Glossary


A glossary is a list of terms in a special subject, field, or area of usage, with accompanying definitions.

51% attack - One of the ways to disrupt a cryptocurrencies blockchain is to control more than 51% of the network. This requires massive computing power and while possible on paper, the resources, coordination and finances required to do this would make it almost impossible to achieve. In this case, a 51% attack is only theoretical.

Address - A Bitcoin address, or simply address, is an identifier of 26-35 alphanumeric characters, beginning with the number 1 or 3, that represents a possible destination for a bitcoin payment. Addresses can be generated at no cost by any user of Bitcoin.

There are currently two address formats in common use:

Common P2PKH which begin with the number 1, eg:

1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2.

Newer P2SH type starting with the number 3, eg: 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy.

It is possible to get a Bitcoin address using an account at an exchange or online wallet service.

AES Hardware Encryption -AES encryption (Advance Encryption Standard) is an International standard which ensures data is encrypted/decrypted following this approved standard. It ensures high security and is adopted by the U.S. government and other intelligence organizations across the world.

Hardware based encryption is where data which is transferred to and from the Integral encrypted USB is automatically encrypted/decrypted through a AES chip built on the Flash Drive. This is much faster and more secure than a software based encryption system, where data is encrypted/decrypted through a software program on the PC/Mac.

Algorithm - In mathematics and computer science, an algorithm is a self-contained sequence of actions to be performed. Algorithms can perform calculation, data processing and automated reasoning tasks. In other words, an algorithm is a set of mathematical instructions or rules that need to be followed in problem solving. For example, there exist various algorithms to solve a rubix cube. If the algorithm is applied correctly, the outcome is that the cube is solved.

Altcoin – Atltcoin (alternative coin) is a term that is used to describe lesser-known cryptocurrencies (i.e. non-bitcoin cryptocurrencies). It is a collective name given to all other cryptocurrencies that are not bitcoin. These include Ethereum, Golem, MOnero, Ripple, Dash, Litecoin, Dogecoin, Reddcoin, StratisCoin, Blackcoin, yocoin and MANY MANY others. There are over 700 recognized cryptocurrencies, tokens and assets today.

ASIC – Acronym for Application Specific Integrated Circuit. It is a computer processing chip that is designed to perform 1 function and 1 function only. Most modern computers have multi-thread CPU’s that allow the computer to complete a range of tasks all at the same time, whereas an ASIC computer focuses only on 1 function. In the crypto space, an ASIC computer is used to mine Bitcoin. These single-task designed silicon chips process SHA-256 hashing problems in order to validate transactions and mine new bitcoins.

ASIC miner – Hardware housing Application Specific Integrated Circuit chips and used to mine for bitcoins. Such devices may connect directly to a computer or to a network with use of an ethernet cable or wireless link. It is a computer that contains an Application Specific Integrated Circuit chip that are used to mine for bitcoins. They may connect directly to a computer or network wirelessly or with the use of an Ethernet cable.

Bear market - A market that is in a downtrend (prices are going down) The term relates to the direction that a bear attacks. (Bears attack by swiping downwards with their claws.)

Bear Trap - This is a manipulation of a stock or commodity by investors. Traders who “set” the bear trap do so by selling stock until it fools other investors into thinking its upward trend in value has stopped, or is dropping. Those who fall into the bear trap will often sell at that time, fearing a further drop in value. At that point, the investors who set the trap will buy at the low price and will release the trap—which is essentially a false bear market. Once the bear trap is released, the value will even out, or even climb.

Bit - A unit of information expressed as either a 0 or 1 in binary notation. The bit (a portmanteau of binary digit) is a basic unit of information used in computing and digital communications. A binary digit can have only one of two values, and may be physically represented with a two-state device. These state values are most commonly represented as either a 0 or 1. Bit: A bit is a common unit used to designate a sub-unit of a bitcoin – 1,000,000 bits is equal to 1 bitcoin (BTC or B?). This unit is usually more convenient for pricing tips, goods, and services. A common unit used to designate a single sub-unit of a bitcoin. 1,000,000 bits is equivalent to 1 bitcoin.

Bitcoin Address - Bitcoin addresses are used to receive and send transactions on the Bitcoin network. An address is a string of alphanumeric characters, but can also be represented as a scan-able QR code.

Bitcoin (uppercase) - The well-known cryptocurrency, based on the proof-of-work blockchain.

bitcoin (lowercase) - The specific collection of technologies used by the bitcoin ledger. Note that the currency is itself one of these technologies, as it provides the miners with the incentive to mine.

Bitcoin - Bitcoin was founded in 2009 and is the most widely used crypto currency. The mysterious Satoshi Nakamoto, whose true identity is unknown and has yet to be verified, supposedly created it. The Bitcoin network is designed to mathematically generate no more than 21 million Bitcoins and was designed regulate itself to deal with inflation. A Bitcoin (Bit + Coin) is a worldwide cryptocurrency and digital payment system called the first decentralized digital currency, since the system works without a central repository or single administrator.

Block - A block is a record in the block chain that contains and confirms many waiting transactions. Roughly every 10 minutes, on average, a new block including transactions is appended to the block chain through mining.

Blockchain - It is a public ledger that records bitcoin transactions. A novel solution accomplishes this without any trusted central authority: maintenance of the blockchain is performed by a network of communicating nodes running bitcoin software.

Block explorer – a search engine for a cryptocurrency, block explorers allow you to query transactions, addresses and other information.

Block height – the number of completed blocks in the blockchain.

Block reward - The coins that are paid to the computer (or pool of computers that finds a working hash to complete a block in the mining process of cryptocurrencies. This term refers to the “reward” that the Miner receives for successfully hashing a transaction block.

Bollinger Bands - Bands that use historical data in a market to indicate possibly volatility.

Branching Point - The block at which the block chain diverges into multiple chain branches

BTC - BTC is a common unit used to designate one bitcoin (B?).

Bull Market - A market that is in an uptrend. (Prices are going up) The term relates to the direction in which a bull attacks (horns low to the ground, a bull strikes upwards)

Central Ledger - A central ledger refers to a ledger maintained by a central agency or a centralized system. Coin - A coin is a small, flat, (usually) round piece of metal or plastic used primarily as a medium of exchange or legal tender. They are standardized in weight, and produced in large quantities at a mint in order to facilitate trade. They are most often issued by a government.

Cold Storage - The storage of Bitcoin private keys in any fashion that is disconnected from the internet. Typical cold storage includes USB drives, offline computers, or paper wallets.

Confirmation - All transactions on the blockchain need to be verified by all nodes – each verification of the transaction is called a confirmation. A confirmation means that a transaction has been processed by the network and is highly unlikely to be reversed. Transactions receive a confirmation when they are included in a block and for each subsequent block. Even a single confirmation can be considered secure for low value transactions, although for larger amounts like 1000 US$, it makes sense to wait for 6 confirmations or more. Each confirmation exponentially decreases the risk of a reversed transaction.

Consensus - Consensus is achieved when all participants of the network agree on the validity of the transactions, ensuring that databases are exact copies of each other.

Cryptocurrency - A cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency.

Cryptography - Cryptography or cryptology is the practice and study of techniques for secure communication in the presence of third parties called adversaries. More generally, cryptography is about constructing and analyzing protocols that prevent third parties or the public from reading private messages; various aspects in information security such as data confidentiality, data integrity, authentication, and non-repudiation are central to modern cryptography. Modern cryptography exists at the intersection of the disciplines of mathematics, computer science, and electrical engineering. Applications of cryptography include military communications, electronic commerce, ATM cards, and computer passwords.

Cryptographic hash function - A cryptographic hash function is a special class of hash function that has certain properties which make it suitable for use in cryptography. It is a mathematical algorithm that maps data of arbitrary size to a bit string of a fixed size (a hash function) which is designed to also be a one-way function, that is, a function which is infeasible to invert.

Dapp – decentralized application that exists on a blockchain. Dapps are renowned for having proven 100% uptime.

DAO - Decentralized Autonomous Organizations – A blockchain technology inspires organization or corporation that exists and operates without human intervention.

DDoS – Abbreviated form of Distributed Denial of Service. A DDoS attack utilizes many computers under the control of an attacker to deplete the resources of a primary target. In the past, some Bitcoin exchanges have come under DDoS attacks.

Difficulty - Difficulty, in Proof-of-Work mining, is how hard it is to verify blocks in a blockchain network. In the Bitcoin network, the difficulty of mining adjusts verifying blocks every 2016 blocks. This is to keep block verification time at ten-minute intervals, according to the protocol.

Digital currency - Digital currency or digital money or electronic money is distinct from physical (such as banknotes and coins). It exhibits properties similar to physical currencies, but allows for instantaneous transactions and borderless transfer-of-ownership. Examples include virtual currencies and cryptocurrencies. Like traditional money, these currencies may be used to buy physical goods and services, but may also be restricted to certain communities such as for use inside an on-line game or social network.

Distributed Ledger - It is also known as a shared ledger, is a consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, and/or institutions.

Distributed database - A distributed database is a database in which storage devices are not all attached to a common processor. It may be stored in multiple computers, located in the same physical location; or may be dispersed over a network of interconnected computers. Unlike parallel systems, in which the processors are tightly coupled and constitute a single database system, a distributed database system consists of loosely coupled sites that share no physical components.

Double Spending - If a malicious user tries to spend their bitcoins to two different recipients at the same time, this is known as double spending. Bitcoin mining and the block chain are there to create a consensus on the network about which of the two transactions will confirm and be considered valid. This helps to prevent fraud. Nevertheless users accepting zero-confirmation transactions remain vulnerable to double spending.

Encryption - In cryptography, encryption is the process of encoding a message or information in such a way that only authorized parties can access it. Encryption does not itself prevent interference, but denies the intelligible content to a would-be interceptor.

Ethereum - A public blockchain-based distributed computing platform, created for coders/developers to create new ideas/designs of decentralized trust, such as smart-contracts. With the Ethereum blockchain, developers are provided a decentralized virtual machine, the Ethereum Virtual Machine (EVM), which can execute peer-to-peer contracts by utilizing the internal cryptocurrency referred to as Ether.

Ether - The internal currency/coin of the Ethereum Blockchain.

Exchange – A central platform for exchanging different forms of currencies and assets. Typically, bitcoin exchanges are used to exchange cryptocurrency for traditional monetary units.

Fiat currency – A currency with no intrinsic value but deemed to have worth because a government has declared it to be so. The word ‘Fiat’ comes from Latin, meaning ‘Let it be done’. Fiat currency is money that a government has declared legal tender by fiat (order or decree). It is not backed up by any physical or tangle commodity (something that can be bought or sold). Its value is strictly established by supply and demand. The US Dollar, British Pound, Euro, etc. are fiat currencies that became so after the abolishment of the gold standard.

FOMO - Fear Of Missing Out - A mindset that causes people to purchase a stock based on the premise that they may miss out on a good thing.

Fork – a change of the Bitcoin protocol that is not backwards-compatible. A blockchain fork occurs when nodes running the new version of the protocol create a separate blockchain incompatible with the older software.

FUD - Fear, Uncertainty and Doubt - Rumors and misinformation that can have an affect on a stock or a crypto that causes people to sell their holdings. Sometimes distributed deliberately to cause confusion and lend an advantage to those who start the spread of information.

Full Node - A full node checks transactions and blocks to see whether they comply with the consensus rules that have been installed before forwarding to other full nodes and miners to include in the blockchain.

Gas (Ethereum) - When Ether is used to pay for transactions. While in Bitcoin each transaction costs more or less the same, in Ethereum, the transaction fee is dependent on the amount of computing needed for the full transaction. Each transaction or message therefore has an amount of “startgas” included in order to pay for the execution of a function and as transaction fee that goes to the miner. The function will stop, or return an error when it has run out of gas.

Genesis block – the original (very first) block in the blockchain.

Halving: Bitcoins have a finite supply, which makes them scarce. The total amount that will ever be issued is 21 million. The number of Bitcoins generated per block is decreased 50% every four years. This is called “halving.” The final halving will take place in the year 2140. Every 4 years, the “reward” for successfully mining a block of bitcoin is reduced by half. This is referred to as “Halving”. For instance, the initial reward for mining a Bitcoin Block was 50 Bitcoins, which was reduced to 25 in 2012 after the first “halving” and half again to 12.25 bitcoins after the next halving. This mechanism ensures a finite amount of coins are created for a crypto currency. The actual time span is not 4 years, but rather the amount of time taken to mine 210 000 blocks.

Hard Fork - A complete change to the protocol used for a particular cryptocurrency. It is a complete divergence from the previous software version of the Blockchain for a cryptocurrency, and nodes running previous versions will no longer be accepted by the newest version.

Hardware Wallet - Physical hardware device designed to secure Bitcoins offline. eg: Ledger Hardware Wallet.

HASH FUNCTION - A hash function is any function that can be used to map data of arbitrary size to data of fixed size. The values returned by a hash function are called hash values, hash codes, digests, or simply hashes.

Hash: A hash is a mathematical process that converts inputted data into a fixed length string, usually 32 characters. In the world of bitcoin, a hash must follow certain rules and formats and is formulated using very specific information, and must contain the previous hash and block information within itself together with some “dummy data” (a nonce) to produce a randomized hash. Not all hashes will be accepted. Even the slightest modification of the original input data would result in a completely different hash. A hash is “rehashed” thousands of times over per second until a suitable hash is found. The hash is created by the computers trying to find a suitable hash out of hundreds of thousands. Once a hash is created, it is then stored at the end of the blockchain. The computer that is responsible for submitting a working hash is allocated a reward in the form of bitcoin.

A cryptographic hash is a mathematical function that takes a file and produces a relatively short code that can be used to identify that file. A hash has a couple of key properties:

It is unique. Only a particular file can produce a particular hash, and two different files will never produce the same hash.

It cannot be reversed. You can’t work out what a file was by looking at its hash.

Hashing is used to prove that a set of data has not been tampered with. It is what makes bitcoin mining possible.

Hash Rate - The number of hashes (computations) that can be performed by a bitcoin miner in a given period of time (usually a second). The higher the hashrate, the better the odds of receiving the block reward. The hash rate is the measuring unit of the processing power of the wholt Bitcoin network. The network must make difficult mathematical operations for the purpose of security. The Bitcoin network must make intensive mathematical operations for security purposes. For example, when we speak about a hash rate of 1 Th/s, it means you are producing 1 trillion calculations per second. When the network reached a hash rate of 10 Th/s, it meant it could make 10 trillion calculations per second.

Hierarchical Deterministic - A hierarchical deterministic wallet is a system of deriving keys from a single starting point known as a seed. The seed allows a user to easily back up and restore a wallet without needing any other information and can allow the creation of unlimited public addresses

without the knowledge of the private key.

KYC – Know Your Client, or Know Your Customer. KYC guidelines mandate that financial institutions must vet potential clients to ensure that they are legitimate and can verify their identities.

Ledger - A ledger is the principal book or computer file for recording and totaling economic transactions measured in terms of a monetary unit of account by account type, with debits and credits in separate columns and a beginning monetary balance and ending monetary balance for each account. The ledger is a permanent summary of all amounts entered in supporting journals which list individual transactions by date.

Liquidity – The market’s ability to buy and/or sell an asset combined with the extent to which pricing remains relatively stable and consistent between transactions.

mBTC – A bitcoin metric of 1 thousandth of a bitcoin (0.001 BTC).

Message (Ethereum) - Apart from transactions, accounts can also send messages that can for example consist of a request to run a given piece of code. Contract accounts can thus send each other messages to run their contract code.

Miner - Computer software which is designed to repeatedly calculate hashes with the intention to create a successful block and earn coins from transaction fees and new coins created with the block itself. The term references an analogy of gold miners who dig gold out of the ground and thus "discover" new gold that can be used to create new coins with a similar kind of discovery occurring with a successful hash to create new Bitcoins.

Mining - Bitcoin mining is the process of making computer hardware do mathematical calculations for the Bitcoin network to confirm transactions and increase security. As a reward for their services, Bitcoin miners can collect transaction fees for the transactions they confirm, along with newly created bitcoins. Mining is a specialized and competitive market where the rewards are divided up according to how much calculation is done. Not all Bitcoin users do Bitcoin mining, and it is not an easy way to make money.

Multi-Signature: It is also knows as a multi-sig. A bitcoin transaction that requires signatures from multiple parties before it can be executed. A contracted term for Multi-signature addresses which allow multiple users to partially seed an address with a public key. The ability to access funds from such an address requires multiple signers to access the account. As a result, multisig addresses are much more resilient to theft.

Node – Refers to a computer running a full-client blockchain. It serves to share blocks and transactions across the network using the client-to-client infrastructure.

Online Wallet - Also known as a Web Wallet, a Wallet that can be accessed on the web from any device connected to the Internet.

Open-Source Software - Software whose code is made publicly available and that is free to distribute. Bitcoin is an open source project and arguably the first open source money. This will help to study, change, and distribute the software to anyone and for any purpose. Open-source software may be developed in a collaborative public manner from multiple independent sources, generating an increasingly more diverse scope of design perspective than any one company would be capable of developing and sustaining long term. Open-source software is the most prominent example of open-source development.

P2P - Peer-to-peer refers to systems that work like an organized collective by allowing each individual to interact directly with the others. In the case of Bitcoin, the network is built in such a way that each user is broadcasting the transactions of other users. And, crucially, no bank is required as a third party.

Paper Wallet: Some people prefer to store their Bitcoin in the paper wallet – a form of cold storage – in order to improve security. The term simply refers to a printed sheet of paper that holds a number of public bitcoin addresses and corresponding private keys.

Pool - A collection of mining clients which collectively mine a block, and then split the reward between them. Mining pools are a useful way to increase your probability of successfully mining a block as the difficulty rises.

Private Key - A private key is a secret piece of data that proves your right to spend bitcoins from a specific wallet through a cryptographic signature. Your private key(s) are stored in your computer if you use a software wallet; they are stored on some remote servers if you use a web wallet. Private keys must never be revealed as they allow you to spend bitcoins for their respective Bitcoin wallet.

Proof-of-Stake - An alternative to the proof-of-work system, in which your existing stake in a cryptocurrency (the amount of that currency that you hold) is used to calculate the amount of that currency that you can mine.

Proof-of-Work - A system that ties mining capability to computational power. Blocks must be hashed, which is in itself an easy computational process, but an additional variable is added to the hashing process to make it more difficult. When a block is successfully hashed, the hashing must have taken some time and computational effort. Thus, a hashed block is considered proof of work.

The proof-of-work (POW) system (or protocol, or function) is an economic measure to deter denial of service attacks and other service abuses such as spam on a network by requiring some work from the service requester, usually meaning processing time by a computer. The concept may have been first presented by Cynthia Dwork and Moni Naor in a 1993 journal article. The term "Proof of Work" or POW was first coined and formalized in a 1999 paper by Markus Jakobsson and Ari Juels.An early example of the proof-of-work system used to give value to a currency is the Shell Money of the Solomon Islands.

Proof of work and proof of stake are 2 algorithms for reaching consensus across a blockchain - To ensure the safety, security, incorruptibility and anonymity of cryptocurrencies being traded without the need for a centralized database or bank, there needs to be a way prove your work (PoW) or prove that you have a stake (PoS).

Public Key: The public key is a string of digits and letters (your bitcoin address). When hashed with a corresponding string known as a private key it digitally signs and online communication.

Public-key encryption - In public-key encryption schemes, the encryption key is published for anyone to use and encrypt messages. However, only the receiving party has access to the decryption key that enables messages to be read.

QR Code - A QR code is a machine-readable optical label that contains information about the item to which it is attached. Similar to a barcode, QR codes consist of black squares arranged in a square grid on a white background, which can be read by an imaging device such as a smartphone camera. The digital data is then extracted from the patterns that are present in both horizontal and vertical components of the image. A QR Code is a digital representation of a bitcoin public or private key. It is a two-dimensional block image containing a black-and-white pattern representing a sequence of data. The images are scannable and are often used to encode bitcoin addresses.

Reward - An amount included in each block as a reward to the miner for finding the proof-of-work, thus validating and securing the network. The reward is halved every once in a while to eventually reach 0 when the limit of 21million bitcoins are in circulation.

Satoshi – the smallest sub-unit of a bitcoin currently available (0.00000001 BTC). A satoshi and represents one one-hundred millionth (100,000,000) of a Bitcoin.

Satoshi Nakamoto - Satoshi Nakamoto is the name used by the unknown person(s) who designed bitcoin and created its original reference implementation. As part of the implementation, they also devised the first blockchain database. In the process they were the first to solve the double spending problem for digital currency. They were active in the development of bitcoin up until December 2010.

Segwit (Segregated Witness) - an improvement to the core way Bitcoin handles transactions in order to make the Bitcoin network approve more transactions with each block.

SEPA – Single European Payment Area. SEPA was designed as a European Union payment integration agreement that would make it easier to transfer funds between nations in Euros.

SHA 256 - The cryptographic function used as the basis for bitcoin’s proof of work system.

Simplified Payment Verification (SPV) - As noted in Satoshi Nakamoto's whitepaper, it is possible to verify bitcoin payments without running a full

network node. With simplified Payment Verification (SPV), a user only needs a copy of the block headers of the longest chain, which are available by querying network nodes until it is apparent that the longest chain has been obtained thereby enabling quick access to the Bitcoin network.

Smart Contracts - Smart contracts are contracts whose terms are recorded in a computer language instead of legal language. Smart contracts can be automatically executed by a computing system, such as a suitable distributed ledger system.

Stand Alone Mobile BTC client - A wallet application on a smartphone or tablet that doesn’t require a full copy of the blockchain in order to synchronize. Using SPV (simplified payment verification), the wallet connects directly to the Bitcoin network with the needed quickness of a mobile device. There is no server to get hacked or go down, so you can always access your money and perform transactions.

Signature - A cryptographic signature is a mathematical mechanism that allows someone to prove ownership. In the case of Bitcoin, a Bitcoin wallet and its private key(s) are linked by some mathematical magic. When your Bitcoin software signs a transaction with the appropriate private key, the whole network can see that the signature matches the bitcoins being spent. However, there is no way for the world to guess your private key to steal your hard-earned bitcoins.

Soft Fork - A change to the operating protocol for a cryptocurrency that is backward compatible, so older nodes that don’t upgrade will still function.

Transaction block – A compilation of bitcoin transactions that are collected into a block and then hashed and added to the blockchain.

Transaction fee – A small fee imposed on some transactions sent across the bitcoin network. The transaction fee is awarded to the miner that successfully hashes the block containing the relevant transaction.

Unpermissioned ledgers - Unpermissioned ledgers such as Bitcoin have no single owner — indeed, they cannot be owned. The purpose of an unpermissioned ledger is to allow anyone to contribute data to the ledger and for everyone in possession of the ledger to have identical copies. This creates censorship resistance, which means that no actor can prevent a transaction from being added to the ledger. Participants maintain the integrity of the ledger by reaching a consensus.

Volatility – Market volatility reflects the measurement of price movement over a period of time for a traded financial asset, including bitcoin.

Wallet – A storage facility for cryptocurrencies. There are a number of different kinds of wallets; web wallets, desktop wallets, hardware wallets, mobile wallets, paper wallets and brain wallets. The conceptual cyber equivalent of a physical wallet on the Bitcoin network. A wallet contains the private keys associated with the bitcoin address. A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold or store bitcoins, due to the nature of the system, bitcoins are inseparable from the blockchain transaction ledger. A better way to describe a wallet is something that "stores the digital credentials for your bitcoin holdings" and allows one to access (and spend) them.

Wire transfer – Electronically transferring funds from person to person. A wire transfer is often used to send and retrieve traditional (‘fiat’) currency from bitcoin exchanges.

XBT: Informal currency code for 1 Bitcoin (defined as 100 000 000 Satoshis). See also BTC.