Crypto: Short for cryptocurrency, a type of digital asset
that is secured by cryptography and operates on a decentralized network of
computers. Crypto can also refer to the field of cryptography or the study of
encryption techniques.
Blockchain: A system of storing and transferring data in a
distributed ledger that is maintained by a network of nodes. Blockchain allows
for secure and transparent transactions without the need for intermediaries or
central authorities.
Coin: A unit of value that represents a cryptocurrency.
Coins are usually native to their own blockchain, such as Bitcoin or Ethereum.
Coins can also be used to pay for network fees or participate in network
governance.
Token: A type of digital asset that is issued on top of an
existing blockchain, usually through a smart contract. Tokens can represent
various things, such as utility, security, equity, or collectibles. Tokens can
also follow certain standards, such as ERC-20 or ERC-721, to ensure
compatibility and interoperability.
Wallet: A software or hardware device that allows users to
store, send, and receive cryptocurrencies. Wallets can be either custodial or
non-custodial, depending on whether the user has full control over their
private keys or not. Wallets can also be either hot or cold, depending on
whether they are connected to the Internet or not.
Exchange: A platform that allows users to buy and sell
cryptocurrencies using fiat money or other cryptocurrencies. Exchanges can be
either centralized or decentralized, depending on whether they are operated by
a single entity or a network of peers. Exchanges can also offer different
services, such as spot trading, margin trading, futures trading, or lending.
Mining: The process of validating transactions and creating
new blocks on a proof-of-work blockchain. Mining involves solving complex
mathematical problems using specialized hardware and software. Miners are
rewarded with newly minted coins and transaction fees for their work.
Staking: The process of locking up coins in a wallet or a
smart contract to participate in the consensus mechanism of a proof-of-stake
blockchain. Staking involves validating transactions and creating new blocks by
holding a stake in the network. Stakers are rewarded with newly minted coins
and transaction fees for their work.
Fork: A split in the blockchain that results in two or more
divergent versions of the ledger. Forks can be either hard or soft, depending
on whether they are compatible or incompatible with the previous version. Forks
can occur due to technical reasons, such as software upgrades or bug fixes, or
due to social reasons, such as disagreements among the community or developers.
Hash: A fixed-length alphanumeric string that is generated
by applying a mathematical function to an input data. Hashes are used to verify
the integrity and authenticity of data on the blockchain. Hashes are also used
to solve the mining puzzles and link the blocks together.
Private key: A secret alphanumeric string that is used to
sign transactions and prove ownership of a cryptocurrency. Private keys are
derived from a seed phrase or a random number generator and should be kept confidential
and secure at all times.
Public key: A public alphanumeric string that is derived
from a private key and is used to generate addresses and receive transactions.
Public keys can be shared with anyone without compromising security.
Address: A unique identifier that represents the location of
a cryptocurrency on the blockchain. Addresses are usually generated from public
keys and consist of a series of letters and numbers. Addresses can also have
different formats, such as legacy, SegWit, or Bech32 for Bitcoin.
Transaction: A transfer of value between two or more
addresses on the blockchain. Transactions consist of inputs and outputs, which
specify the source and destination of the funds. Transactions also have fees,
which are paid to the miners or stakers for processing them.
Block: A collection of transactions that are validated and
added to the blockchain by miners or stakers. Blocks have headers, which
contain metadata such as the block number, timestamp, hash, nonce, difficulty,
and merkle root. Blocks also have a reference to the previous block, which
forms a chain of blocks.
Smart contract: A self-executing program that runs on the
blockchain and enforces the rules and logic of an agreement between parties.
Smart contracts can facilitate various functions, such as escrow, token
issuance, governance, lending, or gaming.
Decentralized application: An application that runs on a
decentralized network of computers and uses smart contracts to perform its
operations. Decentralized applications (or dApps) can offer various services,
such as finance, social media, gaming, or e-commerce.
Decentralized finance: A movement that aims to create an
open and permissionless financial system using blockchain technology and smart
contracts. Decentralized finance (or DeFi) encompasses various protocols and
platforms that offer services such as lending, borrowing, trading, investing,
or insurance.
Non-fungible token: A type of token that represents a unique
and indivisible digital asset, such as art, music, collectibles, or identity.
Non-fungible tokens (or NFTs) can be created and traded on various platforms
and marketplaces using smart contracts and standards such as ERC-721 or
ERC-1155.
Decentralized exchange: A type of exchange that allows users
to trade cryptocurrencies without intermediaries or custodians. Decentralized
exchanges (or DEXs) use smart contracts and protocols to facilitate
peer-to-peer transactions and provide liquidity. DEXs can be either order
book-based or automated market maker-based, depending on how they match buyers
and sellers.
Automated market maker: A type of protocol that uses
mathematical formulas and liquidity pools to provide constant quotes and prices
for trading cryptocurrencies. Automated market makers (or AMMs) eliminate the
need for order books and intermediaries and allow anyone to become a liquidity
provider by depositing their coins into the pools. AMMs can also generate fees
for the liquidity providers and offer incentives for the users.
