Cryptopedia is the most complete FAQ in the Crypto world

Cryptopedia

General

Bitcoin is the first digital currency. It operates in a decentralized manner and has nothing to do with third parties such as banks and governments. The payments in the network are literally sent from person to person. A P2P network, in other words.

The inventor of Bitcoin is named Satoshi Nakamoto. No one knows who he is. To this day he has been able to maintain his anonymity. If Satoshi is still walking around somewhere he is a Bitcoin billionaire by now. This is because of the 980,000 BTC that have been in his wallet since 2009.

Bitcoin shares a public ledger called the Blockchain. This ledger contains all transactions ever processed, allowing a user's computer to verify the validity of each transaction. The authenticity of each transaction is protected by digital signatures that correspond to the sending addresses.

The growth of users is enormous. More and more people are starting to see that this could be the future. Visa cards such as Wirex or Coinbase also allow you to spend your coins easily and anywhere.

For people who have immersed them in this matter will have no problems. New to space? Then get assistance to make the first transactions. Acting without knowledge can mean loss.

Total freedom when paying. You can send and receive your Bitcoins at any time. There are no holidays or borders. Bitcoin has no borders so the world is your playground. Also, the Blockchain network behind Bitcoin is extremely secure. This is because of its Proof of Work in mining. Once something is recorded in the blockchain, it can never be changed. The coin is also completely transparent. It cannot be used for fraud.

Bitcoin is completely open source and decentralized. So everyone has access in the code. The consensus mechanism that ensures that everyone keeps a copy of the ledger. This decentralization makes Bitcoin the most reliable money system in the world.

The Cryptocurrency world is going fast very fast. With the right knowledge, you can indeed make some money. Note that without knowledge, you are without a doubt going to lose money.

If you have lost your private keys, your coins are forever dormant in the Bitcoin network. In the old days when Bitcoin had no value, this happened regularly. Now people take care of their coins and the way they are stored. Millions of Bitcoins have already been lost in the Blockchain.

On any exchange or trading platform there is a KYC required a Know Your Customer. A know your customer therefore. So on those platforms you give all your information which decreases your anonymity.

Economy

This is done by the miners. The miners who process the transactions and keep the network safe are rewarded in BTC. This is done in new Bitcoins each time. This can continue until 2140, at which point all Bitcoins will be in circulation.

This happens simply through supply and demand. If there is more demand than supply then the price will rise. If there is more supply than demand then the price will fall.

A pyramid or ponzi scheme only exists as long as new investors are added. With Bitcoin, this does not play a role. Even without additional people in the space, it will continue to run. Maybe less volatile but completely usable.

According to the theory behind the deflationary spiral, people will postpone purchases when prices are expected to plummet in order to take advantage of lower prices. This fall in demand causes sellers to lower their prices to stimulate demand, exacerbating the problem and leading to an economic depression. While the theory is a popular way to justify inflation within central banks, it does not always prove to be true and is seen as controversial by economists. Consumer electronics is an example of market where prices are continually lowered, but where there is no depression. Similarly, as the value of Bitcoins has grown over time, so has the size of the Bitcoin economy. Because both the value of the currency and the size of the economy started at zero in 2009, Bitcoin is a counterexample to theory and indicates theory is sometimes wrong. Nevertheless, Bitcoin is not designed to be a deflationary currency. Rather, Bitcoin is designed to inflate during its early years and become stable in later years. The only time the amount of Bitcoins in circulation drops is when people carelessly lose their wallets by not making backups. With a stable monetary base and a stable economy, the value of the currency should remain the same.

Transactions

This is simply because it takes 10 minutes to mine a block. This block contains all the transactions of the last 10 minutes.

Transactions can be processed without fees, but sending free transactions can take days or weeks. Although fees may increase over time, the cost of normal fees is currently very low. Transaction fees are also used as protection against users sending transactions to overload the network and as a way to pay miners for their work in keeping the network safe.

Mining

Mining is the process of using computer power to process transactions, secure the network and keep everyone in the system synchronized with each other. It can be thought of as the Bitcoin data center, with the exception that it is designed to be fully decentralized with miners from all countries and is run without a network administrator. This process is also called mining because it is a temporary mechanism to issue new Bitcoins. However, Bitcoin mining offers rewards in exchange for helpful services needed to run a secure payment network. Mining is still needed after the last Bitcoin is issued.

Anyone can become a Bitcoin miner by running software on specialized hardware. Mining software looks for transactions broadcast over the peer to peer network and performs the necessary tasks to process and confirm these transactions. Bitcoin miners perform this work because it allows them to earn transaction fees paid by users for faster transaction processing and newly created Bitcoins issued according to a set formula To confirm new transactions, they must be included in a block along with a mathematical proof of work. These proofs are difficult to generate because there is no way to create them except by trying millions of calculations per second. This requires "miners" to perform those calculations before their blocks are accepted by the network and before they are paid out. As more people start "mining" it is automatically made harder by the network to find valid blocks to ensure that the average time to find a block remains equal to 10 minutes. As a result, "mining" is a very competitive activity in which individual "miners" have no control over what is included in the blockchain. The working proof is also designed to enforce a chronological order in the blockchain depending on the previous block. This makes it exponentially more difficult to reverse previous transactions because it requires the recalculation of the working proofs of all subsequent blocks. When two blocks are found at the same time, "miners" work on the first block they receive and switch to the longest blockchain once the next block is found. This allows "mining" to secure and maintain a global consensus based on computing power. Bitcoin miners cannot cheat by increasing their own rewards or process fraudulent transactions that could corrupt the Bitcoin network, because all Bitcoin nodes reject any block containing invalid data in accordance with Bitcoin protocol rules. As a result, the network remains secure even if not all Bitcoin miners can be trusted.

Mining creates the equivalent of a competitive lottery in which it is very difficult for the same person to successively add new transaction blocks to the blockchain. This protects the neutrality of the network by preventing anyone from blocking certain transactions. It also prevents someone from replacing parts of the blockchain to reverse their own spending, something that can be used to cheat other users. Mining makes it exponentially more difficult to revoke a transaction made by rewriting all the blocks following that transaction.

In the early days of Bitcoin, anyone could find a new block by simply using their PC's CPU unit. With the huge increase in the number of "miners", the difficulty of finding a new block has increased to the point where it is only possible and profitable with specialized hardware.

Security

Bitcoin is perfectly secure because of Blockchain technology. The Blockchain cannot be tampered with. The only weakness of Bitcoin is the people who work with it. Any loss of coins is due to human error. Also, Bitcoin is constantly being updated to keep the network as secure as possible.

Yes, most cryptographic systems are, including all traditional banking systems. However, operational quantum computers do not yet exist and will not exist in the near future. If quantum computers become a threat, the Bitcoin protocol can be upgraded to use post-quantum algorithms. Given the importance of this update, it is expected that it will be looked at heavily by developers before being accepted by all Bitcoin users.

A public key is like your account number. You share this to receive transactions.

A private key provides access to your coins. So don't share it with anyone.

One Bitcoin consists of 100 million particles, those particles are called Satoshi's.

Altcoins

Bitcoin is Bitcoin, any other form of cryptocurrency is called an altcoin. This simply stands for alternative coins.

Meanwhile, there are more than 9000 Cryptocurrencies and there are more every day, there are beautiful projects but also many dregs and unfortunately often scams. So always make a good fundamental analysis before you get involved in a project.

Each coin or token represents a particular project and technology. By buying a particular coin you are investing in that particular project.

www.coinmarketcap.com is the website where you can find all the coins. You will find the ranking but also a short explanation and some statistics.

  1. Cryptocurrency: these tokens can only be used to conduct financial transactions.
  2. Platform tokens: these are coins with a blockchain that allow the creation of projects on their platform.
  3. Utility tokens: these are tokens that can be used with all kinds of services.
  4. Security tokens: these will be the stocks of the future, these coins will make it possible to start putting Wallstreet on a blockchain!
  5. Commodity tokens: these are similar to the security tokens, but for all commodities.
  6. Stablecoins: these are coins that represent a fixed value e.g. coins that always maintain the same value in values such as euro or dollar.
  7. Cryptocollectables: these are unique tokens that can be collected.

Terminology

51% attack
If 1 person controls more than half of the network, they can single-handedly reach consensus on what happened, and therefore manipulate transactions. (Don't panic, the Bitcoin network is now so big that this is impossible)
Address
An account where you can receive or store money. It is often a long string whose structure varies from Blockchain to Blockchain.
Airdrop
Distributing a coin or token to as many people as possible, often for free or in exchange for giving it some publicity. The goal is to get people involved and build a community.
Algorithme
In the blockchain world, all kinds of algorithms are used. For example, for calculating hashes that serve as a signature to a transaction. Each algorithm has its own characteristics. Such as suitability for ASIC, GPU or CPU.
All Time High
This is the highest price a cryptocurrency and/or tokens have ever achieved.
Altcoin
Altcoins literally stands for alternative coins. Bitcoin is Bitcoin and all the rest are altcoins.
AML
This stands for anti money laundering. These are laws designed to prevent money laundering.
ANN
Announcement. The first notification of the existence of a project, often on the bitcoin forum. Here the principles of project are shared, sometimes with reference to a white paper or website.
Arbitrage
If a currency is listed on several exchanges then a difference can arise between the prices on different exchanges. Exploiting this difference by buying on one exchange and selling on another is called arbitrage.
ASIC
A chip specifically designed and made to do the calculations required for mining a particular group of coins. Some blockchains use an algorithm for which ASICs cannot yet be made.
Bagholder
Holding a lot of a particular coin or token.
Bearish
In a bear market we are in a downtrend.
Bitcoin maximalist
These are people who do not value altcoins. For them, Bitcoin is the only real Cryptocurrency. The belief goes far to even almost religious.
Block
A blockchain consists of blocks that hold all the transactions of a particular coin. With Bitcoin, it takes about 10min to mine a block.
Block explorer
A cryptocurrency is transparent, so each coin has its own block explorer where you can find all transactions.
Block height
This is the identifier of a block, a number that indicates where a block will be in the blockchain. The first block has height 0, the next 1, and so on.
Block reward
The number of coins given as a reward to the miner who mined the new block the fastest.
Block subsidy
The number of new coins put into circulation in a block as part of the block reward. It rewards miners for securing the network as long as the transaction costs are still insufficient.
Block time
The time between 2 consecutive blocks. Often between 1 and 10 minutes. The lower the block time the faster a transaction is confirmed by the network. In proof of work, the block time is kept constant by adjusting the difficulty with each block according to the hashrate of the network.
Blockchain
A public and chronological log of all transactions. No one is the boss of a blockchain, the participants of the network control and confirm the transactions. The transactions are grouped into blocks, hence the name.
BTFD
Buy the fucking dip.
Bullish
A bull expects the price to rise. A bull market shows an upward trend. News or developments that have a positive impact on the price are called bullish.
Buy wall
A bull expects the price to rise. A bull market shows an upward trend. News or developments that have a positive impact on the price are called bullish.
Charlie lee
This is the creator of litecoin. 1 of the top coins.
Circulating supply
The number of coins or tokens currently in circulation. This number can increase by, for example, mining. The number can also decrease with, for example, a token burn.
Confirmation
Each block contains a reference to the previous block and thus confirms that the network has actually accepted the previous block. Each following block is therefore also called a confirmation. If there are 30 blocks following a particular block, that block has 30 confirmations.
Consensus
The network as a whole must reach consensus on which transactions are actually correct, without a minority being able to get their way. There are several consensus algorithms, such as proof of work and proof of stake.
Cost averaging
If the price falls after you make a purchase, you can then buy some more to lower the average purchase price. This is called cost averaging, and it allows for a greater profit per unit if the price rises later.
Cryptocurrency
This is the collective term for all digital currencies whose integrity is monitored by a decentralized cryptography-based system, such as a blockchain.
DAPP
A distributed app. An application whose code consists of smart contracts. That code is executed decentrally by the nodes of the blockchain, and therefore not by a central server.
Death cross
In the "death cross" we look at a cross between 2 moving averages, one long term and one short term, traditionally 200 and 50 days. In a rising market, the short-term average is higher than the long-term average. If the short-term average falls below the long-term average (and thus the lines cross) then it confirms a trend reversal, we leave a bull market for a bear market.
Decentralized
Decentralized. There is no central authority; no one is the boss of the network. The network exists because there are many participants and control is spread among those participants.
DEX
This is a decentralized exchange. A trading platform on which traders trade directly with each other, without the intervention of a central party where you have to deposit your money.
Difficulty
In mining, the work delivered must meet a certain level of difficulty, the difficulty. This is reset by the network with each block to keep the block time constant.
Distributed ledger
Distributed ledger. A blockchain is a ledger, a record of transactions, that is not in 1 central location, but distributed across a large network of participants who control the ledger.
Double spending
A properly functioning blockchain prevents anyone from spending their money twice. Therefore, participants must verify transactions before accepting them.
DYOR
Do your own research. It's your money, so it's up to you to examine why you're investing in something.
ERC 20
This is a collective name for all tokens on the Ethereum platform.
ETH
This is the abbreviation for ether, the currency of the Ethereum network.
Exchange
An exchange where coins and tokens are traded. Projects like to be tradable quickly on the major exchanges, because then more people will have access to their coins or tokens.
Fiat currency
Regular money, such as euros and dollars. Fiat money is money where the value is based on the trust people have in a central banks and governments.
Flippening
The moment when another crypto currency becomes larger than Bitcoin in market capitalization.
FOMO
Fear of missing out. Can apply to a specific project or to the crypto market as a whole. The feeling that everyone is participating and you don't want to miss the boat.
Forging
Alternative proof of stake process, where the miner is not rewarded with a block reward. Instead, he gets to keep the transaction costs as a reward.
Fork
Splitting a blockchain into two separate blockchains. They share history until the split, then they are separate networks. A fork is necessary when there is a major change in the rules or structure of a blockchain. Sometimes only one of the two new branches continues because the entire network accepts the new rules.
FUD
Fear, uncertainty and doubt. Can apply to a specific project or to the crypto market in general. This often stems from rumors and speculation, and causes people to sell or not buy yet. The price falls without fundamental or technical reasons.
Fundamental Analysis
This is an examination of a project or organization to determine if you want to invest in it. Is the foundation under the course surprisingly good? Then perhaps the project is undervalued. So buy it! Is it disappointing? Then let it lie. There are enough good projects. So don't take any risks.
GAS
A smart contract needs computation time from the nodes that execute the code. The fee they receive for this is called gas (fuel). The more computation time it takes, the more gas is needed.
GAS limit
This is the maximum amount of gas you want to pay for a transaction.
GAS price
How much ETH per unit of gas you want to pay for a transaction. If you want to pay more, your transaction will be completed sooner, but will also cost more. Often expressed in GWEI.
Genesis block
This was the first block in the blockchain. It is created by the developers and sometimes contains an idealistic message or provides a large reward that is used by the developers to fund the project.
Golden cross
In the "golden cross" we look at a cross between two moving averages, one long-term and one short-term, traditionally 200 and 50 days. In a falling market, the short-term average is lower than the long-term average. If the short-term average rises above the long-term average (and thus the lines cross) it confirms a trend reversal, we leave a bear market for a bull market.
GPU
The chip on a video card. Some mining algorithms can be computed quickly and efficiently by GPUs. Mining rigs often consist of a number of GPUs that do the work.
Gwei
A gwei is a unit of ETH. One Ethereum consists of 1,000,000,000 gwei.
Halving
With many blockchains, the reward per block decreases as time goes on. With Bitcoin, the reward is halved every 210,000 blocks. That moment is called the halving.
Hard cap
The maximum amount of money that the ICO is intended to raise. When this is reached, the ICO ends. All coins or tokens intended for the ICO are then issued.
Hash
This is a control number of a set of data, with a fixed length. For example, a block contains the hash of the transactions in that block. The original data cannot be derived from the hash. There are various hashing algorithms such as SHA 256 and Scrypt.
Hashrate
The number of hashes a participant can compute per second.
HODL
A corruption of hold, meaning to hold. A trading strategy where you buy a coin to hold it for a long time. You speculate on a large increase in value over the long term. Can also stand for Hold On For Dear Life.
ICO
Een initial coin offering. Een manier om een munt of token in roulatie te brengen, door hem voor een bepaalde periode te verkopen.
Immutability
Something once written cannot be changed. A blockchain is immutable, because an accepted and confirmed block cannot be modified again. Censorship is therefore not possible.
No definitions
KYC
Know your customer. Laws requiring organizations to keep records of their customers. Intended to limit illegal activities.
Lambo
Lamborghini. A symbol of trading success. The first car you could ever buy with Bitcoins, and therefore a favorite with crypto traders.
Lightning network
A network that allows transactions to be made outside of the blockchain. These transactions are fast and inexpensive, without sacrificing the security provided by the blockchain.
Limit order
You buy something at the maximum price you specify. If the current supply cannot fulfill your order, your order waits in the order book until it does.
Liquidity
How much supply and demand there is. If liquidity is high, then large quantities can be bought and sold without the price moving much because there is enough supply and demand.
Long
When you go long, you take advantage of a rising price. You can do this by buying a currency, or a derivative that increases in value as the currency rises in value.
Margin trading
This is leveraged trading. You give capital as collateral. You lose that if the price goes too much in the wrong direction. Very risky with high volatility.
Market cap
The total value of all tokens or coins of a particular project currently in circulation. The market cap is an important means of determining whether a project is under or overvalued. Always compare the market cap of projects, never the value of a unit of coin.
Market order
You buy or sell something at the price at which it is currently trading.
Masternode
A masternode is a special participant in the network and may perform special functions, such as voting and privacy transactions. The owner must tie up a large amount of capital to be a masternode, and in return he gets a share of the blockrewards. There are similarities with proof of stake, but not every POS network has masternodes and vice versa.
Maximum supply
The total number of coins or tokens that will ever be made. With a blockchain, this number is fixed in the code of the blockchain and cannot be changed.
Mining
A blockchain based on proof of work needs miners to verify and confirm transactions. They bundle new transactions into a new block that meets the current difficulty level. Miners receive new coins as a reward for doing so. Hence the reference to gold mining.
Mining pool
With many blockchains, it takes a long time for an individual miner to find a block, and get the corresponding reward. Sometimes as long as weeks or months. Many miners work together in a pool. Everyone does a piece of the work, and the profits are shared.
Mining rig
A computer built specifically for mining crypto currency. The design is optimized for cooling and power consumption.
Moon
To the moon. This is when a coin or token skyrockets in value.
MyEtherWallet
An open source software wallet for the Ethereum network and its derivatives. Can be used online at myetherwallet.com, or offline by downloading the software.
Node
Network participant. Checks and confirms transactions. It takes many participants to ensure that no one has sole control.
OG's
Original Gangsters. People who were there from the very beginning. They've been through it all once: crashes, valleys, peaks, hacks, euphoria and panic. Some really get it. Some have become very rich by accident and take themselves way too seriously.
Order Book
The collection of all buy and sell orders given on a particular exchange. You can often view the order book and therefore get an idea at what price there is supply and demand.
Permissionless
Many blockchains are permissionless. Anyone can participate in the network and view and control the content of the entire blockchain. No permission is needed from a central authority. Regulation and censorship is therefore more difficult.
Presale
This is a limited pre-sale of a coin, prior to the ICO. This gauges interest and verifies that the pricing is right. The presale is sometimes private or by invitation, and often at a steep discount.
Private key
The secret key that accompanies a public key. This allows you to encrypt or sign data, such as transactions. Anyone can then use the public key to verify that you signed it without knowing your private key.
Proof of stake
A way for different participants in a blockchain network to check and confirm transactions together. If they secure some of their tokens for a certain period of time, they get to vote on the validity of a block. In return, they get a reward.
Proof of work
A way for different participants in a blockchain network to check and confirm transactions together. All seek a solution that must meet a certain high standard. The first one who can provide that proof gets the reward. The search for that solution is called mining.
Public key
The public key that accompanies the secret key. This allows anyone to verify that you have encrypted or signed something.
Pump and dump
Artificially driving up the price by all of us buying and then artificially crashing the price by all of us selling. The people who are the first to know that a pump and dump is coming make the most money. You also have whales who can do this on their own or in small groups.
No definitions
Rekt
Wrecked, or scrapped. The value of your currency after a bad transaction. Or the value of your portfolio after a market crash. Or the value of a project after a huge price drop.
Roadmap
A document that describes the plans for the coming period as specifically as possible. Often the plans are placed on a timeline. In a good roadmap, the plans are very concrete and measurable in the near future, and more abstract further into the future.
Satoshi Nakamoto
This is the inventor and creator of Bitcoin. This is a pseudonym for an unknown person or group of persons.
Sats
One Bitcoin consists of 100 million units. A unit is called a satoshi or sat.
Scam
Scams. In the still unregulated and erratic crypto world, people try to make money by scamming others. For example, with fake ICOs or copied blockchains. A fake coin is also called a scamcoin.
SegWit
A change in the code of bitcoin that provides more security and more capacity. A prerequisite for the lightning network.
Sell wall
Most order books of exchanges contain what is called a depth chart. There you see a graphical representation of the current buy and sell orders. A sell wall is the representation of a large sell order waiting to be filled. Often such an order is visible as a vertical line - the sell wall.
Sharding
A way to make blockchains scalable. Originally, nodes within a blockchain contained a copy of the complete blockchain. By using sharding it is possible to store a part of the blockchain on a node. This increases the speed of the network.
Shilling
Shill a project. Recommend a project. Often used by experienced traders with many followers.
Shitcoin
A coin or token with no clear function or value yet. Thus, the price is based entirely on speculation.
Short
When you go short, you take advantage of a falling price. You can do this by buying a derivative that increases in value when the currency falls in value.
Silk road
Large marketplace for the sale of firearms, drugs and other illegal products. It has since been taken out of operation by the FBI. It passed in the crypton news because the FBI auctioned confiscated Bitcoin.
Smart contract
A programmable address. When money is sent there, code is executed to determine what to do with it. For example, distribute it among other addresses or return a number of tokens.
Soft cap
The minimum amount of money that people want to raise with the ICO. If this is achieved, then the ICO is a success. If the proceeds are lower than this amount, then a project is sometimes cancelled, and everyone gets their deposit back. Unsold tokens are often destroyed via a token burn.
Soft fork
With a soft fork, the rules within the blockchain are tightened. Less is then allowed than before. However, the tightened rules are compatible with the rules that were active before. Therefore, a split of the blockchain is not necessary as with a regular hard fork.
Solidity
This is the most widely used programming language for smart contracts for Ethereum.
Spec mining
Speculative mining. Mining a coin that has little value or is not even tradable yet, with the expectation that it will become worth a lot in the future.
Stable coin
These coins have a fixed value that is usually pegged to the dollar.
Technical analysis
The movement of the stock price is the result of supply and demand. They are the result of the emotions and expectations of the buyers and sellers. And that appears to follow certain patterns. Examine what happened to the price, and you may be able to predict what will happen next.
Token
The term token and coin are often used interchangeably. In practice, a token often has a very specific function within a specific application. Also, a token does not have its own blockchain, but lives for example on the blockchain of Ethereum, Neo or waves.
Token burn
When a token is removed from circulation, or destroyed, it is burned. This reduces the number of tokens in circulation, the tokens become more scarce, and this often makes the price rise.
Total supply
The total number of coins or tokens made at this time. Some of it may have been reserved or held until some point in the future, and thus is not in circulation. Coins or tokens not in circulation count in the total supply, but not in the circulating supply. Coins or tokens that have not yet been created do not count in the total supply, but they do count in the maximum supply.
No definitions
Vitalik Buterin
The inventor and creator of Ethereum.
Volatility
The volatility of a stock price. Volatility is often higher when there is turmoil or when the price is falling rapidly. Also if there is little trading, volatility is higher because a relatively small purchase or sale already affects the price.
Wallet
The wallet for crypto coins and tokens. There are many different types. For one or more types of tokens. With one or more addresses. In the form of a USB stick or as software.
Wei
This is the smallest unit of an Ethereum.
Whale
Whales are wealthy coin holders. Usually also able to manipulate markets.
Whitelist
Some ICOs require you to sign up in advance to participate. You then get put on the whitelist.
Whitepaper
A document describing the philosophy, goals, technology and people of a project. Important for fundamental analysis. For a good project, it tells you why the project is valuable and promising.
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