Glossary:

Blockchain

A distributed, digital ledger that is maintained by a community of contributors instead of a single entity.

Coin

A cryptocurrency that operates as a currency on its own platform. For example, Ether and Tezos are coins. On the other hand, cryptos that operate on a different platform are generally referred to as tokens.

Cold Wallet

A cryptocurrency wallet that is not connected to the internet. This includes hardware wallets and paper wallets. Cold wallets are more secure than hot wallets since hackers can’t access the user’s private key through the internet.

Confirmation

A single confirmation means that the transaction has been included in a block on the blockchain. Subsequent confirmations refer to the number of blocks that have passed since a transaction was added to a coin’s blockchain. The higher the number of confirmations, the more irreversible the transaction. While buyers and sellers may agree to wait for only one confirmation, most people wait longer in order to ensure that the transaction cannot be reversed.  Each merchant must decide how many confirmations each coin needs. There is no magic number. However, there are certain widely known recommended practises. A basic rule of thumb is that 3 blocks is a decent safe medium ground, 6 confirmations is recommended for large transactions, and really large transactions may require even more transactions.  A new block is added to the Bitcoin network every 10 minutes. That means that after an unconfirmed transaction is put to the blockchain, there will be one confirmation every ten minutes. Then, following that initial block, each subsequent block adds one confirmation. As a result, one confirmation takes ten minutes, three takes a half hour, and so on.

Cryptocurrency

A decentralized digital (or virtual) currency that harness the power of blockchain technology to enable peer-to-peer interactions without the need for an intermediary.

Fees

Fees come in many shapes and sizes in the crypto space, and it’s important to understand just what it is you’re paying.

If you’re sending cryptocurrencies like Bitcoin, Ethereum, and Dogecoin to someone else’s wallet you’ll need to pay a fee to the miners, those that run expensive computers to validate transactions and keep the blockchain going.

Go deeper into the crypto space, and you’ll encounter a fee called ‘gas’ which you’ll pay anytime you interact with a smart contract. A smart contract is an automatic agreement that executes when certain conditions are met, and while it’s cheaper than your lawyer, it will still charge you for usage. Different blockchains will have different gas costs, with Ethereum always showing up on the more expensive side and Binance Smart Chain coming first in cost effectiveness.

Then you’ll have fees involved when you buy and sell your crypto into fiat currencies like the US Dollar or the Thai Baht. On top of that, some exchanges will charge a fee for withdrawing cryptocurrencies into your personal wallet.

Hot Wallet

An online wallet. Hot wallets are considered less secure than cold wallets since the user’s private keys are exposed on the internet.

Signature

A cryptographic proof of authorization for a cryptocurrency transaction. Signatures are created using your private key.

Verification

The onboarding process for new customers, which includes verifying that you are who you say you are.