A Definitive Glossary Of Blockchain And Cryptocurrency Terms

cryptocurrency glossary

The guarantee that completed cryptocurrency transactions can’t be changed or cancelled. A marketplace for cryptocurrencies where users can buy and sell coins. The ecosystem that consists of decentralized financial applications built on top of blockchain networks.

Stablecoins

This is the protocol followed by each network participant to create a single, shared state of the blockchain. In this context, consensus protocols replace a centralized record keeper or counterparty, enabling trustless, peer-to-peer interactions. Just like fingerprints, digital signatures are unique to a single person or entity. These signatures are mathematically derived from a special pair of numbers called a public/private key pair. A signature on a public key can only be created by the holder of the corresponding private key. Just like a real signature, a digital signature should convince the recipient that message is authentic. A special mathematical function is then applied to this private key in order to derive a second value, a public key.

Long is a trading position in which the trader is expecting the asset or currency price will appreciate and therefore realize a profit by selling at a higher price than it was purchased at. A limit order is a type of order set to purchase or sell an asset at a specified price or better. For buy limit orders, the order will be executed only at the limit price or lower.

View keys are a special derivative of a private key which grant the recipient permission to view a specific transaction from the corresponding public key. Sharding is a classic technique in distributed systems that reduces the load on the nodes participating in a network by eliminating the requirement that each node process every transaction. cryptocurrency glossary With sharding, each node instead processes only a subset of all transactions. This enables a much greater network throughput, though at the cost of some redundancy. If a dishonest validator violates the protocol, their deposit is “slashed” or confiscated and distributed to the remaining honest validators on the network.

This key can be used to decipher encrypted messages created by the public key. When an ETH transaction runs out of gas, it has done so because not enough gas was provided for a transaction to fully process on the blockchain. A miner fee is crypto that is provided to reward miners for enabling transactions to be sent across the network. Mining is the act of confirming transactions on the blockchain using a series of advanced computations. The number of confirmations is based on the number of times that the network has accepted the transaction. The more confirmations, the more likely the transaction is to be legitimate.

Secure Hash Algorithm (sha)

cryptocurrency glossary

In the case of a sell limit orders, the order will be executed only at the limit price or higher. This stipulation allows traders to better control the prices they trade at. Limit orders rest in the order books until such time as they are cancelled or market transacted against. The Lightning Network is a layer 2 payment protocol designed on top cryptocurrency glossary of the Bitcoin blockchain. It allows instantaneous transactions and settlement off-chain with only the final state of participating nodes being recorded onto the layer 1 Bitcoin blockchain. KYC is the government-mandated practice of collecting exchange and broker market participant data so their movements of assets can be tracked and recorded.

Block Chain

DApps operate similarly to regular web applications; however, they retrieve their state and data from a blockchain network. DApps do not require a central web server to function and can communicate to each other over the messaging protocol of the blockchain network to which they’re connected. In some contexts, confirmations refer to the number of nodes that have accepted a transaction, the number of transactions that reference it, or the number of blocks that are above it. In Bitcoin, a transaction has five confirmations when five blocks have been produced after the block containing the transaction. For many consensus protocols, chain reorganizations occur during the confirmation process. Different blockchains have different metrics for what blocks can be considered immutable and therefore confirmed. The generation of blockchain technology that enabled smart contracts and generalized processing on chain.

A Blockchain 1.0 chain that uses ring signatures to provide a level of anonymity beyond public key addresses. Only the parties to a transaction are able to determine the data in cryptocurrency glossary the transaction, including the amount, sender, and recipient. In the blockchain industry, mining is the process of creating a new block and submitting it to the blockchain.

In this case, the blockchain splits into two or more branches at the last point of agreement, and new valid blocks accepted on one fork will be rejected by the other. Proof-of-work puzzles are based on hash functions, and are at the foundation of Bitcoin’s security model.

A public key can be used to decrypt a message that is symmetrically encrypted using the corresponding private key. A consensus mechanism in which the ability to produce a block is proportional to the amount of the blockchain’s native cryptocurrency an actor holds. The more cryptocurrency the actor holds, the more likely it becomes that he or she will be assigned as a block producer. A participant in a blockchain network that is connected to peers and is capable of validating and propagating new blocks.

Stable tokens reduce the risk associated with the traditional market volatility of cryptocurrencies. A cryptographic equation or set of parameters that corresponds to a paired private key.

  • , the unique codes that are essential to cryptocurrency transactions.
  • Therefore, the further down the chain a transaction is, the more secure and correct its details are.
  • In the case of cryptocurrency creation , the publishing node includes a transaction sending the newly created cryptocurrency to one or more blockchain network users.
  • A digital asset/credit/unit within the system, which is cryptographically sent from one blockchain network user to another.
  • With an asymmetric key algorithm, both parties have access to the public key, but only the person with the private key can decode the encryption; this assures that only they can receive the funds.
  • These assets are transferred from one user to another by using digital signatures with asymmetric-key pairs.

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A master node is defined as a governing hub in some cryptocurrency networks. It requires an initial collateral of tokens (or a “stake”) to operate. A node is defined as any computing device (computer, phone, etc.) that is maintaining a network. A master node has a managing role and special jobs that regular nodes don’t have. A cryptocurrency glossary market order is a request made by an investor or trader through a broker or on an exchange to buy or sell an asset immediately at the best available current price. Each market maker competes for customer order flow by displaying buy and sell quotations for a guaranteed number of shares, or coins in the case of cryptocurrency.

cryptocurrency glossary

Since the “work” is repeated hash functions, the combined calculations of every miner on the network to solve those functions is called the hash rate. In general, a higher network hash rate corresponds to a greater level of security for a given blockchain. Because blocks are made up of cryptographic digests, they cannot be changed after the fact without detection.

The time period between the moment when a transaction is submitted to the network and the moment when it’s recorded into a confirmed block. An approximate number of cryptocurrency coins circulating in the market. Any incoming transactions are broadly classified as a buy if the user directly cryptocurrency glossary invests US dollars to acquire the cryptocurrency. Coins issued by the blockchain protocol to cryptocurrency miners for each successfully mined and validated block. A term referring to the lowest price a seller is ready to accept on their sell order when trading an asset on an exchange.

Hot Wallet

Cost basis for payment received will be based on the Fair Market Price of the asset at the time payment is received. ZenLedger accepts payment reception entries through its manual entry interface. A digital list of outstanding buy and sell orders for a specific asset on a crypto exchange.

Either all or some of a currency is sold at a certain time to raise money for development. 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. A transaction is confirmed when it has been verified by miners on the blockchain. cryptocurrency glossary It is the successful act of hashing a transaction and adding it to the blockchain. Traders who are fooled by the bull trap will often buy the asset at the inflated price, in the belief that the upward trend will continue. Blocks are packages of data that carry permanently recorded data on a blockchain network.

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