Crypto ABC’s

It’s been a while since I’ve posted on the blog, as I’ve used social media (IG and Twitter) for the past year as my primary means of sharing info. The markets are changing quickly and so now its time to get back in the blog, and see where it goes!

The reason that cryptocurrencies are called cryptocurrencies is that they all have the commonality of being a digital asset that uses a decentralized ledger secured by public-key cryptography. Cryptocurrency is a digital unit of value that belongs to a private key. Users send and receive funds through public addresses, which are supported by cryptocurrency wallets (interfaces that allow for easy interaction with a blockchain) system for generating public addresses and private keys.

Most of the questions I see lately revolve around Crypto. With the help of a few friends at Money Map Press and Nick Black, I have assembled this basic list of terms and definitions to familiarize yourself with! Good luck! Come back soon for more!

Address: A long string of letters and numbers (in the case of Bitcoin, 26 to 35 characters) that represents a destination for one or more payments. The network ensures all addresses are unique. Payments received to an address are visible in the public ledger.

Airdrop: Cryptocurrency distributed for free based on some particular criteria. For example, to receive some airdrops, you had to prove you owned Bitcoin; how much you received was based on how much Bitcoin you owned. In other cases, airdropped coins are “earned” through tasks such as sharing news or downloading an app. Crypto projects often use airdrops to generate interest in a new coin.

Altcoin: Any cryptocurrency that is not Bitcoin. That includes such top cryptocurrencies as Ethereum (ETH) and Cardano (ADA).

Atomic swap: A trade of one cryptocurrency for another made outside of an exchange and without the use of a trusted third party. Instead, it uses the “smart contract” feature built into most cryptos to ensure each party receives their coins (and can’t cheat their counterparty). The Lightning Network is a platform that supports atomic swaps.

Automated Market Maker (AMM): A system that provides liquidity for automatic crypto trading without the need for an order book or third party. Used by decentralized exchanges like Uniswap.

Bitcoin (BTC): The cryptocurrency that started it all launched in January 2009. Trades under the ticker BTC.

Bitcoin/Crypto ATM: A physical machine similar to a bank ATM where a person can exchange fiat money, such as U.S. dollars, for Bitcoin and sometimes other cryptocurrencies. Coin ATM Radar tracks the locations of crypto ATMs worldwide.

Bitcoin Cash: Created in 2017 by a hard fork of the original Bitcoin protocol. The main difference from the original Bitcoin is that it allows for larger-sized blocks in its blockchain (and thus for more transactions). Trades under the BCH ticker.

Bitcoin Core: The name for the full node software that runs the Bitcoin network. Has also become a nickname for the original Bitcoin in the wake of multiple hard forks that have created multiple versions of Bitcoin, including Bitcoin Cash (BCH), Bitcoin Gold (BTG), Bitcoin Diamond (BCD), and Bitcoin SV (BSV). A website run by Roger Ver that purports Bitcoin Cash is “the real Bitcoin” and sells both BCH and BTC. An open-source website created by Satoshi Nakamoto and maintained by the Bitcoin developers. It’s dedicated to raising awareness about Bitcoin as well as providing resources and information to general users.

Bitcoin ETF: A Bitcoin exchange-traded fund (ETF). A Bitcoin ETF makes it easier for both retail and institutional investors to invest in Bitcoin by providing a way to gain exposure to the asset without holding it. The first Bitcoin ETF – the ProShares Bitcoin Strategy Fund (NYSE: BITO) – launched in October 2021 and made for the second-most heavily traded debut ETF in history.

Block height: In a blockchain, as the blocks are created sequentially, each block is assigned a number according to its place in the chain. Events like forks can be scheduled to occur at a particular block height, such as 478,559.

Block reward: The amount of cryptocurrency a miner receives for “solving” a block. Often, as is the case with Bitcoin, the rewards are halved at regular intervals (“halving”).

Block size controversy: A fight within the Bitcoin community that raged from 2015 to 2017. One side wished to keep the size of the blocks at 1 megabyte; the other felt that the block size needed to increase to accommodate scaling of the network. The fight ended with the fork of Bitcoin Cash, giving each side the version of Bitcoin it desired. Later, the Bitcoin Cash group had its own split over further increases to the block size, creating Bitcoin SV (Satoshi’s Vision) in November 2018.

Blockchain: The public digital ledger of all of a cryptocurrency’s transactions, made up of individual blocks of data created either through mining or another process. It secures the transactions on the network and prevents double spending.

Blockchain-as-a-service: A cloud-based service, based on blockchain technology, offered by a company, usually to other companies. Both IBM and Microsoft have blockchain-as-a-service products.

Buterin, Vitalik: The Russian-Canadian computer programmer who created Ethereum. He remains one of the most prominent figures in the cryptocurrency community.

Central Bank Digital Currency (CBDC): A digital currency created and maintained by a central bank such as the U.S. Federal Reserve or the People’s Bank of China. These blockchain-based digital tokens would represent the fiat currency of that central bank. Most of the world’s central banks are studying CBDCs but none has yet launched one. Sometimes referred to as a Digital Fiat Currency (DFC). A website that tracks the value by market cap of all cryptocurrencies and tokens. Includes basic info on each coin, price charts, and the markets where it trades.

Coinbase: A major United States-based cryptocurrency exchange, largely considered the easiest way for beginners to buy crypto. It is a publicly traded company under the stock ticker COIN. (There are MANY exchanges to choose from and this is not an endorsement of Coinbase)

Cloud mining: The purchase or rental of a set amount of crypto mining power operated by another (typically a commercial enterprise such as Genesis Mining). In this way, a person can mine crypto without owning or operating any mining equipment themselves.

Cold storage/wallet: A cryptocurrency wallet not connected to the Internet. Includes hardware wallets and paper wallets. Recommended as a more secure way to store crypto.

Consensus: On a crypto network, a condition in which all the participants (nodes and miners) agree on the order of the blocks in the blockchain as well as the veracity of the transactions contained in those blocks. This the “normal” state of a properly functioning crypto network.

Cryptocurrency: A digital medium of exchange secured by strong cryptography.