Cryptocurrency Mining Glossary
This is a glossary of all cryptocurrency terms and lingo you might come across when reading about mining and mining pools. Just refer to this page when you see an unfamiliar word or phrase.
- ADDRESS – a cryptocurrency address is a string, containing numbers and letters, from which you can send and receive crypto payments.
- ALGORITHM – kit of rules, which are solving a problem via calculations, using a computer. It’s encrypting and transferring data, which makes it mining’s base when it comes to extracting cryptocurrencies.
- ASIC – (Application Specific Integrated Circuit) a dedicated mining device, which is able to extract coins, working with on one particular algorithm.
- ASIC-RESISTANCE – memory hard algorithms that are hardly cooperating with ASICs, because they are built to be resistance to this kind of devices.
- ATTACK 51% – a miner possess 51% of the pool’s hash rate, so he’s able to manipulate the network.
- BANDWIDTH – the maximum capacity of the network to transmit data.
- BLOCK – a piece of the blockchain, containing transactions.
- BLOCKCHAIN – a public ledger, which contains lots of data, encrypted in separate block in the form of hashes (messages). Considered immutable and unable to manipulate.
- BLOCK HEADER – a string long 80 bytes, which miners hash with the nonce to find the solution of the block.
- BLOCK REWARD – this is what a miner gets for successfully calculating a valid hash in the block when performing a mining process.
- BLOCK SIZE – this is a limit of bytes that the block might contain (also limits of transactions in one piece).
- BLOCK TIME – the average time needed to find a block’s solutions. It’s different for each coin.
- BLOCK SYNCHRONIZATION – the time requested for the blockchain to sync with your device (for full nodes usually).
- CENTRALIZATION – an organization or system, which is controlled by a central authority.
- CLOUD MINING – performing a mining process via rented hashing power from a third-party provider.
- COIN – a term used to describe units of blockchain value.
- CONFIRMATION – the process of validating if a transaction is including on the blockchain.
- CONSENSUS – a rule all participant agrees on when operating on the same network.
- CONTRIBUTION SHARE – the hash rate a miner puts into the pool to contribute.
- CPU – (Central Processing Unit) a processor, which coordinates the work of all the other part of a computer.
- DAO (Decentralized Anonymous Organization) – organization running smart contracts.
- DIFFICULTY – a measure of how difficult might be to mine a new block.
- DIFFICULTY BOMB – malicious attack, increasing difficulty that much, that the reward doesn’t cover the expenses to mine.
- DISTRIBUTION – percentage of each pool from all the ones available in the network for this coin.
- DOUBLE SPENDING – general issue of the decentralized conception or spending a same amount twice.
- DOWNTIME – a period when a machine isn’t working.
- EXCHANGE – a platform to buy, trade and sell cryptocurrencies.
- FIAT MONEY – national currency of a central government.
- FORK – changing in the rules of the consensus, which might be able to exist with the old established rules (soft fork) or not (hard fork).
- FPGA – a modern mining device, improving the ASIC, which can mine coins from one particular algorithm. The interesting here is that you can modify it to mine a different algorithm if you decide to change the coin you mine.
- FULL NODE – storing the blockchain data locally on your PC.
- GAINS – increasing profits (reward).
- GENESIS BLOCK – the first block, computationally created in the blockchain. It contains the initial transaction.
- GPU (Graphic Processing Unit) – a graphic card, also known as a video card (part of a computer), which is successfully used for mining purposes.
- HASH FUNCTION – encrypted message with fixes size and unique value.
- HASH RATE – a unit to measure the computational power by which a miner contributes in the mining process.
- HASH RENTAL – a rented computing power for mining purposes by a cloud mining provider.
- HARD FORK – this is a protocol change, which results in splitting into two different chains and the longer one continuous existing. If both of them do – we have a chain split. These changes cannot cooperate with the old rules and require an update.
- HARD DISK SPACE – the storage a user needs to locally store the blockchain data on a desktop PC.
- Halving – decreasing the reward of gained coins per block using a particular formula.
- ICO (Initial Coin Offering) – crowdfunding via crypto coins for the purpose of gaining capital for a particular project.
- IMMUTABLE – unable to change in time.
- KYC (Know Your Customer) – an identification process for the users in the network.
- LEDGER – a piece of record of data, which is immutable.
- LIGHT CLIENT – not storing the entire blockchain data but using just parts of it (a block’s header). To have some more information, they trust a full node.
- LIGHTNING NETWORK – an additional layer of the blockchain to perform faster transactions between the nodes participating in the network.
- LIQUIDITY – the ease to buying and selling, without bothering the market’s price.
- MARKET CAPITALIZATION – a cryptocurrency’s price, according the total supply.
- MARKET SHARE – the hash share of the market with which the pool operates.
- MINEABLE – a coin which can be mined in return of reward.
- MINER – either the device or the person who’s performing the mining process.
- MINER’s FEE – this is the reward a miner receives for its contribution to the network by validating transactions. Normally, miners choose transactions with higher fees to add in the next block to profit more and faster.
- MINING – a process of extracting a cryptocurrency by adding and verifying transactions to the blockchain, respectively gaining a reward for it.
- MINING POOL – group of miners, combining their power to find a block faster and sharing the reward from it too.
- MINING RIG – this is a set of multiple mining hardware, combined to mine with higher hash rate and find a block faster.
- NODE – a computer that keeps a copy of the blockchain.
- NONCE – an arbitrary number in a cryptographic communication. It is generated during the hashing process and can be used only once.
- ORPHAN BLOCK – a valid block, which isn’t part of the blockchain and occurs when two miners find the same block in the same time. The one which is late becomes orphan.
- PAYOUT LIMIT – the minimum amount of coins which you can withdraw from your account.
- POOL DISTRIBUTION – a percentage of each pool, possessed for this particular coin.
- POOL FEES – the fees requested from the pool for maintenance.
- POW (Proof-of-Work) – when it comes to mining this is a consensus mechanism where miners are using a nonce to search the block’s solutions and get rewarded proportionally of their contribution (work). There’s no need of trust, since everybody’s “work” (share) is visible in the network.
- PPS – (Pay Per Share) a type of rewarding system, based on contribution.
- PPLNS – (Pay Per Last N Shares) a type of rewarding system, based on time a contribution.
- PRIVATE KEY – this is the “password” which helps you to access your public address. It’s the one and only, which let you read the hashes (messages) sent to your public key.
- PROP – (Proportional) a type of rewarding system, based on a proportional relation between contribution and luck.
- PUBLIC KEY – this is a recipient’s address to receive any crypto assets in the form of a hash, which might be read with only one specific private key.
- QR-CODE – a graphic sign, which can be scanned via smartphone camera to read a wallet’s public address and send some coins within it.
- REWARDING SYSTEM – a method of rewarding the miners, depending on their contribution to the network.
- REPOSITORY – a software where you keep all your information, which might be retrieved at some point.
- STALE SHARE – when two miners send a share to the network to affirm, they found a block, the one which is late is a stale one.
- SPV (Simple Payment Verification) – a client which checks on transactions, using only the headers of the blocks, which is considered a proof of inclusion.
- TRAFFIC (incoming & outcoming) – the traffic from one point to another (movement of data and actions). It’s important when it’s up to cryptocurrencies because it can define your speed when broadcasting a transaction.
- TRANSACTION FEE – a payment to broadcast your transaction on the network.
- UPTIME – the time during which a mining machine is properly working.
- UTXO (Unspent Transaction Output) – a value, calculating the balance of unspent coins, based on all the previously spent outputs and inputs, based on the public ledger’s history of transactions.
- VALID BLOCK – there’s a signal that the block is mined and the user’s waiting for confirmation from other nodes to gain the reward.
- VARDIFF (Variable Difficulty) – the share’s difficulty might rise or fall, depending on the hash rate.
- VPS (Virtual Private Server) – a PC with static IP, supporting the network.
- WALLET – a digital wallet to store, send and receive crypto assets.
- WORKER – either a mining device, either an account in the mining pool configuration.
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