Sheepy glossary

A unique identifier used to send and receive digital assets on a blockchain network. It functions similarly to a bank account number, enabling users to transact securely. An address typically consists of a string of alphanumeric characters and may include both letters and numbers. Each cryptocurrency address corresponds to a specific public key derived from a private key. The private key must be kept secure, as it grants access to the funds associated with the address, while the public key can be shared with others to receive payments.

A decentralized digital currency that operates on a peer-to-peer network without the need for intermediaries like banks. It was created by an unknown person or group of people using the pseudonym Satoshi Nakamoto and was released as open-source software in 2009. Transactions are verified by network nodes through cryptography and recorded on a public ledger called a blockchain. Bitcoin can be used for online purchases, investments, and as a means of transferring value globally. Its limited supply of 21 million coins contributes to its value and deflationary nature.

A digital record containing a list of transactions that have been verified and bundled together. Blocks are added to the blockchain in a linear, chronological order. Each new block strengthens the security of the previous blocks, creating a secure and immutable ledger. This structure underpins the integrity and trustworthiness of blockchain networks like Bitcoin.

A decentralized and distributed digital ledger that securely records transactions across multiple computers, ensuring data integrity, transparency, and immutability. Unlike traditional databases controlled by a single entity, a blockchain is maintained by a network of nodes that collectively validate and record transactions. Each participant in the network has a copy of the entire blockchain, which makes the system redundant and consistent. Once data is recorded in a block and added to the blockchain, it cannot be altered or deleted, thanks to cryptographic hashing and the linking of blocks. Blockchain technology uses consensus mechanisms like Proof of Work (PoW) or Proof of Stake (PoS) to validate transactions, ensuring agreement among nodes. While blockchains are commonly associated with cryptocurrencies like Bitcoin and Ethereum, they also have applications in various industries such as supply chain management, healthcare, and finance.

A web-based tool that allows users to view and search the contents of a blockchain in real-time. It provides detailed information about blocks, transactions, addresses, and the overall health of the blockchain network. Users can track the status of specific transactions, see the latest blocks added to the blockchain, and explore historical data. Blockchain explorers also display various metrics such as transaction fees, confirmation times, and mining difficulty. By offering a transparent view into the blockchain, these explorers are essential for users, developers, and researchers to monitor and analyze blockchain activity.

Digital forms of a country's official currency that are issued and regulated by the nation's central bank. They are designed to be a secure and efficient alternative to physical cash and traditional bank accounts, leveraging modern digital payment technologies. CBDCs aim to enhance payment systems, promote financial inclusion, and potentially provide a tool for implementing monetary policy more effectively. Unlike cryptocurrencies, CBDCs are centralized and maintain the same value as the fiat currency they represent, ensuring stability and trust in the currency.

A method of securing cryptocurrencies or digital assets offline to protect them from unauthorized access, cyber hacks, and other forms of online vulnerabilities. This is typically achieved by storing the private keys, which are necessary to access and manage the digital assets, on a device that is not connected to the internet. Common forms of cold storage include hardware wallets, paper wallets, and offline computers. By keeping these keys offline, cold storage provides a high level of security, making it an essential practice for safeguarding significant amounts of digital assets.

A type of cryptocurrency wallet that stores digital assets offline, away from any internet connection, to provide enhanced security against cyber threats, hacking, and unauthorized access. Cold wallets are used to protect private keys, which are essential for accessing and managing cryptocurrency holdings. Cold wallets are considered one of the safest methods for storing cryptocurrencies, particularly for long-term holdings or large amounts of assets.

A process by which a transaction is verified and added to the blockchain. Each confirmation represents the addition of a new block to the chain after the block containing the transaction. The more confirmations a transaction has, the more secure and irreversible it becomes. For example, if a transaction is said to have three confirmations, it means that three blocks have been added to the blockchain since the block containing that transaction. Multiple confirmations are typically required to ensure the reliability and integrity of the transaction, reducing the risk of double-spending or fraud.

A digital or virtual form of currency that uses cryptography for security. It operates on decentralized networks based on blockchain technology, which ensures transparency, security, and the prevention of double-spending. Cryptocurrencies are not controlled by any central authority, making them immune to government interference or manipulation. They can be used for a wide range of transactions, from buying goods and services to investing and transferring value globally. Examples of cryptocurrencies include Bitcoin, Ethereum, and Litecoin. Cryptocurrencies rely on consensus mechanisms like Proof of Work (PoW) or Proof of Stake (PoS) to validate transactions and maintain the integrity of the network.

A practice and study of techniques for securing communication and data from unauthorized access and tampering. It involves the use of mathematical algorithms and protocols to encrypt (convert plaintext into coded text) and decrypt (convert coded text back into plaintext) information, ensuring confidentiality, integrity, and authenticity. Cryptography is essential in securing digital transactions, protecting sensitive information, and maintaining privacy in various applications such as online banking, e-commerce, and email communication. It underpins the security mechanisms of cryptocurrencies, ensuring that transactions are secure, verifiable, and resistant to fraud and cyber attacks. Key cryptographic techniques include symmetric-key cryptography, where the same key is used for both encryption and decryption, and asymmetric-key cryptography, which uses a pair of keys (public and private) for secure communication.

Cryptography is crucial for the development and operation of crypto payment systems. A robust crypto payment gateway, for instance, relies heavily on encryption to secure transactions. The best crypto payment gateway and processors employ advanced cryptographic techniques to ensure the safety and integrity of crypto payments. Businesses looking to integrate crypto payment solutions can utilize a crypto payment API for seamless integration. Crypto payment gateway development focuses on creating secure platforms that facilitate fiat to crypto payment gateway functionality, ensuring smooth transitions between traditional and digital currencies.

A service that allows merchants to accept cryptocurrency payments from customers in exchange for goods and services. It acts as an intermediary between the customer and the merchant, facilitating the transaction by converting the cryptocurrency into the merchant's preferred currency, if necessary, and ensuring the payment is securely processed. Crypto payment gateways provide various features such as real-time conversion rates, transaction tracking, and integration with existing e-commerce platforms. They enhance the ease of accepting digital currencies by handling the complexities of blockchain transactions, thereby allowing businesses to expand their payment options and reach a broader customer base.

A distribution of authority, control, and decision-making away from a central entity or location to a network of dispersed participants. In the context of technology and finance, particularly with blockchain and cryptocurrencies, decentralization means that no single party or organization has complete control over the system. Instead, it is managed by a distributed network of nodes, each having a copy of the entire ledger and participating in consensus mechanisms to validate and record transactions. This structure enhances security, transparency, and resilience against failures or attacks. Decentralization promotes trust in the system by ensuring that it operates transparently and is not subject to manipulation by any single entity.

Decentralization is particularly relevant in the realm of cryptocurrency payments, where a cryptocurrency payment system enables transactions without relying on centralized authorities. Businesses can accept crypto payments on their websites through a cryptocurrency payment gateway or processor. Cryptocurrency payment providers facilitate secure and efficient transactions, enhancing customer trust and satisfaction. By using cryptocurrency payment solutions, companies can streamline their payment processing, adhere to payments KYC requirements, and offer customers the ability to use cryptocurrencies for various purchases. Accepting crypto payments provides a decentralized and transparent method for handling transactions, promoting a fair and open financial ecosystem.

A technical standard used for creating and implementing tokens on the Ethereum blockchain. It defines a set of rules and functions that an Ethereum token must follow, ensuring interoperability with other tokens and decentralized applications (dApps) on the network. ERC-20 tokens can represent a variety of digital assets, such as utility tokens, stablecoins, or even other cryptocurrencies. The standard includes functions for transferring tokens, checking token balances, and approving tokens for use by other parties. Because of its widespread adoption, ERC-20 has become the most common standard for Ethereum-based tokens, facilitating a robust ecosystem of decentralized finance (DeFi) projects, token sales, and blockchain-based services.

A value of one currency in terms of another currency. It represents the amount of one currency that can be exchanged for a given amount of another currency. Exchange rates can fluctuate based on various factors, including economic conditions, interest rates, inflation, political stability, and market speculation. In the context of cryptocurrencies, exchange rates indicate how much one cryptocurrency is worth relative to another cryptocurrency or fiat currency (such as USD, EUR, or JPY). These rates are determined by supply and demand dynamics on cryptocurrency exchanges, where users trade different currencies. Exchange rates are crucial for international trade, investments, and travel, as they impact the relative value of goods, services, and financial assets across different currencies.

A type of currency that is issued by a government and has value because the government maintains it and people have faith in its value. Unlike cryptocurrencies or commodities like gold and silver, fiat money does not have intrinsic value; its worth is derived from the trust and confidence of the people who use it. Examples of fiat currencies include the US Dollar (USD), Euro (EUR), British Pound (GBP), and Japanese Yen (JPY). Fiat currencies are the most common form of money used for everyday transactions, and they are regulated by central banks, which control the supply and influence interest rates to manage economic stability.

An event in the lifecycle of certain cryptocurrencies, particularly Bitcoin, where the reward for mining new blocks is reduced by half. This event occurs approximately every four years or after every 210,000 blocks are mined. The purpose of halving is to control the supply of the cryptocurrency, making it scarcer over time and potentially increasing its value. For Bitcoin, the initial reward for mining a block was 50 BTC, which was reduced to 25 BTC after the first halving, 12.5 BTC after the second, and so on. Halvings will continue until the maximum supply of 21 million Bitcoins is reached, which is expected to occur around the year 2140. Halving events are significant in the cryptocurrency community as they impact the rate of new Bitcoin creation and can influence market dynamics and prices.

A fixed-length string of characters generated from input data of any size using a hash function. In the context of blockchain and cryptocurrencies, a hash function takes an input (or "message") and returns a unique string called a hash value or digest. This process is deterministic, meaning the same input will always produce the same hash, but even a small change in the input will produce a drastically different hash.

Hashes are crucial for ensuring data integrity and security in blockchain technology. Each block in a blockchain contains a hash of the previous block, creating a chain of linked blocks that is secure and immutable. This linking prevents tampering, as altering any part of a block would change its hash, thereby breaking the chain. Hash functions used in cryptocurrencies are typically designed to be computationally efficient while being resistant to collision (where two different inputs produce the same hash) and preimage attacks (where it is infeasible to recreate the original input from its hash). Common hash functions in the blockchain world include SHA-256, used by Bitcoin, and Keccak-256, used by Ethereum.

A type of cryptocurrency wallet that is connected to the internet, allowing for easy and quick access to digital assets. These wallets are designed for convenience, enabling users to send, receive, and manage their cryptocurrencies efficiently. Hot wallets can be accessed through various forms, including desktop applications, mobile apps, and web-based platforms.

While hot wallets offer high accessibility and ease of use, they are more vulnerable to cyber attacks, hacking, and other online threats compared to cold wallets, which are kept offline. Therefore, hot wallets are typically used for day-to-day transactions and storing smaller amounts of cryptocurrency, while larger amounts are often kept in more secure cold wallets.

A commercial document issued by a seller to a buyer, detailing the products or services provided, their quantities, and the agreed-upon prices. It serves as a formal request for payment and typically includes important information such as the invoice number, date of issuance, payment terms, and due date. Invoices also often list any applicable taxes, discounts, and the total amount due. They are essential for accounting and record-keeping, helping both parties track transactions, manage cash flow, and fulfill legal and tax obligations. In digital and cryptocurrency transactions, invoices may also include wallet addresses and QR codes for facilitating payments.

Know Your Business (KYB) is a regulatory process used by financial institutions and other regulated entities to verify the identity and legitimacy of corporate clients. KYB involves the collection and analysis of detailed information about a business, including its registration documents, ownership structure, key personnel, and financial records. The goal is to ensure that the business is legitimate, compliant with relevant laws, and not involved in illegal activities such as money laundering, fraud, or terrorism financing. KYB procedures are similar to Know Your Customer (KYC) processes but are tailored for business entities rather than individual clients. By conducting thorough KYB checks, organizations can mitigate risks, maintain regulatory compliance, and protect the integrity of the financial system.

Know Your Customer (KYC) is a regulatory and legal process used by financial institutions and other regulated entities to verify the identity of their clients. The purpose of KYC is to prevent identity theft, fraud, money laundering, and terrorist financing. The process involves collecting and verifying personal information from clients, such as their name, address, date of birth, and identification documents like passports or driver's licenses. Additionally, KYC may include assessing the client's financial background, source of funds, and ongoing monitoring of transactions to detect suspicious activities. By implementing KYC procedures, organizations ensure they are conducting business with legitimate and trustworthy individuals, thereby enhancing the security and integrity of their operations and compliance with regulatory requirements.

A comprehensive record of all financial transactions within an organization. It systematically documents every debit and credit entry, categorizing them into accounts such as assets, liabilities, revenues, expenses, and equity. The primary purpose of a ledger is to provide an accurate and detailed account of all financial activities, enabling the preparation of financial statements and facilitating financial analysis and decision-making.

In the context of blockchain and cryptocurrencies, a ledger refers to a decentralized and distributed digital record of all transactions on a particular blockchain network. This ledger is maintained by a network of nodes that validate and record transactions in blocks, ensuring transparency, security, and immutability. Each participant in the network has access to an identical copy of the ledger, which is continually updated and synchronized across the network. This decentralized ledger technology underpins the functionality and trustworthiness of cryptocurrencies like Bitcoin and Ethereum.

An individual or entity that uses computational power to validate and add new transactions to a blockchain. Miners solve complex cryptographic puzzles to create new blocks, a process known as mining. Once a block is successfully mined, it is added to the blockchain, and the miner is typically rewarded with newly created cryptocurrency tokens (such as Bitcoin) and transaction fees.

Mining is essential for maintaining the security and integrity of a blockchain network. It ensures that all transactions are legitimate and prevents double-spending by requiring computational effort to add new transactions to the ledger. The process relies on consensus mechanisms like Proof of Work (PoW), which involves significant energy consumption and computational resources. Miners play a crucial role in decentralized networks, as their work verifies and records transactions, contributing to the overall trustworthiness and stability of the blockchain.

Mining pools are groups of cryptocurrency miners who combine their computational resources over a network to increase their chances of successfully mining a block and earning rewards. By working together, miners can solve cryptographic puzzles more quickly and efficiently than they could individually. When a mining pool successfully mines a block, the rewards are distributed among the participants based on the amount of computational power (hash rate) each contributed to the pool.

Mining pools are particularly important in the context of cryptocurrencies like Bitcoin, where the difficulty of mining has increased significantly over time, making it challenging for individual miners to compete. By joining a mining pool, miners can achieve more consistent and predictable returns, even if their individual contributions are relatively small. Popular mining pools include AntPool, Slush Pool, and F2Pool. These pools provide the necessary infrastructure and software to coordinate the mining efforts and ensure fair distribution of rewards among members.

A digital security feature that requires multiple private keys to authorize a cryptocurrency transaction. This method enhances security by distributing control of a wallet or a transaction among multiple parties. For instance, a multi-signature wallet might require signatures from three out of five authorized keys to process a transaction.

Multi-signature arrangements are commonly used in scenarios where increased security and trust are essential, such as in corporate treasury management, joint accounts, or escrow services. By requiring multiple approvals, multi-sig helps prevent unauthorized transactions and reduces the risk of fraud, theft, or loss of funds due to a single compromised key. This feature is supported by many cryptocurrencies, including Bitcoin and Ethereum, and is implemented using various protocols and standards to ensure compatibility and security.

A node in blockchain technology is a computer or device that participates in the operation and maintenance of a blockchain network by validating transactions, maintaining a copy of the blockchain ledger, and propagating transaction data across the network. Nodes can vary in their roles: full nodes store the entire blockchain and ensure security and integrity, light nodes download only block headers for efficiency, mining nodes contribute computational power to add new blocks through cryptographic puzzles, and masternodes, found in specific networks, provide additional services like facilitating instant transactions and enhancing privacy. Nodes communicate with each other to share information, maintaining the blockchain's decentralized, secure, and up-to-date nature.

A service or platform that allows users to convert their digital assets into fiat currency or other traditional financial assets. Offramps provide a way for individuals and businesses to exit the cryptocurrency ecosystem and access conventional banking and financial systems. These services typically include cryptocurrency exchanges, payment processors, and brokerage services that facilitate the selling of cryptocurrencies for fiat money, which can then be deposited into bank accounts or used for everyday transactions. Offramps are essential for providing liquidity and enabling the practical use of cryptocurrency holdings in the traditional economy.

A service or platform that allows users to convert fiat currency or other traditional financial assets into digital assets. Onramps provide a way for individuals and businesses to enter the cryptocurrency ecosystem by purchasing cryptocurrencies with conventional money. These services typically include cryptocurrency exchanges, payment processors, and brokerage services that facilitate the buying of cryptocurrencies using credit cards, bank transfers, or other payment methods. Onramps are essential for increasing accessibility to cryptocurrencies, enabling new users to participate in the digital economy and invest in digital assets.

Open source refers to software or projects whose source code is made publicly available for anyone to view, modify, and distribute. This model promotes collaboration, transparency, and community-driven development.

A physical document that contains a public and private key pair used to store and manage cryptocurrencies offline. The keys are typically represented as strings of characters and QR codes, providing a secure way to store digital assets without exposing them to online threats.

A service provider that handles transactions between a customer and a merchant, facilitating the transfer of funds from the customer's account to the merchant's account. In the context of cryptocurrencies, payment processors enable merchants to accept digital currencies and convert them to fiat currency if needed.

Peer-to-peer (P2P) refers to a decentralized network where participants (peers) interact directly with each other without the need for a central authority. In cryptocurrency networks, P2P systems enable users to transact directly, ensuring greater privacy and reducing the need for intermediaries.

A secret cryptographic key that allows the holder to access and manage their cryptocurrency funds. It must be kept secure, as anyone with access to the private key can control the associated digital assets.

A consensus mechanism used by some blockchain networks where validators are chosen to create new blocks and validate transactions based on the amount of cryptocurrency they hold and are willing to "stake" as collateral. PoS is designed to be more energy-efficient than Proof of Work.

A consensus mechanism used by blockchain networks like Bitcoin, where miners compete to solve complex mathematical puzzles to create new blocks and validate transactions. The process requires significant computational power and energy consumption.

A cryptographic key that can be shared openly and is used to receive cryptocurrency transactions. It is paired with a private key, which is used to sign and authorize transactions.

A two-dimensional barcode that can be scanned using a smartphone or other device to quickly access information. In cryptocurrencies, QR codes are often used to share public keys or payment addresses for easy and accurate transactions.

Pseudonymous individual or group of individuals who created Bitcoin and authored its original white paper in 2008. The true identity of Satoshi Nakamoto remains unknown.

A cryptographic hash function that produces a fixed-size 256-bit hash value from input data. It is widely used in blockchain technology, particularly in Bitcoin, to secure transactions and blocks.

A cryptographic mechanism that verifies the authenticity and integrity of a message or transaction. In cryptocurrencies, digital signatures ensure that transactions are authorized by the rightful owner of the associated private key.

A self-executing contract with the terms of the agreement directly written into code. These contracts automatically execute and enforce agreements when predefined conditions are met, running on blockchain networks like Ethereum.

A type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset like a fiat currency (e.g., USD) or a basket of assets. Stablecoins aim to combine the benefits of cryptocurrencies with the stability of traditional currencies.

A transfer of digital assets from one address to another. Each transaction is recorded on the blockchain, ensuring transparency and immutability.

A process of converting rights to an asset into a digital token on a blockchain. This can apply to various assets, including real estate, stocks, or intellectual property, enabling more efficient and secure trading and management.

A digital tool that allows users to store, manage, and transact with their digital assets. Wallets can be hardware-based (cold wallets) or software-based (hot wallets), providing varying levels of security and accessibility. They store private and public keys necessary for accessing and authorizing transactions with cryptocurrencies.