Basic Concepts

In the Basic Concepts category you will find introductory articles that range from the very basics (such as the ELI5 subsection) to medium difficulty subjects (e.g. beginning programming).

The concepts presented on this section are recommended for those beginning with cryptocurrency programming, investing, mining and other crypto related activities which involve some technical background.

ELI5 Proof of Stake (PoS) – How does PoS work?
In the cryptocurrency universe, Proof of Stake (PoS) is one of the most popular alternatives to the Proof of Work (PoW) family of consensus mechanisms. While PoW systems invest la...

ELI5 How to mine Litecoin
Litecoin has consistently been one of the most popular cryptocurrencies since its inception in 2011. It was initially forked from the main Bitcoin source code by a developer ca...

Understand the Double Spending problem
As the name implies, the double spending problem consists in executing a transaction twice while subtracting just once from your account balance. This, of course, can only hap...

ELI5 First, second, third and fourth generation cryptocurrencies [2021 Update]
Although the theoretical building blocks that form cryptocurrencies existed prior to 2009, it was only in January of that year that Bitcoin registered its first ever transaction o...

ELI5 Provably Fair Games
What is a provably fair game? The answer lies at the heart of a whole new industry which has been developed around the transparent, decentralized, nature of the blockchain. ...

ELI5 Bitcoin Puzzle Transactions
As the name implies, Bitcoin puzzle transactions are created as a challenge and not for the usual purpose of monetary transfer. Puzzles can be published for several reasons, in...

ELI5 PSBT – Partially Signed Bitcoin Transactions
Trustless operation is one of the key concepts behind cryptocurrencies. The idea is that you should not have to personally meet, or trust your peers, in order to perform successfu...

How to buy Bitcoin near me?
If you feel insecure about purchasing Bitcoin through virtual channels, a personal contact can go a long way in helping you break through the toughest barrier for new crypto inves...

Opinion: Decentralized blockchains can only survive having a valuable token, like Bitcoin, attached to them [Feb 2018]
We've heard this time and again, especially from folks in the financial sector: "blockchain is here to stay, Bitcoin not so much". Is this really so? We disagree, and in th...

ELI5 What’s a stablecoin?
Since the beginning of cryptocurrency history, most crypto assets have been known to experience enormous oscillations against the US Dollar (or some other legacy fiat currency). ...

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Concepts In This Page

Consensus Mechanism - A process or system by which multiple parties are able to reach consensus. In the context of cryptocurrencies, it's the process which allows for everyone to agree on everyone else's money balance. E.g. Bitcoin employs Nakamoto consensus via PoW mining.
PoS - PoS is an acronym for Proof of Stake
Proof of Stake - Proof of Stake is a consensus mechanism in which block verifiers prove their commitment to the network by staking their coins instead of by proving they performed some work (contrast with Proof of Work).
Staking - Staking is the process by which users delegate their Proof of Stake voting rights to a staking pool. The pool then verifies transactions on the users' behalf and, similarly to mining pools, share some of the profits back with the stakers.
Litecoin - Litecoin is a first generation cryptocurrency which was originally forked from the Bitcoin source code. It substituted Bitcoin's SHA256 hashing algorithm for Scrypt as an attempt to make ASIC mining impossible.
Litecoin Mining - A PoW based mining method by which Litecoin transactions are verified and blocks get produced.
Double Spending - Double spending is a condition where the same value can be spent twice, revealing a flaw in the payment processing system.
Irreversible Transactions - Irreversible transactions are a characteristic of digital payment systems which offer trustless decentralization. The irreversibility is necessary in order to guarantee that no transaction will be undone once committed by the network.
First Generation Cryptocurrencies - The first generation cryptocurrencies was spawned by Bitcoin. Several Bitcoin forks exist on this generation. Most 1st generation coins simply copied the Bitcoin source code while modifying the encryption algorithms and total coin supply.
Second Generation Cryptocurrencies - The second generation of cryptocurrencies added on-chain smart contracts and fully featured contract programming languages. Ethereum, which is the most notable 2nd generation cryptocurrency, brought smart contracts and introduced tokens to the masses, spawning the wave of ICO's from 2014 onwards.

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Basic Concepts

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Concepts In This Page

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