Welcome to Spectacle Investing’s Cryptocurrency Glossary. Here you’ll find a large variety of terms and blog posts diving more in depth into specific concepts and ideas. We’ve ranked each term from 1-3.
1) These are the initial terms one should learn when going down the crypto rabbit hole. These terms are less complex and are a necessary introduction to Cryptocurrencies and blockchain technology.
2) Here you’ll find the intermediate terms. This is where you’ll begin to understand the components of blockchain technology and the more complex concepts.
3) These are the “expert” level terms, expert for the scope of what this glossary has to offer. At this stage you’ll be able to understand and evaluate blockchain projects on your own.
Airdrops(1) – Typically a marketing stunt where crypto tokens are awarded to wallet addresses.
Bear Market(1) – A period of time where a financial market is trending negatively(downwards). Common terminology not only in crypto markets but traditional financial markets.
Blockchain Technology(1) – A blockchain is a digital, decentralized ledger which is distributed across a network of nodes.
Blockchain Trilemma (2) – Blockchains looks to accomplish decentralization, scalability and security. The blockchain trilemma outlines the difficulty of accomplishing these 3 factors without sacrificing a portion of one of them. Example: Sacrificing some decentralization in order to achieve more scalability.
Blocks(1) – These are what make up the data structure of a blockchain. Blocks contain information on the transactions being conducted on the network with all blocks being interlinked to one another. Because the information being stored on a block must go through a consensus first, once a block is mined it is immutable.
Bull Market(1) – A period of time where a financial market is trending positively (upwards). Common terminology not only in crypto markets but traditional financial markets.
Byzantine General Problem (2) – A game theory problem which outlines the difficulty of a decentralized network to arrive upon a consensus without a trusted central authority. The most fundamental problem that blockchain technology hopes to resolve.
Centralized(1) – Where decision mechanisms are concentrated and awarded to a central authority or entity within a system.
Composable(2)- Composability is defined as the interoperability of components within a system. In Crypto, this refers to decentralized systems having the ability for anyone to adapt or build on top of them.
Consensus Mechanism(1) – A system which allows distributed computing and multi-agent systems to work together and synchronize.
Double Spend Problem (1) – A phenomenon where a digital currency is simultaneously spent more than once.
Fiat(1) – Money that is declared by a government to be legal tender.
Genesis(1): In cryptocurrency, this is referred to the first block that is mined by a crypto network, thereby being the first block in the chain.
Hard Fork(1) – Hard forks, in reference to blockchain technology, is when the code changes so much that older versions of the blockchain are no longer compatible and therefore the blockchain splits into two; the original chain and the new chain that follows a new set of rules. When this happens, an entirely new cryptocurrency emerges, in Bitcoin’s case, Bitcoin Cash and Bitcoin Gold were hard forks of Bitcoin. Check out Soft Fork.
Hash Value(2) – Hash values can be thought of as fingerprints for files. A Cryptographic algorithm processes the contents of a file into a compressed set of numerical values.
Immutable(2) – Not capable or susceptible to change. In Crypto this term is used in reference to the ledger where all previous transactions and records cannot be changed by a centralized authority.
Layer 1 Solutions (2): These solutions focus on the base level protocol of a blockchain, typically through consensus changes or sharding.
Layer 2 Solutions(2): These solutions involve processing transactions off the main chain(mainnet) while maintaining the same security and decentralization as the mainnet.
NFTs(1) – Also known as Non-fungible Tokens, are unique cryptographic tokens stored on a blockchain. Types of NFTs can include but are not limited to photos, digital art, video, audio and any other form of a digital asset.
Proof of Stake(1) – In contrast to Proof of Work, proof of stake is a consensus mechanism where validators stake or set aside their tokens in hopes to be randomly chosen to create the new set of blocks and transactions.
Proof of Work(1)- Proof of work is a form of cryptographic proof in which one party(the prover) demonstrates to another party(the verifiers) that a specific amount of computational effort has been completed. In Bitcoin’s case, miners compete to add new blocks to the chain by racing to solve a cryptographic puzzle while expending computational resources to do so. The probability of a specific miner winning the race is equal to the amount of computational energy provided.
Scalability(1) – ability to support large amounts of transactions and support future growth.
Security(1) – ability of a blockchain to operate and protect itself from attacks, bugs and other issues.
Sidechains(2) – An extension of the mainnet of a blockchain network used to increase transaction throughput and interoperability.
Smart Contract(1) – A computer program which is designed to automatically execute once the specified contract requirements have been met.
Soft Fork(1) – A soft fork is essentially a software upgrade to the blockchain. When it is adopted by all users of the network, it becomes the new standard for that cryptocurrency. Soft Forks tend to bring new features and functions to the blockchain at a software level and are backwards compatible with all previous blocks.
Stablecoin(1) – A cryptocurrency designed to have its value pegged 1 to 1 to a real world asset, most commonly the U.S. dollar.
Web2(1)- The second version of the internet starting in the early 2000s to present day. Themes of this version are central companies (Facebook, Twitter, Uber, Google etc.) who own the platform, own the data and monetize through data exploitations and ad sense.