Cryptocurrencies
Glossary of
Common Terms
and Phrases
Ashdraked
To lose all of your money, investment, or capital. The term “ashdraked” or “ashdraking” comes from a crypto trader known by the handle (username) Lord Ashdrake. He was a prominent Bitcoin short-seller in 2014 and 2015. Ultimately, his endeavour of shorting Bitcoin didn’t bear fruit, since Bitcoin steadily rose from US$300 to US$500 at the time, costing him all of his investment and any earnings he made in the process.
While the term can loosely define any complete loss of investment, it’s most commonly used to reference the unsuccessful practice of shorting Bitcoin specifically.
Accumulation/Distribution Indicator
The accumulation/distribution (A/D) indicator uses the current volume, flow, and price of a stock to determine its momentum (near-future trends) and whether it’s being accumulated (bought by traders) or distributed (sold off). Put simply, the A/D indicator gauges whether a price trend is backed by a meaningful market activity to support it or if it’s a passing fad. Rising prices with a low A/D could mean that a decline is imminent. The A/D indicator is commonly cumulative, compounding its previous value with the changes to a stock’s price and volume over a certain period.
Algo-Trading (Algorithmic Trading)
Algorithmic trading refers to the practice of using automated tools to conduct trades. An algorithm uses the stock’s current market variables to determine which of the predetermined, coded actions to take. Algo-trading is popular among crypto traders of all skill levels due to its intuitive design, especially for novices using widely-acclaimed traders. One of the benefits of algo-trading over manual trading is that algorithms can run and analyse market conditions much faster than humans. Using algo-trading still comes with the same risk as regular trading options, and users don’t have as much control over their investments if they let the algorithm select from stock choices entirely.
Bitcoin ATM
A Bitcoin ATM is a kiosk machine (similar to, but not the same as, a regular ATM) that allows customers to buy, and sometimes sell, Bitcoin or other cryptocurrencies for cash. While traditional ATMs connect to a bank’s network and the user’s bank account, a Bitcoin ATM (BATM) is an interface that uses blockchain transactions with a specific crypto exchange. The transactions the user executes while on the BATM are stored on their digital wallet, typically by scanning QR codes that the machine creates. One of the more significant downsides of trading crypto with cash is that BATMs usually charge much higher fees than other exchange options.
Bitcoin Dominance (BTCD)
Bitcoin dominance refers to how much market share Bitcoin has by total stock value and how it can influence altcoin prices directly and indirectly. When Bitcoin was the only cryptocurrency available, the BTCD was 100%. Nowadays, the number fluctuates rapidly due to market trends, ranging from the low 40s to the high 60s, depending on the current Bitcoin and altcoin prices and significant events like the introduction of new (legitimate or illegitimate) altcoins. Since Bitcoin remains by far the most prominent crypto coin in the network, other cryptocurrencies will typically follow in the wake of major Bitcoin trends.
Bitcoin Pizza
Bitcoin Pizza refers to the (in)famous, and pivotal, first transaction in the earlier days of cryptocurrency, where a Florida man used 10,000 BTC to pay for two pizzas on May 22, 2010. Considering how much the price of Bitcoin has risen, the Bitcoin pizzas continue to gain value (although they were most likely eaten the same night). Curiously, the person who received the BTC in exchange for the pizzas also spent them relatively quickly. The effect of the Bitcoin Pizza illustrates how the value of Bitcoin is intrinsically linked to how people use it and how unpredictable the digital currency market was initially and might be in the future.
Bitcoin Improvement Proposal
A Bitcoin improvement proposal (BIP) is a standardised format for any documents that propose to change or improve Bitcoin’s structure, coding, or technology. Since Bitcoin is a decentralised system without an active lead developer, all changes have to be proposed and approved by a sufficient number of developers within the community. The first BIP drafted outlined how BIPs should look and used Python proposals as a reference. Current BIPs are publicly available on the Bitcoin Core GitHub. BIPs can be roughly divided into consensus, standard, and process BIPs, which state internal Bitcoin node rules, external service requirements or advice, and general ruleset of BIPs and crypto structures, respectively.
Bitcoiner
A Bitcoiner is simply a term used to refer to anyone interested in Bitcoin trading and uses. As a primarily self-proclaimed title, pretty much anyone can be a Bitcoiner if they start interacting with the community and learning the basics of crypto trading. A Bitcoiner may or may not believe that Bitcoin is the greatest cryptocurrency ever and that it can solve every financial problem in the world, depending on how idealistic their views on cryptocurrencies and political affairs. Unlike a Bitcoin Maximalist, a Bitcoiner understands that using Bitcoin comes with the inherent risks associated with the industry.
Bitcointalk
Bitcointalk (officially Bitcointalk.org) is the largest online forum on Bitcoin and cryptocurrencies in general. It is primarily education and empowerment-oriented, allowing users to learn about Bitcoin and how to leverage that knowledge to make smart and meaningful decisions and investments on the crypto market. Like most forums, users can create unique profiles and protect their privacy behind an anonymous username (also referred to as a handle). As one of the most important online information repositories, Bitcointalk is an excellent place to start if you’re a budding Bitcoiner.
BitLicense
A BitLicense is the first attempt at regulating cryptocurrency business organisations and their activities or transactions. The BitLicense is issued by the New York State Department of Financial Services (NYSDFS). As such, it only applies to companies residing within New York state. After its initial announcement in 2014, several companies focusing on cryptocurrencies moved their headquarters outside New York. Since then, more than a dozen companies, some from the U.S. and some from other countries, have received a BitLicense. As a decentralised system, the Bitcoin community typically avoids having global lawmakers design rules and regulations for cryptocurrencies. Still, these regulations may be inevitable should Bitcoin become more prevalent as an actual currency rather than a commodity.
BitPay
Founded in 2011, BitPay is a Bitcoin payment service provider from Atlanta in the United States. By utilising its services, customers can use Bitcoin to purchase goods and services directly without transferring them to a fiat currency. BitPay is one of the main reasons Bitcoin is a cryptocurrency rather than a commodity. BitPay offers their own Bitcoin wallet, where users can store and transfer their Bitcoin, and a BitPay card that can be used like a debit card.
Block
A block is a structured file containing all the information about transactions in a given period. As a vital part of the blockchain, each block (except the first one) also contains a hash that points to the preceding block. This provides uninterrupted access to the entire history of crypto transactions for any given currency. Each block must be verified by a miner before it can be added to the blockchain, which makes the block permanent and can’t be undone or changed. This is achieved by solving a cryptographic puzzle, and the first transaction recorded on each block becomes the miner’s address and how much he has earned by mining the block. Since the hash contains references to all the data in the previous block, a hacker would have to change all instances of the block. All of which are stored on multiple servers due to the cryptocurrencies’ decentralised system.
Block Explorer
Also known as a blockchain browser, a block explorer allows the user to directly connect to a specific cryptocurrency’s blockchain and read its contents. As a key part of the cryptocurrency structure, block explorers provide transparency and universal access to the necessary information to decentralise the system. A basic block explorer overlay will often include information on the most recent blocks and transactions added to the blockchain and some that should enter the blockchain relatively soon. There are many blockchain browsers available online, including Bitaps, Blockchain.com, Blockchair, BTC.com, Etherscan, Etherchain, and Ripple.
Block Header
A block’s header is one of the most crucial block constituents and a part of what makes the blockchain so secure. A header contains three sets of hashed data, ending up as an 80-byte string containing the Bitcoin version number, the Merkle root of the hash of transactions in the block, the previous block hash, the timestamp, the nonce used for creating the hash, and the difficulty target for the block. Bitcoin development and exploration typically stores headers since they accurately ascertain the extent of the blockchain in a compressed memory format. This way, an entire blockchain can fit into one moderately large file.
Block Height
Since a blockchain is a single-linked sequential array of blocks, a block’s height can be used to indicate its position within the chain. A genesis block (the block starting the chain) is given the height of 0 since that’s how most computer arrays work. Block height is a measure of how fast the blockchain is growing and allows miners to verify their blocks. It’s possible for two blocks to end up with the same block height. A situation which is resolved by determining only one block to be legitimate and continuing the blockchain onwards or by implementing a fork. Increasing the block height leads to eventually decreasing the awards for mining a block, which pits miners against one another to solve blocks faster. The chain’s block height with Bitcoin increases by about 140 each day.
Block Producer
In Delegated Proof of Stake (DPoS) blockchains, a block producer is a person or a company designated to confirm or build a block in exchange for a cryptocurrency award. This is different from the traditional Proof of Work blockchain (which Bitcoin uses), where any miner who solves the block first will receive the reward. In effect, a block producer provides a similar service in DPoS blockchains to miners in PoW blockchains. The blocks are the foundation pieces for the system to work in the first place. Unlike mining, block producers are chosen depending on their computational capacity and their investment in the system.
Block Reward
A block reward is the amount of cryptocurrency given out to the miner(s) responsible for solving the block hash and adding it to the blockchain. This reward is also the only way for new coins to enter the market. The original reward for each new Bitcoin block was 50 BTC, but that has been halved for every 210,000 blocks entered into the chain. The latest halving was in May 2020 which dropped the reward to 6.25 BTC. Eventually, the reward will become less profitable with subsequent halvings, even before the hard limit of available Bitcoins is reached, and the primary incentive for mining blocks will be the transaction fees. Unlike with Bitcoin, Ethereum blocks don’t have a theoretical upper limit, but the block reward is lowered periodically to curb inflation.
Block Size
Since a block is a certain number of transactions hashed together to provide authentication and security, certain limits indicate how many transactions you can put in a block. One of those limits is the block size. For Bitcoin, each block can take up only 1 MB. Miners can choose which and how many transactions to add on a block. In effect, this allows users to pay higher transaction fees to gain block priority, giving certain transactions much higher waiting times than usual. The limit on the block size prevents users from submitting enormous blocks, which slow the blockchain processing.
Block Time
Block time approximates how much time passes between two sequential blocks being added to the blockchain. The block time primarily depends on mining difficulty, but provides a useful tool in determining the average time it takes to process a transaction. Since each transaction is processed only upon it being added to a block, there is an ongoing debate between optimising block size and time and how it will affect a system’s scalability and security.
Block Trade
A block trade is a large-scale transaction that typically occurs through an intermediary. As a result, block trades can heavily shift the volume and price of the commodity being exchanged. In cryptocurrencies, a block trade is typically considered any trade above 10 BTC (or equivalent) at the time. A block trade allows a company or an entity to sell or buy large amounts of stock at the same price by enabling an intermediary to find suitable breakdowns in multiple transactions. These transactions occur simultaneously, which prevents the stock from losing value between transactions.
Blockchain
The blockchain is the distributed system that forms the base of decentralised cryptocurrencies. A blockchain is created from blocks, and every block except the first contains a reference to the blocks that came before it. These blocks can be stored in multiple places to provide additional security. These factors make the blockchain virtually unassailable since you’d need to change every block in a blockchain everywhere to falsify a record. Most modern cryptocurrency blockchains are public and can be viewed by a blockchain browser.
Blockchain 1.0
Blockchain 1.0 is the first-generation phase of blockchain implementation and technology, and is the basis of all cryptocurrencies used today. It outlines how the decentralised system of blockchains work and how cryptocurrencies are created. Specifically, blockchain 1.0 is a pure cryptocurrency-focused system, with minimal implications on the rest of the world apart from its usability in economics. Blockchain 1.0 was devised as a way to disrupt centralised economies and provide a way for a unified monetary system that doesn’t rely on governments. Bitcoin is the primary example of how Blockchain 1.0 and blockchains in general operate.
Blockchain 2.0
Blockchain 2.0 is the second-generation improvement on Blockchain 1.0. Blockchain 2.0 advances the concepts introduced by Blockchain 1.0 by implementing blockchain technologies in other areas of life. One of the key developments is the addition of smart contracts, allowing for a decentralised system for confirming any type of transaction rather than just cryptocurrencies. As such, Blockchain 2.0 allows for far more flexibility in determining ownership and transfer of goods and commodities than existing systems do. Ethereum is implementing the core concepts of Blockchain 2.0 to facilitate its potential usage.
Blockchain 3.0
Blockchain 3.0 is currently considered the final step in implementing blockchain technology beyond financial records, cryptocurrencies, and contracts. Additionally, improvements in algorithms included in Blockchain 1.0 and 2.0 aim to speed up and lower the cost of transactions to make them more palatable for other industries. Currently, Blockchain 3.0 aims to compete with centralised systems that can handle millions of transactions per day. Unlike Blockchain 1.0 and 2.0, the third generation focuses on Delegated Proof of Stake blockchains, which improve energy efficiency and lower transaction fee inflation.
Blockchain Explorer
Blockchain explorers utilise one of the foundations of blockchain technology – complete public access to transaction records. Similar to a block explorer, a blockchain explorer is a browser-like program that allows users to search for specific addresses within the blockchain and retrieve a complete history related to the address. Blockchain explorers also provide block-based information and data about how many new blocks are entered and the speed at which transactions are recorded. Some explorers can also provide a list of unconfirmed or pending transactions.
Blockchain Trilemma
The blockchain trilemma is a group of three concepts that plague modern blockchain design: scalability, security, and decentralisation. It is a commonly held belief that modern blockchain designs must sacrifice one of the three goals to achieve a fully functioning system. In most cases, these boil down to a tradeoff between security and scalability since decentralisation is largely used as a primary scaling and safety net. Companies working in the blockchain industry are trying to implement solutions that make the most of the three functions.
Blockchain-Enabled Smart Lock
As per Blockchain 2.0, the concept of smart contracts allows for a blockchain-dependent device that has uses beyond cryptocurrencies. One such feature is a lock that can be locked or unlocked remotely via mobile devices using a blockchain to process the requests. While such locks would have more cybersecurity through a decentralised and private key system, extensive networks would suffer from increased request processing time and the risk of getting locked out. Smart locks using blockchain technology could also track people who use them through the digital ledger records.
Bollinger Band
A Bollinger band is an analysis tool that estimates the volatility of an asset. Created by the esteemed trader John Bollinger, the band uses a moving average (typically a 20-period moving average) and two bands that default to two standard deviations above and below the moving average. Most commonly, the price of an asset will be somewhere within the band. Empirical evidence shows that periods where the Bollinger band for an asset is tight (i.e., smaller deviations) are followed by periods where the band is much wider and the asset is more volatile as a result, and vice versa. Prices beyond the band may point to the asset being overbought or oversold.
Bonding Curve
The concept of the bonding curve defines the price/supply relationship of an asset or commodity. The bonding curve is most commonly a mathematical relationship of the price of an item based on its supply amount. In cryptocurrency, the bonding curve can explain how prices of a currency can rise after someone has recently purchased some coins. Since there are now fewer currency tokens in circulation, they become more valuable. Ethereum uses bonding curve contracts to calculate the average price of Ether and use it as an exchange token independent from crypto exchanges.
Bots
Generally speaking, a bot is an automated tool that performs one or more predetermined and programmed task. In cryptocurrency, the most commonly found bot is a computerised trader. Advanced bots can collect data from multiple stock markets and react to changes in prices almost immediately, provided they have the programming executive to do so. Commonly known as arbitrage bots, these programs can use brief discrepancies and delayed exchange updates to eke out a profit. Bots can also be used to automate mundane tasks like periodic portfolio rebalancing.
Bounty
A bounty tactic is a commonly-used formula to incentivise marketing and promoting a blockchain task or a cryptocurrency campaign or product. One of the most memorable and infamous forms of bounty is the initial coin offering (ICO) for an altcoin. This form of bounty was popular in 2017 and 2018. The bounty system was misused for many fraudulent blockchain projects, and the public remains wary of new bounty designs. Despite that, bounties remain a popular way for projects to gain traction and have spawned an entire population of ‘bounty hunters’ that profit from them.
Brute Force Attack (BFA)
A brute force attack is one of the most simplistic forms of cryptographic attacks. In a BTA, the attacker floods the encrypted system with randomly or sequentially generated keys in hopes of chancing upon the correct code. With the advent and improvements of cryptography, modern systems are considered nearly impervious to BTAs. The time needed to cycle through them would be orders of a magnitude greater than what is available or useful. More commonly, attackers use lacklustre implementation and human error to access an encrypted system rather than brute force.
Bubble
A bubble, sometimes referred to as a speculative or financial bubble, is a situation when an asset’s price is much higher than reasonably justifiable by the current market environment. In most cases, cryptocurrency bubbles are only recognised as such after the bubble has burst and the price crashes down to more reasonable levels. One example was the fabled 2018 crash when Bitcoin lost roughly 60% of its value within a year. Sceptics believe that all cryptocurrencies exist in a perpetual bubble due to their absence from real-world economics and use cases.
Bug Bounty
Bug bounties are rewards for finding vulnerabilities and errors within a system, typically a piece of software or code. In essence, bug bounties are considered friendly competition between ethical hackers. In exchange for not exploiting the vulnerability, the finders are awarded a predetermined bounty. Bounties can be thought of as a secondary way to improve cybersecurity after creating and testing proactive measures. The actual bounty for finding a vulnerability largely depends on its extent and severity, with some bounties paying out thousands of pounds or their equivalent.
Bug Exploit
A bug exploit, more commonly referred to simply as exploit, is a piece of code that uses a system’s vulnerability to provide access to ordinarily restricted and protected files or cause unintended behaviour in a program. Most frequently, bug exploits are used to gain control of remote systems and download private and confidential data that is stored within them. In crypto, bug exploits can be used to steal currency or redirect transactions to specific addresses (which is essentially the same thing). When an exploit is first identified it’s called a zero-day exploit. Exploits are commonly patched out of the system by removing vulnerabilities or adding more secure pieces of code and software over them.
Bull
A bull is a person optimistic about current crypto trends. They believe that the prices will rise in the short- or long-term. As a result, ‘bullish’ behaviour often involves buying and investing in cryptocurrency to hopefully take advantage of the increasing demand and prices. Due to the bonding curve inherent in assets, bullish investments tend to raise the prices of the crypto involved – a trend called a ‘bull market.’ The term bull may have derived from Gold Rush mining, or the fact bulls skewer their victims by raising them into the air. Opposite to the terms ‘bear’ or ‘bear market.’
Central Bank Digital Currency
Central Bank Digital Currency, or CBDC, is a term for a digital, or virtual, form of any centralised fiat currency. Therefore, a CBDC is a token that has the same value as the same amount of a country’s fiat currency and is issued, regulated, and fully recognised by that country’s central financial authority (bank). Using CBDC can provide the benefits of virtual or digital currency (much like crypto) with the backing of an official bank using the same money as fiat currency. Unlike cryptocurrencies, CBDCs are primarily centralised, with a single central bank in charge of issuing, maintaining, and controlling fiat currency and subsequent transactions.
Casascius Coin
Casascius coins are physical Bitcoins created and distributed by the trader Casascius (Mike Caldwell) until 2013. A Casascius coin functions much like any other physical Bitcoin, containing a piece of paper embedded with a predetermined BTC value, depending on the coin’s denomination. Casascius coins were available in 1, 10, 25, 100, and 1000 BTC. Since the coin has a single-use private key, redeeming the digital currency stored within the paper makes the physical coin meaningless. While unopened, they function as a limited form of physical Bitcoin wallets.
Craig Wright
Craig Steven Wright is a computer scientist and businessman from Australia. His public claims of being the face behind the pseudonym Satoshi Nakamoto and one of the inventors of Bitcoin shook the world of cryptocurrency and prompted multiple media investigations. The current consensus by much of the community and media is that Wright was, and still is, involved in a huge fraud to attempt to monetise Bitcoin’s success. Hence, he is also known as ‘Faketoshi’ in the community. His current endeavours in cryptocurrency involve running Bitcoin SV, a forked version of BitcoinCash, with varying results.
Dominance
Dominance typically refers to Bitcoin Dominance (BTCD). In a broader term, a cryptocurrency’s dominance is a measure of one currency’s performance on the market against other coins, typically as a percentage of the entire market. Additionally, dominance can be used to measure any particular market metric, such as trading volume or total market capitalisation percentage, depending on the context of the term’s use. Most commonly, though, the term is synonymous with BTCD unless stated otherwise.
Decentralised API (dAPI)
An Application Programming Interface (API) is a documented mechanism that allows communication between different platforms and services. Companies can provide their API to allow other companies to incorporate API-bound services in various SaaS products. While an API is nominally centralised due to being a product of a single company, a recent trend has made way for creating decentralised versions of the interface. The dAPI are compliant with blockchain technology and can fully use the improvements created by the API3 protocol.
Dust Transactions
Dust Transactions are essentially amounts of BTC or any altcoin that are so minuscule that transferring them would cost more in fees than the person would gain in fiat currency or another crypto. Dust transactions can be used to breach another wallet’s anonymity. Since they remain unused in digital wallets due to their lack of inherent value, attackers can transfer these almost unnoticeable amounts to a random digital wallet then track that wallet’s transactions for identity proofing and theft. Alternatively, charitable organisations can use dust transactions to sweep up unused coins from multiple wallets (lowering the overall fee), transfer them into fiat currency, and donate the proceeds.
Flippening
The Flippening is currently a theoretical scenario where Ethereum (the second-largest cryptocurrency by market utilisation) overtakes Bitcoin. The idea of a Flippening originated during the crash of 2018, when Bitcoin lost more than half of its value within a year. While the crash affected other crypto coins in much the same way, including Ethereum, many Ether bulls have spawned the idea of it becoming the most-used crypto. One of the possible reasons for the Flippening includes Ethereum’s use of smart contracts for more flexibility in use cases outside of the currency market.
Hal Finney
Hal Finney was one of the main contributors to Bitcoin after Satoshi Nakamoto. As a designer behind the cryptocurrency, he was the first person to receive a BTC transaction after Nakamoto sent 10 BTC to Finney’s address. Some community members believe that Finney was Nakamoto, a claim that Finney himself has denied by posting email conversations between the two developers. His work on improving Bitcoin and cryptocurrency protocols continued until his death from ALS-related complications in 2014. Finney remains praised within the crypto community for his influence and innovations in the industry.
HODL
The term HODL originated as a typo of the word ‘hold’ on the Bitcoin forums and has since gained widespread acclaim and become one of crypto industry’s catchprases and most recognisable slang terms. In practice, HODLing refers to a long-term investment strategy where the user (HODLer) holds an investment for a significant period regardless of market changes and events. The HODLing strategy is mainly passive. However, if a HODLer has purchased a minuscule amount of BTC a decade ago, their profit today would be monumental, highlighting the strategy’s potential success (see Bitcoin Pizza for reference). Most commonly, HODL means ‘Hold On for Dear Life.’
Laser Eyes
Laser Eyes, or Glowing Eyes, is an internet meme popular in the Bitcoin or altcoin communities. The meme’s origins are two-fold. The original internet meme most likely originates from various video games, movies, or comics, where characters will develop or display glowing eyes as a sign of power or particularly commanding presence. Specifically, the meme was first found to have originated from the game “Mass Effect 2.” The meme’s spread to Bitcoin circles was widely considered to have similar origins in various superhero comics, particularly Superman’s iconic laser eyes. In the crypto community, the meme was most popular on Twitter in February 2021. Many prominent crypto investors changed their profile pictures to include glowing or laser eyes in various shades.
Lightning Network
One of the major downsides of Bitcoin that make it ill-suited to replace fiat currency is slow transaction time. Current Bitcoin mining allows for about seven transactions per second, a paltry number compared to the financial giants like Visa, which deal with tens of thousands in the same timespan. The Lightning Network is a second layer of nodes overlaying the primary Bitcoin blockchain designed to improve transaction speed and ensure the cryptocurrency’s scalability for real-life scenarios. Unlike in the primary blockchain, transactions through the Lightning Network don’t require all nodes to approve them.
MicroBitcoin (uBTC)
MicroBitcoin, with the acronym uBTC, is erroneously considered to be a fork of Bitcoin and a separate cryptocurrency. Actually, the term simply means one-millionth of a Bitcoin, or 0.000001 BTC. While this small amount held close to no value when Bitcoin first started operating, today’s market makes uBTC worth roughly £0.043 (as of November 2021). The term MicroBitcoin, when paired with the acronym uBTC, shouldn’t be confused with MicroBitcoin (MBC) and United Bitcoin (UBTC). They are separate, lesser-known altcoin cryptocurrencies and hard forks of Bitcoin.
Mining
Mining is a process through which new blocks are added to the blockchain in cryptocurrencies (like Bitcoin, Ethereum, and other altcoins). Mining is the only way to validate Bitcoin transactions and inject new Bitcoins into the market. Mining is typically done on commercial GPUs, usually built as a rig using a single CPU controller and several GPUs to mine. This widespread secondary use of GPUs prompted a significant price hike for these products and partially led to a chip scarcity that negatively affected many electronic and adjacent industries. Newer ASIC machines outpace GPUs, which prompted a significant backlash from hobbyist miners due to their inaccessibility and price.
Mt. Gox
Mt. Gox was one of the first major platforms for trading in Bitcoin, conducting about 70% of the transactions at the time. Unfortunately, it was subject to a hacker attack in 2014 which saw about 850,000 BTC stolen from the platform, the majority of which belonged to the exchange’s customers. Most of the stolen Bitcoin was never recovered, making it one of the largest losses in cryptocurrency history. The events surrounding Mt. Gox have prompted a widespread shift towards more decentralised cryptocurrency exchanges and higher scrutiny towards any new exchanges.
On-Ledger Currency
An on-ledger currency creates and stores all instances of the currency on the blockchain ledger. This is the base of many current cryptocurrencies, including Bitcoin. Due to its existence solely on the ledger, records of creating and transferring currency between users and addresses are public and decentralised, allowing for more transparency and a degree of anonymity not possible with fiat currencies. On-ledger currencies can be forked to spawn new currencies with slightly different parameters. Fiat currencies are an example of off-ledger currency, the directly opposite concept.
Paul Le Roux
Paul Le Roux is a criminal mastermind, cartel kingpin, and former programmer who was at one point considered to be the face behind the Satoshi Nakamoto pseudonym. His notable contribution to computer science is developing E4M, an open-source encryption program for the Windows platform, which was used as a base for newer encryption programs. Le Roux is better known for his various criminal activities, including narcotics smuggling, call centre scams, and involvement in several murders. In 2020, Le Roux was sentenced to 25 years in prison.
Physical Bitcoins
Physical Bitcoins are various forms of physical wallets in the shape of a traditional coin, bridging the gap between crypto and fiat currencies. One of the main advantages of using physical Bitcoins over digital wallets is the slightly improved security due to more convenient and secure public and private key storage. Physical coins can come preloaded with a certain amount of currency for investment and storage or start blank and have coins transferred to them later. In a physical Bitcoin, the keys are stored on or inside the coin, with the private key protected with a tamper-proof hologram or other security options. The coin itself, usually made from metals, has no intrinsic value beyond the cost of materials used to make it.
Raiden Network
The Raiden Network is an Ethereum-adjacent off-the-blockchain solution that enables faster and more anonymous transactions that incur lower transaction fees than standard blockchain transfers. It is designed as a secondary layer to Ether’s ERC20 standards and uses a similar structure as Bitcoin’s Lightning Network. The Raiden network uses token verification channels that allows bidirectional transfers between two addresses without addressing the blockchain or waiting for global node confirmation. The network is also used to waive fees associated with transacting via the blockchain, making many different scenarios involving real-life situations more feasible to incorporate through the system.
Retargeting
Retargeting, otherwise known as difficulty adjusting algorithm, is the process many proof-of-work cryptocurrencies, such as Bitcoin, use to enforce a consistent average block time. The algorithm adjusts the target of the hashing algorithm (the number of the result must be equal to or lower than) every 2,016 blocks (about 14 days). The new target means that the miners creating new blocks have to develop increasingly difficult nonces and consume more processing power to resolve the hash successfully. This means that the average cost of each block in terms of processing and energy costs has steadily risen since Bitcoin’s inception.
Roger Ver
Roger Ver is a major proponent of cryptocurrencies, starting with Bitcoin then switching to Bitcoin Cash after the fork that created the latter. As one of the most prominent media personalities popularising crypto as a way to upend and transform the global economy, Ver is sometimes called “Bitcoin Jesus.” Ver was an early investor in Bitcoin and used his profits to fund and create various crypto startups. He became involved with Bitcoin Cash shortly after the fork, to the extent that he was erroneously listed as one of its co-founders. Ver is a proponent of libertarian ideals and individual freedom, and has donated significantly to companies embroiled in those causes. He has served an eight-month federal prison sentence in 2002 and 2003 for selling fireworks through eBay, and has posted a video describing his experiences there.
Satoshi (SATS)
The SATS is the smallest subdivision of a Bitcoin, at one one-hundred-millionth, or 0.00000001 BTC. The name derives from the pseudonym of the creator of Bitcoin, Satoshi Nakamoto. The satoshi was initially intended to be one-hundredth of a Bitcoin (0.01 BTC). However, a later consensus settled on the current definition. This was doubly fortunate due to Bitcoin’s significant increase in market value in the intervening years. Restricting the BTC to only two decimal places means that the smallest unit traded would be impractical for everyday use, worth hundreds of pounds.
Satoshi Nakamoto
Satoshi Nakamoto is a pseudonym used by the creator, or creators, of Bitcoin. In particular, Nakamoto is the author of the Bitcoin whitepaper, the blueprint which the cryptocurrency followed and which became the base of the entire industry. Over the course of its existence, various individuals or groups have claimed to be Satoshi Nakamoto, while others were suspected of being Satoshi by the community. Subsequent investigations usually refuted the claims or were found inconclusive in proving the real identity behind the pseudonym. Further compounding the mystery, Nakamoto seemingly left the project shortly after it started, with their final message being posted in 2010.
Scrypt
Scrypt, pronounced “ess crypt” and not to be confused with “script,” is a proof-of-work key derivation algorithm developed in 2009, and is one of the alternatives to the SHA-family algorithms (Bitcoin mining uses SHA-256). Unlike SHA, which uses a significant amount of processing power, scrypt incorporates heavy memory requirements. The key difference is that using scrypt instead of SHA effectively nullifies the advantage ASICs have over modern GPU mining rigs. Currently, a modified version of scrypt is used in a few altcoins.
Segregated Witness (SegWit)
SegWit is a BIP implemented in 2017 as a soft fork intended to remove some of Bitcoin’s scalability and processing time problems. SegWit modifies transaction data to omit signatures from the start, severely reducing the transaction size and allowing a block to hold more transactions for validation as a result. The reason for implementing SegWit is straightforward since Bitcoin can currently only process seven transactions per second, a far cry from being usable in real-world economics. When Bitcoin prices change significantly and abruptly, the increased number of transactions lead to significant bottlenecks and delayed processing.
SHA-256
SHA-256 is one of the most popular hashing algorithms. The nature of hashing algorithms allows encryption methods to derive a fixed-length output string from an irreversibly modified variable-length input. SHA-256 qualities mean that you can’t derive the input by knowing the output. SHA-256 is used in Bitcoin mining to create and manage addresses or verify transactions by running the method twice when creating a block. SHA-256 is secure enough to be used by many current encryption standards outside of crypto, like SSL, TLS, and Unix or Linux software, as well as most password verification systems.
Symbol
A symbol is an abbreviation or a code for a particular cryptocurrency. For example, Bitcoin uses the symbol BTC while Ethereum has the symbol ETH. Symbols are also used on the stock market for various publicly traded companies to assign them unique, short, and relatable names that take up less memory and space. Symbols have to be unique within a market, allowing investors to differentiate between companies at a glance. Symbols range from being between one and five letters long for some products. Most cryptocurrencies use three- or four-letter symbols, and some are incredibly challenging to differentiate without their associated abbreviations, especially considering the number of Bitcoin forks.
Taproot
Taproot is one of the most prominent and promising improvements to Bitcoin’s security and implementation since the SegWit soft fork. At its core, Taproot provides more support for complex transactions. Using a new signature-producing strategy developed by Claus Schnorr, Taproot can use multiple keys and produce a single signature for added privacy and security. By implementing Taproot, complex transactions like time-locked or multiple-key transfers can be registered under a single, private signature, which provides anonymity without sacrificing verification.
Virgin Bitcoin
A virgin Bitcoin is a coin that has never been used in a transaction. Essentially, a virgin Bitcoin has never left the miner’s address after it was awarded for solving a block. New government regulations on cryptocurrency proposed by the Financial Action Task Force against Money Laundering (FATF) require exchanges to indicate individuals involved in transactions. This has led to some users preferring to buy virgin Bitcoin for up to 30% more than the average price. The lack of transactional history makes virgin Bitcoins more valuable to investors and hackers alike, who prefer them for similar reasons.
Vitalik Buterin
Buterin is one of the co-founders of Ethereum, the second-largest cryptocurrency by market utilisation (as of 2021). Vitalik was born in Russia and moved to Canada as a child, starting his crypto involvement by writing for Bitcoin Weekly magazine in 2011. His proposal for the Ethereum white paper started in 2013 and has gained momentum before the cryptocurrency’s founding in 2015. Ethereum is currently considered one of the best alternatives to Bitcoin and has a growing community, consistently competing for the spot of the most traded cryptocurrency on the market, with more potential real-life applications than Bitcoin.