The following keywords are concepts you will likely come across as you begin your journey to understanding crypto. Therefore, we have simplified their definition in a way that explains the concept for easy comprehension to aid your rapid adoption of the technology in your daily living. For example, there is much more to the understanding of the word Bitcoin, but we want to give you a highly simplified definition to help you start to grasp the idea in the easiest way.
All the computers that are connected together to use Bitcoin software as a payment system. This includes all programmers, and individuals who own and use Bitcoin as money.
A software technology that allows trusted transactions to occur between 2 or more parties, without the need for a middleman. It was declared a successful innovation when Bitcoin was created in 2009. Bitcoin blockchain was the first successful blockchain software that enables payment between individuals without government influence or control. Blockchain software can be used to power any type of data transfer between individuals without the fear of fraud because it offers transparency, data security and accountability due to the decentralization of data.
The first widely accepted online money created without physical cash backup or government control. It is called cryptocurrency and was created with a software technology called the blockchain. Bitcoin functions as money and a store of value. It has influenced the creation of thousands of other cryptocurrencies. Bitcoin is the most well know form of cryptocurrency. Many people who don't have a full undersanding may use Bitcoin as a generic term to refer to all cryptocurrencies (similar to how people use Coke as a general term for all soft drinks).
A system that does not require trust in a middleman to facilitate an exchange between individuals. This is a core principal of Bitcoin. The idea is that you don't have to trust anyone. You just trust the math and code. With Bitcoin for example, the source code (code that makes it operate) is open source (available to anyone to look at). Additionally it uses a Distributed Ledger. So you don't have to trust any one centralized authority to make sure the Ledger is correct because it is distributed. So if one copy of the Ledger is intentionally or unintentionally changed, you have countless other copies to provide accurate copies of the Ledger.
Cryptocurrency / Crypto
An umbrella term for all types of digital currencies created on a blockchain. Some related terms are often used interchangeably, like crypto, token, or coin. They are digital assets that represent value and often function as money, therefore they can be transferred, exchanged or used to make payments for goods and services online.
Decentralized Finance - all types of traditional financial services that have been created on blockchain to operate without a middleman like a payment system without bank or brokerage etc.
A fork occurs on a blockchain when there is a change in the direction of rules. When the change requires a total upgrade, a new blockchain and new currency are formed. E.g. Bitcoin cash was a fork of Bitcoin.
A variant spelling of HOLD. Meaning to Hold assets for long term investment purpose. Also short for Hold On for Dear Life.
Know Your Customer laws. Traditional law that requires business to know who they are dealing with, particularly by having an individual provide acceptable identification
Having access to invest with a capital that is greater than a trader’s available funds either through borrowing or using such privilege available on some crypto platforms.
Lightning Network is a second layer solution that functions on Bitcoin blockchain to offer users cheaper transaction fees and faster processing.
The most sensitive data that grants access to a crypto wallet. Think of it similar to a PIN.
Proof of Stake
The process of mining new currency on the blockchain where a miner is empowered to verify and add transaction blocks to the chain because the miner has staked some coins on the network.
Proof of Work
The process for mining new currency on the blockchain, which requires that miners solve difficult mathematical puzzles. The first miner to solve the mathematical puzzle is able to verify a new block of transactions and add it to the chain. This miner is then rewarded with new cryptocurrencies for the work done.
Wallet Address which are a set of digits that suffice as the destination of the digital asset. Think of it similar to a bank account number.
Seed Phrase / Seed Words
Recovery phrase (a list of words) that grants secure access to digital assets. Often used with wallets such as the Trezor.
A set of computer programs that executes predetermined actions on a blockchain when specific requirements are met.
Traders in the currency market are termed to have strong hands when they are resilient and hold on to assets despite market conditions. People with strong hands in the bitcoin/crypto space may also be called Hodlers.
A cryptocurrency created to be used on a blockchain network primarily to facilitate some specific processes.
A crypto wallet stores the records of the money an individual owns on a blockchain so the assets can be readily accessed for use - either to hodl, spend, receive or trade. A wallet has a private key (PIN) and a public address (account number).
Digital assets are secure in offline wallets when the private key is written or printed on paper to keep it away from internet access.
Wallet (Software / Electronic)
Wallets that are assessed online and are constantly connected to the internet like mobile, web, and exchange wallets. A commonly used Software Wallet is Exodus.