'Crypto' and 9 more digital asset vocabulary words
MSM writers have a new problem. The Associated Press (AP), creators of the AP Stylebook that largely determines how most mainstream journalists and professional writers practice their craft, has determined that it is not acceptable to use the word 'crypto' to refer to cryptocurrency. In their wisdom, the powers that be believe doing so only adds to the confusion between cryptocurrency and cryptography.
In the latest edition of the 2019 Stylebook, the AP explains cryptocurrency as follows:
"A type of digital money that uses encryption technology to make it secure. Avoid using the shorthand crypto, which can be confused with cryptography. Cryptocurrency is not the same as virtual currency, which is used in virtual worlds such as online games."
Note that they went beyond simply telling writers not to confuse the terms. They went so far as to define what they believe cryptocurrency is and how it differs from virtual currency. But they did not stop there. The AP also wrote this gem:
"Although it's possible to trace bitcoins and some other cryptocurrencies as they are spent, owners of accounts behind the transactions aren't necessarily known. For this reason, cryptocurrency is a favored form of payments among criminals, including those behind ransomware, in which malicious software locks a computer and its data until a ransom is paid."
It seems like the AP Stylebook has crossed the line from good journalism practices into making moral judgments about cryptocurrency. At any rate, those of us who are required to write according to AP style must either stop using 'crypto', find another word, or a defy AP standards.
On that happy note, below are nine additional digital asset vocabulary words a writer should thoroughly understand before using them:
We can use the term 'address' to mean anything from the physical location of a building to a network location on the internet. In the cryptocurrency world, an address is something entirely different. A crypto address is a virtual location assigned to every coin on the network.
Usually consisting of a string of at least 30 characters, the address contains information about that coin, the current wallet in which it resides, and its trade history. It essentially acts as the main record that tracks where a coin is throughout its lifetime.
Blockchain is the technology that makes cryptocurrencies run. The best way to understand it is to think of a digital ledger system. A blockchain is a digital ledger that keeps record of each and every transaction conducted on its associated network. As such, it is a ledger that continually grows.
Blockchain's name comes from the fact that the ledger is constructed of individual blocks of information that are all linked together in a continuous chain. Blocks have limited capacity, so a new block is created as soon as the current block in the chain is full.
3. Cold Storage
People who own cryptocurrency assets have to store them somewhere. Cold storage is any form of storage that is not connected to the internet. In other words, it is not online. It can be something as simple as a USB flash drive or a paper record. You can also purchase purpose-built cold storage units that offer additional security measures to prevent theft.
Blockchain ledgers, like Bitcoin's ledger for example, tend to be distributed across multiple computers on the network. That could mean hundreds or even thousands of computers. In order for transactions to be confirmed and blocks to be built, all of the computers on the network must agree as to the validity of each transaction. Their agreement is called consensus. If consensus cannot be reached on a given transaction, that transaction is considered null and void.
Consensus also applies to structural changes within a blockchain. For example, if a core group of developers want to modify the blockchain to improve its performance, they all have to agree to that change. A lack of consensus prevents any meaningful changes from being made.
Decentralization is a philosophical concept that says cryptocurrency should not be controlled or influenced by government or central banks. In a fiat scenario, the government prints money while its central bank manages the money. The two work together to control that fiat in its entirety. In a cryptocurrency scenario, there are no governments or central banks involved.
Cryptocurrency networks are controlled and maintained by developers and coin miners. And because nothing can be done to a blockchain without consensus, it is exceedingly difficult for a single individual or entity to exert controlling influence.
The concept of decentralization is not limited only to cryptocurrency. It is possible to build an application using blockchain as the foundation, making the application decentralized as well. A decentralized application is not controlled by a central authority. Rather, it is controlled by its developers and users.
The cryptocurrency exchange is the place where coins are bought and sold. It is a lot like a stock exchange in that it brings traders together. Cryptocurrency exchanges are private entities that generally exist to make money. A small number are open source and decentralized; most are closed sourced and privately owned.
Buyers and sellers open exchange accounts for the purposes of trading their coins. They can store their coins on the exchange as well, although this is generally frowned upon. It is better to utilize cold storage once trades are complete.
Exchanges make money by charging transaction fees. Those fees apply to both buyers and sellers. Every time you buy coins, you will pay a fee. Likewise when you sell. As such, frequent trading can get expensive. This is not a problem for exchanges because they make their money on volume. Higher volumes mean more profit.
From time to time, new blockchains are created by taking existing blockchains and creating copies that are slightly altered to move in a different direction. This results in multiple copies of the same blockchain existing side-by-side. Those copies are known as forks. There are both soft and hard forks.
A soft fork is one in which new transactions are validated and processed as usual while all those transactions that occurred before the fork are invalidated. A hard fork is just the opposite. It retains all previous transactions as valid while invalidating any future transactions that appear on all other copies of the blockchain from which it was split. New transactions are only valid in the new fork and its copies.
Bitcoin Cash is an example of a hard fork. A few years back, a number of Bitcoin developers decided they needed to do something about Bitcoin's extremely slow speeds. They couldn't agree on the right approach, so some of them decided to retain the original Bitcoin blockchain while others decided it would be best to fork the blockchain and then modify it to make it faster.
Mining is one of the most confusing terms in the cryptocurrency universe. We typically think of mining as the process of digging into the ground to locate precious metals. Cryptocurrency mining operates on an entirely different principle. Rather than digging around looking for something they can take, miners actually do the work of verifying and validating transactions.
Coin mining requires using computer hardware and software to decrypt cryptocurrency transactions, do some sort of work - like solving a mathematical equation - and then posting the result in hopes of gaining consensus with all of the rest of the miners on the network. Miners are rewarded for their work in coins.
Miners are essentially those individuals and organizations that maintain cryptocurrency networks. Without them, it would be impossible to trade coins and pay for things. Without the miners, there would be no way to play casino games with your bitcoins.
9. Private Key
Digital wallets are utilized and maintained through a series of both public and private keys. These keys are strings of numbers and letters used for identification purposes. If you own cryptocurrency, your digital wallet has a public key that others can use to send you coins. It also has a private key which acts as your password. Only you have your private key so, if you lose it, you also lose your coins with it.
Cryptocurrency traders do not necessarily need to have their own independent wallets and private keys. They can trade through entities like Binance, entities that act more or less like stockbrokers. You open an account just as you would with a stockbroker, then allow that organization to handle your coins for you. Your coins are stored in a wallet on their system.
This post has barely scratched the surface when it comes to cryptocurrency vocabulary. But at least now you know the meanings of some of the more commonly used terms. As for the term 'crypto', it remains to be seen what will happen with the recent AP Stylebook update. There is a real chance that writers and journalists will ignore the AP on this one.
The term 'crypto' has become synonymous with cryptocurrency just as 'Google' has become synonymous with online searches. So even if the AP frowns on its use, it is a safe bet that writers will continue using the term to refer to cryptocurrency rather than cryptography.