Cryptocurrency Dictionary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Address

The address is the cryptographic character string which is publicly visible on transactions either as sender or as recipient. A sender enters the recipient’s address to send a certain amount to him. The word address is another word for ‘public key’.

Airdrop

Conducting a distribution campaign whereby units of a digital currency are given out to a high number of users. Receiving the Airdrop can be tied to various requirements, such as subscription to a newsletter, tweeting a tweet or already holding a particular digital currency.

Warning: Sometimes airdrops are used by malicious individuals to gain access to users’ private information or their private keys. The disclosure of once private key should be absolutely avoided.

Altcoin

An Altcoin (alternative coin) is a cryptocurrency that is not Bitcoin. In total there are more than 1500 Altcoins, most of which depend on their market capitalization for their popularity and importance. Examples of popular Altcoins are Ethereum, EOS, Litecoin, Cardano or Dogecoin.

Some Altcoins are not designed as monetary cryptocurrencies in direct competition to Bitcoin, as it is the case with Dash. Many Altcoins have instead focused on certain fields of application, such as IOTA (Internet of Things), Steemit (Social Media) or Ethereum (Smart Contracts).

AML (Anti-Money Laundering)

AML regulations are laws that financial institutions and their customers have to comply with in order to stop money laundering.

Arbitrage

Arbitrage trading means making a profit out of the price differences between two or more exchanges by purchasing a commodity at a low price at one exchange and selling it for a higher price at the other. This kind of trading is important in order to balance different markets.

ASIC

The term ASIC stands for application-specific integrated circuit and refers to devices created for a single purpose, thereby significantly reducing their manufacturing costs. An ASIC in the cryptocurrency field therefore refers to a mining device capable of mining only currencies with the same algorithm (SHA256, Scrypt, X11, etc…).

ATH (All Time High):

The all-time high is the point in time at which buyers were willing to pay the (until then) maximum price for a single unit of a cryptocurrency.

Bitcoin

Bitcoin was the first cryptocurrency. While the concept was based on older ideas, the anonymous developer(s) Satoshi Nakamoto is considered to be the inventor of Bitcoin and blockchain technology. His Bitcoin white paper appeared in 2008 on a Cypherpunk email list and the first block (the Genesis block) of the Bitcoin blockchain was mined on January 3, 2009.

In terms of market capitalization, Bitcoin is still the biggest of all cryptocurrencies and serves as the basis of many other cryptocurrencies. Even today, Dash is still based on the Bitcoin source code, although it pursues a different scaling approach. The blocks of the Bitcoin blockchain are about 10 minutes apart from each other and have a size of 1 MB, while the blocks of Dash have a size of 2 MB and are only 2.5 minutes apart.

Bitcoin Cash

The Bitcoin core developers have decided to not increase the size of the Bitcoin blocks because they have adopted an off-chain scaling concept called Lightning Network. Because some developers and community members do not agree with the concept, they have developed a separate code base that tries to allow scaling by increasing the block size.

The Bitcoin Cash blocks can reach a size of up to 32 MB, however, since the blockchain is used less than the Bitcoin blockchain, very few blocks are larger than 1 MB. Well-known Bitcoin Cash proponents are the investor Roger Ver (aka Bitcoin Jesus) and Craig Wright (who claims to be Satoshi Nakamoto).

Blockchain

A blockchain is a public ledger that records cryptocurrency transactions. It provides a list of all confirmed transactions in a chronological order. Individual elements of the blockchain are called blocks and the transactions are written into them. The new blocks are added to the chain in regular intervals so that the new transactions are recorded.

Cold Wallet / Cold Storage

A wallet that stores cryptocurrencies in a very secure way as it is not linked to the web. Most cryptocurrency balances that are traded on a exchanges are held in cold wallets until they need to be paid out.

Confirmation

A “confirmation” occurs whenever a transaction has to be entered into a block, because the transaction can no longer be undone. Every additional block added to the blockchain confirms the transaction one more time, because it confirms all blocks written before.

DAO (Dezentrale Autonome Organisation)

The DAO is the organizational structure of the Dash network. A cryptocurrency that is organized as a DAO differs from other cryptocurrencies because it is self-funding and can decide very quickly because community members can vote on its future development. Dash has the longest history as a DAO and is also the biggest one.

Day Trading

Day traders are defined as people who earn money through buying and selling (crypto)currencies (usually on the same day). The high volatility of the cryptocurrency market is beneficial to day traders, but they also take high risks because the price can change at any time.

Exchange

In the world of cryptocurrencies, an exchange is a trading platform on which cryptocurrencies are traded against each other or against fiat money (USD, EUR…). It is important to point out that the seller or buyer creates his own bid and depends on someone else being willing to accept it. Exchanges offer their users charts and tables with which they can observe the current market trend. This is particularly important for traders earning money by trading cryptocurrencies against each other in accordance with price fluctuations.

Fiatcurrency

National currencies are called fiat currencies because they are only created at the will of a centralized organization and that, in contrast to gold and cryptocurrencies, have no intrinsic value. From the Latin fiat = it will, fiat money means “let there be money” which sounds like a reference to the biblical story of creation.

Genesis Block

A Genesis block is the very first block of a blockchain. Therefore, each cryptocurrency has its unique Genesis block, that contains no transaction other than the first block reward payment. Bitcoin was the first cryptocurrency, so Bitcoin’s Genesis Block is the first block ever mined.

Hardware Wallet

Hardware wallets are small devices that can be used to securely store cryptocurrencies. It connects to the computer via the USB port and you can only perform transactions if you confirm them by pushing a key on the hardware wallet.

Hashrate

The hashrate represents the number of mathematical calculations performed every second that gives the first person to find the correct result the permission to write the next block. Which number of calculations is necessary for finding the exact result depends on the difficulty. When the hashrate increases, this means that the network is more secure. But since cryptocurrencies are using different algorithms with different pieces of hardware, it is only possible to compare the hashrates of two cryptocurrencies if the two are using the same algorithm (e.g. Bitcoin and Bitcoin Cash). At the moment, Bitcoin and Dash have a hashrate of 52 Exahash (= 52,000,000,000,000,000,000,000,000 hash) and 2 Petahash (= 2,000,000,000,000,000), but Bitcoin uses the Sha256 algorithm, while Dash uses the X11 algorithm.

HODL

The term “Hodl” refers to the prolonged holding of cryptocurrencies, which contrasts with short-term trading. The word “Hodl” is no abbreviation, but indeed the misspelling of the word “Hold”.

InstantSend

The function InstantSend is a unique feature of Dash, which allows to confirm transactions after 1.3 seconds. It is the answer to the so-called DoubleSpend attack, whereby a transaction can be “spent” two times as long as the transaction has not yet been entered into a block (one of the transactions would not be included in the block because it is invalid). Masternodes play a central role for this feature, because they ensure that a transacted balance cannot be used again.

KYC (Know Your Customer)

KYC directives are laws that financial institutions must comply with in order to have accurate information about their customers at their disposal.

Masternodes

Masternodes are an innovation of Dash, although many other cryptocurrencies have already incorporated them. Generally speaking, nodes are the connected storages of the blockchain, while Masternodes also provide other functions. Masternodes are the backbone of PrivateSend, InstantSend and the Decentralized Autonomous Organization (DAO). Because Masternodes must be a reliable service, they are rewarded for providing their services. They also need to have an interest in the success of Dash. Therefore, the owner of a Masterode must hold a minimum of 1000 Dash.

PrivateSend

The function PrivateSend is a unique feature of Dash, which allows the origin of a transaction to be obscured. Therefore, the balance of a user is split into denominations (10, 1, 0.1, 0.01) each of which is mixed several times with the balances of several other users. You can repeat this process up to 8 times and it represents a simple and inexpensive form of anonymization which has never been cracked although it is a theoretically simple solution.