Crypto Currency Terminology
Welcome to the crypto dictionary, it is advised reading through the list and getting a general idea of what these key terms mean. These words are the fundamentals into the cryptocurrency world. Note: This is an ALPHA version and is subjected to change at any minute.
Crypto – Crypto means Cryptography, and is ultimately the method on how algorithms are secured. It is the encryption process of the entire crypto-coin network.
Algorithm – Algorithm in mathematics is defined as: A process or set of rules to be followed in calculations or other problem-solving operations, especially by a computer.
Within cryptocurrencies, algorithms are the defining point in what shapes and ultimately the rules for miners mining.
Mining – A computer that processes algorithms. There are various levels on how well your computer can ‘mine’ such as: computer processing unit (CPU), graphic processing unit (GPU), and the highest form of mining, with, application-specific integrated circuit (ASIC). CPU mining is less effective than ASIC mining. Mining Cryptocurrency is ultimately what secures the network and processes transactions (confirming, see below).
Miner – A person or computer who is using hardware (mentioned above) to mine algorithms or blocks.
Hash – A measure on how powerful your computer hardware for mining is.
Blocks – An imaginary “block” of algorithms that miners are trying to solve. When a miner mining solves the correct algorithm for the block, he or she is awarded a block reward.
Block Reward – The payout of Bitcoins, or any crypto-based currency to the miner who solves the block.
Confirmations (Transactions) – Confirmations is the way in which miners help secure the network. When miners mine, they are using Hashes to mine the network. The more hashes a miner has, the more secure the network is and the quicker transactions can be confirmed. All transactions are processed in Blocks and are recorded in the Blockchain
Blockchain – A public ledger of all the transactions any user has ever done.
Total-Supply – Total supply of a coin is dictated by the developer of the crypto created. Supplies can vary from 1 total coin, to 1,000,000,000,000,000 total coins. The total supply is ultimately how many coins will ever be mined.
Pre-mine – Pre-mine or Pre-mining is a practice of mining by the creator of the specific crypto-currency. He or she mines coins before launching the coin for other users to mine. Effectively giving him or her a larger share of the total supply.
Instant-mine – Instant mine is much like pre-mine; But, the crypto-currency is released to the public immediately and the developers increase the Block rewards of the first few blocks to give a larger then normal payout. This will give the developers the upper hand in controlling the total supply.
Proof-of-Work (POW) – Currencies that use proof-of-work (POW) schemes require miners to spend computation resources to solve a block.
Proof-of-Stake (POS) – Currencies that use proof-or-stake (POS) schemes accept verification votes for each block from members of the network, based on how much of the currency each member controls.