While you’re still learning about cryptocurrencies it’s common to bounce from fascination to confusion within the same sentence- it’s a brand new technology after all, and some of these terms haven’t fallen into common use yet.
So it’s useful to have a glossary of crypto words to reference before it all starts to sound like gibberish. Let’s start with the big one:
It’s pretty simple really- a blockchain is a huge file of information containing the complete history of every transaction of a coin ever made. Most cryptocurrencies have their own blockchain, such as Bitcoin and Dash, and some piggyback on the blockchain of another, such as Golem, which exists as a token on the Ethereum blockchain.
A sequence of letters and/or numbers, usually between 27 and 34 characters. Every address is unique. Here’s an example of a Bitcoin address: 1MvSr21cJZhnLxbLc4o8fVsE6viFWf
You store physical money in your physical wallet, you store digital money in your digital wallet- software either installed on your computer or on a secure server, which allows you to interact with digital coins and store them at a digital address.
Every digital address has a unique private key that has the power to open its corresponding wallet without the need of a password. So, when you set up your own digital wallet on one of the guides on this site and are given your own private key, you should make a point of storing it safely and never, ever sharing it with anyone.
A physical device devoted to keeping coins safe- by keeping your digital wallet’s private key stored and encrypted. Without access to the hardware wallet, which is itself protected by a password, no-one can access your digital wallet except yourself. I highly recommend getting one yourself if you have any amount of crypto you’d be upset to lose.
To some people everything but Bitcoin is an alt coin. To some people everything but Bitcoin and Litecoin is an alt coin. To some people everything but Bitcoin and Ethereum is an alt coin. You see where I’m going with this- what makes a coin an alt coin is based on the opinion of whomever you ask. Though remember Bitcoin did come first, so I’m not sure it will ever be considered an alt coin.
Fiat currency is defined as legal tender whose value is backed by the government that issued it. So think dollars, pounds, euros etc. Crypto has no central bank so it’s not a fiat currency.
This is a web platform that facilitates the conversion of one coin to another (for example Bitcoin to Ethereum) based on the current exchange rate. Some platforms allow you to buy crypto using fiat currency, for example Coinbase, while others specialize in converting digital coin to digital coin, for example Changelly.
ICO (initial coin offering)
An initial coin offering is a means of crowdfunding using cryptocurrency, where a startup company will release a digital currency for investors to purchase (often in the hope it’s going to be the ‘next big thing’).
Shorthand for a Decentralized Application, a Dapp is a piece of software with a standard UI (user interface) but utilizing a decentralized back-end, meaning it doesn’t run on your computer, instead typically making use of a blockchain and smart contracts.
Smart contracts help people exchange money, property, shares- pretty much anything of value- in a transparent, conflict-free way. Both parties can see the code of the contract, and thus the outcome. Smart contracts also avoid the services of a middleman- for instance, when sending money to a friend, banks are the middlemen, taking their cut every step of the way.
Software that has its original source code freely available for download so it can be audited, modified and redistricted by anyone.
Described in the simplest way, cryptocurrencies are digital assets stored on computer databases around the world.
Anyone can purchase these digital assets, and as a result their price goes up when more people buy, and down as more people sell, just as the exchange rate constantly changes for your own country’s currency as traders buy and sell it.
But unlike the (fiat) money in your pocket or bank account, cryptocurrencies are not issued or controlled by any sovereign state or central bank- they’re ruled by plain, logical computer code.
Why are cryptocurrencies important?
Bitcoin was originally created in 2009 as a currency free from any central bank authority. At the time the world’s central banks were hell-bent on printing money to inflate the world out of a debt bubble- and the inflation money printing brings is bad news for anyone who wants their money to retain its spending power.
As Bitcoin’s popularity has grown, many other coins have been created, most sharing the same set of attributes-
Each and every transaction of a cryptocurrency is recorded in a single file, called a blockchain, of which copies are stored across thousands of servers around the world, creating a robust, decentralized system.
Almost every cryptocurrency presents its code for the world to see (called open source). Anyone so minded can audit the code themselves to be sure nothing nefarious is going on. Open source code provides trust in the system- people can be corrupted, but code obeys logic.
Security & transparency combine to make it all-but impossible for someone to change the transaction history of a cryptocurrency, as each coins movement has been stored in thousands of identical blockchain files across the world.
All that’s required to send and receive cryptocurrencies, anywhere in the world, is a device capable of accessing the internet.
Bank transfers take days. Cryptocurrency transfers can be instantaneous, or take up to an hour, depending on the currency used.
Sending cryptocurrencies across countries and borders requires no conversion fee.
All of these characteristics combine to give crypto impressive benefits over fiat currency- you don’t have to trust any third parties with your money, its movement is cheap, quick and recorded on an incorruptible ledger for anyone to see and confirm themselves.
Which crypto to invest in?
Every cryptocurrency listed at getcrypto.info was created with a purpose or problem in mind, for example:
Bitcoin is a world currency free from meddling central banks.
Dash aims to provide completely private transactions while still offering the security of blockchain.
Golem aims to create a world supercomputer with payments handled via the blockchain.
The question becomes, What do you want to do with crypto?
Do you want to send money halfway around the world in seconds? Buy a currency for gamers to bet on the outcome of their matches? Or maybe invest in the coin of a company creating a digital wallet that promises to bring crypto to the masses?
What’s for certain is that you should always to do your own research on any coin before you choose to invest in it. And in that spirit, every guide on getcrypto.info features links to the coin’s official site and Reddit home, to help you find out more for yourself.