We’ve explored some terminology from the general cryptocurrency and blockchain space, now let’s look specifically at the leading digital asset, Bitcoin. An ICO is an Initial Coin Offering, similar to an Initial Public Offering (IPO) in the stock market.
The process of validating transactions and adding new blocks to the blockchain is called mining. This nickname was created because it is through this process that the amount of Bitcoin in circulation increases, similar to what happens with precious metals like gold.
A computer which is connected to the Internet and runs the software of a given cryptocurrency. Nodes are responsible for validating transactions and packaging those transactions inside new blocks on the blockchain. In other words, it is the network of nodes that keeps a cryptocurrency running.
In the cryptocurrency world the most famous case is Bitcoin Cash, which was forked from the original Bitcoin in 2017. Since the Bitcoin development team didn’t agree with this modification, the fork took place, practically creating a rival to Bitcoin. This is the core technology behind Bitcoin and most other cryptocurrencies. Some people argue that this innovation has more value than Bitcoin itself, because it can be used on countless future projects.
This event happens when a crypto project launches its currency or tokens in the market, allowing the first investors to purchase them. The process is similar to an IPO, where a company offers its shares to the public for the first time. Notice that when you invest in an ICO, however, you are not buying equity from that project. Instead, you are buying the coins or tokens of such project, and investors do so hoping that such coins will increase in value over time.
Since cryptocurrencies like Bitcoin do not have a central authority, it is the consensus of the network nodes that determine which transactions are valid and which are not. If a malicious user controls 51% of the network nodes he might be able to validate his own fraudulent transactions. The larger the number of nodes in the network, the harder it is to make this attack, and so far none of the popular crypto projects has suffered from it. Cryptocurrencies were originally developed to be used as electronic cash.
Bitcoin is the most popular cryptocurrency, but there are also more than 1,000 others. Each one of those more than 1,000 cryptocurrencies is known as an altcoin, short for alternative coin. It allows mining transactions to be approved more frequently.
Bitcoin Specific TerminologyH2 Heading Here
A digital currency which relies on cryptography to validate transactions, removing the need to have a trusted central authority reporting which transaction is valid and which is not. Bitcoin is the most popular one but today we have over 1000 cryptocurrency projects on the market. The total balance of bitcoins on an address can be spread over multiple blocks in the blockchain. By searching the blockchain for the UXTO’s, which belong to a ‘wallet’ address, the total spendable balance can be determined. This is displayed by the wallet when it is fully synchronised.
An ICO is used to raise money for a new cryptocurrency project by offering a set amount of coins to the public. This initial set of coins is available at a base price, after which the price will fluctuate based on supply and demand. In cryptocurrency terms, a wallet is a digital or physical address that is used to store the coins. The wallet can also be used to send and receive Bitcoin and other forms of cryptocurrency. The term altcoin refers to any digital cryptocurrency other than Bitcoin (and to some extent, Ethereum).
- Cryptocurrencies are a kind of alternative currency and digital currency (of which virtual currency is a subset).
This is a software development term that also applies to cryptocurrency projects. When a fork happens, the current source code of the software is copied and used to start a new, independent version of the software.
Miscellaneous terms
On top of that it is impossible to remove or change past transactions, making the system secure. An alternative way of seeing the blockchain is as an open, distributed digital ledger. An exchange is a place where you can buy and sell different kinds of cryptocurrencies and tokens. These coins can then be deposited back to a wallet, which supports the coin.
The basic idea is to organize all the transactions of a system (i.e. Bitcoin payments) into blocks, and then to connect those blocks in a chain using cryptography. The cryptographic functions ensure that all the transactions on the blockchain are valid, and anyone can check this information, as it is public.
The ultimate glossary of cryptocurrency and blockchain acronyms
Over time, however, people realized that the same technology (i.e. blockchain) could be used for other purposes, most notably smart contracts (see below). Units of those crypto projects that aim to have functionality beyond those of a digital currency are usually called tokens.
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Cryptocurrencies are a kind of alternative currency and digital currency (of which virtual currency is a subset). Since the release of bitcoin, over 4,000 altcoins (alternative variants of bitcoin, or other cryptocurrencies) have been created. As explained above, network nodes are responsible for validating individual transactions. Once there are enough outstanding transactions a node can create a new block on the blockchain by solving a cryptographic challenge. The node that first solves such challenge will get rewarded a certain amount of units of that cryptocurrency (e.g. on the Bitcoin network nodes get rewarded Bitcoins for adding new blocks).
Created in 2015, Ethereum is a type of cryptocurrency that is an open source platform based on blockchain technology. Some of the main types of altcoins include mining-based cryptocurrencies, stablecoins, security tokens, and utility tokens. There is also some movement toward separating most of these concepts from altcoins. If that trend continues, altcoins might refer only to mining-based cryptocurrencies other than Bitcoin in the future. In the cryptocurrency sector, a wallet is a digital address used to store coins or tokens.
Altcoins are the other cryptocurrencies launched after the success of Bitcoin. Generally, they sell themselves as better alternatives to Bitcoin. The term “altcoins” refers to all cryptocurrencies other than Bitcoin. As of early 2020, there were more than 5,000 cryptocurrencies by some estimates. According to CoinMarketCap, altcoins accounted for over 34% of the total cryptocurrency market in February 2020.