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cryptocurrency glossary

They are different from forward contracts, which can be customized for each trade and can be conducted over-the-counter, instead of being traded on an exchange. Decentralized Exchange A peer-to-peer exchange that allows users to buy and sell cryptocurrency and other assets without a central intermediary involved. Bug Bounty A reward offered for finding vulnerabilities and issues in computer code. It is often offered by cryptocurrency companies like protocols, exchanges and wallets to identify potential security breaches or bugs before they are exploited by unfriendly parties. Blockchain A blockchain is a continuously growing, append-only, list of records called blocks, which are linked and secured using cryptography. This type of attack has happened with smaller cryptocurrency projects, however there is no confirmation of this attack happening with larger projects like Bitcoin or Ethereum. An online platform where users can exchange one cryptocurrency for another.

Mining Pool

It contrasts with a futures market, in which settlement is due at a later date. Spot A contract or transaction buying or selling a cryptocurrency for immediate settlement, or payment and delivery, of the cryptocurrency on the market. Simplified Payment Verification A lightweight client to verify blockchain transactions, downloading only block headers and requesting proof of inclusion to the blockchain in the Merkle Tree. Sharding Sharding is a scaling approach that enables splitting cryptocurrency glossary of blockchain states into partitions containing states and transaction history, so that each shard can be processed in parallel. Selfish Mining A situation in which a miner mines a new block but does not broadcast this new block to the other miners. Segregated Witness A Bitcoin Improvement Proposal that aimed to fix transaction malleability on Bitcoin. In the past, when changing the “witness” information on blocks, it would change the transaction ID and its subsequent hash.

Genesis Block

Private Key / Secret Key A piece of code generated in asymmetric-key encryption process, paired with a public key, to be used in decrypting information hashed with the public key. Pre-mine When some or all of a coin’s initial supply is generated during or before the public launch, rather than being generated over time through mining or inflation. cryptocurrency glossary They may be used for legitimate purposes, such as crowdfunding or marketing. Oversold When a cryptocurrency has been sold by more and more investors over time, with its price decreasing for an extended period of time. When this happens without any justifiable reason, the cryptocurrency is considered oversold, and a period of buying is expected.

This public key, like the private key, is a combination of numbers and letters. A private key is a piece of information—presented as a string of numbers and letters—that an investor can use to access their digital currency. POS stands for «proof of stake,» which is another method of confirming transactions. The digital currencies that use this approach to verification frequently provide all their digital tokens up front, and miners are selected based on how many units they have .

Traders will often buy a digital asset when it makes a substantial move to the upside, instead of waiting for the perfect setup. This is driven by the notion of ‘FOMO’ and typically will end up as a losing trade. The network is “decentralized,” meaning that it’s void of a centralized company or entity that governs the network.

Cold Wallet

Going long is effectively betting that the asset will increase in price, while shorting is betting on the asset will move to the downside. FOMO – The ‘fear of missing out’ is widespread in the crypto community.

  • By choosing the most efficient and suitable hardware and mining target, mining can produce a stable form of passive income.
  • In this cryptocurrency boom, mining can be a lucrative business when done properly.
  • Verification of transactions on the blockchain generates new coins in the process, and the miner is rewarded a portion of those.
  • A form of incentive for the miner who successfully calculated the hash in a block during mining.
  • The necessity of validation warrants an incentive for the miners, usually in the form of coins.
  • Sharding has been utilised for many years to partition data linearly within a single database.

SegWit was aiming to fix this by segregating signature and block content a side effect of this change was smaller block sizes and the ability to support second layer solutions. Public Address A public address is the cryptographic hash of a public key, allowing the user to use it as an address to request cryptocurrency glossary for payment. Protocol The set of rules that define interactions on a network, usually involving consensus, transaction validation, and network participation on a blockchain. Proof-of-Authority A blockchain consensus mechanism that delivers comparatively fast transactions using identity as a stake.

A special transaction, with the zero address as the recipient, that is used to register a contract and record it on the Ethereum blockchain. When numerous nodes all have the same blocks in their locally validated best blockchain. Generally speaking, the trend line on a chart will move more or less diagonally as trades are made. However, once in a while there is a buy or sell order that comes in which will make the trend line move directly cryptocurrency glossary up and down, creating a vertical line that resembles a wall. These “walls” represent a temporary high demand in interest, either in buying or selling a certain type of digital currency. To help guard against it, heavy and aggressive over-investment is discouraged, and digital currency investors learn quickly how to sort the truth from false information. This is a market strategy that’s strongly frowned upon by conscientious investors.

Orphaned blocks in Ethereum can be included by newer blocks as ommers and receive a partial block reward. The term «ommer» is the preferred gender-neutral term for the cryptocurrency glossary sibling of a parent block, but this is also sometimes referred to as an «uncle.» Also known as a «deed,» this is a token standard introduced by the ERC-721 proposal.


cryptocurrency glossary

Some exchanges also allow users to exchange crypto currencies for fiat currencies and vice versa. This electronic component is the brain of the computer, being responsible for carrying out logic and mathematical operations.

A digital token is a unit of a digital currency, such as a bitcoin. It is worth noting that some of these tokens are used for specific ecosystems, cryptocurrency glossary and those are frequently referred to as utility tokens. A public key is an address where an investor can receive digital currencies.

They can be professional miners or organizations with large-scale operations, or hobbyists who set up mining rigs at home or in the office. It was initially popularized by Dash to reward owners of these servers for maintaining a service for the blockchain. Market Order / Market Buy / Market Sell A purchase or sale of a cryptocurrency on an exchange at the current best available price.

cryptocurrency glossary

Major Cryptocurrency Terms

When generating secret information, such as private keys, algorithms usually rely on a source of high entropy to ensure the output is unpredictable. A type of dapp that lets you swap tokens with peers on the network. You need ether to use one but they are not subject to geographical restrictions like centralized exchanges – anyone can participate.

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