- October 27, 2020
- Posted by: Anita Iyer
- Category: Blog
Certain phrases and acronyms are highly unique to digital currencies and to understand the space better it will be helpful if you know the basic industry terminology. Let’s continue with our “Cryptocurrency terminologies you need to know’ series. You can read Part 1, Part 2 and Part 3 for more terminologies.
DDoS Attack
A distributed denial of service (DDoS) attack takes place when a group works together to overload a system by either flooding requests for information or corrupt data. Basically, the parties involved in such attacks want to prevent a resource, such as a server, from being able to provide some specific service, such as serving a web page.
Some crypto exchanges have been DDoS attacked from several parties looking to cripple the marketplace and to take steal cryptocurrencies. In the case that stealing digital asset does not work due to a solid security system in place, the exchange will not be accessible for a while and exchange’s users will not have access to the platform making users unhappy as they won’t be able to trade.
Distributed Ledger
Distributed ledger technology known as (DLT) is a system that duplicates, secures, and shares data on a decentralized or centralized network. DLT is also designed to remove corruption by replacing a single point of failure with a distributed network of nodes or devices that work together to verify transaction, data, or any functionality the distributed ledger is utilized for. There are several types of distributed ledger some are private, and some are public, mostly are based on “Blockchain Technology” yet other technologies do exist such as “The Tangle” by IOTA
Pump and Dump
Is a type of investment strategy where several market participants work together to remove corruption so they can sell it when its value is contrivedly high. This is a common practice when it comes to digital currencies, as traders can easily get together using Reddit or Telegram groups with the goal of causing a sudden rise in value with specific cryptocurrencies, crypto whales are also known to influence prices of certain cryptos.
Arbitrage
Taking advantage of a difference in price of the same asset on two different exchanges. For example, buying Bitcoin from one exchange for $10,000 and selling it in a few minutes on another exchange for $10,200 is an Arbitrage, this typically happens between Korean exchanges and U.S based exchanges.
Smart contract
A computer protocol code that is deployed onto the Ethereum blockchain, often directly interacting with how money flows, business agreements, logistics and other contracts…for example; A normal transaction allows you to send money from A to B. Smart contracts allow you to send money from A to B, on the condition that C happens.”
Fiat Money
Tangible paper money or coins that is considered a legal tender by a government declaration. In the U.S., dollars are fiat money and, in the UK its pounds.
Block Explorer
An online tool for exploring the blockchain of a cryptocurrency, where you can watch and follow all the transactions happening on the blockchain. Etherscan (A block explorer) is designed to facilitate the Ethereum blockchain transparency and accessibility along with the tokens built on the Ethereum blockchain; it is the go-to resource for users to discover general and technical information on Ethereum or Tokens, from pricing, circulating supply, gas fee to live transactions taking place on the blockchain
Difficulty
Difficulty refers to the mining of cryptocurrencies in a certain moment in time. The more transactions that are trying to be confirmed by the node (miners), divided by the total power of the nodes on the network at that time, defines the difficulty. The higher the difficulty, the greater the transaction fee, this measurement changes over time, the more available nodes the more difficult to mine.
ERC-20
The standard to which each Ethereum token follows. They comply to a set of standards and the way that each token behaves so that transactions are predictable. Other cryptocurrencies also use the ERC-20 standard built on the Ethereum network in the process such as iOWN Token.
Roadmap
A project’s roadmap is a plan that show what an organization wants to achieve and contains a strategic overview of the major elements. This usually contains the deliverables for a year or two. In can be as detailed with specific dates or months, but it can also be broader and based on quarters. In crypto it’s a common practice that the team shares this roadmap publicly in order to give insight to potential investors into the coming features and when those will be fulfilled. It should include objectives, milestones, deliverables, resources, and planned timeline.
SHA-256
Stands for Secure Hash Algorithm 256-bit is like a signature or a fingerprint for a data set. The cryptographic hash function is used by bitcoin and by a number of altcoins too. Using an online tool, you can easily generate SHA256 hashes.
Token Burn
The burning of tokens involves the permanent removal of existing cryptocurrency coins or tokens from circulation. The practice of burning is quite common in the industry and is quite simple. Token burning is a deliberate action taken by the creators in order to remove a certain number of available tokens from circulation. This happens when there is a certain number of tokens that are not sold through ICO, IEO or private sale, to gain the confidence of investors, the project will burn unused tokens. Token or coin burning usually affects the token price and is considered a deflationary mechanism, a consistent demand and less tokens in circulation will increase the price of a token or a coin.
Crypto has its own language, we hope that these terminologies will make it easier for you to dive into the Crypto World. If you are interested to learn more, check out our Knowledge Center videos, where we explore different topics related to the crypto space.
You might also like:
Coins vs. Tokens: What is the difference?
Crypto Terminologies You Need To Know – Part 1
Crypto Terminologies You Need To Know – Part 2