Definitions

  • Currency – Currency is something you are certain will be accepted in trade for things you want at a later time, for example, dollar bills for food at the grocery store. It was invented to make trading and bartering easier. The word currency comes from current which means to flow [from one person to another]. Before currency, eggs might spoil before they could be traded for clothing or a wagon. The first currency in the Western world was made from coins of gold and silver.
    Currency 1) is widely and easily accepted, 2) holds its value, 3) endures over time, 4) can be broken into smaller units and 5) is easily verified.
  • Digital Currency – Currency that is represented digitally. Until Bitcoin, digital currency was authorized and controlled by banks, for example credit cards, Paypal or wire transfers.  This management led to restrictions and expensive charges. With the invention of Bitcoin, central authorization and control by banks was eliminated along with inflation and expensive charges to transfer it. Central control was replaced with independent verification of a unique, hidden computer code in each Bitcoin which prevents counterfeits and fraudulent transactions. Because it relies on a hidden code, Bitcoin is referred to as Cryptocurrency. Crypto meaning hidden or secret.
  • Bitcoin – The first and most widely known Digital Currency that relied on a secret, hidden code that prevents counterfeits and fraudulent transactions. The first Bitcoin was created in 2009 and now (May 2017) numbers roughly 21 million Bitcoins valued at more than 28 Billion dollars. In addition to being widely and easily accepted, holding its value, enduring over time, being divisible and easily verified; Bitcoin is not limited by national borders.
  • Cryptocurrency – Because it relies on a hidden code, Bitcoin is referred to as Cryptocurrency. Crypto meaning hidden or secret. Although Bitcoin was the first, there are now more than 700 other cryptocurrencies.
  • Altcoins – After Bitcoin, hundreds more cryptocurrencies have been created. Altcoin refers to any other cryptocurrency.
  • Wallet – A software program for computers or or an app smartphones that fulfills 3 functions: Receiving, Storing and Sending digital currency. There are also hardware wallets that combine physical hardware with a software program to fulfill those same 3 functions.
    Popular software wallets are: Breadwallet and Blockchain,
    Popular hardware wallets are: Ledger and TREZOR
  • Exchange – A website that provides 6 functions: Buying, Selling, Trading as well as Receiving, Storing and Sending digital currency. All Exchanges incorporate Wallets. This is just like a “Stock” Exchange for digital currency.
    Popular exchanges include: Coinbase, Kraken and Gemini.
  • Bitcoin Address or Wallet Address – The Blockchain doesn’t contain the name of the owner of the Bitcoin. Rather, it contains the sending and receiving addresses of the Bitcoin. Each address is 34 characters: upper or lower case letters and numbers, but no spaces or special characters (!@#$%^&*).
    If I want to send you Bitcoin, I will get your deposit or receiving address and send my Bitcoin to that address. Since they are long and make no sense, it is always best to copy and paste these addresses because Bitcoin sent to a wrong address is either lost forever or sent to someone who has no idea who sent it and can’t find that information!
  • Blockchain – A chain from the beginning of Bitcoin to the present containing blocks of data with that Bitcoin’s secret hidden code, when it was originated, which Bitcoin Addresses have owned it. All the computers running Bitcoin software share the same Blockchain data so that any deviation from it, for example an attempt to “counterfeit” a Bitcoin, is easily discovered and rejected as not a valid Bitcoin.
  • Market Cap(italization) – A financial measure of how big a company or digital currency is. For example, Apple Inc. has roughly 5 and 1/4 Billion shares. Since each one is worth roughly $150 each, Apple Inc. has a market cap of over 800 Billion dollars. There are roughly 16 million Bitcoins. Each one is worth roughly $1,930 each. So the market cap of Bitcoin is roughly 30 Billion dollars. Apple has been around since 1976. Bitcoin has only been around since 2009.
  • Mining – New Bitcoins are still being made and will be until the maximum number of 21 million is reached. To create a new Bitcoin, a computer must solve a very complex mathematical problem. Once it finds a solution to that problem, it submits the answer it found to the other computers on the Internet running Bitcoin software. If that answer is confirmed by 6 other computers, the computer (owner) that found the answer is rewarded with a certain number of Bitcoins. At this time, the reward is 12.5 Bitcoins.