Table of contents
Bitcoin is the first and most well-known cryptocurrency, introduced by an anonymous person or group of people using the pseudonym Satoshi Nakamoto in 2008. Bitcoin operates on a decentralized peer-to-peer network, allowing users to send and receive payments without relying on a central authority such as a bank.
Bitcoin is the first and most well-known cryptocurrency, introduced by an anonymous person or group of people using the pseudonym Satoshi Nakamoto in 2008. Bitcoin operates on a decentralized peer-to-peer network, allowing users to send and receive payments without relying on a central authority such as a bank.
Altcoins refer to any cryptocurrency other than Bitcoin. The term "altcoin" is a portmanteau of "alternative" and "coin," representing the myriad of cryptocurrencies that have been developed following Bitcoin's success. Altcoins aim to improve upon Bitcoin's perceived limitations or introduce entirely new features.
Definition: The first decentralized digital currency, operating without a central authority and enabling peer-to-peer transactions.
Explanation: Bitcoin transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. Bitcoin is often referred to as digital gold due to its limited supply and store of value properties.
Definition: Any cryptocurrency other than Bitcoin.
Explanation: Altcoins can vary significantly from Bitcoin and each other in terms of technology, purpose, and features. Examples include Ethereum, Litecoin, and Ripple.
Definition: A digital or virtual currency that uses cryptography for security and operates independently of a central authority.
Explanation: Cryptocurrencies leverage blockchain technology to gain decentralization, transparency, and immutability.
Definition: A distributed ledger technology that records transactions across multiple computers so that the record cannot be altered retroactively without altering all subsequent blocks and obtaining network consensus.
Explanation: Blockchain is the underlying technology for Bitcoin and most altcoins, ensuring secure and transparent transaction records.
Definition: The process of using computational power to validate transactions and add them to the blockchain, earning rewards in the form of cryptocurrency.
Explanation: Miners solve complex mathematical problems to add blocks to the blockchain, receiving new coins and transaction fees as rewards.
Definition: The distribution of power away from a central authority to a network of nodes.
Explanation: In the context of cryptocurrencies, decentralization means that no single entity has control over the entire network, enhancing security and trust.
Definition: Self-executing contracts with the terms of the agreement directly written into code.
Explanation: Used predominantly by Ethereum and other altcoins, smart contracts automatically enforce and execute the terms of a contract when predetermined conditions are met.
Definition: A consensus mechanism that requires network participants (miners) to solve complex mathematical problems to validate transactions and add them to the blockchain.
Explanation: PoW is used by Bitcoin and several other cryptocurrencies. It is secure but energy-intensive.
Definition: A consensus mechanism that assigns the right to validate transactions and create new blocks to participants based on the number of coins they hold and are willing to "stake" as collateral.
Explanation: PoS is considered more energy-efficient than PoW and is used by cryptocurrencies like Ethereum 2.0 and Cardano.
Definition: A split in the blockchain network that occurs when the community makes changes to the blockchain's protocol or software.
Explanation: Forks can be hard (resulting in a new blockchain) or soft (backward compatible changes). Bitcoin Cash is an example of a hard fork from Bitcoin.
Description: Ethereum is a decentralized platform that enables smart contracts and decentralized applications (DApps) to be built and run without any downtime, fraud, control, or interference from a third party.
Unique Feature: Introduced the concept of smart contracts, allowing developers to create decentralized applications.
Description: Often referred to as the silver to Bitcoin's gold, Litecoin was created by Charlie Lee in 2011 as a "lighter" version of Bitcoin.
Unique Feature: Faster block generation time (2.5 minutes compared to Bitcoin's 10 minutes) and a different hashing algorithm (Scrypt).
Description: A real-time gross settlement system, currency exchange, and remittance network created by Ripple Labs Inc.
Unique Feature: Consensus ledger and the use of the XRP token to facilitate cross-border transactions between banks.