Crypto glossary


#61

Atomic swaps: Atomic swaps are a way to exchange cryptocurrencies from different blockchains without a third party or intermediary such as an exchange – for example from Bitcoin to Ethereum. By removing intermediaries, Atomic swaps remove the unnecessary fees associated with exchanging cryptocurrencies.


#62

Double spend problem: The risk that a digital currency can be spent twice. Double-spending is a potential problem unique to digital currencies because digital information can be reproduced relatively easily.


#63

this kind of reminds me of how “urban dictionary” is laid out. the definition with the most votes is filtered to the top, and then it trickles down from there.


#64

Airdrop: The distribution of a cryptocurrency or token to a large number of wallets. Airdrops are often used as a marketing technique by founders to encourage use and stimulate network effects. Some airdrop campaigns work like a lottery, randomly selecting wallet addresses that meet certain criteria such as holding a specified amount of tokens. Others offer coins or tokens to people in exchange for completing tasks like joining social media channels, liking or retweeting, referring others, or downloading an app.


#65

Hash Rate / Hash Power: A hash rate can be defined as the speed at which a given mining machine operates. Crypto mining in PoW based blockchains involves finding new blocks through complex computations. The mining machine has to make thousands or even millions of guesses per second to find the right answers to get a new block added to the blockchain. To effectively mine a block, the miner should hash the block’s header such that it’s below or equal to the “target" set. The target changes with every change in difficulty. To arrive at a given hash (or target), the miner has to vary a field of block’s headers, which is known as a “nonce”. Each nonce begins with “0” and is increased every time to get the necessary hash (or target). Given that the varying of the nonce is a game of chances, the chances of getting a given hash (or target) is very low. The miner, therefore, has to make numerous tries by varying the nonce. The number of attempts that miner makes per second is known as the hash rate or hash power. Hash rate is computed in hashes per second (h/s). The various machines used to mine different cryptocurrencies don’t have equal hashes. Currently, a bitcoin mining device such as ASIC has a mining power of approximately 12 terahashes per second. The higher the hashrate, the more powerful miner it is. Thus hash rate/hash power can become a measure of 51% attack on a PoW blockchain network.


#66

Block Nonce: The “nonce” (number used once) in a block header is a 32-bit (4-byte) field whose value is adjusted by miners so that the hash of the block will be less than or equal to the current target of the network. The rest of the fields may not be changed, as they have a defined meaning. Block header data contains the block version number, a timestamp, the hash used in the previous block, the hash of the Merkle Root, the nonce, and the target hash. Successfully mining a block requires a miner to be the first to guess the nonce, which is a random string of numbers. This number is appended to the hashed contents of the block, and then rehashed. If the hash meets the requirements set forth in the target, then the block is added to the blockchain.


#67

Difficulty: The difficulty is a number that regulates how long it takes for miners to add new blocks of transactions to the blockchain. Difficulty ensures that blocks of transactions are added to the blockchain at regular intervals, even as more miners join the network. If the difficulty remained the same, it would take less time between adding new blocks to the blockchain as new miners join the network. Hence the requirement a block hash must meet corresponds to the difficulty, i.e. a valid block hash must be below a certain target value set automatically (and periodically adjusted) by the blockchain protocol. The lower the target value, the more repetitions of the hash function a miner must go through in order to get an acceptable result – in other words, the higher the difficulty. A miner can, in theory, get lucky and obtain a valid hash for a given block on the first try: over time, however, higher difficulty means that miners must iterate through more nonces and rehashes per block on average. The difficulty adjusts every 2016 blocks (roughly every 2 weeks).


#68

Blinding factor: A random value used to obscure transaction amounts. This offers privacy by granting knowledge of transaction sums only to the sender and receiver. However, third-parties can still ensure the validity of the transaction by comparing the number of inputs and outputs. This ensures the integrity of the ledger while allowing privacy. Blinding factors are a key ingredient of privacy-focused cryptocurrencies based on the Mimblewimble protocol such as Grin and Beam.