Virtual Currency Glossary – all important terms related to crypto-currencies
Crypto-currency: Digital currencies based on cryptographic mathematical algorithms. Bitcoin is the first Crypto-currency and the best known, but currently there are alternatives of Crypto-currency such as Ethereum, Dash Litecoin and Jerus among others.
Cryptography: Use of mathematics for message encoding so that only the recipient can understand its meaning. If a third party intercepts the message, he wouldn’t understand it.
Bitcoin (with capital B): Used to describe the concept of Bitcoin, the entire network and the protocol that composes it.
Bitcoin (with lowercase b): Refers to the currency unit of the homonymous network and can be used in singular and plural (bitcoin and bitcoins). It is often abbreviated as BTC, and sometimes as XBT.Bitcoin Whitepaper: A document that describes the Bitcoin technology in detail and with it these basics were established as a method of payment. It was written by ‘ Satoshi Nakamoto ‘ and was published in 2008.
Block: It is the fundamental piece of the crypto-currency and consists of a collection of transactions, that is, each block stores the transactions made in a period of time. Each stored transaction contains all relevant information, from where it was sent, where it was sent, date of the transaction, and any other relevant data for the blockchain-the block chain. Each transaction in a block is immutable, cannot be deleted.
Blockchain-blockchain: It is the technology that allowed the creation of the bitcoin and all the cryptocurrencies that followed it. Cryptocurrencies transactions are sent to the blockchain so that miners can place them in the mining blocks. Once a block containing a transaction is mined, it is added to the string. The chain of blocks is the equivalent in the world of the cryptocurrencies to the ledger used in the companies where it takes record of the statement. It contains a historical record of all the mined blocks-and therefore of all the transactions carried out-in all the history of each currency, and is public. Each block contains the hash of the previous block, creating an ordered succession of blocks. That’s why it is called Blockchain.
Blockchain.info: is a service that allows to observe all that is happening in the Bitcoin network, like updated graphics in real time that inform about the state of the crypto-currency, the transactions that are taking place or detailed information on each operation and mined block.
Hash: This is the result of a mathematical process that converts a variable amount of data and converts it to a fixed- output length. It has 2 indispensable features: it is virtually impossible to reverse (find the original data from the hash) and a minimal change in the original data produces a totally different output. In the world of cryptocurrencies, miners are used to generate hashes of blocks as fast as possible to find which solves them.
Mining: It is the act of solving a block, validating all the transactions that it contains. In return, the miner receives new Bitcoins (generated from nothing by the net). It is the way in which new currencies are generated in the net, drawing a parallel with the extraction of gold, which generates new richness when extracted. Because of this similarity it is called “mining”.
Billfold-Wallet: A user’s wallet contains their addresses with their private keys. A user can own as many addresses as they like, but these are usually part of a single wallet that contains them. Even so, a user can have as many wallets as he wants and in fact it is advisable to have at least one for daily operations and another for savings. By putting many addresses together in a single wallet, you can backup all of them in one operation.
Transaction: A crypto-currency transaction, is the actual act of moving coins from one wallet to another
Address: Possible destination of crypto-currency. It is used to receive coins (similar to an email address). Each crypto-currency transaction that is performed moves the money between addresses, which are shaped like a string of alphanumeric characters.
Private Key: An alphanumeric text associated mathematically to an address and which must be known only by the owner of this address. Access to this key is necessary and sufficient condition will be able to dispose at your whim of the crypto-currency deposited in that direction.
Public key: An alphanumeric text from which an address is trivially obtained and is known to all. By being known to everyone, anyone can send cryptocurrencies to the associated address. But only those who have the associated private key will be able to dispose of them. The public key is easily generated from the private key.
Client: It is the software used to send and receive cryptocurrencies and more in general, to manage our wallet.
Exchange: It is an exchange market where you are able to buy/sell the crypto-currencies with others or for FIAT money (dollar, euro, pesos).
Confirmation: A confirmation occurs when a transaction is added to a block that the miners properly undermine. To complete a transaction, you must confirm it between 3-6 times.
Fiat Money: It is trust money, or money created at the will of a government that is based on the faith and trust of the community and is not supported by precious metals. A currency that has value as long as people agree that it has value. The trust money began with the “Nixon Shock” of 1971, when the then President of the United States cancelled the precious metal support system of the US dollar. All of today’s legal course currencies are fiduciary currencies, including the peso, the dollar, the euro and many more. This means that the essential value of all of today’s conventional currencies is the support of a government and society trust.
Node: A computer connected to the Bitcoin network relaying transactions to others.P2P: Peer-to-peer is a network between peers or peers. It is a network of computers that work without clients or fixed servers, but with a series of nodes that behave like each other. That is, they act simultaneously as clients and servers with respect to the other nodes on the network. P2P networks allow the direct exchange of information, in any format, between the interconnected computers. The blockchain for example, is a P2P network in which all nodes are equal to each other, resulting in a distributed system resistant to computer attacks, failures or falsifications.
Ethereum: Ethereum is a decentralized platform that allows the creation of agreements of intelligent contracts between pairs. Ethereum also provides a crypto currency called ‘ ether ‘.
Smart contracts: A smart contract is a program that operates in a system not controlled by any of the parties, or its agents, and that executes an automatic contract which functions as a statement of any other Computer program. With the difference that it is done in a way that interacts with real assets. When a pre-programmed condition is triggered, not subject to any kind of human valuation, the smart contract executes the corresponding contractual clause
Satoshi: is the name given to the lowest possible subdivision of a bitcoin this days. . It represents one hundred millionth of a bitcoin, or 0.00000001 BTC.Satoshi Nakamoto: Is the pseudonym of the person or group of people who invented the bitcoin. No one knows his true identity.