A cryptocurrency address is like an email address, but instead of being fused or emails, it is to send and receive cryptocurrency. Usually, cryptocurrency addresses are derived from a public/private key pair and are between 16 and 24 characters long consisting of a random collection of numbers and letters. Cryptocurrency addresses are also often embedded into QR codes to make sending cryptocurrency easier. Because cryptocurrency addresses are for receiving cryptocurrency, it is ok to post them anywhere and people can then send you cryptocurrency.
An example of a Bitcoin address is: 3MfesBVoKWMkfYp56Ji8WVSWrLhY6ua5aq
An example of an Ethereum address is: 0xFE75716f9aFB0ABa1a02A834BFDd7019c52E8F24
An airdrop is a free cryptocurrency giveaway. To receive an airdrop a person has to have a wallet setup and then meet the requirements of whoever is giving the cryptocurrency away, sometimes the requirement is to sign up for an email list, follow on social media, or simply have a wallet. Cryptocurrency projects do airdrops to generate interest in their projects or to make their network more decentralized by having more participants.
“Alt-coin” is a commonly used term to refer to any cryptoasset in existence that is not Bitcoin. This term exists because Bitcoin was the first cryptocurrency and to this day is the cryptoasset with the largest market cap (worth the most money). Because of this position of dominance held by Bitcoin, many people, especially Bitcoin maximalists (people who believe that Bitcoin is the only cryptoasset of value), refer to all of the other cryptoassets as “alt-coins” as a way to lump them all together and minimize their existence. In reality, the only common point between all of the so-called alt-coins is that they are not Bitcoin. Because of the lack of specificity, we don’t think alt-coin is a great term. With that said, because alt-coin is the most common term to refer to the entire crypto market excluding Bitcoin, we will use it.
On a basic level, an application is the action of putting something into operation. A good example is a canvas made for painting. In order to use a canvas for its intended purpose (put it into operation) a person applies paint to it. Speaking in computer terms, the canvas would be called a platform and the painting on it would be an application. Today this word is commonly used to refer to computer (or phone) applications. An example of a common modern computer platform is Windows 10. Common applications for Windows 10 are Microsoft Word, Photoshop, and Google Chrome. A common cell phone platform is Android, common applications for this platform include Instagram, Whatsapp, and Google Maps. Applications are how we put our technology to use. The most popular applications for Bitcoin are as a digital currency or as a digital store of value.
Encryption is the science that enables digital items to be protected by a password. Standard encryption works well when only one person needs access to whatever is password protected. When multiple people need access to encrypted information, because sharing passwords is unsafe, a different type of encryption is needed. This type of encryption is called asymmetric encryption.
Asymmetric encryption works like a mailbox locked with a key. Anyone can deposit mail into the mailbox, but to get mail out, a key is required. Digitally, the mailbox is referred to as a “public key” and the key required to unlock it is the “private key”. These two keys are mathematically linked so that any information sent to a public key can always be unlocked with its unique private key.
Asymmetric encryption is one of the properties which makes cryptocurrencies the world’s most secure way to transact. It is what allows any user to have a shareable public key and address to which anyone can send funds and also a private key making the user the only one able to spend these funds.
To demonstrate how this works, let’s imagine that I live in California and my mother, father, and sister all live in North Carolina. Father’s day is coming up and I want to buy my dad some pottery made by his favorite local artist. This artist has no online shop and I can’t go to his store myself so I’ll have to have my mom or sister go in and buy it using my credit card number. I’m not easily accessible by phone, so they can’t just call me while they are in the shop to get my credit card number. The logical thing to do is the email them my credit card number so one of them can do it at their leisure. The problem with this is that emails get hacked all the time, what if my credit card number ends up in the wrong hands?
Instead of sending the credit card via an unencrypted message, I use my mom and sisters public keys to create an encrypted message containing my credit card information. Once they receive this message they can easily decrypt this message by unlocking it with their private key. This ensures that even if one of our emails were to be hacked, nobody would have my credit card information without also having access to one of our private keys!
If you are still confused or curious about this asymmetric encryption, here is a good YouTube video on the topic: https://www.youtube.com/watch?v=AQDCe585Lnc.
ATH is a commonly used acronym when referencing the price of a cryptoasset that stands for “all time high”. For example, currently (in July 2019) the price of one bitcoin is valued at around $10,000 but the ATH was set in December of 2017 when one bitcoin was valued at $20,000.
A “bear” in any market is someone who expects the price to go down. This term comes from the way a bear attacks, by striking down on its prey. When a market is bearish, The prices are consistently going down. The opposite of a bear is a “bull”, the opposite of bearish is bullish.
Bitcoin (with a capital B) is free open source computer software used for creating and maintaining the Bitcoin blockchain. The Bitcoin blockchain stores the world’s first and most popular cryptoasset known as bitcoin with a lowercase b. When a person downloads the Bitcoin software on their computer or smartphone, they can then send and receive “bitcoins” (with a lowercase b), which are the currency or units of exchange for the network created by computers running the Bitcoin software.
When a person owns bitcoin, they do not own a physical coin, nor do they own some sort of digital coin that they download to their computer, they own an exclusive association to specific entry on a single, distributed, worldwide ledger known as the Bitcoin blockchain. They can prove their exclusive association to this ledger entry, or “transaction” using cryptography. This ability to prove association to transactions on this ledger allows for a person to exclusively “own” bitcoin on the shared bitcoin blockchain. Everyone in the world can view and verify this ownership.
A blockchain block is a group of transactions on a blockchain. When a block is “confirmed” it becomes a part of the immutable ledger known as the blockchain and all the transactions in it are confirmed with it. Once a block is confirmed, all the transactions in it cannot be changed or charged back. Depending on the blockchain, blocks hold can hold differing numbers of transactions and are confirmed at different rates. Bitcoin blocks usually contain between two and three thousand transactions and take roughly 10 minutes to be confirmed.
A blockchain is a huge digital ledger that is created by grouping transactions (edits to this ledger) into “blocks” (groups of transactions) and linking them to the previous “blocks” (edits to the ledger) to prove their validity.
The first and most well known blockchain is the Bitcoin blockchain. The Bitcoin blockchain is permissionless meaning that anyone who pays a fee is allowed to make an edit to the ledger (send a transaction), no exceptions. Once an edit is suggested (a transaction is sent), a peer to peer network of computers works on solving a math problem involving all of the previous blocks (the full ledger), and a couple of other variables. This math problem proves that the suggested edits are in fact valid and confirms those transactions.
This specific type of math problem that all of the computers on the bitcoin network are working on solving is called a cryptographic hash function. To solve this math problem a huge amount of computational power is required, which means that it is impossible to solve the problem without owning lots of expensive computers that use lots of electricity. The requirement to use lots of computational power in order to solve the math problem (cryptographic hash function) is know as proof of work, often abbreviated to PoW. The requirement of PoW to solve the math problem makes it very expensive to make an unauthorized edit to the ledger, so expensive that it would never be worth anyone’s effort to try. Because unauthorized edits to the ledger are effectively impossible, when this network of computers solves this math problem, the latest block (group) of transactions are proved valid and are added to the blockchain permanently. In other words, transactions added to the blockchain are impossible to remove or change.
When we reference “blockchain” in this guide, it will be referring to any of the many technologies that work in this manner. In other words, a technology that operates across a neutral peer to peer network and that is made secure through proof of work and cryptography. If a technology does not meet these requirements, it is not a blockchain, or at least not the type this guide it referring to.