Cryptocurrency Glossary

• Addresses

An address is an identifier of between 26 and 35 alphanumeric characters, indicating the destination for a payment of Bitcoin or any other cryptocurrency. Addresses can be created free of charge to any cryptocurrency user. All cryptocurrency addresses will start with the number 1 or 3.

• Agreement Ledgers

An agreement ledger is a business agreement where specific agreements are outlined and participants voluntarily agree to, without the need to enter a more arduous contractual arrangement. It is a distributed ledger, used by multiple parties to self-execute and self-enforce itself upon those who originally agree to it.

• Altcoin

An altcoin is the term short for ‘alternative to Bitcoin’. This means that all cryptocurrencies other than Bitcoin can be considered to be altcoins. This includes the likes of Ethereum and Litecoin that are now well-established cryptocurrencies but remain an alternative to Bitcoin – the original cryptocurrency.

• Attestation Ledgers

An attestation ledger provides legal proof of all cryptocurrency transactions. It can also be extended to incorporate statements or commitments, providing evidence to third-parties that such statements or commitments have been made.

• ASIC

An Application-Specific Integrated Circuit (ASIC) was the evolution of CPUs, GPUs and FPGAs in the world of Bitcoin mining. An ASIC could outperform all of these in terms of mining speed and energy efficiency. Bitcoin ASICs can only be used to mine Bitcoin, although there are a few exceptions to the rule that can mine Litecoin too.

• App

An app is a mobile application designed to operate as a computer program or software on a smartphone or tablet device. There are apps for everything, including in the world of cryptocurrencies. There are apps that can help you buy, sell and trade cryptos and even store them securely.

• Bitcoin

Bitcoin is the original cryptocurrency, becoming the first legitimate form of digital cash. It is a decentralized form of digital currency, operating without a centralized bank or overarching administrator. The founder of Bitcoin is said to be pseudonymous Satoshi Nakamoto, who has never been photographed or seen before. Although Bitcoin has been labelled a ‘speculative bubble’ in recent times, it is still being widely adopted around the world as a legitimate and recognized form of currency.

• Block Ciphers

A block cipher is known as a method of encrypting or decrypting text or data one block at a time rather than one bit at a time via a shared, secret key.

• Block Height

The height of a block is the total number of blocks in the blockchain between the block in question and the genesis block.

• Block Rewards

A block reward is handed out by the blockchain network to eligible miners of cryptocurrencies for every single block they successfully mine. These rewards are usually in the form of the cryptocurrencies they are mining for.

• Blockchain

A blockchain is a collection of records or data, known as blocks, which are connected to one another via cryptography. Each block stores a cryptographic hash of the previous block, to ensure the blockchain is extremely resistant to being hacked and modified.

• Blockchain Algorithm

Blockchain consensus algorithms are mechanisms designed to achieve universal agreement on a single data value. This helps blockchain networks to maintain their reliability in the event of unreliable network participants, known as nodes.

• Blockchain Technology

Blockchain technology concerns itself with the overarching concept of decentralization. Blockchain technology allows digital data to be distributed as opposed to being copied. It was originally founded to underpin the Bitcoin cryptocurrency, but the global technology community is now finding other potential uses for blockchain as it can be programmed to store not only crypto transactions but almost anything of value.

• Blockchain Wallet

Blockchain Wallet is a digital wallet that enables cryptocurrency buyers and sellers to transfer and store Bitcoin and Ether. The wallet is the brainchild of software company Blockchain, established by entrepreneurs Nicolas Cary and Peter Smith.

• Blockchain Stock

There is a fast-growing number of fintech companies involved in blockchain technology, many of which are listed on the world’s stock exchanges. Some of the world’s leading tech conglomerates are working on blockchain projects that could influence their future stock value, including IBM and TradeLens and NVIDIA.

• Blockchain Mining

Mining on a blockchain is the process of adding transactional data to a cryptocurrency’s public ledger of past transactions or blockchain. The decentralized computational process of mining on a blockchain is two-fold: it confirms transactions in a trustworthy, transparent manner and issues new cryptocurrency coins in each new block.

• Blockchain Supply Chain

Organizational supply chains are crying out for improved efficiency and transparency – that’s where blockchain can really come into its own. Blockchain supply chains can improve the efficiency of everything from logistics to transactional records, with every piece of data recorded on a block, across multiple copies of the public ledger that are shared across many computers (nodes).

• Blockchain Conference

If you are wondering whether any major blockchain conferences exist to help you underpin your knowledge of the technology, London is playing host to the world’s largest blockchain conference and exhibition in April 2019. Blockchain Expo Global will focus on the future of enterprise technology over two days at London’s Olympia Grand.

• Blockchain Ledger

A distributed ledger on a blockchain is a database that is stored and updated independently by every node within a blockchain network. Each node within a blockchain network records and processes every transaction made on the distributed ledger. This means that networks are less reliant on the ownership and maintenance of a single, basic database.

• Blockchain Capital

Blockchain Capital is a leading venture capital firm and a pioneer of investing in Blockchain-enabled technology firms. They are headquartered in San Francisco, California and have a history of raising millions of dollars for blockchain-based start-ups.

• Blockchain ecosystem

The ‘blockchain ecosystem’ is one of the biggest buzzwords in the fintech industry. In biological terms, an ecosystem is often used to discuss a community of organisms working and interacting with one another in a living environment. This term has now extended to the blockchain industry, with the blockchain ecosystem made up of multiple ‘actors’, including users, developers, miners, investors and transactions.

• Blockchain Hash

Within a blockchain network, hashes are used to identify the current state of a blockchain. Hashing takes an input string of any size and provide an output of a fixed length via the Secure Hashing Algorithm 256 (SHA-256). Put simply this means that no matter how large your initial data input is, the output will always be 256-bits in length; hugely important when handling vast amounts of data and transactions. Instead of having to remember lengthy inputs, blockchain users can remember and make note of the output hash instead.

• Blockchain Programming

Programming on the blockchain can be coded in almost any programming language used today. Blockchain developers are increasingly using C++, JavasScript, Java and Python to create open-source, decentralized applications that remove the need for middlemen due to the immutability of blockchain technology.

• Blockchain Nonce

A random number used in cryptography to maintain uniqueness and to prevent the re-running of transactions on a blockchain, for security reasons and to maintain the integrity of the ledger.

• Blockchain Mutual Funds

Blockchain mutual funds either invest in companies involved in the transformation of business applications through the use of blockchain technology, or track the performance of Bitcoin and other cryptocurrencies via futures contracts (or by owning the underlying crypto assets).

• Cryptoeconomic

Cryptoeconomics is the utilization of incentives and cryptography to design and build innovative applications, platforms and infrastructures. Put simply, it is the process of building new protocols using cryptography to govern the consumption of goods and services in decentralized environments.

• Central Ledger

A central ledger is the main repository for a company’s assets, liabilities, revenues and expenses within a blockchain. As they are controlled by a central agency, centralized ledgers are at greater risk of fraudulent activity because control over the ledger is not decentralized.

• Chain Linking

Chain linking relates to the network that offers reliable tamper-proof inputs and outputs for complex smart contracts on a blockchain. It allows smart contracts to be linked to any data sources and external APIs to carry out the necessary function(s). It also allows payments to be sent from a smart contract to a bank account or payment network.

• Confirmation

New blocks are created on the Bitcoin blockchain every ten minutes or so. Once a new block is created and added to the blockchain through Bitcoin mining, the block is verified and records any new transactions. Once new transactions are recorded in a new block, they are said to have been confirmed by the Bitcoin network.

• Consensus Process

Blockchain consensus processes are one of the most important aspects of the technology. They help to foster an undisputable system of agreement across devices in a distributed network, guarding against the network’s exploitation. The consensus protocols on a blockchain help synchronize all nodes within a network, helping to create a self-auditing ecosystem, which prevents criminals from dismantling an entire blockchain.

• Consortium Blockchain

This is a blockchain which has consensus processes overseen by preset nodes. This means that they are partially decentralized, given that the root hash and its application program interface (API) may be accessible to the general public.

• Cryptanalysis

The study of information systems and mathematical formulas increasingly used by cyber-criminals to breach cryptographic security systems and access encrypted codes, cyphers and text.

• Cryptocurrency

A virtual or digital currency that features cryptography as its core security feature. Cryptography protects the transfer of cryptocurrency assets and oversees the safe creation of additional units.

• Cryptography

Cryptography is the basis of safeguarding communications and data through the use of codes that only those intended to view such data can use to process it. A set of rule-based calculations known as algorithms are used to create cryptographic messages and codes that are hard for anyone else to decipher.

• Cypher

A cypher is a cryptographic algorithm designed to perform encryption or decryption. Essentially, a cypher is a type of code that is secret or disguised. Although codes normally replace different length strings of characters in their output, cyphers normally replace the same number of characters as their input.

• dApp

Short for decentralized application, a computer application operating on a distributed computing system. These applications are decentralized because their back-end code operates on a decentralized peer-to-peer network, such as the Ethereum blockchain. The Ethereum blockchain operates dApps known as smart contracts that are rule-based applications between users.

• DAO (Decentralized Autonomous Organization)

One of the most complex types of smart contracts. In simple terms, a DAO is a piece of code that executes tasks for all participants of a smart contract based on predefined behavioural rulesets. These tasks are executed in an application layer above a stack of distributed networking and consensus technology – for instance, the Ethereum blockchain.

• Decryption

The action of turning information that has previously been encrypted back into its unencrypted format. It sees unreadable code or text returned to a state that both the reader and the overall system can view and understand.

• Distributed ledger

A distributed ledger is a database that is shared and synchronized consensually among multiple users, sites or institutions. It operates without a central administrator and has no centralized data storage. All transactions recorded on a distributed ledger require witnesses for them to be approved and added to a ledger. Blockchain is a distributed ledger, for instance.

• Double spent

If a cryptocurrency has been double spent, it means that same sum has been spent more than once. In essence, a transaction uses the same input as an alternative transaction that has already been recorded on a blockchain network. Double spending is a potential flaw unique to cryptocurrencies that can’t happen with physical currencies.

• Encryption

To encrypt a message or piece of data, people use cryptography to ensure that only authorized parties can gain access to it, which guards against data theft. The process of encryption sees readable data converted from a readable format into an encrypted version that can only be decrypted by another party if they have access to the necessary decryption key.

• Ethereum

Ethereum is an open-source blockchain-based distributed computing platform, boasting smart contract functionality. It was the brainchild of Vitalik Buterin, a cryptocurrency researcher and programmer, who had a dream of building decentralized applications that were secure and scalable. Today, the cryptocurrency that powers the network, Ether, is one of the biggest altcoins in terms of market capitalization.

• EVM code

The binary code that exists within Ethereum smart contracts. It can only be executed by the Ethereum Virtual Machine (EVM). Most smart contracts are initially written in Solidity and need to be translated into machine-readable language such as EVM code in order to be executed.

• Fiat Currency

Fiat currency is physical money that national governments have deemed to be legal tender, like dollars, euro and pound sterling. The value of fiat currencies is driven by supply and demand relationships rather than the value of the material from which it is made, like gold or silver.

• Fork

It is easiest to think of a blockchain fork as a form of software update that is collectively agreed by all decentralized computers (or nodes) within a blockchain network. There are two types of blockchain forks – hard forks and soft forks. Hard forks represent a substantial alteration to a blockchain network’s consensus rules, while soft forks are software updates that will remain compatible with older versions of the new soft fork.

• Gas

Gas is the lifeblood of the Ethereum ecosystem. It is an internal measure of how much work is required for an action or a set of actions to be performed on the Ethereum blockchain. Ethereum miners can increase or decrease the amount of gas required in accordance with the needs of a particular transaction or smart contract.

• Hyperledger

An umbrella project hosted by The Linux Foundation that is attempting to support the collaborative open-source development of blockchain distributed ledgers. The Hyperledger has become a global community of open source software developers with a passion for building groundbreaking blockchain platforms and frameworks.

• ICO

An initial coin offering (ICO) is a type of crowdfunding using established cryptocurrencies to help fund new ones. New cryptocurrency projects will sell their underlying tokens to interested parties in exchange for Bitcoin or Ether. Think of it like the digital version of buying shares in a start-up company.

• Startup

A start-up company is a newly established business venture aiming to develop a viable business model that solves a particular industry problem. In the fintech space, there are dozens of cryptocurrency and blockchain start-ups out there, all looking to develop solutions to bring digital assets and blockchain technology into the mainstream.