Crypto Words | Dictionary

Cryptocurrency & Blockchain Dictionary | Basics | Part 1

By CryptoCata | crypto-general | 11 Feb 2021

As some of you are new in this domain - cryptocurrencies & blockchain, maybe you have heard some words that you don't know exactly their meaning and today I would like to define here some of these words.

1. BLOCKCHAIN = as the name suggests it's a chain of blocks; let's take as example transactions in financial systems, valid transactions are grouped together in blocks and each block is linked (using cryptography) to the previous block of the chain (eg. Bitcoin blockchain , Ethereum blockchain etc.);

2. GENESIS BLOCK = first block of a blockchain; 

3. CRYPTOCURRENCY= digital asset of a blockchain, all transactions on a blockchain are transparent, which means that they can be tracked;

4. DECENTRALIZED= there is no central authority that has the control, thus the control is distributed to multiple nodes from the system;

5. WALLET= this is the cryptocurrency address, a string of characters alphanumeric, please note that each blockchain has it's own address, for example you cannot send $BTC to an $ETH address;

6. CUSTODIAL WALLET = you are not the owner of the cryptocurrencies, exchanges use custodial wallets, so basically you are not the owner of the crypto in an exchange (that's why you will find out that some people will transfer the cryptocurrencies from their exchanges to a non-custodial wallet;

7. NON-CUSTODIAL WALLET = you are the owner of the cryptocurrencies and you are the only one who can access it using a secret phrase; 

8. SECRET PHRASE = bunch of words in a specific order that gives you the access to a wallet; keep them only for you;

9. DeFi = Decentralized Finance - it's used as a replace for the currently financial system where are different central authorities intermediaries such as exchanges, banks or brokerages, it's using something what we called smart contract on blockchains;

10. SMART CONTRACT = small programs that can run on a blockchain (eg. Ethereum uses smart contacts)

11. POW = Proof of Work = computational power in order to help a blockchain to validate transactions using cryptography (eg. Bitcoin);

12. POS = Proof of Stake = validate blockchain system with liquidity in order to make it more stable (eg. Elrond);

13. DEX = decentralized exchange - a good example is UNI Swap where users provide liquidity pools and when someone wants to exchange 2 cryptocurrencies if the pools have enough liquidity they can do it;

14. TPS = transactions per second;

15. APY = annual percentage yield;

Seems like a lot of words right? These are only a few of them. I will do another blog post with a new list.

Let me know in the comments what words were new to you, if any.

Hope you find something new.

Have a nice day,

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