BITCOIN: The first decentralized digital currency or cryptocurrency, as the system works without a central bank or single administrator. It was created by Satoshi Nakamoto in 2008 as an answer to the worldwide financial crisis and the power of traditional financial systems to control transactions. Bitcoin uses a Proof of Work system to maintain its integrity, trust and security.
BLOCKCHAIN: A transparent shared digital ledger in which transactions are made using cryptocurrencies such as Bitcoin and Ether. The transactions are recorded chronologically, publicly, and secured using cryptography.
SATOSHI NAKAMOTO: An unknown person, or persons, associated with the creation of Bitcoin, and subsequently, blockchain. Nakamoto’s 2008 paper Bitcoin: A Peer-to-Peer Electronic Cash System would become the catalyst that sparked the cryptocurrency and blockchain technologies that exist today.
VITALIK BUTERIN: The co-founder and inventor of Ethereum
ETHEREUM: A public decentralized protocol, built on blockchain technology, which allows the development of decentralized applications (DAPPS) and supports the deployment and execution of smart contracts. Ethereum was released on the 30th of July, 2015. It was launched by Vitalik Buterin, Gavin Wood, and Joseph Lubin.
ETH / ETHER: The token powering the Ethereum blockchain. It is traded in the public markets but Ether is not intended to be a unit of currency on a peer-to-peer payment network. It is to act as the “gas” that powers the Ethereum network.
CRYPTOGRAPHY: The constructing and analyzing protocols that prevent third parties or the public from reading private messages; various aspects in information security such as data confidentiality, data integrity, authentication, and non-repudiation are central to modern cryptography. Cryptography is the backbone of all blockchain and cryptocurrencies, as it allows for information be stored and freely transferred between parties in a secure manner.
CRYPTOCURRENCY: A non-government issued and exchangeable digital currency
FIAT: A government-issued currency that is designated as legal tender in its country of issuance through government decree, regulation or law.
SMART CONTRACT: Contracts created by a line of code instead of a document. They work based off if-this-then-that systems. Smart contracts are written with all the parameters between all consenting parties, and then automatically execute the contract once conditions are met. The automation of the contract allows for the removal of timely and costly middlemen.
DIGITAL WALLET: An encrypted software that stores your cryptocurrency stakes. Each cryptocurrency has its own wallet, and must be set up before transactions can be completed. If a wallet key is lost, it is not possible to recover it due to each private key being unique and not stored on a centralized database.
EXCHANGE: An online marketplace platform that allows users to buy and trade cryptocurrencies, using either traditional FIAT or other cryptocurrencies. Users can then send their newly acquired coins to their own digital wallets, or temporarily store them on an exchange wallet. Think of these as a digital crypto focused version of a stock/currency exchange.
GAS: The small fee required to make a transaction or execute a contract on the Ethereum blockchain.
DECENTRALIZED: A term used to define blockchain technology. Think of it as the spreading out of computing power, rather than having everything stored in one central point. This removes the need for central authorities.