Cryptocurrency and Blockchain Dictionary

Terms commonly used in the world of blockchain and cryptocurrency

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P2P

P2P – short for Peer-To–Peer. A network where all the peers are connected to each other, each peer sharing files with the other. Peers are nodes.

Physical Cryptocurrency Wallet

Physical cryptocurrency wallet – a physical object containing user’s private keys. There are several types of physical wallets: Hardware wallet is a device that has user’s private keys saved to its memory. In order to access them, user has to connect such a wallet to a device that is connected to the Internet, such as PC or smartphone, and enter a pin code. For example, Ledger Nano X is a hardware wallet; Paper wallet is a copy or printout of user’s public and private keys.

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

PoW

PoW – short for Proof of Work. A type of consensus mechanism, where nodes validate transactions by using computing power. Here is how it works: User A makes a transaction; User A’s transaction gets bundled into a block along with other users’ transactions; Transactions get validated; The header of the most recent block is inserted into this block as a hash; The cryptographic problem is solved during the mining process; The block is published to the blockchain; User B receives a transaction. For example, Bitcoin uses PoW consensus mechanism.

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.

Public Key

Public key – a unique alphanumeric string that allows cryptocurrency to be received to user’s wallet. It is generated from the private key. For example, 0418fae4ee 35dae20c20 9da4aa4921 156c3fb519e c33fbf37ec7 13e9c7276dc 9d41bce8825 34118684dc8 e47b6ee49cc ce4c77b197e 38441a06c6d 3a15978c724b is a public key.

Pump And Dump

Pump and Dump – a fraudulent scheme. Involves artificially increasing the price of a certain cryptocurrency just to sell it before the "bubble" bursts. Is accountable for sudden spikes in cryptocurrency price charts.

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