The practice and study of techniques for secure communication in the presence of third parties called adversaries. In the context of cryptocurrency, cryptography validates and secures transaction information.
A governance protocol, characterised by distributing control and authority amongst all participants. Bitcoin is decentralised because many different miners secure the network. As opposed to a centralised network, like banking, where one authority such as the central bank makes decisions.
The amount of effort needed to mine blocks. Different cryptocurrencies implement different methods of adjusting the difficulty. In Bitcoin, the mining difficulty adjusts approximately every two weeks to ensure that changes in the number of miners processing transactions don’t drastically increase the rate new Bitcoin is issued into circulation.
A fork occurs when a group of participants (miners) run a different version of the software (protocol). If the new version is backwards compatible (if it can successfully use data from earlier versions of the blockchain) then it’s a soft fork, and all participants will remain on the same blockchain. If the new version does not work with the existing blockchain then it’s a hard fork and the blockchain will split into two separate chains.
The hash rate measures how powerful a (Bitcoin) miner's machine is. Specifically, it measures the number of times a hash function can be computed per second. A miner's expected profit is directly proportional to the hash rate. Hash rate is also used to measure how much computer power is securing a specific blockchain.
An order placed by specifying both the amount and price at which you wish to trade. Depending on the price specified, the limit order might trade immediately against existing orders in the order book (in that case it is a taker order), or it might itself be inserted into the orderbook waiting for other orders to trade against it (in that case it is a maker order).
An order placed by only specifying the amount you wish to trade. The order executes immediately at the best available rate in the market. In other words, the market order matches with existing orders waiting in the orderbook. A market order is always a taker order.
Miners earn block rewards when solving blocks. Over and above this miners also earn voluntary fees paid by people who wish to send coins. This incentivises miners to include transactions with the highest fees into blocks when the network is congested.
In wallets, multiple signature (or MultiSig) refers to the requirement of multiple authorisations (usually from different people) to successfully send a transaction on a blockchain. For example, you have 5 people authorised to send Bitcoin from a MultiSig wallet but at least 3 of these 5 must approve a transaction before it is authorised.
A device with a copy of the blockchain on it that shares information with other nodes across the network. The node does not necessarily mine cryptocurrency but it does contribute to decentralisation and therefore security of the blockchain. All miners are nodes but not all nodes are miners.
A private key is a digital code, like a password, that is used to authorise cryptocurrency transactions on a blockchain. This code, which should be kept secret, authorises the owner to send coins from a specific wallet.
(person) Satoshi Nakamoto is the person credited with inventing Bitcoin. It’s a pseudonym. The identity of the inventor of Bitcoin is unknown. (unit) A satoshi is also the smallest unit into which a Bitcoin is divisible. 1 Satoshi = 0.00000001 Bitcoin.
SegWit is feature of some blockchain protocols (including Bitcoin and Litecoin), that moves a part of the transaction data out of the main block thereby reducing the effective size of transaction. It therefore allows more transactions to fit into into a single block without having to increase the size of the block.
A software program that is created on a blockchain and identified by an address. Transactions on the blockchain can execute the contract in various ways, for example, by sending some cryptocurrency or data to the contract's address. If executed, a smart contract can, in turn, send more transactions or execute other smart contracts.
This is either a buy order at / above the market price or a sell order at / below the market price. This order executes immediately, without waiting in the order book. Because it matches with maker order and takes them out of the market, it is said to be a ‘taker’ order.
Generally, a token is a cryptocurrency that is not backed by its own blockchain, and instead is provided by functionality of another currency's blockchain. For example, ERC20 tokens provided by smart contracts on the Ethereum blockchain.
Roughly every ten minutes (in Bitcoin, that is - other blockchains block times may vary), a new block is created and added to the blockchain through the mining process. This block verifies and records any new transactions. Since subsequent blocks are linked to previous blocks, each subsequent block acts as a confirmation of its predecessors. For example, if a transaction was included in block 101, and the latest block is 110, the transaction is said to have 10 confirmations. In this way, transactions are said to have been confirmed by the (Bitcoin) network.
Sometimes referred to as “2FA". An extra layer of security, usually in addition to a password. Two-factor typically uses a second device (e.g your mobile phone) to provide an extra once-off code. Both your usual password and this unique code are needed to authorise sign-in access or a transaction.
Software with which you send and receive cryptocurrency. Remember, the coins are stored on the blockchain. The wallet contains the private keys that authorise the owner to send these coins to another wallet.
It’s never too late to get started. Buy, store and learn about Bitcoin and Ethereum now.