the hashing algorithm used for Bitcoin. Due to the inability of decryption to recover the original data, this approach is a one-way cryptographic work.
Initial Coin Offering (ICO)
The first public sale and purchase of tokens or other digital assets for a brand-new blockchain project.
Initial DEX offering (IDO)
Initial DEX offering, which resembles an ICO but requires consumers to engage with a DEX before launch.
Initial Exchange Offering (IEO)
This is the first time a coin is offered for sale to the public on a virtual currency exchange.
Know Your Customer (KYC)
The term "know-your-customer," or KYC, refers to a financial institution's duty to confirm a customer's identity in accordance with AML requirements.
A suggestion is to move transactions off the main chain to speed up transactions on the Bitcoin network. The network is a decentralized network of channels with pre-funded funds where users can send money without needing to wait for consensus globally or miner confirmation, enabling quicker settlement times.
The ease with which a cryptocurrency can be purchased and sold without affecting the price of the entire market.
The name is given, albeit ambiguously, to the blockchain transaction verification process. The person who contributes computer power to resolve the encryption puzzles receives new Bitcoin fractions as rewards.
An agreement where a person pays for the mining power from a mining hardware that is rented out for a predetermined period of time. The hardware, along with any necessary upkeep and electricity costs, is not covered by the renter.
An immersive virtual environment that combines cryptocurrencies and blockchain technologies is known as a crypto metaverse. A virtual world with avatars is called the metaverse. Users can socialize, play games, and engage in other activities just as they would in the real world in this virtual reality setting.
A network refers to all the nodes committed to helping the operation of a blockchain at any given moment in time.
Any computer that is connected to a blockchain network is referred to as a node.
When a miner hashes a transaction, a random number is generated, called a nonce. The parameters from which that number is chosen change based on the difficulty of the transaction.
Non-fungible Token (NFT)
Authenticated and kept in a database known as a blockchain, a non-fungible token (NFT) is a non-exchangeable digital commodity such as a picture, song, or video that can be gathered, bought, and sold on different online marketplaces.
A blockchain-based voting system that allows token holders to decide whether to implement improvements or changes that will increase network performance without jeopardizing security.
Blockchain-based smart contracts are locked inside the network. They are only accessible to the outside world via a program known as an oracle. Whenever necessary, the oracle transmits data to and from the smart contract and the outside world. Chainlink is the most popular blockchain oracle as of now.
Off-chain transactions in blockchain-based cryptocurrencies are those that take place outside the blockchain itself. Off-chain transactions can utilize a third-party or coupon-based intermediary by exchanging private keys to an existing wallet in place of transmitting money, or both. Transactions that take place on a blockchain and are recorded on the distributed, public ledger are referred to as "on-chain" transactions. The transactions that update the broader blockchain network are known as on-chain transactions since they have been verified or authenticated.
It is a paper wallet if the private key associated with it is kept on a tangible document. It's also known as cold storage occasionally.
Peer-to-peer connections allow for the data transmission of two or more computers without the necessity of a centralized middleman.
A combination of letters and numbers that you use to open your wallet. While a public key represents your wallet, your private key should be protected carefully. When selling or withdrawing cryptocurrency, you must have your private key because it serves as your digital signature.
A public key is a cryptographic code used to enable transactions between parties and enable users to receive cryptocurrency in their accounts.
A private key that permits its owner to add new blocks to a personal blockchain. A single entity or a predetermined number of entities may hold it. In contrast to the proof-of-work paradigm, a transaction is approved by a select set of nodes rather than a large number of randomly selected nodes in this case. This approach is much quicker.
Another option for proof of work is proof of stake (PoS), which sets the reward for a miner's contribution of processing power to the network at the miner's investment in the cryptocurrency. The system encourages miners to stick with a certain blockchain rather than converting their rewards to an alternate cryptocurrency.
Miners of Proof of Work (PoW) - based blockchain must demonstrate that their computers put forth an effort to approve a transaction in order to be rewarded for their work. Hashing a transaction now requires extra work before a block can be correctly hashed due to the addition of a variable. Proof of work is having a hashed block, which shows the miner has put in the effort and is due a payout.
A blockchain that is secure from assaults by quantum computers. Quantum computers are still not fully func·tional, but it is thought that they will be used in the future. If this is the case, it would make current encryption techniques like SHA-256 (which Bitcoin depends on) vulnerable to them because they can decrypt cryptography codes much more quickly than conventional computing.
A kind of virus that corrupts computers and encrypts files, holding them hostage until their owners pay to decrypt them and regain access.
Government-created regulations are used to ensure that particular firms and industries comply with the laws and set standards.
An encryption method that preserves the user's anonymity is the ring signature. The idea gives a network of nodes the ability to authorize a transaction on a blockchain without knowing which node requested the transaction. It cannot, therefore, be tracked.
An anonymous person or group of individuals who invented Bitcoin.
The smallest unit of bitcoin, or 0.00000001 BTC, is this one. The abbreviation SATS stands for Satoshi Nakamoto, the fictitious name adopted by the person who invented bitcoin.
Segregated witness (segwit)
The Bitcoin Core development team suggested a soft fork upgrade to the Bitcoin protocol, which was implemented in 2017, and enhances network capacity (transactions per second), addresses transaction malleability and decreases UTXO bloat.
A common form of wallet where the private key for an individual is stored within software files on a computer. This is the system you are likely to use if you sign up for a wallet online that is not associated with an exchange.
Simply put, smart contracts are blockchain-based algorithms that execute when certain criteria are met. In a smart contract, the conditions of the agreement between the buyer and seller are directly encoded into lines of code, making it a self-executing contract.
A stablecoin is a cryptocurrency whose value is tied to a different asset, typically another cryptocurrency or a currency like the U.S. dollar or the euro, though other assets are also feasible. When a cryptocurrency tracks an underlying asset, its value remains consistent over time, at least in comparison to the currency to which it is linked.
On a test net, a cryptocurrency developer tests out a fresh iteration of a blockchain. This runs as a backup blockchain but does not affect the value of the main, primary blockchain.
A transaction's encryption point is taken as evidence that the data it collected existed at that time.
A token is a cryptocurrency's "coin." It is, in essence, the digital code that identifies any fraction that may be owned, purchased, and traded. Payment made to miners to confirm transactions into blocks and add them to the Blockchain network is known as a transaction fee.
Transaction ID (TXID)
Every transaction that is confirmed and added to the blockchain is assigned a transaction ID (TXID), also known as a transaction hash. To put it another way, a TXID is a code that marks each transaction on the blockchain.
Transactions Per Second (TPS)
Transactions per second (TPS) in the context of blockchains refers to the number of transactions that a network is capable of processing each second. The average TPS of the Bitcoin blockchain is approximately 5, though this can occasionally change.
A proposed transaction is not validated until the network has checked the blockchain to make sure there are no other transactions involving the same coin that is still waiting. The transaction has not yet been added to the blockchain in the unconfirmed state.
Each and every Ethereum node contains the Ethereum Virtual Machine (EVM), a sophisticated, specialized software virtual stack that runs contract bytecode. EVM, to put it simply, EVM is a software framework that enables developers to create decentralized applications based on Ethereum (DApps)
How much an asset's price has fluctuated over time, or how volatile it has been, is measured by volatility.
A whale is a person who possesses a lot of cryptocurrencies.
A whitepaper is a document that contains all of the project's technical information. This includes information on how it works, token specifics like tokenomics, team information, and a development plan.
A new generation of cryptocurrencies called Web3 crypto’s is dedicated to realizing the decentralized Web3 concept. In order to give consumers control over their data and enable transactions without the use of intermediaries, they integrate blockchain technology and smart contracts.
The smallest ether coin, which is utilized on the Ethereum network, is called a wei. One ether equals one billion billion billion wei (1018). One quintillionth of an ether is equal to one wei, which is another way to look at it.
A sort of proof that validates the veracity of a claim without adding any new information to what is already known. This makes it possible to maintain their secrecy while demonstrating expertise or secret codes.
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