CoinSheet Glossary

THE TERMS YOU NEED TO KNOW


A

Address – Cryptocurrency addresses are used to send or receive transactions on the network. They are hexadecimal strings which represent the unique ID of a wallet on the block chain. It is analogous to an account number.

ATH – All time high, the highest the price has ever been.

ASIC - An acronym for "Application Specific Integrated Circuit". ASICs are silicon chips specifically designed to do a single task. In the case of bitcoin, they are designed to process SHA-256 hashing problems to mine new bitcoins.


B

BIP - An acronym for “Bitcoin Improvement Proposals” which can be submitted by anyone who wants to improve the Bitcoin network.

Bear Market – A prolonged downward trend of a traded commodity. This is the opposite of a bull market.

Bull Market – A prolonged upward trend of a traded commodity. This is the opposite of a bear market.

Blockchain - A digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly. The blockchain serves as a historical record of all transactions that ever occurred, from the genesis block to the latest block, hence the name blockchain.

Blocks - Blocks are packages of data that carry permanently recorded data on the blockchain network.


C

Central Ledger - A ledger maintained by a central agency.

Cold Storage – Storing crypto away from the internet. Meaning on a paper wallet, in a hardware wallet, or on an air-gapped machine. This would be the opposite of a hot wallet or hosted wallet, which is connected to the web for day-to-day transactions. The purpose of using cold storage is to minimize the chances of your cryptocurrency being stolen from a malicious hacker and is commonly used for larger sums of cryptocurrency.

Confirmation – A transaction is confirmed when it has been verified by miners on the blockchain. It is the successful act of hashing a transaction and adding it to the blockchain.

Consensus - Consensus is achieved when all participants of the network agree on the validity of the transactions, ensuring that the ledgers are exact copies of each other.

Crowdsale/ICO/Token Sale - ICO stands for Initial Coin Offering. They are the cryptocurrency equivalent of an IPO. Either all or some of a currency is sold at a certain time to raise money for development. Other rules and things apply and it varies from ICO to ICO. Be wary of ICOs, many ICOs have little to no work done yet and don’t deserve your money - please do a proper assessment before buying in to an ICO.


D

DAO - Decentralised Autonomous Organizations can be thought of as corporations that run without any human intervention and surrender all forms of control to an incorruptible set of business rules.

Dapp - A decentralised application (Dapp) is an application that is open source, operates autonomously, has its data stored on a blockchain, incentivised in the form of cryptographic tokens and operates on a protocol that shows proof of value.


E

Escrow Contract - A transaction in which a spender and receiver place funds in a 2-of-2 (or other m-of-n) multisig output so that neither can spend the funds until they’re both satisfied with some external outcome.

Exchange – Where you buy and sell your traded commodity. Examples: GDAX, Poloniex, Kraken, etc.

 


F

Fiat - Fiat money is currency that a government has declared to be legal tender, but it is not backed by a physical commodity.

The Flippening - The point at which Ethereum’s market cap, and overall block chain dominance, overtakes Bitcoin’s.

FOMO - Fear of Missing Out. This is a term used to describe the act of purchasing a commodity while it is on a bull run. It often carries a negative connotation, in that FOMO may cause the price to be artificially high and indicate that a correction is coming.

FUD - Fear, Uncertainty and Doubt. This term is used to describe the malicious spread of negativity. This is often done with the goal of causing inexperienced members to sell, or possibly cause a temporary dip in price.

Fork - Forks create an alternate version of the blockchain, leaving two blockchains to run simultaneously on different parts of the network.


G

Genesis Block - The very first block in a block chain


H

Halving - Bitcoins have a finite supply, which makes them scarce. The total amount that will ever be issued is 21 million. The number of Bitcoins generated per block is decreased 50% every four years. This is called “halving.” The final halving will take place in the year 2140.

Hard Fork - A type of fork that renders previously invalid transactions valid, and vice versa. This type of fork requires all nodes and users to upgrade to the latest version of the protocol software.

Hardware Wallet – a cryptographically secure piece of hardware designed to keep wallet information secure. E.g. Trezor wallet, ledger nano, etc.

Hashrate - The number of hashes that can be performed by a bitcoin miner in a given period of time (usually a second)

Hodl – The act of buying and holding. A play on the word hold.

Hot Wallet - A wallet that has an active connection to the internet. These are used for “everyday” transactions and should never hold large amounts of cryptocurency, since their connectivity reduces their security.


I

ICO – Initial Coin/Token Offering. When a new coin is being sold at a base price before the launch of the service it is associated with. ICOs are frequently used for developers of a new cryptocurrency to raise capital.


J


K


L


M

Mining - It is the act of validating blockchain transactions. Miners contribute processing power to a blockchain network to help determine the next block. The necessity of validation warrants an incentive for the miners, usually in the form of coins.

Multi-signature -  Multi-signature (multisig) addresses allow multiple parties to require more than one key to authorize a transaction. The needed number of signatures is agreed at the creation of the address. Multi signature addresses have a much greater resistance to theft.


N

Node - A copy of the ledger operated by a participant of the blockchain network.


O


P

Paper Wallet – A printed document containing the information linked to your wallet. I.e. your private key, public key, etc.

Private Key - This is like the key to your home. It can unlock your wallet and everything inside it for whatever transaction you (or whoever has it) choose. It is not advisable to share this with ANYONE. Is a string of data that allows you to access the tokens in a specific wallet. They act as passwords that are kept hidden from anyone but the owner of the address.

Proof of Work (PoW) - Is the system by which most cryptocurrencies, including Bitcoin, manage their blockchains. Through a process known as mining, individuals contribute processing power to solve difficult, arbitrary calculations as well as to validate calculations to determine what the next block in the blockchain should be. Whenever a new block is added to the chain, whoever was lucky enough to be the person that created that block is rewarded with some amount of currency. The difficulty of these calculations can be determined by the developers behind the currency to control the rate at which new coins are dispersed into the economy. The reason for the difficult calculations is to secure the network by making it difficult for an attacker to start adding invalid blocks to the universally accepted chain - in this system, the attacker would need to generate over 50% of the processing power in the entire network to have their malicious validation be accepted. A higher-level way to think about this is that processing power is what creates scarcity and is proportional to the odds of you getting the next reward. This has the unfortunate side-effect of giving a disproportionate amount of power, in regards to both reward and blockchain validation, to miners that control a large portion of the mining hashrate.

Proof of Stake (PoS, *read proof of work first) - Is a system to manage blockchains where the rewards distributed are proportional to the “stake” that validators have in the economy as opposed to the work you can do. Your stake increases based on the amount of currency in your wallet and how long it’s been there. The greater your stake, the higher the odds are that you will receive a reward for the creation of the new block on the chain. In contrast to PoW where scarcity comes from processing power, in PoS, the scarcity comes from the currency itself. As of July 2017, Ethereum is using a Proof of Work system.

Public Key - Your wallet address. This is the key you will share with people in order to have cryptocurrency sent to you or requested from you. They act as email addresses that can be published anywhere, unlike private keys.

Pump and Dump - A form of market manipulation usually performed on small market cap stocks (or cryptocurrencies). This occurs when traders artificially inflate the assets price and then exit their positions, causing a price collapse.


Q


R


S

Satoshi - The smallest unit of bitcoin possible. There are 100 million satoshis in a single bitcoin.

Satoshi Nakamoto - The mysterious creator of Bitcoin. Known to possess over a million bitcoins, his/her/their/its identity is still unknown.

Soft Fork - A soft fork differs from a hard fork in that only previously valid transactions are made invalid. Since old nodes recognize the new blocks as valid, a soft fork is essentially backward-compatible. This type of fork requires most miners upgrading in order to enforce, while a hard fork requires all nodes to agree on the new version.

Smart Contract - Smart contracts encode business rules in a programmable language onto the blockchain and are enforced by the participants of the network.

Staking - In a Proof of Stake system, this generally means leaving your coins in your wallet to increase their stake in an attempt to net rewards from block creation.


T

TCP/IP - Acronyms stand for “Transmission Control Protocol”/“Internet Protocol” and is the connection protocol used by the internet

Technical Analysis (TA) - Financial analysis that uses patterns in market data to identify trends and make predictions. It is the use of past price information to identify trends and areas of supply & demand.

Transaction Fee - All cryptocurrency transactions involve a small transaction fee. These transaction fees add up to account for the block reward that a miner receives when he successfully processes a block.

Turing Complete - Turing complete refers to the ability of a machine to perform calculations that any other programmable computer is capable of.


U


V

Volatility - This refers to how often the price of a currency is changing. The opposite of volatile is stable.


W

Wallet - A file that houses private keys. It usually contains a software client which allows access to view and create transactions on a specific blockchain that the wallet is designed for.

Whales - Traders with massive amounts of the currency being traded. They are able to sell and buy in quantities large enough to manipulate the market price in the short term.


X


Y


Z


I will continue to regularly update this glossary with new terms.