CryptoURANUS Economics: 05/06/21

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Thursday, May 6, 2021

Margin Trading: Defined in CryptoCurrency

Margin Trading: Defined in CryptoCurrency

What Is Margin Trading?


Intermediate:

Margin trading is a method of trading assets using funds provided by a third party. When compared to regular trading accounts, margin accounts allow traders to access greater sums of capital, allowing them to leverage their positions. Essentially, margin trading amplifies trading results so that traders are able to realize larger profits on successful trades. This ability to expand trading results makes margin trading especially popular in low-volatility markets, particularly the international Forex market. Still, margin trading is also used in stock, commodity, and cryptocurrency markets.

In traditional markets, the borrowed funds are usually provided by an investment broker. In cryptocurrency trading, however, funds are often provided by other traders, who earn interest based on market demand for margin funds. Although less common, some cryptocurrency exchanges also provide margin funds to their users.


How does margin trading work?:

When a margin trade is initiated, the trader will be required to commit a percentage of the total order value. This initial investment is known as the margin, and it is closely related to the concept of leverage. In other words, margin trading accounts are used to create leveraged trading, and the leverage describes the ratio of borrowed funds to the margin. For example, to open a $100,000 trade at a leverage of 10:1, a trader would need to commit $10,000 of their capital.

Naturally, different trading platforms and markets offer a distinct set of rules and leverage rates. In the stock market, for example, 2:1 is a typical ratio, while futures contracts are often traded at a 15:1 leverage. In regards to Forex brokerages, margin trades are frequently leveraged at a 50:1 ratio, but 100:1 and 200:1 are also used in some cases. When it comes to cryptocurrency markets, the ratios are typically ranging from 2:1 to 100:1, and the trading community often uses the ‘x’ terminology (2x, 5x, 10x, 50x, and so forth).

Margin trading can be used to open both long and short positions. A long position reflects an assumption that the price of the asset will go up, while a short position reflects the opposite. While the margin position is open, the trader’s assets act as collateral for the borrowed funds. This is critical for traders to understand, as most brokerages reserve the right to force the sale of these assets in case the market moves against their position (above or below a certain threshold).

For instance, if a trader opens a long leveraged position, they could be margin called when the price drops significantly. A margin call occurs when a trader is required to deposit more funds into their margin account in order to reach the minimum margin trading requirements. If the trader fails to do so, their holdings are automatically liquidated to cover their losses. Typically, this occurs when the total value of all of the equities in a margin account, also known as the liquidation margin, drops below the total margin requirements of that particular exchange or broker.


Advantages and disadvantages:

The most obvious advantage of margin trading is the fact that it can result in larger profits due to the greater relative value of the trading positions. Other than that, margin trading can be useful for diversification, as traders can open several positions with relatively small amounts of investment capital. Finally, having a margin account may make it easier for traders to open positions quickly without having to shift large sums of money to their accounts.

For all its upsides, margin trading does have the obvious disadvantage of increasing losses in the same way that it can increase gains. Unlike regular spot trading, margin trading introduces the possibility of losses that exceed a trader's initial investment and, as such, is considered a high-risk trading method. Depending on the amount of leverage involved in a trade, even a small drop in the market price may cause substantial losses for traders. For this reason, it's important that investors who decide to utilize margin trading employ proper risk management strategies and make use of risk mitigation tools, such as stop-limit orders.


Margin trading in cryptocurrency markets:

Trading on margin is inherently riskier than regular trading, but when it comes to cryptocurrencies, the risks are even higher. Owing to the high levels of volatility, typical to these markets, cryptocurrency margin traders should be especially careful. While hedging and risk management strategies may come in handy, margin trading is certainly not suitable for beginners. 

Being able to analyze charts, identify trends, and determine entry and exit points won't eliminate the risks involved with margin trading, but it may help to better anticipate risks and trade more effectively. So before leveraging their cryptocurrency trades, users are recommended first to develop a keen understanding of technical analysis and to acquire an extensive spot trading experience.



Margin funding:

For investors who do not have the risk tolerance to engage in margin trading themselves, there is another way to profit from the leveraged trading methods. Some trading platforms and cryptocurrency exchanges offer a feature known as margin funding, where users can commit their money to fund the margin trades of other users.

Usually, the process follows specific terms and yields dynamic interest rates. If a trader accepts the terms and takes the offer, the funds' provider is entitled to repayment of the loan with the agreed-upon interest. Although the mechanisms may differ from exchange to exchange, the risks of providing margin funds are relatively low, owing to the fact that leveraged positions can be forcibly liquidated to prevent excessive losses. Still, margin funding requires users to keep their funds in the exchange wallet. So, it is important to consider the risks involved and to understand how the feature works on their exchange of choice.



Closing thoughts:

Certainly, margin trading is a useful tool for those looking to amplify the profits of their successful trades. If used properly, the leveraged trading provided by margin accounts can aid in both profitability and portfolio diversification.

As mentioned, however, this method of trading can also amplify losses and involves much higher risks. So, it should only be used by highly skilled traders. As it relates to cryptocurrency, margin trading should be approached even more carefully due to the high levels of market volatility.


Market Capitalization: Defined in CryptoCurrency

Market Capitalization: Defined in CryptoCurrency


Market Capitalization is defined as a way to rank and judge the value and size of a cryptocurrency or stock in a company. 



To get market cap, the total supply (of a stock or cryptocurrency) is multiplied by the price. 


For example, if bitcoin is worth $4,000 and there are 16,500,000 coins in existence, that means its market cap is $66,000,000,000 or 66 billion dollars.

Market Order: Defined in CryptoCurrency

Market Order: Defined in CryptoCurrency


A market order is defined as a request to buy or sell an asset (stock, crypto, etc) at the current available price. A market order’s priority is speed.


A market order is used to immediately purchase or sell an asset. It is best used when your priority is speed rather than hoping to get the best price and maximize your profit.


The risk with market orders is that the price may change rapidly in between the time you place your order and when it is fulfilled. That risk is larger for big orders or with a slow Internet connection.

Masternode: Defined in CryptoCurrency

Masternode: Defined in CryptoCurrency


A masternode is defined as a manager for the Dash cryptocurrency system that performs special jobs and earns Dash as a reward for the work.


A node is defined as any computing device (computer, phone, etc.) that is maintaining a network. 

Cryptocurrencies are supported by a network of computers each keeping a digital record of the data known as a blockchain. 

A computer, a phone, or any other computing device that can receive, transmit, and/or contribute to the blockchain is a node.

A masternode is more than just a node. It has a managing role and special jobs that regular nodes don’t have.
  • A masternode’s managing role is to vote on proposals to improve the Dash system. Every masternode gets one vote.
  • A masternode’s special jobs include creating instant transactions, known as “InstantSend”, and private transactions that hide the fact that you’ve sent money, known as “PrivateSend”.

Anyone can get a masternode, they just need enough money to get 1,000 Dash.

Max Supply: Defined in CryptoCurrency

Max Supply: Defined in CryptoCurrency


Max supply is the maximum number of coins that will ever exist for a cryptocurrency. 


With bitcoin, the maximum supply is 21 million. 


With other cryptocurrencies like EOS, there is no maximum supply, so the number of coins will continue grow

Millibitcoin: Defined in CryptoCurrency

Millibitcoin: Defined in CryptoCurrency




Millibitcoin, also known as the abbreviation mBTC, is one thousandth of a bitcoin or 0.001 of a bitcoin. 


Compare this with Megabitcoin or MBTC which is one million bitcoin or 1,000,000 bitcoin.

Megabitcoin: Defined in CryptoCurrency

Megabitcoin: Defined in CryptoCurrency

 

Megabitcoin, also known as the abbreviation MBTC, is one million bitcoin or 1,000,000 bitcoin. 



Compare this with millibitcoin or mBTC which is one thousandth of a bitcoin or 0.001 of a bitcoin.

MegaHashes: Defined in CryptoCurrency

MegaHashes: Defined in CryptoCurrency

 

Hash rate is defined as the speed that a computer can take any set of information and turn it into letters and numbers of a certain length. Hash rate is also the combined hash speed of every computer in the network. Hash rate is calculated at hashes per second (h/s).



Hash rate is important for computers that mine. Mining is the process of recording and verifying information on the digital record known as the blockchain. The blockchain is made up of a sequence of single recordings known as a block.


To keep the blockchain network running smoothly, only one block can be created at a time. To control when blocks are created, users are required to make their computers solve a math problem involving hashing. The first computer to solve this problem can create a new block and record information on the blockchain.

Miners often purchase very expensive specially designed computers that have higher hash rates to increase their chances of solving the math problem first. These mining computers use tons of electricity to power their computers. This expensive process earns miners a reward in brand crypto plus fees paid by each user for their transactions.


Similar to memory size, hash rate is counted like this:

  • 1 kilo hash per second is one thousand (1,000) hashes per second
  • 1 mega hash per second is one million (1,000,000) hashes per second.
  • 1 giga hash per second is one billion (1,000,000,000) hashes per second.
  • 1 tera hash per second is one trillion (1,000,000,000,000) hashes per second.
  • 1 peta hash per second is one quadrillion (1,000,000,000,000,000) hashes per second.
  • 1 exa hash per second is one quintillion (1,000,000,000,000,000,000) hashes per second.

Merkle Tree: Defined in CryptoCurrency

Merkle Tree: Defined in CryptoCurrency


 

A Merkle tree is defined as a way to organize lots of data in a small, efficient and secure package.


In 1979 Ralph Merkle, a computer scientist, created a patent for Merkle trees. A Merkle tree uses computer technology known as “hashing” to take information and turns it into letters and numbers of a certain length.


Merkle Tree

For example, “I like bitcoin” can be hashed and will equal:

ad3e58f21b94f32dcadca6b71df4c31a18179f38011551a17a80d0ff065d22c5

If I were to capitalize the “b” in bitcoin, so it says, “I like Bitcoin” the hash will be completely different:



d988ca30eaa88c0410ad6e48a5297c0d505dcee572f9884f1a6fa2cbc8dedc86
Hashes cannot be reversed to get the original text. But you can verify the above hashes are correct simply by going to this website and typing in the same text as above: https://www.movable-type.co.uk/scripts/sha256.html

A Merkle tree works like this:

  1. Two units of information are individually hashed. These are known as Merkle leaves.
  2. Those two hashes are then hashed together. These are known as Merkle branches.
  3. Multiple branches are hashed together finally getting one single hash. This is known as a Merkle root.

A Merkle tree is useful because it allows computers to verify information at the bottom of the tree, the leaves, without having to store the entire set of information.

Microbitcoin [uBTC]: Defined in CryptoCurrency

Microbitcoin [uBTC]: Defined in CryptoCurrency


: Defined in CryptoCurrency

The mission of UnitedBitcion is to find a purpose for lost Bitcoin and inactive wallets and create a stable cryptocurrency system through an association of joint credit and smart contracts.


Microbitcoin, also known as the abbreviation uBTC, is one millionth of a bitcoin or 0.000001 of a bitcoin.

Microtransaction: Defined in CryptoCurrency

Microtransaction: Defined in CryptoCurrency


A microtransaction is an online purchase or exchange that worth very little money.

Millibitcoin: Defined in CryptoCurrency

Millibitcoin: Defined in CryptoCurrency




Millibitcoin, also known as the abbreviation mBTC, is one thousandth of a bitcoin or 0.001 of a bitcoin. Compare this with Megabitcoin or MBTC which is one million bitcoin or 1,000,000 bitcoin.

Mining Difficulty: Defined in CryptoCurrency

Mining Difficulty: Defined in CryptoCurrency

Mining difficulty is defined as a measure of how hard it is to maintain and add to the blockchain. 



With bitcoin, users are required to own a computer that runs the blockchain program and compete to solve a complex math problem. The first miner to solve this problem creates a new block and typically, this process happens every 10 minutes.


However, the more computers competing to solve the math problem, the quicker blocks will be discovered. To keep block creation at a fixed speed, every 2,016 blocks (every 2 weeks), mining difficulty is adjusted.

As mining difficulty increases, the amount of work required to create a new block and earn the reward increases.

Mining Pool: Defined in CryptoCurrency

Mining Pool: Defined in CryptoCurrency


A mining pool is defined as a group of people who combine their computing power to solve a complex math problem on the blockchain for a reward.



People join a mining pool to increase their chances of solving the blockchain math problem so they can earn a reward of transaction fees and new coins. 


Once the reward is won, it is split among all of the members of the group. In a pool, you often win the reward frequently but because it is shared, the payout is smaller.

Mining Rig: Defined in CryptoCurrency

Mining Rig: Defined in CryptoCurrency


Mining rigs are defined as computer specially designed to maintain the blockchain, this process is known as mining.



Mining is the process of using computer power to solve a complex math problem, review and verify information, and create a new block so the information can be added to the blockchain.


Mining requires expensive mining and a lot computer power. People buy rigs and pay for lots of electricity so they can earn cryptocurrency. Because rigs are built especially for mining, they do the job faster than other computers and can earn more.

Mixing Service: Defined in CryptoCurrency

Mixing Service: Defined in CryptoCurrency

A mixing service, also known as a “tumbler”, lets you send in your cryptocurrency and get the same amount back, minus fees, from other people. 


The purpose of a mixing service is to improve the privacy and anonymity of digital money by making it harder to track what the cryptocurrency was used for and who it belongs to.

Mnemonics: Defined in CryptoCurrency

Mnemonics: Defined in CryptoCurrency


Mnemonics are memory aids of any kind such as rhymes, abbreviations and songs that help you remember something else. 


Mnemonics comes from a Greek word that meant, “relating to the mind”.  Mnemonics is pronounced: nuh-mon-ics.

Money: Defined in CryptoCurrency

Money: Defined in CryptoCurrency


Money is a system and its units for exchanging value. The value of each unit is agreed to be worth something. 


Money is used to pay for things and services as well as debts. The history of the word money comes from mint, meaning to make coins, medals and tokens out of raw metal. 


Usually money is made out of paper and cheap metals, but sometimes it can be found made out of gold or silver. Which is to say, some money is made out of things that are already valuable.

Mooning: Defined in CryptoCurrency

Mooning: Defined in CryptoCurrency

Mooning is the action of the price of a cryptocurrency going way up, sky high, and to the moon.

Moore’s Law: Defined in CryptoCurrency

Moore’s Law: Defined in CryptoCurrency


Moore’s Law is an observation that computer technology becomes quicker and smaller with time.


This observation was first made by Gordon Moore in 1965. Gordon, a co-founder of the computer company Intel, found that the number of transistors (an electronic device that controls the flow of electricity) in one square inch doubles every year.

Mtgox.com: Defined in CryptoCurrency

Mtgox.com: Defined in CryptoCurrency

Mtgox or Mt. Gox was one of the first websites where bitcoin could be exchanged for regular government issued money like US dollars. 


In 2014, Mt. Gox closed after roughly 850,000 bitcoin was declared lost or stolen. 


Mt. Gox was created in 2006 by Jed McCaleb who named it after Magic: The Gathering Online Exchange where users could cards like stocks. Jed later sold Mt. Gox to Mark Karpel├Ęs in 2011.

Multisignature: Defined in CryptoCurrency

Multisignature: Defined in CryptoCurrency


Multisignature means more than one signature or approval is required before a transaction can take place. 


Multisignature increases the security for cryptocurrencies so that one person cannot take all of the money for himself without approval

Dark Web: Defined in CryptoCurrency

Dark Web: Defined in CryptoCurrency

Dark web is defined as a part of the Internet that is only visible to people with special software that allows them to hide their identities. It is known for providing illegal info and services.


The Internet is often broken down into 3 different parts:

  1. The surface web: What you see in search engines like Google.
  2. The dark web: What Google doesn’t see like password protected pages.
  3. The deep web: The anonymous, slightly complex part of the Internet where illegal activities often occur.

While the phrases “dark web” and “deep web” are often used interchangeable, there is a difference as seen above. 

And while the deep web is known for providing illegal information, services and products (drugs, hackers, etc.) not all is bad.

The deep web is only accessible through the free anonymous browser known as TOR. Though accessing it only through TOR may not be enough to keep you truly anonymous.

Digital Asset: Defined in CryptoCurrency

Digital Asset: Defined in CryptoCurrency


A digital asset is defined as any electronic file (text, picture, audio, etc) that you have the rights to use.


If you do not have the rights to using that file, it is not a digital asset. 


Digital assets can be transported or accessed on many types of technology including CDs, computers, USB drives, blockchain, etc.

Digital Signature: Defined in CryptoCurrency

Digital Signature: Defined in CryptoCurrency

A digital signature is permission and proof done through a computer that an authorized person has agreed to something. 


When a signer authorizes something, they use their private key known only to them, to encrypt information along with a stamp of the time of signing. If the information is somehow modified, the time stamp will be altered and the digital signature becomes void and invalid.


The person receiving or verifying the signed and encrypted information uses the signer’s public key to verify the information came from the signer.

Digital signatures are used by cryptocurrency systems to allow the owner to send and receive money.

Dildo: Defined in CryptoCurrency

Dildo: Defined in CryptoCurrency

A dildo is a long green or red bar found on a graph showing the changes in price of a cryptocurrency. 


Green and red bars of any size are known as candles.

Dip: Defined in CryptoCurrency

Dip: Defined in CryptoCurrency


Dip is defined as a drop in the price of an asset such as a stock or cryptocurrency.

Directed Acyclic Graph [DAG]: Defined in CryptoCurrency

Directed Acyclic Graph [DAG]: Defined in CryptoCurrency

 

A directed acyclic graph or DAG is a structure that is built out in one single direction and in such a way that it never repeats. Here a “graph” is simply a structure of units. 


“Directed” describes the connection between each unit in the structure, and that they all flow the same way. And “acyclic” means describing something that is not circular or repeating.


A good example of a directed acyclic graph is a checklist. In order to do step 10, you must have done step 9, and before you can do step 8, you must have done step 7 and so on. 

If you were to list out these steps on a graph, you would see the flow from 1-10 and that it never repeats itself going back to 1. If it did repeat, it would not be a directed acyclic graph. 

Another example of a DAG is a family tree. Your grandparents had your mom and her brother. Your mom met your dad and had you. Your mom’s brother met his wife and had their kids. In no way does your grandpa or grandma ever show up again beneath you.

Distributed: Defined in CryptoCurrency

Distributed: Defined in CryptoCurrency


Distributed is defined as a type of computer system that is run simultaneously by many computers but run as a single system.


There are 3 separate goals a distributed computing system may be designed for:

  1. Performance: Be able to do a lot of intense computing in a short time.
  2. Scalability: Be able to service many people, in many locations at the same time.
  3. Reliability: Be able to service people even if one fails or is unavailable.

Distributed Ledger [DLT]: Defined in CryptoCurrency

Distributed Ledger [DLT]: Defined in CryptoCurrency


Distributed ledger is defined as a system of independent computers all simultaneously recording data. With distributed ledger technology, identical copies of the recording are kept by each computer.


We can define a distributed system, as one where all computers work independently toward the same goal as one large system. We can define a ledger as a book used to record transactions (money in, money out).


However, distributed ledger technology has evolved beyond recording transactions so that it can record any data. With distributed ledger technology, there is no central authority maintaining the system. 

Instead, updates to the ledger are independently created and then voted on. Once an agreement regarding the update has been reached, a recording is made in the ledger.

The latest version of the ledger, with the new recording, is then saved to each computing system and the process repeats itself. The first type of distributed ledger technology is called the blockchain.

Diversification: Defined in CryptoCurrency

Diversification: Defined in CryptoCurrency


Diversification is defined as a strategy where you buy many different investments as a way to increase your chances of becoming profitable and minimize your chances of losing everything.


Many investors are big fans of diversification, but like anything it can be overdone. By spreading yourself too thin across many different investments, you have a low risk of losing everything, but you also will not make huge profits.


If at the beginning of Facebook, Mark Zuckerberg, the founder had asked you for $5.000 as an investment, would you do it? Of course you would.

As a diversified investor, you might only want to give him $100-500 so you could avoid risking all of your money.
In other words, diversification works well with investments that you have little knowledge or understanding in.

Double Spending: Defined in CryptoCurrency

Double Spending: Defined in CryptoCurrency

Double spending is defined as the action of spending digital money twice. It is meant to cheat the first person out of their money before they’ve received it.


Bitcoin was the first digital money to provide a good solution to prevent double spending. Bitcoin prevents double spending with a permanent, public and digital book of records known as the blockchain. 


This blockchain can record any information. Each page in that book can be considered to be a block.

Because the blockchain public, many people are simultaneously verifying and recording information on it using their computers. After enough users in this network confirm your transaction, the guy who wants double spend cannot.

Dust Transactions: Defined in CryptoCurrency

Dust Transactions: Defined in CryptoCurrency

Dust transactions describes a purchase or sale using a tiny amount of cryptocurrency.

DYOR: Defined in CryptoCurrency

DYOR: Defined in CryptoCurrency


DYOR short for Do Your Own Research and is defined as doing research before making an investment. 


There are many manipulating people who urge others to buy a cryptocurrency so the price will rise and they can sell it for a profit. 


DYOR is advice to do research studying websites, Reddit, forums, and more before making an investment.

Enterprise Ethereum Alliance [EEA]: Defined in CryptoCurrency


Enterprise Ethereum Alliance [EEA]: Defined in CryptoCurrency

















Enterprise Ethereum Alliance also EEA are a group of organizations all working together to learn better ways to grow and build the cryptocurrency known as ethereum.

J.P. Morgan, Microsoft, Intel, Accenture, BP, and Credit Suisse were the founding members creating the Enterprise Ethereum Alliance (EEA) in February 2017.


In July 2017, the number of organizations in the EEA surpassed 150, pushing the EEA into the largest open-source blockchain initiative in the world. Newcomers included Cisco Systems and MasterCard among others.


EEA Specification 1.0 Document (Download Now)

EEA EXPANDS INTO ASIA WITH JAPAN OFFICE:
KAZUAKI ISHIGURO APPOINTED REGIONAL HEAD
(Read More)






Introducing Enterprise Ethereum Alliance:

The Enterprise Ethereum Alliance (EEA) is the industry’s first global standards organization to deliver an open, standards-based architecture and specification to accelerate the adoption of Enterprise Ethereum. 

The EEA’s world-class Enterprise Ethereum Client Specification and forth-coming testing and certification programs will ensure interoperability, multiple vendors of choice, and lower costs for its members - the world’s largest enterprises and most innovative startups. 

For additional information about joining the EEA, please reach out to: membership@entethalliance.org.




Trust, Privacy & Performance:

Ethereum's intrinsically trusted system is the most promising solution for enterprise Blockchain adoption, given its maturity and multi-purpose design. Privacy and Performance improvements will be mandatory to achieve enterprise-ready status and will be the focus of Enterprise Ethereum’s roadmap.







Community & Resources:


In partnership with the dedicated and robust Ethereum community, Enterprises are coming together to produce the industry standard, open source, free to use blockchain solutions that will be the foundation for businesses going forward.



Electrum Wallet: Defined in CryptoCurrency

Electrum Wallet: Defined in CryptoCurrency

 

The electrum wallet is a secure and free wallet that allows people to store bitcoin more quickly and easily. Bitcoin transactions are kept on a digital record, known as the blockchain, and is maintained by thousands of people around the world. 


This digital record is growing larger every day and in 2016, it exceeded 100 gigabytes. A wallet is software that interacts with the network of recordings (blockchain) and lets users receive, store, and send their digital money. 


The benefit of an electrum wallet is that it doesn’t have to download and maintain the entire massive blockchain file.

Emission: Defined in CryptoCurrency

Emission: Defined in CryptoCurrency


Emission, also known as Emission Curve, Emission Rate, and Emission Schedule is the speed at which new cryptocurrency coins are created and released. 


Many cryptocurrencies are set up so that new coins are created on a regular basis, this can be measured by an emission rate. Sometimes a limit is placed on how many coins will ever be created, this is known as the max supply.


Some cryptocurrencies have no limit and so a small emission will continue, forever.

Encryption: Defined in CryptoCurrency

Encryption: Defined in CryptoCurrency

Encryption is the process of locking information in an unreadable form so it can be kept secret. Encryption has existed for thousands of years. 


With the use of computers, encryption has become much more difficult to break without the code.

Escrow: Defined in CryptoCurrency

Escrow: Defined in CryptoCurrency

Escrow is a part of the transaction process where the buyer and seller store money or other valuables with a third-party to minimize risk. 


The escrow service holds onto the valuables and won’t release it until the agreement has been met.

Ethereum-[ETH]


Ethereum [ETH]:



















Ethereum is the second largest cryptocurrency. Ethereum is built with publicly available software that developers can use to build their own cryptocurrency and software.


Some cryptocurrencies built with it include: OMG, Qtum, EOS, and BAT.

Some of the apps built from it include games, social networks, and marketplaces.



Introduction:

Work on Ethereum started in 2013, when its creator Vitalik Buterin failed to get enough support for his proposal to start application development on top of Bitcoin’s blockchain.

Ethereum is above all a platform for decentralized software development.

The value of its associated currency Ether is based on its utility – it is also used as a fuel that powers the decentralized apps (daps) and other functionality (smart contracts).



Ethereum has its own Turing complete or computationally universal internal code – meaning that any software application can be built on top of it, giving the technology a very broad range of use.

Smart contracts are ones allowing to program a contract which executes when given variables are met.

Finally, blocks are mined in a matter of seconds allowing quick transaction times.


The utility of Ethereum goes beyond digital cash and therefore has garnered a lot of attention from investors and institutions.



Its development team is covered by the Ethereum Foundation, a Swiss non-profit organization.


Every aspect of Ethereum is well documented and openly discussed and there is a lot of effort to promote Ethereum’s functionality to software developers and businesses.

Ethereum is well on its way to storm the industry and become the number one platform for decentralized software application.
What are Smart Contracts?

Imagine you want to bet someone a 1000 ETH on who wins the presidential elections.

You both put 1000 ETH on the smart contract, you agree on the data feed for the election results.



Once the president is elected, the winner is automatically rewarded with 2000 ETH from the escrow contract.


This is a very simple example of a smart contract, but many inputs and conditions can be defined so that, automatically executed smart-contracts can be used for will settlement, trust funds, work-contracts, industrial-grade agreements without the need for intermediaries.


Once agreed upon, the smart contracts cannot be altered by one of the parties or a third party. They can’t be hacked or nullified.



Influencers:


Vitalik Buterin:

The main driving force behind Ethereum. On the cryptocurrency scene since its beginning, Buterin proposed and described Ethereum in his 2013 whitepaper when he was seventeen. After seeing the shortcomings of Bitcoin. Ethereum’s co-founder who openly discussed and presented the technical and strategic choices for Ethereum.



Vlad Zamfir:

A long-term member of the Ethereum R&D team, very voiced and often sharing all his findings without sugarcoating them. Very valuable source of information from Ethereum’s development.



Ming Chan:

The Executive Director of the Ethereum Foundation who is paving the way for the blockchain technology by working on legal and regulatory matters and cooperating with key industry players.



Jeffrey Wilcke:

One of the founders and the creator of Ethereum - as in the one who coded it to existence using the Go programming language. Wilcke has been the head developer of the Ethereum platform ever since.



Investors:


International Private-Banking Institutions and Large Corporations, such-as, J.P. Morgan, Microsoft, Intel, Accenture, BP, and Credit Suisse were the founding members creating the Enterprise Ethereum Alliance (EEA) in February 2017.

In July 2017, the number of organizations in the EEA surpassed 150, pushing the EEA into the largest open-source blockchain initiative in the world.

Newcomers included Cisco Systems and MasterCard among others.



Roadmap:


The development of Ethereum was originally divided into 4 stages.

Frontier was the beta stage, which called for user caution; Homestead is the current version launched in March 2016, considered stable;

Metropolis, which is being tested since September 2017, its main focus is to make dap development and the whole EVM environment more user-friendly to promote steep adoption;

Serenity is the final (for now) stage. It aims to improve scalability by adding sharding, offer more privacy for users and to switch from Proof of Work to Proof of Stake; the so-called “virtual mining” which consumes less resources while keeping the network secure and agreeing on a single sequence of blocks.

The Serenity stage is to make the protocol.


“industry-ready”, deadline for Serenity has not been set yet.



Conclusion:


Since Ethereum is a decentralized businesses can create their business logic and thrive with Ethereum. The potential of Ethereum has been recognized by many Fortune 500 companies who participate in its development.

These include J.P. Morgan, the biggest US bank, Microsoft, Intel, BP, Thomson Reuters, the Russian Development Bank, and Russian Bank System. The development of Ethereum is not stopping, and its use is growing.


WEBSITE-SOURCE



Exchange: Defined in CryptoCurrency

Exchange: Defined in CryptoCurrency


An exchange is defined as a place where something of value can be traded. One of the purposes of an exchange is to ensure fair trades are conducted.


Traditionally, stocks were a common item traded on exchanges. Now with exchanges for cryptocurrencies, many new exchanges are being built in countries around the world.

Faucet: Defined in CryptoCurrency

Faucet: Defined in CryptoCurrency

A faucet is a website or application that provides small, free amounts of new cryptocurrencies to help increase awareness.

Financial Crimes Enforcement Network: Defined in CryptoCurrency

Financial Crimes Enforcement Network: Defined in CryptoCurrency



Financial Crimes Enforcement network or FinCEN is a part of the US government that analyzes financial information so they can protect the US financial system.

FOMO: Defined in CryptoCurrency

FOMO: Defined in CryptoCurrency


FOMO is short for Fear of Missing Out. FOMO is often felt when you see a coin start to increase in value and you don’t yet own it.

FUD: Defined in CryptoCurrency

FUD: Defined in CryptoCurrency


FUD is short for Fear, Uncertainty and Doubt. FUD is any information that is supposed to create feelings of fear, uncertainy, doubt and other negative emotions.

FUDster: Defined in CryptoCurrency

FUDster: Defined in CryptoCurrency

 

A FUDster is someone who spreads FUD and FUD is short for Fear, Uncertainty and Doubt. FUD is any information that is supposed to create feelings of fear, uncertainy, doubt and other negative emotions.

Full Node: Defined in CryptoCurrency

Full Node: Defined in CryptoCurrency


A full node is defined as a computer that has a complete, current copy of the blockchain software. 


A node is defined as any computing device (computer, phone, etc.) that is maintaining a network. Cryptocurrencies are supported by a network of computers each keeping a digital record of the data known as a blockchain. 


A computer, a phone, or any other computing device that can receive, transmit, and/or contribute to the blockchain is a node.

When talking about blockchain technology, we have two types of full nodes:
  • A full node that maintains an entire copy of the blockchain program and also receives, records, verifies, and transmits transactions on the blockchain. This process is known as “mining”.
  • A full node that only receives and transmits transactions on the blockchain program. This process is passive and relies on a mining full node for updates.

Gains: Defined in CryptoCurrency

Gains: Defined in CryptoCurrency


Gains are defined as increases in value. When used to describe cryptocurrency, it is an increase in value and profit.

Gas: Defined in CryptoCurrency

Gas: Defined in CryptoCurrency


Gas is a small amount of ethereum paid to people who use their computers to record transactions and do other software actions. 



Gas is calculated by multiplying a very small amount of ethereum, known as gas price or gwei, and multplying that by how much gwei you want to spend known as gas limit. 


Because 1 ethereum = 1 billion (1,000,000,000) gwei, gas costs are usually very small, around several dollars. If the amount of gas is insufficent to complete the work, the work will fail. On the other hand, you can pay a bit more gas and expect the computers to complete your task sooner.

Gas Price: Defined in CryptoCurrency

Gas Price: Defined in CryptoCurrency

Gas price is a very small amount of ethereum and it is multiplied by an amount known as gas limit to pay people to record transactions and do other software actions. 


If the amount of gas is insufficent to complete the work, the work will fail. On the other hand, you can pay a bit more gas and expect the computers to complete your task sooner. 


Gas is calculated by multiplying a very small amount of ethereum, known as “gwei” and “gas price”, and multplying that by how much you want to spend, known as the “gas limit”. 

The very small amounts of ethereum used in gas price are known as gwei. 1 ethereum = 1 billion (1,000,000,000) gwei. A typical gas price is 20 gwei, but it can go as high as 50 during peak usage and as low as 2 gwei for a slower transaction.

Gdax.com: Defined in CryptoCurrency

Gdax.com: Defined in CryptoCurrency


Gdax or GDAX is short for General Digital Asset Exchange, it is a cryptocurrency exchange company owned by Coinbase. Gdax provides more advanced tools than Coinbase for people who want to regularly trade cryptocurrencies.

Genesis Block: Defined in CryptoCurrency

Genesis Block: Defined in CryptoCurrency

 

A blockchain is a digital book of records where each new page made in that book is what is known as a “block”. Those blocks are connected in one group known as the blockchain. The first block in a blockchain is known as the genesis block.

Graphical Processing Unit [GPU]: Defined in CryptoCurrency

Graphical Processing Unit [GPU]: Defined in CryptoCurrency

 

A Graphical Processing Unit or GPU, is defined as a computer chip that creates 3D images on computers. GPUs are often called graphics cards.



Blockchains require people receive, record, verify, and transmit information. That process is known as “mining”. Because mining requires computer power, people do this work in return for money. GPUs were one of the first tools used to mine.

Green or Red: Defined in CryptoCurrency

Green or Red: Defined in CryptoCurrency

 

Green or red is defined as, the color of pricing charts used to show the change in value of an asset like cryptocurrencies or stocks.



A green color on charts means the price is increasing in value. While a read color on charts means the price is decreasing.



When you are “seeing green” that means overall, the charts are displaying a green color and the price has been increasing. Compared that with “seeing red” where the charts are mostly displaying a red color and the price has been decreasing.

Gwei: Defined in CryptoCurrency

Gwei: Defined in CryptoCurrency


Gwei is a very small amount of ethereum coin used to calculate transaction fees for sending ethereum to another. One ethereum coin is worth 1 billion (1,000,000,000) gwei.

Hacking: Defined in CryptoCurrency

Hacking: Defined in CryptoCurrency


Hacking is the process of using a computer to manipulate another computer or computer system in an unauthorized and unapproved way.

Halving: Defined in CryptoCurrency

Halving: Defined in CryptoCurrency

 

Halving comes from an Old English word meaning “half”. In cryptocurrencies, mining is a computer process of recording and verifying information on the digital record known as the blockchain. 


In bitcoin and other currencies, mining also requires computers compete with each other to solve a complicated math problem. 


Once solved, a new block is discovered that can be added to the chain of blocks and a reward of brand new bitcoin is given to the computer that solved the math problem first. Halving is the reduction of the bitcoin mining reward issued by half.

Hard Cap: Defined in CryptoCurrency

Hard Cap: Defined in CryptoCurrency

 


Hard cap is defined as the maximum amount of money a cryptocurrency can receive from investors in its Initial Coin Offering (ICO). 



An ICO is the limited-time process by which new cryptocurrencies make their coins publicly known and begin selling them directly to people. 


 People invest their money in these coins in the hopes that they will later be worth many times more that what was paid. A hard cap is the major financial goal and is always larger than the small cap.

Hard Fork: Defined in CryptoCurrency

Hard Fork: Defined in CryptoCurrency


Hard fork is defined as a decision to make a permanent change to the technology used by a cryptocurrency. 


This change makes all new recordings (blocks) very different from the original blocks. 


They are changed so much that new blocks are seen as invalid to anyone who didn’t upgrade their technology. Which means, any computer that is not updated with the new technology, will find these new blocks appear invalid.

This process can cause a lot of trouble which is why, for a hard fork to go smoothly, it is important everyone agrees to the change. Any new fork in the blockchain can fail and if it does, all users will return to the original recording.

Hardware Wallet: Defined in CryptoCurrency

Hardware Wallet: Defined in CryptoCurrency



A hardware wallet is a specially designed device to lock away access to your cryptocurrency. 


The device is extra secure because it is disconnected from the Internet and other computers and is virtually virus-proof. 


A cryptocurency wallet is software that interacts with the network of recordings (blockchain) and lets users receive, store, and send their digital money.

Hash Function: Defined in CryptoCurrency

Hash Function: Defined in CryptoCurrency


A hash function is defined as a computer program that takes information and turns it into letters and numbers of a certain length.



For example, “I like bitcoin” can be hashed and will equal: ad3e58f21b94f32dcadca6b71df4c31a18179f38011551a17a80d0ff065d22c5

 

If I were to capitalize the “b” in bitcoin, so it says, “I like Bitcoin” the hash will be completely different: d988ca30eaa88c0410ad6e48a5297c0d505dcee572f9884f1a6fa2cbc8dedc86

Hashing is used to make storing and finding information quicker because hashes are usually shorter and easier to find. Hashes also make information unreadable and so the original data becomes a secret.

Hash Rate: Defined in CryptoCurrency

Hash Rate: Defined in CryptoCurrency


Hash rate is defined as the speed that a computer can take any set of information and turn it into letters and numbers of a certain length. Hash rate is also the combined hash speed of every computer in the network. Hash rate is calculated at hashes per second (h/s).



Hash rate is important for computers that mine. Mining is the process of recording and verifying information on the digital record known as the blockchain. The blockchain is made up of a sequence of single recordings known as a block.


To keep the blockchain network running smoothly, only one block can be created at a time. To control when blocks are created, users are required to make their computers solve a math problem involving hashing. The first computer to solve this problem can create a new block and record information on the blockchain.

Miners often purchase very expensive specially designed computers that have higher hash rates to increase their chances of solving the math problem first. These mining computers use tons of electricity to power their computers. This expensive process earns miners a reward in brand crypto plus fees paid by each user for their transactions.


Similar to memory size, hash rate is counted like this:

  • 1 kilo hash per second is one thousand (1,000) hashes per second
  • 1 mega hash per second is one million (1,000,000) hashes per second.
  • 1 giga hash per second is one billion (1,000,000,000) hashes per second.
  • 1 tera hash per second is one trillion (1,000,000,000,000) hashes per second.
  • 1 peta hash per second is one quadrillion (1,000,000,000,000,000) hashes per second.
  • 1 exa hash per second is one quintillion (1,000,000,000,000,000,000) hashes per second.

Hidden Cap: Defined in CryptoCurrency

Hidden Cap: Defined in CryptoCurrency

 

Hidden cap is an unknown limit to the amount of money a cryptocurrency can receive from investors in its Initial Coin Offering (ICO). 


An ICO is the limited-time process by which new cryptocurrencies make their coins publicly known and begin selling them directly to people. People invest their money in these coins in the hopes that they will later be worth many times more that what was paid. 


The circumstances and limits of a hidden cap are created and known only by the development team. 

The purpose of a hidden cap is to allow smaller investors a chance to put their money into a new cryptocurrency by discouraging very wealthy investors from putting in large amounts of money. 

Because large investors want to know the total supply of an asset before investing, a hidden cap prevents this awareness and can limit how much they are willing to spend.

HODL: Defined in CryptoCurrency

HODL: Defined in CryptoCurrency

 

HODL is defined as a misspelling of “hold” that evolved into a shortened form of “Hold On for Dear Life”.



After buying crypto, a person who is HODLing intends to keep it even as prices go up and down. 


Originally a misspelling of “hold”, HODL became a popular term among those who buy cryptocurrencies.

A person who does this is known as a “HODLer” or “HODLER”.

Hot Storage: Defined in CryptoCurrency

Hot Storage: Defined in CryptoCurrency




Hot storage is defined as digital data storage that is provides immediate access. Hot storage is often connected to the Internet. Also known as “hot wallet”.



Unlike cold storage, hot storage is typically connected to other computers, networks or the Internet. Hot storage always has rapid access times. Shorter access times means less control and security.



There are many types of hot storage including:

  • Storing your cryptocurrency on an exchange.
  • Storing your cryptocurrency on an often connected computer.
  • Storing your cryptocurrency on cloud storage.

Hyperledger: Defined in CryptoCurrency

Hyperledger: Defined in CryptoCurrency




Hyperledger is an organization started by the Linux Foundation with the purpose of expanding the use of blockchain technology. Imagine the blockchain as a digital book of records where each new page made in that book is what is known as a “block”. 


Those blocks are connected in one group known as the blockchain and are maintained simultaneously by a network of computers. Because of this, updates become permanent and changing the recording is almost impossible. 


Because the records aren’t stored in any one location, and every unit in the network keeps their own copy, it becomes even harder to manipulate. That means, the information is very safe despite being shared by so many units.

Initial Bounty Offering [IBO]: Defined in CryptoCurrency

Initial Bounty Offering [IBO]: Defined in CryptoCurrency


An Initial Bounty Offering or IBO is the limited-time process by which a new cryptocurrency is made public and distributed to people who invest their skills and time to earn rewards in the new cryptocurrency. 


Unlike an Initial Coin Offering where the coins are sold, an IBO requires more mental commitment.

Inflation: Defined in CryptoCurrency

Inflation: Defined in CryptoCurrency


Inflation is the yearly increase in the prices of products and services, and is measured as a percentage. In other words, increasing inflation means your $5 bill will purchase fewer and fewer candy bars. 


Government issued money like US dollars are created all the time, there is no limit, and the creation of new money creates inflation. 


Many cryptocurrencies are set up in the same way where brand new coins are created regularly.

Initial Bounty Offering [IBO]: Defined in CryptoCurrency

Initial Bounty Offering [IBO]: Defined in CryptoCurrency

 

An Initial Bounty Offering or IBO is the limited-time process by which a new cryptocurrency is made public and distributed to people who invest their skills and time to earn rewards in the new cryptocurrency. 


Unlike an Initial Coin Offering where the coins are sold, an IBO requires more mental committment.

Input: Defined in CryptoCurrency

Input: Defined in CryptoCurrency


Input is defined as cryptocurrency being received into your digital wallet. 


Cryptocurrency coming into your digital wallet is known as an “input”.


Let’s say you want to spend 10 bitcoin, if you have 3 inputs (3, 9, and 15) then the first two are combined (3+9=12) and both are sent out as outputs. 

After transaction fees are spent, the remaining balance (about 2 bitcoin) is sent back to you as an input.

Your input is always another’s output. And reversely, your output is always another’s input.

Instamine: Defined in CryptoCurrency

Instamine: Defined in CryptoCurrency

 

Instamining means new cryptocurrencies, for a short time after launch, are very easy to create. 


The purpose of instamining is to accumulate a large quantity of the available supply early on and later sell it for a big profit. 


Mining is a computer process of recording and verifying information on the digital record known as the blockchain. 

Mining usually also involves computers working very hard at solving a math problem. The first computer to solve this problem would discover a new block and could record information on the blockchain. This earned them a reward in brand new digital money plus fees paid for each transaction.