Definitions of the most used terms.
- 51% Attack
- Atomic Swap
- Bear Run
- Bull Run
- Coin Swap
- Distributed Ledger Technology (DLT)
- Full Node
- Hard Fork
- Initial Coin Offering (ICO)
- Light Node
- Private Key
- Proof of Stake (PoS)
- Proof of Work (PoW)
- Public Key
- Pump and Dump
- Soft Fork
Does a miner or a group of miners have 51% of the computing power for mining a coin, he can take over the network und rewrite the blockchain as he wants. The miner can generate coins without the knowledge of anybody or stop transactions from other persons. A successful 51% Attack damages the cryptocurrency a lot and spreads FUD.
Altcoins (= alternative coins) are alternative cryptocurrencies compared to Bitcoin (BTC) which was the first cryptocurrency. Altcoins can differ from Bitcoin in a range of ways. They differ from Bitcoin in every possible way, for examble in mining mechanisms, coin-distribution methods, transaction speed or fees or the ability to create decentralized applications. They proclaim themselves as a better cryptocurrency. Today there are thousands of altcoins...
An atomic swap is an additional function in the lightning network. The atomic swap enables a direct exchange between cryptocurrencies on two different blockchains. There is no need for a centralized intermediary like an exchange. Atomic swaps are based on Hash Time Lock Contracts (HTLC), which guarantee with the help of the blockchain protocoll the safe change without scam.
Period of time, in which the prices on a financial market fall.
A Blockchain is a decentralized database, which consists of a continuous extendable list of transaction data sets. The data sets are called “blocks“ and contain transaction data, a timestamp and a cryptographic hash. After completing one block, a new block will be added to the blockchain. The blocks are linked and secured with a cryptographic hash of the previous block. A confirmed transaction cannot be changed retroactive without changing all follwing blocks. A change of a block requires the accordance of the network majority. The effort for this is very high. The verification of a block is performed by a fullnode outside the blockchain network with a specific algorithm. The most common algorithms are the Proof of Work (PoW) and the Proof of Stake (PoS). The Blockchain was developed by Satoshi Nakamoto with the implementation of the cryptocurrency bitcoin.
Period of time, in which the prices on a financial market rises.
A Coin is digital cash used for payments. They can descend from the Bitcoin blockchain or base on their own blockchain. ERC20-Tokens are treated as coins too.
Coin Swaps are needed for cryptocurrencies for a change from an old to a new blockchain with a pre-determined rate. The Coins from the old Blockhain will be unavailable on the new one.
Distributed Ledger Technology (DLT)
The Distributed Ledger Technology decribes a specific technology for the data processing and storage. A DLT is a decentralized data bank, that enables the users in the network the permission to read and write all the time. There is no central data store or administration functionality. Examples for DLT are the the Blockchain, the tangle or the Block lattice (NANO).
Exchanges are businesses or companies allowing the trading of cryptocurrencies and sometimes the trading of Fiat money with crypto. There are two types of exchanges: centralized and decentralized exchanges.
FOMO Is the short team for "fear of missing out". It can lead you to buy a coin at the top or not to set limits for profit.
FUD is the short term for "Fear, Uncertainty and Doubt", which is often caused by social media. It can lead to a price drop of a coin based on bad news. Fake News could also cause a price drop.
A Full Node is a programm that verificates transactions and blocks and increases the safety for them. All full nodes are an important for maintaining the decentralization of a peer-to-peer network. Fullnodes are also checking all transactions against the consensus rules. If a transaction is not confirm with the consensus rules, its get rejected. Full Nodes are limiting the power of the Miners, so they can´t change or damage the blockchain.
A Hard Fork is a radical change of the Blockchain protocol. All previous transactions / blocks will be invalid. All users, nodes and miners have to update to the new protocol. It is a permament change to a new Blockchain. It can lead to a new cryptocurrency, because a part of the users wants to work with the old blockchain further.
Initial Coin Offering (ICO)
Initial Coin Offering is a way to place a cryptocurrency on the market and a kind of crowdfunding. It works like a Initial Public Offering (IPO), just for cryptos. It is used for capital intake without the compliance with regulations. With an ICO shares of a cryptocurrency are sold to investors in exchange of other currencies.
A Light Node is the most common used Node in a network and is the lightweight variant of a Full Node. You only have to download parts, the headers of the blockchain to validate the transactions, which means the storage requirements are not so high. Light Nodes are using the Simрlifiеd рауmеnt vеrifiсаtiоn (SPV) and need a Full Node as a host for the validation of a transaction.
A Masternode is another way to create a passive income. A Masternode is a software setting on a server on a decentralized network. They are completing functions, what other notes aren't able to do. Functions like instant or private transactions are possible. To run a masternode you have to own a determined number of coins.
Mining is a process, where computing power is used for processing transcations, safing and synchronizing all users in a network. You are getting rewards for usefull services. The paying-out depends on the delivered computing capacity. All transcations in one block become encoded. The function of a miner is to decode the block with computing power. Therefore the miner uses a mathematic formular. After the successfull encoding of a block a hash for the encoded block is generated and the miner gets rewards with a determined amount of the cryptocurrency.
Orders are placed to buy or sell a cryptocurrencies. There are different kinds of orders: the Limit Order, the Market Order and the Stop Limit Order.
A Paperwallet is one of the most safety ways to safe your cryptocurrencies offline. The creation of a Paperwallet is free of cost. The public and the private key and a QR-Code is being printed on a piece of paper. Now you can store your paperwallet on a safe location and nobody has access to it. To transfer your cryptos you only have to scan the QR-Code. A paperwallet is used for long term hold.
A private key ist a access to a cryptocurrency stored on a address. With the private key you are able to send the cryptos to another address. The public key should nobody know except yourself.
Proof of Stake (PoS)
Proof of Stake is a way to validate the transactions and generate new cryptos in a blockchain network. Stakes of a cryptocurrency are getting encoded. The user validates with the stake transcations on the blockchain and takes part to maintain the safety in the network. For that the user is getting rewarded with a specific percentage of the currency, which is staking. PoS is a less expensive way for the validation of transactions.
Proof of Work (PoW)
Proof of Work is a way to validate the transactions in a blockchain network. Everyone, who solves a kryptographic task and therefore validates the transactions in the network, is getting rewarded with a specific amount of a cryptocurrency. This process is also known as mining. The solving of the task takes a lot of time and electric energy. So it is very expensive.
A public key is a public Address everybody can send you cryptocurrency to. For each cryptocurrency you need a seperate public key.
Pump and Dump
Pump and Dump is a targeted market manipulation to influence the price of a cryptocurrency. It can lead to a price increase caused by well planned marketing (fake news, large number of social media posts ...). Investors or traders don't want to miss out the price increase and buy the currency. FOMO is happening the price raises. This is the point when the initiators sell or dump the overvalued currency and take out their profits out of the initiated market manipulation. After that the price corrects to the normal value or even below.
A Sidechain is a additional blockchain beside the original one to safe disk space and is created for a specific purpose or application. All transactions for this purpose or application will be proceeded in the Sidechain. Just the transactions, which are very important will be added to the original Blockhain htrough an interface. The Sidechain can have additional functionalities, which the orginal Blockchain is not able to do.
A snapshot deletes the data and the history of the transactions from the Ledger. There will be only left the amount of the cryptocurrency on each address. It is useful to safe memory space.
A Soft Fork is a change of the software protocol of the blockchain. All blocks, who were not created with the change of the protocoll, are made invalid. A Soft Fork is backward compatible. So they can also be used with an older software. There is only a majority of miners needed upgrading to enforce the new rules.
The tangle is another distributed ledger technology and therefore an alternative for the blockchain technology. The tangle is also a data set for transactions as the blockchain. Instead of using a Blockchain Tangle is using a directed acyclic graph (DAG). It enables scalability without transaction fees and the parallel verification of transactions. The verification is performed in the tangle network and needs the confirmation of two other transcations. That means, the higher the amount of transactions in the network is, the faster und more secure a transaction is completed. The Tangle becomes an independent and decentralized network. The tangle was developed by the IOTA Foundation.
A Token offers functionality over digital cash. Tokens are treated as shares of a project and can be relatively easily created on the existing blockhcain.
A Wallet is a digital pocket for your cryptocurrencies. You can use it to store, send and receive cryptos. The wallet saves the public and the private key, which is the access to your cryptos.
A Whale is a term for a person, which has a big amount of money or cryptocrrencies. A Whale has the power to influence the market in his wanted direction.