What is Cryptocurrency, bitcoin mining, Bitcoin… – in simple words


The cryptocurrency industry is actively developing, constantly creating not only new technologies but also new terms to describe them. This article contains the most common concepts and definitions that will help you understand the basics and make cryptocurrency more understandable.

Althin (Altcoin) – any cryptocurrency besides bitcoin, which is considered the ancestor of the whole industry, and for a long time was the only project in the industry.

Asik (ASIC) , an acronym for Application Specific Integrated Circuit. Know that word specializirovannye chips for mining and high-grade equipment based on them. Each asik has a limited list of cryptographic algorithms, which are able to work.

Attack 51% vulnerability cryptocurrency networks, by which a miner or a coordinated group of miners have under its control more than half the computing power of the entire network. This allows them to spend the same funds several times, as well as prevent carrying out foreign transactions.

Bitcoin (Bitcoin) – the first cryptocurrency, which was released in 2009, and today it is the most expensive. In the lexicon of traders, miners also called “cue” and “granddad” (since he is the oldest).

Block – building “brick” for the blockchain, which stores information on the checked and confirmed transactions, for a certain period of time.

The blockchain is a distributed database consisting of a sequential chain of blocks. The blockchain stores all the transactions between the users and created by the miners coins. Each block is calculated based on the previous special algorithm that guarantees the inalterability of the information on previous transactions, if it is already in the blockchain.

A paper wallet data of a wallet, printed on paper. A paper wallet can have a QR code that allows you to scan it with a smart phone or payment terminal.

The volatility of the change in the value of cryptocurrencies over time.

Double spending (Double Spending) – use the same funds to pay different contractors. Such situation is possible during the attack 51%.

A client program for interaction with the network. An example of this is the purse.

Keys – character sets, created by a cryptographic algorithm. They are designed to encrypt and decrypt the transmitted messages using digital signatures and other tasks related to security of funds.

Public keys are those keys that can be passed to other people – in fact, they are addresses to which funds are sent. An analogue of the banking system – account number. However, one cryptocurrency wallet can be a lot of keys.

Private key – a secret combination that you want to keep secret. This key allows you to manage all funds in the wallet. Also it generates a public key using an irreversible cryptographic function. Typically, the private key of the wallet is only one.

Cryptocurrency is a digital form of currency based on cryptographic algorithms. A big part of the cryptocurrency community believes that another important factor is decentralization, which does not allow you to have full control over the system. However, today there are centralized crypto – currency- for example, Ripple.

Purse – program mobile app or web site that allows you to carry out transactions, check balances and perform other tasks laid down by the developers of a particular cryptocurrency. The purses are divided into complete (contain a copy of the blockchain) and light/thin (contain only the most recent blocks).

Mining – the process of creating new coins. Distinguish PoW (Proof-of-Work) and PoS ( Proof-of-Stake) mining, which have their own characteristics.

PoW mining – mining equipment, is able to compute a cryptographic challenge. The more computing power the equipment from the miner, the greater the chance first to solve the current task and the reward in the form of new coins. Most of the modern cryptocurrency Mein on this algorithm.

PoS mining – mining with the node and wallet where you want to have a certain amount of cryptocurrency. Miner, who is charged with a reward, is randomly selected. In some systems (e.g., Dash) each participant has an equal chance at the award, since masternode need a fixed number of coins in the other (for example Stratis) – a chance for a reward depends on how much cryptocurrency is stored in the wallet.

Cloud mining service that offers mining equipment rental for a nominal fee. In return, tenants receive all naminanu cryptocurrency, which can dispose of at their discretion (sell immediately or store in hopes of a price increase).

Mining pool, or simply a pool is a cooperation of miners, who are working together and share the reward. Pools became widespread due to the fact that solitary miners in the modern world can count on the award rather seldom – once in several months or even years, depending on the specific cryptocurrency. Collaboration allows you to get paid regularly in proportion to the paid contribution.

Miner – this term has 3 meanings. First – the person who is engaged in the mining of cryptocurrencies in any of the above methods. Second software for mining. The third is the mining hardware.

Multipoles – wallet that can only be used when there are two or more keys. For example, this can be the account of the company or joint family account. In order to spend the funds from this wallet, it is necessary that the transaction has been signed by several keys. So,if access to the account have 5 people to confirm spending will take up to 5 keys, depending on the specified conditions (can be set the possibility to dispose of funds in the presence of 3 of 5 keys, for example).

Node, or the node – a computer with a full copy of the blockchain, which is connected to the network. Node performs the function of the controller, checking created by miners blocks. The corresponding current sequence of blocks validinputs and attached to the blockchain, and not relevant is rejected.

Masternode – node, which performs the function of a network service in cryptocurrency projects with PoS mining. Owners masternode receive remuneration in the form of part of the coins generated by the network. As a rule, for creation of such nodes is necessary a Deposit of a certain amount of cryptocurrency, which is blocked on the account at the time of masternode.

Premining mining cryptocurrency creators before the official release of the project in the light. This allows you to create an initial pool of coins that will be used to maintain the health of the project and cover the costs of development. However, too large amounts of premining can be a sign of fraud.

Satoshi Nakamoto – the pseudonym of the inventor of bitcoin. As actually name of the person who was behind him, nobody knows. In his honor, was named one of the ten millionth fraction of a bitcoin (Satoshi).

The complexity – parameter of cryptographic tasks that allows you to save embedded developers the emission rates of cryptocurrencies when you increase or decrease the capacity of the equipment of miners. The difficulty is recalculated regularly based on the rate of mining for the previous period.

Smart contract – software code that allows for automatic payment under the contract in compliance with laid down conditions. In the smart contract you can lay any number of conditions, and after its signing by all interested parties, to break them will not work.

A token is a unit of cryptocurrency. In one project can exist as a single token (Bitcoin), and several (TRON).

Transaction – transfer of crypto currencies from one account to another. Transaction is confirmed by network, without a centralized authority that ensures her the unconditional execution.

Farm – connected computer with multiple graphics cards that perform the task of mining cryptocurrency.

Fork (eng. Fork – fork) is a fork of the project on several branches that operate independently from each other. It occurs when changes are made to the blockchain.

Softpark fork, which retains compatibility with previous versions customers.

Hardwork fork that is not backward compatible with the previous version. In case of disagreement of the community with support for hard forks start to operate simultaneously two versions of the cryptocurrency. Original usually is the one that supports most.

Hasrat (hashrate) is the value at which to measure the performance of the equipment for mining. It shows how many hashes per second counts asik-miner, farm, processor or video card.

Hash (hash) is the result of a mathematical calculation in a cryptographic algorithm underlying the specific cryptocurrency.

Cold wallet is the wallet without access to the Internet. The most secure way to store cryptocurrency, which eliminates the break-in by hackers with no physical access to the repository.

Ball, sheyr (Share) – a piece of the task that issued mining-pool all the connected miners.

Shidoin (shitcoin) – shitty coin. Usually referred to as cryptocurrencies, which are similar to fraudulent project or not are based on real innovations that would differentiate them from the rest.

FUD – acronym for “Fear, Uncertainty and Doubt” (Fear, Uncertainty and Doubt). Events and news negative about cryptocurrencies and exchanges, which involves psychological pressure on traders (message banning cryptocurrency exchanges in China and Korea, which never became a reality – the most striking example of FUD).

FOMO (Fear Of Missing Out) syndrome, loss of profits, which often arises in traders, causing them to be afraid to lose profit from the growth of the cryptocurrency.

HODL – typo from “Hold” (keep), which quickly became a term. In 2013, the user with the nickname GameKyuubi, being drunk, created a theme, called “I AM HODLING”, in which he declared that he is a bad trader and continues to hold bitcoins in wallet, despite the fact that their course falls. Other users amused error in the Title, and they quickly picked it up. And soon was invented and decoding for HODL Hold On for Dear Life (hold like you life depends on it).

ICO (Initial Coin Offering) – the initial proposal coins. Popular form to collect the investment on a new cryptocurrency project, which is to sell a certain number of coins issued at the start of the platform, or scheduled for release. In the latter case, investors get a crypto currency some time after depositing the funds.

ISO (Initial Scam Offering) – the initial proposal of the Scam. This term was invented by one of the developers of the Ethereum cryptocurrency, Julien Butela. He noted that the market is ICO, a host of questionable projects, more like a fraud, and decided to notify the community, giving this phenomenon the apt and sarcastic definition.

PPS (Pay Per Share) – payment to the miner in the pool for each of the computed ball.

PPLNS (Pay Per Last N Shares) – payment to the miner in the pool for the last N ball.

PROP (Proportional) – payment to the miner in the pool in proportion to the number calculated ball while pool block.

Leave A Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.