The most important terms about cryptocurrencies you should know

Today, cryptocurrencies have become a global phenomenon and modern and the concern of most people. While some of its terms remain purely vague and technical and are not understood by most people, banks, governments and many companies are aware of their importance, as it will be very difficult to find an international bank, a large accounting firm, a well-known software company or even A government did not conduct a study on cryptocurrencies or publish a scientific paper on the impact of this phenomenon.

The obsession with cryptocurrencies, especially Bitcoin, has led to predictions by experts that it will collapse. Some even consider Bitcoin to be just a bubble that needs to grow before it bursts, as happened in the Internet bubble earlier this century. This article.

The most important terms of cryptocurrencies

In this article, I will address the most important terms of cryptocurrencies, and I will try to explain and simplify it to be as easy to understand and as clear as possible. After reading the article, you’ll learn more about her world and be able to explain it to other people.


It is a form of digital money intended to obtain a high level of security to protect the virtual transactions based on it, to hide the identity of the sender and recipient, as well as to control the creation of new units of currency where it is difficult to counterfeit. For this, the cryptocurrency has important features such as decentralized authority (ie without a controlled intermediary such as the Pay Pal site), and the existence of a public / public account record in which virtual transactions are recorded in an integrated manner called the chain of blocks. Transactions between users on a peer-to-peer network are done directly without an intermediary through the use of encryption.


It is the first and most famous cryptocurrency and is considered the gold standard in the world of cryptocurrencies, it was developed by Satoshi Nakamoto in 2008, and can be compared with other currencies such as the dollar or the euro but with several differences, most notably that this currency is fully electronic and traded online Only without any physicist having. It is the first decentralized cryptocurrency. It is a system that operates without a central repository or a single manager, meaning there is no central regulatory body behind it. Bitcoin is an open-source currency, where it can be copied, modified, and then launched.


It is a secure, inexpensive and centrally controlled storage and transmission technology that is a public record of all chronological cryptocurrency transactions. The blockchain is shared among all users. The chain is used to ensure the continuity of digital transactions and to ensure the correctness of transfers and prevent double-spending. This concept is called a chain description of the interconnectedness between blocks.


It is the use of computer and internet capability to solve mathematical equations and document transactions to extract cryptocurrency. Mining, in a more correct sense, is the process of documenting and recording transactions in a series of blocks using a computer and the Internet. During the acquisition of new units of currency included in the series of blocks involved. Cryptocurrency is mined using an algorithm called Hashing Algorithm.

Satoshi Nakamoto

It is the name of the founder and inventor of Bitcoin. There are many assumptions about the identity of this character, as it is uncertain at this moment whether this name is the real name of the inventor, or is it just a pseudonym used only to announce the new currency. Also, it was not known whether the name was for a man, a woman or a group of people. It has often been announced that the true identity of the inventor has been revealed, but these announcements have not been confirmed and the real character remains unknown. Satoshi Nakamoto is believed to have about a million bitcoins.

Public Key Encryption

A type of encryption in which a user is given a pair of encryption keys, a public or public key and a private key. The private key remains confidential to the user, and the declared key can be distributed to everyone. The two keys are related to a calculation (varies depending on the algorithm used), and one of the keys cannot be reached by the other. This system is used to encrypt messages using the declared key, which can only be decrypted by the corresponding secret key, and is also used in the electronic signature.


The wallet contains the basic information to execute transactions in cryptocurrency, and it stores public and private keys that can be used to receive or exchange this currency. A wallet can contain multiple pairs of public and private keys, and the cryptocurrency itself is not stored in the wallet. There are several types of wallets, such as software wallets, which are software that stores keys on the user’s computer, Internet wallets that are wallets provided by intermediary companies such as banks, or can be physical / hardware wallets, which are usually a small device to store Encryption keys, these are the most secure wallets.

Peer to Peer / P2P

The ability of a user to exchange data, or participate in the transfer of files or digital assets directly with other users on the network without the need to be done through an intermediary, or supervised by a central authority. One of the most peer-to-peer network applications is the sharing of songs and movies on the Internet, BitTorrent, or cryptocurrency platforms such as Bitcoin.

Alternative cryptocurrency

It is any cryptocurrency other than Bitcoin, and sometimes etherium as well. There are thousands of alternative currencies at the moment, and the most important differences between Bitcoin and these alternative currencies are: Since Bitcoin is the most popular and widespread currency, it is the most difficult in mining and the most expensive, while alternative currencies are less famous and widespread. Therefore, they can usually be obtained more easily and cheaply, and their price can be more stable than the price of Bitcoin with a volatile price, and many of these currencies were created to avoid problems in the Bitcoin system that was impossible to predict when starting to deal.


A cluster chain system is a large and complex network of identical databases called nodes. These nodes contain all the previous transactions that took place in this chain. These nodes are computers on the network that regulate and coordinate transactions between miners and cryptocurrencies.


A fork or fork is a condition that occurs when the chain of blocks is split into two separate chains temporarily or permanently. Branching occurs naturally during mining when two strings follow the same rules and have the same accumulated proof of work, both of which are considered valid. It can also occur as a result of using two different sets of rules in an attempt to obtain the same blockchain, using branching in cryptocurrencies to add new features to the blockchain or repel the effects of a hacking attempt or to get rid of something that has a serious impact on the blockchain. There are two types of branches: a harsh branch, and a soft branch.

Proof of Work PoW

It is to verify the validity of the work that occurred during mining and to prove that it is true by using the computing power of the computer. Bitcoin and many alternative currencies follow this method of consensus and consensus to ensure the correctness of the blockchain. For this, the method has some disadvantages such as the high cost of used equipment, energy and effort to confirm the work, and users can decide to move to mine an alternative currency if the reward they receive is higher, and with the increase of mining and subtracting a lot of them, it becomes more difficult to mine new pieces of the same currency with time.

Proof of Stake PoS

An alternative way to validate a transaction or block is to focus on the amount of quota (currency) and the age of that quota when selecting the authenticator. This share can be considered as a bank deposit. Therefore, if you move your quota from one address (or wallet) to another, a new quota age will be reset. This allows to build a reliable network between users with governors authenticators, in this way is not ‘mining’ is important, but ‘certification’ is the most important to process and add mass to the chain, the most important features of the method: speed certification, no need for expensive devices, less energy consumption, The longer the shareholders and the longer their commitment, the more chance they will have.

If there is an important term you know not mentioned, share it with us in the comments.