Cryptocurrency dictionary
Cryptocurrency mining, blockchain and more. What is the meaning of the most commonly used terminology in the cryptocurrency market? Familiarize yourself with the most important concepts.
Bitcoin
Bitcoin was created in 2009 and is now one of the most popular cryptocurrencies in the world. It is based on blockchain technology and is exchanged directly between users. Transactions are transparent but the parties remain anonymous.
Blockchain
The technology that most cryptocurrencies are based on. Each record, or block, contains a register of transactions that are secured and combined using cryptographic techniques. In practice, this means that there is no single storage location and each network user has a complete record of transactions.
Ethereum
Ethereum is one of the most popular cryptocurrencies, created by the programmer and cryptocurrency researcher Vitalik Buterin. Similar to Bitcoin, it is based on blockchain technology, however, it can be described as having a more complex form. Its characteristic feature is the ability to create programs (Smart Contract).
ICO (Initial Coin Offering)
A modern, unregulated form of social financing where capital is accumulated by means of cryptocurrencies. For this purpose, new tokens are issued. The proceeds from their sale are used to implement the objectives set out in the business plan, which is usually presented prior to the commencement of the ICO.
Mining
The process of adding new entries to a public register of transactions (blockchain). It requires specific hardware and cost-efficient calculations to keep the number of blocks found and added stable. Mined cryptocurrencies can be sold on the market.
Cryptocurrency
A decentralized virtual currency which is not controlled by any of the central banks. It is based on cryptography. Crypto transactions take place directly between parties, most commonly using blockchain technology.
Ripple
A cryptocurrency that has predetermined reserves. There are 100 billion units in the market marked with the XRP abbreviation. This virtual currency is distributed by the company Ripple, which intends to introduce it to the market through financial institutions such as banks or traditional payment systems.
Smart Contract
Algorithms in the Ethereum system. They operate with blockchain technology. They are used to cryptographically link the participants in a transaction. Decentralized programs in exchange for an Ethereum currency can return the tokens to the users under programmed conditions, e.g. when investing in new projects under ICO.
Token
A token in the Ethereum system is used to compensate for operations performed by the algorithms. This can be used in projects that aim to acquire new capital. In exchange for the deposit of cryptocurrencies for a specific purpose, the investor recieves a certain number of tokens as a reward for the invested funds.