Cryptocurrency and Blockchain Dictionary

Terms commonly used in the world of blockchain and cryptocurrency

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Miner

Miner – has two definitions. A node which carries out the mining process. A person who owns the working hardware for mining.

Mining – a process during which transactions are verified and added to the P2P network. It is conducted by the miners, which have to solve a cryptographic problem. In order to do it, miners have to produce the hash equal or less than the target hash; they try to do it again and again, inputting the combination of the block header and nonce into a hash algorithm, until the solution is found.

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.

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).

Mnemonic Phrase

Mnemonic phrase – also known as mnemonic seed, mnemonic phrase, mnemonic recovery phrase and seed phrase. An order sensitive combination of words that contains all the information necessary for restoring a cryptocurrency wallet. For example, circus collapse practice feed trap open despair creek road long ice least is a seed phrase.

NFT

Non-fungible tokens which are also referred to as NFTs; are blockchain-based tokens that each represent a unique asset like a piece of art, digital content, or media. An NFT can be thought of as an irrevocable digital certificate of ownership and authenticity for a given asset, whether digital or physical. NFT is a record on a blockchain which is associated with a particular digital or physical asset. The ownership of an NFT is recorded in the blockchain, and can be transferred by the owner, allowing NFTs to be sold and traded.

Node

Node – a device that is connected to the P2P network. Each node has a copy of all the previous transactions and supports the network by validating and relaying transactions.

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