Cryptocurrency
Cryptocurrency is the name for digital money based on asymmetric cryptography (encryption). Most cryptocurrencies are based on blockchain technology.
Unlike traditional, so-called Fiat currencies, cryptocurrencies cannot be counterfeited and the amount in circulation cannot be arbitrarily increased.
Some cryptocurrencies, such as Bitcoin (BTC) or Litecoin (LTC), have a fixed coin limit.
On the other hand, some like Dogecoin (DOGE) do not have such a fixed coin limit. Conversely, other cryptocurrencies have a steadily
decreasing number of coins, Shiba Inu (SHIB), for instance.
Currently (in year 2023) there are around 23700 different cryptocurrencies.
Find out more about cryptocurrencies on Wikipedia
Public key vs private key
In asymmetric cryptography, we often encounter these two terms. In very simplified terms, a public key is an address - similar to a bank account number. The private key is the password to that "account". Thus, logically, private keys should be kept completely secret.
Blockchain
Blockchain is a shared public digital ledger that records all transactions that have already taken place. Find out more about blockchain on Wikipedia.
Mining
Mining is a process which includes verifying transactions and, if necessary, generating new coins. Miners who verify transactions are rewarded with new coins. Earlier, it was possible to mine cryptocurrencies using a PC at home. Nowadays, however, special equipment (ASIC miner) is necessary for mining (PoW) and, moreover, mining is usually only worth it in places with cheap electricity. The best-known mining algorithms are the Proof of Work (PoW) and the Proof of Stake (PoS).
Proof of work (PoW) algorithm
Proof of work (PoW) algorithm is a mining algorithm based on computational power and therefore energetically expensive/environmentally unfriendly. For example, Ethereum has already switched from PoW to PoS, while Dogecoin and Bitcoin still run on PoW.
Proof of stake (PoS) algorithm
Proof of stake (PoS) algorithm is a mining algorithm based on the number of coins held. The algorithm is very energy-efficient and hence more eco-friendly.
Coin vs token
Coins have their own blockchains, unlike tokens which are generated on already existing ones. For instance, Dogecoin and Bitcoin are coins which have their own blockchains. Shiba Inu, on the other hand, is a token which runs on the Ethereum blockchain.
Wallet
See the main page (Dogecoin wallet) for more information. Sometimes we can also come across the terms 'hot' = online, and 'cold wallet' = offline (hardware, paper).
Market capitalization
Market capitalization is also referred to as the total market value of a cryptocurrency. We calculate it by multiplying the 'number of coins in circulation' by the 'price per coin'.
Stablecoin
Stablecoin is a cryptocurrency that has its exchange rate firmly pegged to the US dollar. Examples of stablecoins include Tether (USDT), Binance USD (BUSD) or USD Coin (USDC). There are also stablecoins pegged to the price of gold: Tether Gold (XAUT).
Crypto exchange vs crypto broker
Usually only cryptocurrencies can be purchased on a crypto broker and they need to be transferred into your wallet. On a crypto exchange, you can not only purchase cryptocurrencies but more importantly, they can be traded here or simply held to earn interest. For more information, visit Crypto Exchanges on the main page.
Decentralised vs centralised cryptocurrency exchange
On a centralised exchange (CEX), each user owns a personal account and their cryptocurrencies are stored in the wallet. In contrast, there are no accounts on a decentralized crypto exchange (DEX). A user simply connects his wallet to a decentralized exchange, makes the transfer they intend to make, and disconnects the wallet again. Not all wallets, though, can be connected to these exchanges.
Fiat money
Fiat money is a national, government-issued currency such as the dollar, euro, yen, yuan, ruble, frank etc.
Central Bank Digital Currency (CBDC)
While we can consider classic cryptocurrencies, like Dogecoin and Bitcoin, to be cryptocurrencies that aren't controlled by governments, banks or individuals and therefore offer freedom for ordinary people. On the other hand, CBDCs cryptocurrencies issued by national banks (governments), can suppress human freedom and can lead to complete totalitarianism. CBDCs are so-called programmable money which allows governments to control exactly what people can and cannot buy and, as a consequence, own.