Cryptocurrency and Blockchain Dictionary

Terms commonly used in the world of blockchain and cryptocurrency

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Mining Pool

Mining pool – a group of miners who combine their system resources, allowing them to generate a higher hash rate than it would be possible for any of them to generate individually. Higher hash rate = greater chance of mining a whole block. Mining reward gets split between mining pool members. Note: not every PoW cryptocurrency has mining pools. Some PoW cryptocurrencies accept transactions one by one, not by combining them into blocks, thus eliminating the point of having mining pools.

Other Important Terms

Private Key

Private key – a unique alphanumeric string that allows cryptocurrency to be spent from user’s wallet. For example, E9873D79C6D87DC0FB6A5778633389 is a private key.

Mining Reward

Mining reward – a certain amount of cryptocurrency awarded by the network to select miners for every block/transaction mined. For example, the current Bitcoin mining reward is 12.5 BTC per block mined (this amount will reduce in the future with each halvening).

Fungible Token

Fungible token – a cryptocurrency asset that is divisible, interchangeable and is similar to other tokens of its kind. For example, bitcoins are fungible tokens because any bitcoin can be divided, exchanged for another bitcoin and is not unique in any way.

PoS

Proof-of-stake (PoS) protocols are a class of consensus mechanisms for blockchains that work by selecting validators in proportion to their quantity of holdings in the associated cryptocurrency. This is done to avoid the computational cost of proof-of-work schemes. PoS blockchains include Ethereum, Polkadot, Avalanche, and Cardano

FUD

FUD – short for Fear, Uncertainty, Doubt. Describes the act of sharing negative rumors about a certain cryptocurrency or the market in general, which can negatively affect their price. Usually the rumors are not based on any evidence.

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