Today cryptocurrency is one of the most popular phenomena. When Satoshi Nakamoto invented it, it was an obscure concept. The several bull runs made by Bitcoin and word-of-mouth promotion of currencies like Dogecoin contributed to its widespread popularity.
A lot of new traders are investing in Bitcoin and other altcoins through online trading applications. The availability of trading applications has made crypto more accessible to traders from all walks of life.
In this blog, we will discuss some of the popular cryptocurrency terminologies. This list of languages will provide you with a better insight into how crypto networks function.
Popular cryptocurrency lingo
Distributed ledger
The distributed ledger is central to our understanding of cryptocurrency. Almost all cryptocurrencies, including Bitcoin and most altcoins, use blockchain technology. The blockchain is a distributed ledger. This ledger system is different from the traditional ledger system used in banks and all other financial institutions.
A singular authoritative body regulates the traditional ledger system. At the same time, the distributed ledger used in cryptocurrencies is decentralized. In the distributed ledger system, the blockchain is simultaneously maintained by multiple computer networks. It is for this reason the distributed ledger system is virtually immune to tampering.
Altcoins
The first cryptocurrency to be invented was Bitcoin. It is also the most valuable cryptocurrency at this moment. However, there are more than 6000 cryptocurrencies existing today. Currencies excluding Bitcoin are referred to as altcoins. Some of the popular altcoins are Ethereum, Dogecoin, Litecoin.
Blockchain
Blockchain is the primary technology on which the existing infrastructure of cryptocurrency is based. As we can understand from the name, it is a chain consisting of data blocks. The blocks store data on crypto transactions. It also records the data of the previous block. This is a digital ledger used to record all transactions taking place on the crypto network.
Consensus
Algorithms maintain crypto ledger systems. The consensus is an important security feature that helps in the maintenance of the distributed ledger. There are multiple computers registered in a crypto network. During the creation of a new block, all the computers need to come to a consensus and verify the transactional data to approve the legitimacy of the new block. The consensus program of the blockchain guides this process.
Crypto wallet
These are online applications that allow you to store cryptocurrencies. Crypto wallet comes with its private passkey. The passkey can be used to make transactions from a wallet. Most of the trading platforms on the internet provide a wallet facility. Apps like ethereum code come with their own wallet facility as well as features like automated trading.
Nonce
The nonce is the abbreviation of numbers only used once. Crypto miners have to solve for a number when verifying and auditing transactions on a crypto network. The nonce is the targeted number for which every miner is competing. Data from the previous blockchain is hashed into a hexadecimal number. This number has to be solved in order for a minor to create a new block and earn rewards in crypto successfully.
Mining
The process through which new blocks are registered to the existing ledger is known as mining. For a transaction to be successfully processed, miners have to verify the encrypted transactional data against data from the distributed blockchain ledger. For this, miners have to solve complex mathematical equations. Through this verification process, the minor can provide the data required to create a new block. This is also how miners earn their crypto rewards. Thus mining is also the process through which new cryptocurrencies are introduced into circulation.
Nodes
The blockchain ledger has to be maintained by computational power. Every cryptocurrency platform has several computer networks in it. A single computer network in a cryptocurrency platform is known as a node. A node has access to the entirety of data stored as blocks in the blockchain.
Conclusion:
These are some of the standard technical terms for cryptocurrencies. If you are a new trader, this list of crypto jargon might be helpful to you.
