General Cryptocurrency Terms for starters

General Cryptocurrency Terms for starters:

FIAT MONEY - Government-issued currency, such as the US dollar.

BITCOIN - Bitcoin is a digital currency, created and stored electronically. Bitcoin is not printed and is not controlled by anyone.

ALTCOIN - Altcoins are the alternative cryptocurrencies launched after the success of Bitcoin.

SATOSHI - 1 BITCOIN = 100,000,000 SATOSHI / 1 SATOSHI = 0.00000001

SATOSHI NAKAMOTO - The ‘creator’ of Bitcoin.

THE BLOCKCHAIN TECHNOLOGY - Simplified: Blockchain technology is like the internet BUT it is decentralized. That means it can not be controlled by any single entity. In a centralized network, hackers can perform cyber attacks like shutting down networks. They do these things just by targeting central repositories and single points of failure. Blockchain has no single point of failure. The blockchain is actually a network of servers or nodes. Each server/node contains all transaction data. Nodes in the network validate, check and approve or reject each transaction on the blockchain. Example: I send to you 5 BTC. Each node receives the transaction request and approves or reject the transaction. When the transaction is approved each node updates its own ledger and passes the message to the nearby nodes. This way, every node has all the information on former blockchain transactions.

DISTRIBUTED LEDGER - Distributed ledgers are records of consensus with a cryptographic audit trail maintained and verified by many separate nodes. Example: I send to you 5 BTC. Node 1 and Node 2 approve my transaction and they agree by consensus to record the transaction to the ledger. All individual transactions are stored in groups, or blocks, which are attached to each other in chronological order to create a chain. Blockchain provides users with an immutable and permanent audit trail to prove occurrence and timing of the transaction. All transactions that are recorded on the ledger are permanent and can not be changed.

MINING AND HASH - Nodes /servers that verify transactions and record them on the ledger are called miners. Miners collect all transactions made during a set period into a list, called a block. Blocks are then attached to each other forming blockchain. When a block of transactions is created, miners act. They take the information in the block, and apply a mathematical formula to it, turning it into something else called hash. That something else is a far shorter, seemingly random sequence of letters and numbers known as a hash. Hashes have some interesting properties. It’s easy to produce a hash from a collection of data like a bitcoin block, but it’s practically impossible to work out what the data was just by looking at the hash. Every time someone successfully creates a hash, they get a reward in form of the coins they mine, the blockchain is updated, and everyone on the network hears about it.

HASH RATE / HASH POWER - Hash rate is a unit measured in hashes per second or [h/s]. Bitcoin network’s difficulty goes up because of more miners joining the network and thus the hash power needs to be increased. That means more and more computational power is needed to find the solution and get the reward.

MINING POOL - Mining pools are a way for miners to put their resources together and share their hashing power while splitting the reward equally according to the number of shares they contributed to solving a block.

SMART CONTRACT - Smart contracts help you exchange money, property, shares, or anything of value in a transparent, conflict-free way while avoiding the services of a middleman. Example is taken from the blockgeeks.com:
Suppose you rent an apartment from me. You can do this through the blockchain by paying in cryptocurrency. You get a receipt which is held in our virtual contract; I give you the digital entry key which comes to you by a specified date. If the key doesn’t come on time, the blockchain releases a refund. If I send the key before the rental date, the function holds it releasing both the fee and key to you and me respectively when the date arrives. The system works on the If-Then premise and is witnessed by hundreds of people, so you can expect a faultless delivery. If I give you the key, I’m sure to be paid. If you send a certain amount in bitcoins, you receive the key. The document is automatically canceled after the time, and the code cannot be interfered by either of us without the other knowing since all participants are simultaneously alerted.

FORK - As it relates to blockchain technology, a hard fork (or sometimes hardfork) is a radical change to the protocol that makes previously invalid blocks/transactions valid (or vice-versa), and as such requires all nodes or users to upgrade to the latest version of the protocol software. Put differently, a hard fork is a permanent divergence from the previous version of the blockchain, and nodes running previous versions will no longer be accepted by the newest version. This essentially creates a fork in the blockchain, one path which follows the new, upgraded blockchain, and one path which continues along the old path. Generally, after a short period of time, those on the old chain will realize that their version of the blockchain is outdated or irrelevant and quickly upgrade to the latest version.
[Taken from investopedia.com]

PROOF-OF-WORK - A system that ties mining capability to computational power.

PROOF OF STAKE -An alternative to proof of work, in which your existing stake in a currency is used to calculate the amount of that currency that you can mine.

COIN - A Coin is a cryptocurrency that can operate independently. A coin is a mean of payment. The purpose of a coin is to act like money.

TOKEN - A Token is a cryptocurrency that depends on another cryptocurrency as a platform to operate. Tokens offer functionality over and above that of digital cash. They may deliver value to investors, beyond speculative returns. Example: You pay $1 at a darts machine exchanging your $ for 5/credits (tokens) to be used to play the game.