Blockchain? Mining? A Primer on Crypto Terms
September 21, 2017
Even if you’re following ICOs, or Initial Coin Offerings, you may still have questions about the cryptocurrency world. Most of cryptocurrency is straightforward, but it can seem complex if you don’t know the jargon. Here are a few key terms to get you started.
Bitcoin is the most widely recognized, the mostly widely used, and the first decentralized cryptocurrency. A cryptocurrency is any digital form of currency that uses encryption techniques in order to control the creation of new currency as well as the transfer of currency from one owner to another. But to understand why bitcoin took off and spawned other cryptocurrencies, the word decentralized is key.
The blockchain technology is what makes bitcoin and its derivatives decentralized, and what sets them apart from fiat currencies. Instead of relying on a central authority, like the U.S. government, to control the creation of new currency and to record transactions, bitcoin uses the blockchain to decentralize this record. The blockchain is a distributed ledger, whereby all users of the currency help to validate the transactions as they happen (and keep users from using the same coin twice.)
In order to control the creation of new currency, bitcoin and other decentralized cryptocurrencies (which are called alternative cryptocurrencies or altcoins) use miners. Miners are users who must use a certain amount of computer power to solve a difficult code. The difficulty limits the amount of money that can be created in a certain timeframe.
This is hardly an exhaustive list of terms, but now you should be better equipped to browse cryptocurrency forums as you research the next new ICO.