Altcoin: A crypto coin other than bitcoin. These are cryptocurrencies launched after bitcoin and piggy-backing on its success. It’s difficult to keep track of them, but there were believed to be about 5 000 altcoins in 2020.
Bitcoin (BTC): The original cryptocurrency, and the grandaddy of them all. It was launched in 2009 in response to the 2008 financial crisis as an effort to remedy the perceived pitfalls of fiat currencies controlled by central banks. The chief pitfall being few restraints on the expansion of money supply (Bitcoin will only ever have 21 million coins in issue). It was developed by the mysterious Satoshi Nakamoto in 2008 and released as open source software. Bitcoin is a digital currency that uses peer-to-peer technology (with no intermediaries, such as a bank) to facilitate payments. More recently it has come to be regarded as a safe have asset, correlated to the gold price.
Bitcoin network: A decentralised peer-to-peer network that allows users to send units of value to each other without any intermediary or bank.
Blockchain: A decentralised public record of transactions, rather like an accounting ledger with full details detailing all transactions. These are used for recording cryptocurrency transactions such as bitcoin. Blockchains are ‘decentralised’, meaning they are stored on multiple computers distributed around the world.
Cold storage: A ‘wallet’ for digital assets that are stored offline, away from the internet, to reduce chances of hacking and theft.
Cryptocurrency: A digital asset, with strong cryptography to prevent theft or counterfeiting, that can be transferred electronically anywhere in the world. Bitcoin’s bitcoin and Ethereum’s ether are examples of cryptocurrencies.
Digital asset: Any form of value reducible to a digital form, such as cryptocurrencies, digital stocks, utility tokens and security tokens. As they are intangible, they are secured using advanced cryptography to prevent theft or hacking.
Double spend: The risk that a digital asset can be stolen or copied. In the case of bitcoin, this risk is largely eliminated by announcing all transactions to all nodes, thereby preventing instances of double spend.
Encryption: A way of scrambling information that can only be unscrambled by authorised users.
Ether (ETH): A cryptocurrency similar to bitcoin.
Ethereum network: A blockchain similar to that used by Bitcoin, but with some added functionality to run smart contracts (which allow transactions, such as life policies or trade shipments, to be effected on the fulfilment of certain conditions, and without the need for third parties).
Exchange: An online market for the buying and selling of assets such as cryptocurrencies. Examples include Luno, VALR, Ovex, Coinbase and Binance.
Fiat: Currencies such as the US dollar and the rand issued and backed by governments rather than by commodities such as gold (which was the case until 1971). Since there is very little control over the ability of…
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