Understanding Crypto - Terminology
The cryptocurrency and blockchain world can be very confusing for a newcomer. Experts have worked in this field for many years now and developed their own specific language that can make you think that everything is a lot more complicated than it actually is. That is why we are going to give you a short explanation of some of the most common terms and concepts. Instead of 100 terms and a single sentence about each, we will talk about 7 terms and explain them in detail.
ICO - Initial coin offering. A way for a new company to raise funds so that they can develop a product. During the ICO they show their plans and anyone can invest by buying their new cryptocurrency directly from the company. A very direct and straightforward approach. But this method has fallen out of use because of various untrusty projects. As anyone can make an ICO and no one regulates it, you have to be extra careful before you invest.
IEO - Initial exchange offering. Also a way to raise funds, but instead of investing in a company directly, you buy their coin through an exchange. Those exchanges will not want to host untrusty projects, so they will make sure the project follows certain requirements. The project needs to prove to the exchange that they have a new idea that improves the system and that they have the technical know-how to implement it. While now less people will invest, as they have to register with the exchange, it is a sign of a more trustworthy project.
Node - Blockchains consist of many computers using the same blockchain network. Each computer gets the full information about the blockchain and does its work in the network, it becomes a part of the network. And many computers together become the network itself. While you can connect with a desk computer, a laptop or even a server, all of them are called “nodes”. Every node gets the same rights and tasks as everyone else.
Centralized system - Most internet services are centralized systems. A single authority directs everything. When you are sending money through a bank, you are not sending it directly to the recipient. You are sending it to the bank itself, it checks it, approves it and only then it sends it to the recipient. Everything you do in the system gets governed by a single entity. You are less a participant in the network and more a client. But if that controlling entity fails, all the system fails. If the banking overs are closed, you can not send money to the recipient.
Decentralized system - All the nodes in the network have equal rights. There is no single node that can forbid you from acting. And all the nodes in the network check the transactions or other sent information to see if it is valid, not of malicious nature. If one node gets turned off, nothing is stopped, as others take its place. And no single node can start censoring, banning or changing the sent information. That is why nodes are so important - the more computers check everything, the safer the network. The disadvantage is that no central authority means that funds and information can be sent to people and regimes that are of a bad nature.
Protocol - A set of rules that everyone using the system must follow. In blockchain technology the protocol sets the permissions for all users, how the transactions will be verified, how the nodes will connect to each other and everything else. Every blockchain out there has different settings, a different protocol. Some want to be faster, some want to be more secure. Some have better solutions to existing problems. So every good blockchain does something differently.
Swap - To change one digital asset in a blockchain to another digital asset in a different blockchain. Because the protocols differ, it is not possible to do it directly. There are many ways how this is done, usually through various exchanges and services, where you give your assets and receive others.
This is exactly what is going to happen to ProperSix in the coming days. The token from Ethereum blockchain PRO6 will be swapped to a token in Libonomy blockchain, PSIX. This will be done because the protocol and the new approach of Libonomy solves many issues that the industry has been struggling with. The swap will be very easy. The user will just have to press a button and it will all be done on the ProperSix side.
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