RytaDeCrypt

Welcome to Ryta’s Random Crypto-Dictionary!

All you need to know if you’re new to the Bitcoin space! 

What is Blockchain, Cryptocurrency, etc.? 

Most commonly used crypto-terminology.

Answers to the typical noob FAQs:

My "ALL ABOUT BLOCKCHAIN" on one page!

BLOCKCHAIN BASICS - WHAT IS:

Blockchain – an open-source  Distributed Ledger Technology (DLT) – “blocks” of continuously growing digital data, forming a chain of blocks (hence block-chain). DLT carries out Cryptocurrencies (Bitcoin, Ethereum, Monero, …) and allows information to be securely and incorruptibly distributed, Not copied! This revolutionary invention is already becoming the new internet!

The main types of Blockchains are:

  • Public / Permissionless

Bitcoin, Ethereum – truly decentralized, reliable and trustful blockchains in terms of security, where absolutely anyone can participate! ‘Bad actors’ with malicious intents can not alter the network because of the high number of nodes composing it.

Being highly secured, this type of blockchain is also very volatile and unstable.

Even You can create a public blockchain! The more nodes join – the more secure and immutable your network becomes!

  • Private / Permissioned  

Typically created, used, and owned by enterprises/ private companies, with access only through the authority that manages it. They are more centralized by nature – an excellent use-case for companies or organizations that want to take the benefit of the DLT in a closed environment. While having speed, stability, and scalability, these blockchains lack security.

  • Hybrid blockchains 

Dragonchain or XinFin(XDC), as examples, have a combination of centralized and decentralized features – controlled access and freedom at the same time – entirely customizable! The hybrid blockchain members can decide whom to participate in the blockchain or which transactions to be made public.

  • Consortium blockchains 

Governed by a group of “frenemy” companies that collaborate to leverage blockchain technology for improved business processes, with a semi-private system and a controlled user group, functions more efficiently across different organizations.

Participants in consortium blockchains can include anyone from central banks to governments or supply chains.

A virtual/digital currency – Cryptocurrency is an internet-based medium of exchange, secured by cryptography, which makes it almost impossible to falsify or double-spend while handling financial transactions. 

“Crypto” refers to the various cryptographic techniques and encryption algorithms that safeguard these records, such as elliptical curve encryption, hashing functions, and public-private key pairs.

Bitcoin was the first “Peer-to-Peer Electronic Cash System” invented by Satoshi Nakamoto. Some of the cryptocurrencies are its clones (forks), while others are new currencies built from scratch.

Cryptocurrencies consist of a network of peers, where every peer has the complete transaction history record and the balance of every account.

Litecoin or Bitcoin Cash, for instance, share Bitcoin’s core features but explore new ways to process transactions. Others, like Ethereum, offer more extensive range of features used to run applications and create smart contracts.

A public Bitcoin address is like your email address, which can be seen by the whole network; a private key is like your password, proving that Bitcoin belongs to you. 

Cryptocurrencies have scalability issues because the bigger gets the network, the slower transactions are processed, and the more nodes are on the network, the longer it takes to reach an agreement or consensus. 

Cryptography is the study of making ordinary data unreadable that gradually relies upon mathematics and computer science. 

Algorithms for Cryptography prove an actually sent message, keep the information confidential, and prevent theft or alteration. They are hard to crack for any malicious third party – adversaries.

There is Symmetric and Asymmetric Cryptography, and it involves two major components called Encryption and Decryption. The symmetric approach uses a single key for both processes, when the asymmetric one, also known as public-key cryptography, uses a pair of related keys – public and private – to encrypt and decrypt information, protecting it from unauthorized access or usage. 

Encryption is the process of locking information, a plaintext, into an unreadable form, converting it to a code, known as “ciphertext”, to keep it secret. 

The plaintext is supplied to an algorithm and an encryption key, which creates a ciphertext that can be decrypted with a valid key. Data that is stored on the computer need to transfer using the internet or computer network.

Data can be encrypted “at rest,” when it is stored, or “in transit,” while it’s being transmitted elsewhere.

 

Commonly used encryption algorithms:

  • Blowfish
  • AES
  • RC4, RC5, RC6
  • DES
  • Twofish

 

Encryption is foundational for many technologies, it is especially essential for keeping HTTP requests and responses secure, and also for verifying website origin servers. HTTPS (Hypertext Transfer Protocol Secure) is the protocol responsible for this – it uses the encryption protocol called TLS (Transport Layer Security). Earlier SSL (Secure Sockets Layer) was the standard, but TLS has replaced it, so now a website that implements HTTPS has an SSL certificate already installed on its root server.

₿TC – A digital Gold of our age – “a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It’s completely decentralized with no server or central authority”. – Satoshi Nakamoto, January 2009, announcing Bitcoin on SourceForge.

Bitcoin allows transactions to process in a permissionless, censorship-resistant, and apolitical habit.

No single entity is in control of the economic activity that happens on the blockchain, and unless you choose to link your name to a bitcoin address, it is hard to tell who owns it.

“It is an electronic payment system based on cryptographic proof instead of trust, allowing any two parties to transact directly with each other without the need for a trusted third party” – writes Satoshi Nakamoto in the original Bitcoin white paper.

The main qualities of BTC are:

  • Decentralized
  • Anonymous / Pseudonymous
  • Transparent
  • Fast
  • Irreversible (once sent – can’t be recalled)
  • Secure (almost impossible to counterfeit)
  • Flexible
  • Easily-adopted
  • Non-repudiable
  • Open to use for anyone
  • Usable in different environments
  • Economic (Choose your own commission)
  • Durable
  • Fungible
  • Volatile

Bitcoin has its particular rules:

  • New bitcoins are produced every 10 min.
  • Some computer chips are specifically designed to mine bitcoin more quickly than the others.
  • There can only ever be 21 million bitcoins.
  • Halving event every 4 years.
  • Bitcoin was created to be a form of digital money and nothing else.

Bitcoin sign Colour: – HEX – #ff9900 , RGB – rgb(255, 153, 0)

The smallest division of a Bitcoin (0.00000001 BTC) is called a Satoshi (after its pseudonymous developer), representing one hundred millionths’ of 1BTC.

Back in 2008, Satoshi Nakamoto published a document called “Bitcoin: A Peer-to-Peer Electronic Cash System.” A couple of months later, the Bitcoin software went live with a code connected to Nakamoto. The Genesis block (first block of a blockchain) was mined, and very soon, the Bitcoin society started gaining traction. Nakamoto was active in the community until 2010, then Gavin Andresen took it under control. In 2011 Satoshi wrote a final “goodbye” to the community and disappeared.

Nakamoto is self-described as Japanese, born in 1975. Though most say Nakamoto is male, no one really knows the founder’s gender or if he/she/they acted alone.

Various outlets were trying to reveal Satoshi Nakamoto but without success. More names are constantly added to the suspect list – though 100% of them are “Faketoshis”. 

 

Numerous alternative cryptocurrencies, launched after the success of Bitcoin, are called – Altcoins. Basically, these are all the other currencies that are not BTC! 

The first altcoin introduced to the market of cryptocurrency was Namecoin in April 2011.

Other examples of Crypto Coins include Litecoin, Peercoin, DogeCoin, as well as Ethereum, EOS, and Cardano – they all are virtual currencies that reside on their own blockchains and represent an asset or service.

They are launched as improved replacements of Bitcoin with the claims to overcome some pain points of BTC.

But don’t confuse Coins and Tokens! 

The majority of coins in existence, nearly 80%, are tokens, since they’re much easier to create, but not all tokens are coins!

Altcoins are the separate currencies running independently on their own blockchains, that can be used for buying and selling things, while tokens operate on top of a blockchain that facilitates the creation of decentralized applications, and has a specific use in the project’s ecosystem.

Nowadays, you can “tokenize” practically anything! Tokenization is the process of protecting data by replacing it with an algorithmically generated number – a token.

Tokens represent a particular asset or utility, usually acting as the method of payment inside the project’s ecosystem, offering greater value and functionality over the risky returns offered by coins.

So, the crypto tokens do not necessarily operate on their own blockchain; instead, they can be used on other platforms, in decentralized applications or smart contracts.

For example, ERC-20 tokens are built on the Ethereum platform. And depending on the purpose, other DAPPs that run on Ethereum, create these tokens to work as a currency, a share in the company, points in a loyalty program, even proof of ownership of physical or digital goods.

Features of Tokens:

  1. Multi-purpose: are utilized in various applications as payment, digital signature, smart contracts, etc.
  2. Secure: are a long cryptographic chain of numbers and letters impossible to guess.
  3. Accountable: for the stock shares held by multiple users.
  4. Recoverable: some can be recovered if sent wrong.

 

Known examples of tokens include EOS, Tron (TRX), and OmiseGo (OMG), with other platforms for token development, similar to Ethereum, such as Omni, NEO, and Qtum.

Every member/ participant/ device in a blockchain network is – a node – a connection point capable of creating, receiving, and transferring information to other members.

Each cryptocurrency has its own nodes that keep the transaction records of its tokens.

There are 2 main types of Nodes – Full nodes and light/lightweight nodes.

 

Light Nodes (SVP) – Simple Payment Verification

These nodes are used in day to day crypto operations; they communicate with the blockchain while relying on full nodes to provide them with essential information. They don’t store a copy of the chain, only the current status for which block is last and broadcast transactions for processing.

 

Full Nodes operate as a server in a decentralized network. They maintain the consensus between other nodes, verify transactions, and store a copy of the blockchain, therefore being more secure. Full nodes enable custom functions such as “instant send” and private transactions.

Full nodes are the ones voting on proposals when making decisions for the future of a network.

Full nodes are divided into Pruned nodes and Archival nodes.

Archival Full Nodes – the most important ones – envision a server, which hosts the full blockchain in its database, maintains consensus, validates blocks. 

Archival nodes are divided into a couple of additional subtypes – those that can add blocks to the blockchain and ones that can’t:

  • Mining
  • Staking
  • Authority
  • Masternodes

 

Mining Nodes 

Miners aim to prove that they’ve completed the required work to create a block. Consequently, the name of consensus is Proof of Work

They are not hard to use, but they are wasteful in terms of energy consumption and have a high initial cost.

Staking Nodes

Stakers purchase coins and hold them, while in return, receive interest back as a reward. Based on a pre-defined set of rules and luck chance factored in, will be determined, who goes next to create a block and get rewarded. Consensus – Proof of Stake.

Factors of “luck” include coin age, quantity, ratio, comparing to other available ones in the network. Staking system of rewards lacks transparency, but it consumes a lot less electricity since you don’t need any expensive machinery, just keep your crypto wallet online 24/7, it can be done with a device like Raspberry Pi.

 

Authority Nodes

The most Centralized type that works for Consensus algorithms like Delegated Proof of Stake, Delegated Byzantine Fault Tolerance, Proof of Authority, and others. The development team defines a fixed number of authority nodes, or it is voted on by the community.

Despite the low level of security, these nodes consume much less energy than any others, have no storage requirements (you can use your mobile device as a wallet), easier to upgrade the network, and keep developers accountable.

 

Masternodes

Masters are the most rewarding and beneficial nodes for the network, even tho require the largest initial investment and are quite complex to set up.

Their only purpose is to keep a record of transactions and validate them, cannot add blocks to the blockchain. By running a Masternode, you not only secure the network but can receive rewards for your services.

 

The other type of full nodes – Pruned nodes – begin downloading blocks from the beginning, and once reached the set limit, deletes the oldest ones, retaining only headers and chain placement. 

 

The highest-performing nodes in a blockchain are called Supernodes – highly connected points in a blockchain network – permanently switched on and constantly running the blockchain software, the reliable point of contact for other nodes to join or rejoin the network.

 

New types of nodes are continually being invented on blockchain networks such as – Lightning Nodes (LightningNetwork), Storage nodes (Storj) Systemnodes (Crown),…

A block is a container data structure, like a ledger page that represents the ‘present’ and carries information about its past and future. Once it’s completed, it gives a path to a new block in the blockchain. It is a permanent store of records which, once written, cannot be modified or removed. 

A block is composed of an extensive list of transactions (500 on average) and a Header, which consists of:

1). Reference to the previous block – a parent block hash.

2). Mining competition (POW). For a block to be part of the blockchain, it needs to be given a valid hash. It contains:

  • Timestamp – proof that a piece of data existed at a certain point in time (current hour as seconds in universal time).
  • Nonce – “number only used once” – is a 4-byte field that starts with 0 and increases with every hash count. It is the number that miners need to find to “solve” the block.
  • Algorithm difficulty target.

3). Merkle tree root – summarizing transaction data structure.

 

TYPES OF BLOCKS:

Genesis Block – is the very first block on the blockchain that represents its starting point.

Candidate Block – is a temporary block created using transactions from the memory pool, it’s trying to get mined in order to receive the block reward. It is either validated or discarded by the network.

Orphan block – is an expired block on the blockchain. Generated by ‘mining’ or ‘staking’, occasionally, 2 blocks are generated simultaneously. Only 1 can be valid on the blockchain, so the other one becomes an orphan block.

Stale block – is an already solved block, that cannot offer miners any reward for further work on it.

Block characteristics:

  • Block size – is the maximum limit of transactions that a block can be filled up with. The average block size is 1MB (BTC). In some other Altcoins, like Bitcoin Cash, this size can go up to 8MB, which allows processing more transactions per second.
  • Block time – defines the time it takes to produce/mine a new block. In BTC, the expected block time is 10 min., while in ETH it’s 10 to 19 sec.
  • Block height – is the number of blocks in the chain between it and the genesis block.
  • Block reward – is the payout earned by the miner for mining the cryptocurrency.

There are multiple correct solutions for any given block, but only one needs to be found to solve the block. Therefore, a block has one Parent and many Children, where only one child becomes part of the blockchain.

A block is identified by a cryptographic hash – a digital signature that is created by hashing the block header twice with the SHA256 algorithm.

Blocks link with one another through a hashing function – a form of cryptographic validation.

 A hash is a unique mathematical code which belongs to a specific block. If the information inside the block is modified, the hash of the block will be subject to modification too.  Each block in a blockchain network stores some information along with the hash of its previous block. The connection of blocks through unique hash keys is what makes blockchain secure.

Hash takes an input of any length and returns a fixed-length string of numbers and letters.

Hash rate (sometimes called the hash power) refers to the speed at which a cryptomining device operates.

To be successful at mining, speed is essential since the miner has to solve a question, add a block to the chain and grab the rewards before anyone else. More answers suggested faster will increase the chances of solving that block.

In cryptography and computer science, a hash tree or Merkle tree allows efficient and secure verification of the contents of large data structures. Hash trees are generalized hash lists and hash chains.

The concept of hash trees is named after Ralph Merkle who patented it in 1979.

Cryptomining is the process when transactions are verified and added into the blockchain public ledger. It is responsible for introducing new coins into the existing circulating supply. This is how Bitcoin is mined thanks to the Proof of Work consensus. A ‘miner’ is a person or organisation that uses computing power (CPU, GPU or ASIC) required to find the next blockchain block. Once the answer is found, a new ‘block’ is generated, in which a number of transactions are permanently stored. The miner is rewarded with the predefined number of cryptocurrencies. Usually this is complemented with the electricity, hardware, and transaction costs,  paid by the user.

Minting (Forging) – creation of new blocks in blockchain based on the Proof-of-Stake algorithm with the opportunity to receive a reward in the form of new cryptocurrencies and commission fees. Forgers are able to keep transaction fees instead of block reward.

In Staking you lock up an amount of a certain cryptocurrency in a wallet to participate in the operation of a blockchain, in return for rewards, on any blockchain operating a proof-of-stake consensus.

Cryptojacking is the unauthorized use of someone’s computer to mine cryptocurrency. Hackers get the victim to click on a malicious link that loads cryptomining code on the computer, or by infecting a website or online ad with JavaScript code that auto-executes once loaded in the victim’s browser.

An application-specific integrated circuit (abbreviated as ASIC) is an integrated circuit (IC) made for a particular use, rather than for general-purpose use. In Bitcoin mining hardware, ASICs were the next step of development after CPUs, GPUs and FPGAs.

A field-programmable gate array – FPGA – is an integrated circuit designed to be configured for a certain task by an engineer after manufacturing.

CPU mining is a process of adding transaction records to the public ledger of cryptocurrency by performing necessary calculations with Central Processing Unit (CPU) – a part of computer that provides computing power for execution of operations performed by the software installed.

GPU – graphics processing unit – is responsible for the digital rendering in a computer system. Due to a GPU’s power potential vs. a CPU, they have become useful in blockchain mining for their speed and efficiency. An easy solution for gamers, creative professionals, and everyone who wants to earn money by providing computing power for mining!

Payment Currencies

are the assets used mainly for payments. You can use them to pay for goods or services, pay your bills, cash out from digital currencies to local fiat like euros or dollars,…

Cryptocurrencies like Bitcoin (BTC), Litecoin (LTC), Bitcoin Cash (BCH), are the most popular ones.

Blockchain Economies,

also known as blockchain platforms, allow you to create your own digital assets (usually referred to as tokens), decentralized applications (Dapps), etc. on their platform. Therefore, they become their own “Blockchain Economies” with different assets, applications, and much more…

Some Blockchain Economies you may have heard of include Ethereum (ETH), Ethereum Classic (ETC), EOS (EOS), NEO (NEO), and Tron (TRX).

Blockchain-as-a-Service (BaaS) is based on the Software As A Service (SaaS) model and works in a similar way – it allows customers to leverage cloud-based solutions to build, host, and operate their own blockchain apps and related functions on the third-party’s, blockchain. They install and maintain blockchain networks for company’s technologies — help businesses develop and host Dapps and smart contracts in a blockchain ecosystem, that’s managed and administered by cloud-based service providers.

A consensus algorithm is a mechanism that allows users or machines to coordinate in a distributed manner. It needs to ensure that all agents can agree on a single source of truth in the system, even if some of them fail. The system must be fault-tolerant.

Byzantine fault tolerance (BFT) is the property of a system that is able to resist the class of failures derived from the Byzantine Generals’ Problem.

The digital record, known as the blockchain, must verify and record identical information simultaneously across many thousands of computers and none of the computers can be trusted as a reliable source.

Bitcoin provided a unique solution to this problem known as mining.

A major goal of consensus mechanisms is to stop users from double-spending the same coin.

See more below

Fork’ or ‘Forking’ generally means a software or a protocol/code upgrade/update which is done in a way that it can or cannot be backward-compatible.

  • Soft Fork (Backward Compatible)

This type of fork doesn’t need a universal update of nodes and softwares as old nodes recognize the change.

  • Hard Fork (Non-Backward Compatible)

This type of fork is permanent and requires all nodes and users to upgrade to the latest version of the protocol software/wallets.

Fork-Free Consensuses are now being invented too.

Ethereum is a decentralized network with two main functions:
blockchain that can record transactions, and a virtual machine that can produce smart contracts.

It is a blockchain-based, open public network platform that enables developers to build and deploy decentralized applications (DAPPs) for use by businesses as well as individual users.

They are built on existing Ethereum blockchain which charges developers for the computing power in their network. Ether (ETH)  is the only inter-platform currency.

Depending on its purpose, DAPPs might create ERC-20 tokens to function as a currency, a share in the company, points in a loyalty program, or even proof of ownership, for instance, of an amount of precious metals.

While Bitcoin is limited to a particular “payment-only” application of the blockchain technology, Ethereum can support anything and everything through its apps and programming.

Enterprise Ethereum AllianceEEA – is a group of organizations all working together to learn better ways to grow and build ETH.

Ethereum’s core innovation, the Ethereum Virtual Machine (EVM), instead of having to build an entirely original blockchain for each new application, enables the development of potentially thousands of different applications all on one platform.

A smart contract is a self-enforcing piece of software, embedded in computer code managed by a blockchain, that provides a coordination and enforcement framework for agreements between network participants, without the need of traditional legal contracts. Smart contracts can be used to formalize simple agreements between two parties, the bylaws of an organization, or to create tokens.

The code contains a set of rules under which the parties of that smart contract agree to interact with each other. If and when the predefined rules are met, the agreement is automatically enforced. Smart contracts provide mechanisms for managing tokenized assets and access the rights between parties.

You can think of it like a cryptographic box that unlocks value or access, if and when specific predefined conditions are met.

They run on their own code without any possibility of censorship, fraud, downtime or third party interference.

ETH smart contracts are written in the programming language “Solidity” on the basis of If-This-Then-That (IFTTT) logic.

After a token has been created, it can be traded, spent, or given to someone else.

 

Huge companies like EOS, TRON & VeChain have started as ERC20, but moved to their own mainnet in 2018.

 

  • Initial Coin Offering – ICO is the cryptocurrency industry’s equivalent to an IPOs. ICO is a way to raise funds, where a company looking to raise money to create a new coin, app, or service.
  • STO – Security Token Offering – combines the benefits of ICO with the strength of regulated financial securities, where the investment is backed by tangible items or assets such as profit or revenue in a company or a physical asset, similar to holding shares or stocks in a company.
  • ISO: Initial Securities Offering – intended fundraising structured as securities using a Blockchain platform.
  • Initial Public Offering (IPO) is the process of offering shares of a private corporation to the public in a new stock issuance allowing a company to raise capital from public investors.
  • Initial Exchange Offering (IEO) is a token sale supervised by a cryptocurrency exchange. IEOs  are administered by a crypto exchange on behalf of the startup that seeks to raise funds with its newly issued tokens.
  • An Initial Bounty Offering or IBO is the limited-time process when a new cryptocurrency is made public and distributed to people who invest their skills and time to earn rewards in the new cryptocurrency.

A ‘whitepaper’ is a document that is almost always written for the launch of a new coin – ICO: how it is used, for what, it’s price expectation, etc.

It is a marketing document used to persuade potential customers to learn more about the service or technology. It should contain a problem, the solution, how the token works, the team, and the deployment plan. It is like an official proposal.

A ‘yellowpaper’ is a research document. It describes a more in-depth technical analysis. The purpose here is to inform those involved and interested.

It presents the scientific details of the technology in a very concise way. If white paper is a proposal, the yellow paper is the part 2 where all the specific details are.

A beige paper is a rewrite of a yellow paper for readability. It re-formats the yellow paper into a more organized format and is usually easier to understand.

Green Paper is a Government publication that details specific issues, and then points out possible courses of action in terms of policy and legislation. It is a report and consultation document of policy proposals for debate and discussion that.

 

  • Utility tokens: are digital tokens used for a blockchain-based product or service. They are part of a Blockchain Economy. Most utility tokens are ERC20 tokens running on Ethereum  but with the continued release of other blockchain platforms, other token types like TRC10 and TRC20 tokens have emerged as well.
  • Security tokens: authenticate a person’s identity electronically by storing personal information. For eg. DAO.
  • Equity tokens: represent any stock or equity of the company.
  • Payment tokens: used only as a source of payment of goods and services.
  • Nonfungible tokens are simply a unique digital assets – goods such as in-game items and works of art , that are being distributed, collected, and traded in greater magnitude within global markets. NFTs extend the functionality of distributed ledgers beyond currencies and utility tokens, allowing them to document ownership of tokens which are cryptographically unique.

A Privacy coin is a cryptocurrency, which focuses on security and anonymity of the users.

Some examples are Pivx, Dash, and Monero. There are several methods to make a transaction anonymous.

 

Stablecoins are very popular among regular traders, as they always have the same price (or aim to), unlike other digital assets, which can fluctuate greatly in value. For example, if a trader thinks that an asset is going to lose value soon, they could sell the asset for a stablecoin to prevent financial loss.

Examples of Stablecoins include USD Coin (USDC), Paxos (PAX), Gemini (GUSD), TrueUSD (TUSD), Tether (USDT),  Dai (DAI), etc.

TYPES of Stablecoins:

  • Fiat-backed  – 1:1, meaning $1 of stablecoins is equivalent to $1 of fiat money. Tether is backed by the US dollars (USD) and represents the most popular stablecoin with huge daily volume.
  • Backed by commodities – fungible assets that are interchangeable for trading in the same market. The most common commodity to be collaterized is gold.
  • Crypto-Backed stablecoins are backed by other digital currencies, usually the top-ranked ones such as BTC or ETH. Typically, they are backed by a mix of cryptocurrencies rather than by just a single currency. 
  • Seignorage stablecoins are the only ones not backed by any asset. Seignorage-style coins utilize an algorithmically governed approach to expanding and contracting a stablecoin’s money supply, just like how a central bank prints or destroys money. As the total demand for the coins increases, new supply of stablecoins are created to reduce price back to stable levels. The main objective is to get the coin’s price as close as possible to USD $1.
External source
  • Airdrops are usually carried out by blockchain-based startups to bootstrap their cryptocurrency projects which distribute their tokens to the wallets of some users free of charge.

Cryptoexchange platforms and wallet services can also carry out airdrops.

This process usually involves the completion of a number of tasks by the user in order to qualify for the airdrop. 

Reasons to conduct airdrops: Generating Awareness; Understanding the users; Raising Funds; Rewarding or Inspiring Loyalty; Wider Distribution of Tokens; Hard Forks,…

 

  • Bounty programs are incentives offered to an array of participants for various activities associated with an initial coin offering (ICO). The participants are spread across various stages of an ICO and range – from investors to ICO promoters and developers, from social media influencers to blog writers and  Signature Bounty marketers. 

It has become a tradition to either do a Pre-ICO bounty or a post-ICO bounty. Bounties are generally not done together with ICOs.

Some of the most common types of bounties include:

  • Signature campaigns –  for placing a specific signature on your forum profile
  • Blog posts or video campaigns – for posting blogs, articles, and videos that are promotional in nature.
  • Translation campaign –  for translating media, such as websites, whitepapers, videos, etc.
  • Social media campaign –  for various social media activities, such as posting, following, retweeting, etc.
  • Pay-per-post campaign – for writing project‐specific posts on Bitcointalk.org or any other specified forum.
  • Code examination – for debugging or finding errors in the project’s source code. (Bug Bounty)

 

  • Faucet is a rewarding system, in the form of a website or app, that gives away /dispenses satoshis, for visitors to claim in exchange for viewing ads, completing a captcha or task as described by the website..

Cyber security refers to the body of technologies, processes, and practices designed to protect networks, devices, programs, and data from attack, damage, or unauthorized access. Cyber security may also be referred to as information technology security.

Types of Cybercrime:

  • Phishing is a type of attack were actors attempt to trick unsuspecting users into doing something they wouldn’t ordinarily do, such as clicking on a malicious URL or email attachment. Actors usually leverage phishing attacks to steal users’ login credentials, details which they can then abuse to gain unauthorised access to their victims’ emails or financial accounts.
  • Ransomware is a subset of crimeware that in most cases infects a victim’s computer via phishing attacks or an exploit kit campaign. Upon successful infection, the ransomware commonly encrypts the victim’s data. It then demands a ransom payment in exchange for the return of their data. But that’s not set in stone. There’s no guarantee victims will ever get their data back.
  • Malware comes in many different forms. Some specifically target users’ financial information by installing keyloggers onto victims’ computers. Malware samples can also reach users via a number of delivery methods, including phishing attacks and malicious software packages that exploit unpatched software vulnerabilities. Once installed, attackers can use the malware to spy on online activities, steal personal and financial information or hack into other systems.
  • Identity Theft

    they can seize control of victims’ banking credentials, apply for new banking accounts, steal users’ hard-earned savings, and more. All they need are some key bits of information about you to convince a bank or a customer service representative that they’re you.

  • Scams don’t come in one size. But many of them have something in common: they convey an enticing offer that in many cases attempts to trick users into sending over money. Of course, those offers are baseless, and victims end up losing money in the process.

 

  • A brute force attack is when an attacker who doesn’t know the key for decryption attempts to determine it by making thousands or millions of guesses. Modern encryption methods, coupled with highly secure passwords, are generally resistant to brute force attacks. 
  • 51% Attack is a process when a certain miner or mining pool, that owns more than 50% of all the network’s hashing power, acts maliciously to disturb the network’s operation.

“Atomic” Coin SWAP is a P2P technology that allows a user to exchange two different coins directly for each other without a third party or intermediary.

The word “atomic” means they either happen completely or not at all.

One recent invention, Super Safe Swap, utilizes a “Super safe” that looks like a microwave oven. Each has a door, a window and a button that opens the door, and two of them are connected together to do instant Swap. The doors will only open if the button on both safes is pressed at the same time.

In order to execute this, something known as Hashed Timelock Contracts or HTLCs are used.

Thinking back to the Super Safe Swap, we need a container to put our money in and lock it. For this, we use a special type of smart contract called a hashlock.

A hashlock is a smart contract that locks coins until a certain “secret passcode” is revealed.

On-Chain Atomic Swaps

What Decred and Litecoin achieved was an on-chain atomic swap. On-Chain swaps takes place on either currency’s blockchain. In order to do this though, both currencies must:

  • Support HTLC
  • Have the same hashing algorithm

Off-chain swap allows you to do atomic swaps off the blockchain. These basically take place on what is  known as “layer 2”, Bitcoin and Litecoin engaged in the first off-chain atomic swap in November of 2017 by using the Bitcoin Lightning Network.

COLD wallet or cold storage is the Hardware device (or Paper) to store your Cryptos offline. This often is a necessary security precaution when dealing with large amounts of BTC. The most popular cold wallets are Trezor and Ledger Nano S.

HOT wallets are those connected to the internet. Generally they are easier to set up, access, and accept more tokens, but they are also more susceptible to hackers and other technical vulnerabilities.

WEB wallets run in your web browser just like any other website.

DESKTOP wallets are installed on your computer’s desktop and provide you with complete control over the wallet.

MOBILE wallet is particularly suited to the day-to-day transactions

Segregated Witness, or SegWit, is an implemented soft fork change in the transaction format, a protocol upgrade that changes the way data is stored. It was activated on litecoin on May 10, 2017, and on bitcoin on 23 August, 2017

The idea of “Segregated Witness (Consensus layer)” was first presented by Pieter Wiulle in 2015. Its purpose was to prevent non-intentional BTC transaction malleability, to allow optional data transmission, and to bypass certain protocol restrictions (f.e. block size limit).

It was also intended to mitigate a blockchain size limitation problem that reduces bitcoin transaction speed by splitting the transaction into two segments – 1). removing the unlocking signature (“witness” data) from the original portion; and 2). appending it as a separate structure. The original section continues to hold the sender and receiver data, and the new “witness” structure contains scripts and signatures. The original data segment is counted normally, when the “witness” segment is counted as a quarter of its real size.

Basically, SegWit fixed transaction malleability by removing the signature information (“witness”) and storing it outside the base transaction block. Therefore, signatures and scripts can be changed without affecting the transaction id.

Sidechains (pegged sidechains) are emerging mechanisms that allow  digital assets from one blockchain to be securely used in a separate blockchain and then, if needed, to be moved back to the original blockchain.

It’s a workaround to implementing new features without launching an entirely new token – a separate, Child,  blockchain that is attached to its Parent blockchain using a two-way peg. 

In a one-way peg you destroy some BTC, and you gain some other currency for doing that –  it cannot be reversed!

Two-way peg lets you move it back and forth. Instead of destroying BTC, you lock them in little boxes.

It allows people to safely experiment with different rules, networks and consensus mechanisms, without putting the main network at risk.

In other words, it creates an area where you can throw in some of your BTC, try crazy experimental stuff, and then bring them back!

A federation is a group that serves as an intermediate point between a main chain and its sidechain. This group determines when the coins used are locked up and released. The creators of the sidechain can choose the members of the federation.

Sidechains need their own miners and they are responsible for their own security. If there isn’t enough mining power to secure a sidechain, it could easily be hacked.

Animals in the Stock Market are commonly used terminology to define specific characteristics of the type of traders, investors, or a market scenario.

Bulls are the ones who drive the share price of a company higher.

Bears, the opposite of the bulls, are convinced that the market is headed for a fall. They are pessimistic about the future aspects of the share market and believe that it’s going RED.

Bulls and bears are often used to describe the market condition. A bull market is a scenario when it appears to be optimistic and climbing new highs. A bear market is where things are not good and appear to be a long-term decline.

Pigs are biggest losers in the stock market – impatient, willing to take high risk, greedy and emotional. They don’t do any kind of analysis or research and always look out for hot tips and want to make some quick money from the share market.

Ostrich investors believe that if they do not know how their portfolio is doing, it might somehow survive and come out alright.

Wolves are the powerful investors/traders who use unethical means to make bucks from the share market. They can be involved in the scams that move the share market when it comes to light. (remember movie “Wolf from Wall Street”?)

Whales are are the big investors who can move the stock price when they simply buy or sell in the market.

Sharks are those traders who are just concerned of making money. They get into the trades, make money and exit the share market.

Wait up, there are also mixes such as – ‘bear whale’- someone with a very large position in a coin, but with a ‘bearish’ vision.

External source

Crypto pump and dump schemes represent a situation where an individual or a group artificially inflates the price of an asset through false and misleading information, planning to make a profit by “pumping” an asset into the market – purchasing of large quantities of coins to push the demand and price up.

Then the original buyers sell (dump) the assets to make a quick money which often causes many users to suffer a significant loss.

Have you heard of Pump & Dump Groups (PnD)? They’re composed of a bunch of “whales” who decide which coin that they’d like to “pump”. Once they’ve accumulated enough coins to be satisfied, they slowly move the price upward. Users purchase the cryptocurrency thinking that they’re on the ‘inside’ of a real pump, but in reality they are just buying up the sell orders of the whales that have already made their profit.

Mooning is when the price of a certain cryptocurrency raises in price rapidly and sharply. Cryptotraders would say that the coin is “Going to the moon!.” Imagine the price on a rocket ship;)

Flippening is an event where an Altcoin (such as Ethereum) is growing bigger, more important, and more valuable than Bitcoin in market capitalization.

Pool is usually just a finance slang word for an exchange market.

A mining pool is a group of miners who share the efforts and the rewards of mining cryptocurrency.

When a transaction of Bitcoin is made, it’s not added to the blockchain rig ht away, instead, it’s held in a transaction pool (or memory pool).

Dark pool has nothing to do with black market or dark web – it is a private financial forum or exchange for trading securities. Dark pools allow investors to trade without exposure until after the trade has been executed. This is an alternative trading system that gives investors the opportunity to place orders and make trades without publicly revealing their intentions during the search for a buyer or seller.

The Mempool is a “waiting area” for BTC transactions that each full node maintains for itself. After the transaction is verified by a node, it waits inside the Mempool until it’s picked up by the miner and inserted into a block.

A mainnet and a testnet are two separate networks operatin independently from each other.

Mainnet  – the “end product” – is the original and functional blockchain where actual transactions take place and the native cryptocurrencies possess real economic value. In other words, it is an open-sourced publicly verifiable blockchain itself. 

Testnet – testing network – an exact replica of the original blockchain, that has the same technology, software, and functionalities. The only difference is that here the transactions are “fake” and the coins do not possess any real value outside of the testnet environment.

In order to constantly enhance a blockchain’s capabilities, numerous testing must be undertaken, so the testnet serves as a simulation on how the actual protocol (mainnet) would work under real-world conditions.

Abbreviations

Coin Market Capitalization is used to rank the size of a cryptocurrency. It’s calculated by multiplying the Price by the Circulating Supply.

Decentralized EXchange – a P2P exchange.

The main idea behind DAO, Decentralized Autonomous Organization, is establishing a company/organization that can fully function without typical hierarchical management or board of directors. 

It acts as a form of venture capital fund, but is based on an open-source code.

A DApp, or Decentralized Application, is a software program that allows users to interact with a network like Ethereum.

Securities and Exchange Commission – is an independent USA government organization. The SEC holds the primary responsibility regarding the financial markets. They enforce the federal securities laws, propose new rules and regulate the US financial markets.

Exchange-traded fund – a listed fund on a stock exchange. It’s a tradable product that follows the price of an underlying asset, f.e. – an equity index, a basket of certain securities, bonds and commodities. There are several applications for a Bitcoin ETF, however they are not yet approved by the SEC.

Knowing your Customer  is a process that identifies and authenticates the customers of financial institutions based on their perceived risk profile. It is vital for Anti-Money Laundering (AML).

Anti-Money Laundering is a complex framework of strategies, rules, and regulations to fight money laundering.

Bitcoin ATM

Over The Counter – is when a transaction made outside of an exchange.

These transactions are slower and cannot be programmed like transactions on an exchange.

OTC purchases are not as visible as those on an exchange and will likely not shift the price at all.

The ways you can make OTC purchases are Bitcoin ATMs & payment processors.

Simplified Payment Verification or SPV is a software that allows you to confirm a cryptocurrency transaction has been added to the blockchain without having to download the entire blockchain.

SPV is included in some bitcoin wallets like Electrum so you can manage your bitcoin in a much smaller software package.

Brute Force Attack is a method of obtaining secret, unreadable information by guessing every single possible key variation that will unlock the security system.

Interplanetary File System is a protocol and P2P network for storing and sharing data in a distributed file system. IPFS uses content-addressing to identify each file in the global namespace connecting all computing devices.

lexicon / abbreviational expressions

fear of missing out

joy of missing out

do your own research

fear uncertainty doubt

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All-time High / All-time Low

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Think Long-Term

Proofs Of...?
(consensus algorithms)

With PoW, miners compete against each other to complete transactions on the network and get rewarded.

do your own research

‘Proof of Burn’. This is a method to invest in a new cryptocurrency by destroying coins of an existing one, which has been given the term ‘Burning’ in the crypto world. This is done by sending coins to a special, unusable address. That’s the usually the only way to destroy coins within a blockchain. This method can also be used when a coin gets a relaunch with a new team and a new coin.

‘Proof of Authority’. This is a validation method to process transactions and blocks in a blockchain only by approved accounts. These are known as ‘validators’ and run specific software to store the transactions in blocks. Since the identity is linked to the system, it can contribute to more trust.

‘Proof of Activity

‘Proof of Activity

‘Proof of Devloper’. This can be any verification that serves as proof that a cryptocurrency was created by a real software developer. This method is mainly used when launching a new cryptocurrency to prevent scams.

Proof of Elapsed Time – based on the principle of a fair lottery system every single node is equally likely to be a winner.

Each participating node in the network is required to wait for a randomly chosen time period, and the first one to complete the designated waiting time – wins the new block.

A service provided through the blockchain that allows users to store a proof of existence for any document they choose online. This allows people to prove that a document existed at a certain point in time and demonstrate their ownership of it.

In the Proof of Capacity (space) consensus, validators are supposed to invest their hard drive space instead of investing in expensive hardware or burning coins. The more hard drive space validators have, the better are their chances of getting selected for mining the next block and earning the block reward.

Proof of Importance

Proof of Reputation

Proof of Location

Master-node PoS

Delegated Proof of stake

Byzantine fault tolerance is a sub-field of error tolerance research inspired by the Byzantine Generals’ Problem.

The object of Byzantine fault tolerance is to be able to defend against Byzantine failures, in which components of a system fail in arbitrary ways. Correctly functioning components of a Byzantine fault tolerant system will be able to correctly provide the system’s service assuming there are not too many Byzantine faulty components.

Byzantine Fault Tolerance et al.

Another group of consensus mechanisms are variations of Byzantine Fault Tolerance, like Federated Byzantine Agreements (“Stellar”, “Ripple”), Practical Byzantine Fault Tolerance (“Hyperledger Fabric”), and dBFT (Delegated Byzantine Fault Tolerance) as used in, “NEO”. Some more alternative protocols use a combination of mechanisms, such as Hashgraph (asynchronous Byzantine Fault Tolerance, Gossip Protocol, Virtual Voting).

Delegated Byzantine Fault Tolerance 

 

Practical Byzantine Fault Tolerance 

 

Examples:

  • Casper (Ethereum)

There is a whole series of protocols that use Directed Acyclic Graphs (DAGs), like “IoT Chain”, “Byteball”, “Block Lattice” (Nano), and “IOTA” (Tangle). The consensus mechanism of DAGs is fundamentally different from blockchains. Instead of bundling data together into blocks that are then confirmed one after another, Directed Acyclic Graphs require newly added data to reference and validate past data. Usually, each new transaction would have to reference and validate two transactions that came before. In doing so, the network comes to form a graph of converging and confirmed transactions. If one were to incorrectly validate a past transaction, one‘s own transaction would fail to be confirmed by other participants.

How and where to buy Cryptocurrency?

Bitcoin ATMs

See – coinatmradar.com

Exchanges, such as Etoro or Binance.