Cryptocurrency Fundamentals

Altcoin is an informal name for a cryptocurrency other than Bitcoin. The category can include coins native to independent blockchains as well as tokens issued through applications on existing networks, depending on the speaker's usage. It is not a technical standard, a quality rating, or a guarantee that different assets share the same characteristics. An altcoin may use proof of work, proof of stake, or another consensus design, while a token may inherit transaction processing from its host chain. Projects can also differ in issuance limits, governance, administrator powers, privacy features, and available software. A low price per unit does not necessarily make an altcoin inexpensive relative to its supply or economic activity. Useful comparisons therefore examine what the asset does, who can change its rules, how transfers are validated, and whether its claimed functionality exists independently of promotional material.

Sources: ethereum.org · namecoin.org

A blockchain is an ordered history organized into blocks that cryptographically refer to earlier blocks. Those links make alterations evident because changing earlier content changes the commitments that later blocks rely on. A functioning blockchain system also needs rules for validating updates and deciding which history participants should follow. The linked structure alone does not provide decentralization, economic security, or accurate information about the outside world. Bitcoin combines it with proof of work and independent transaction validation, while other networks use different mechanisms. Recent history may be reorganized when the applicable consensus rules select another branch. Public records can be inspected, but visibility does not necessarily identify the people controlling addresses. When evaluating a blockchain, useful questions concern who can propose changes, who verifies them, how disagreements are resolved, and what assumptions protect the ledger against manipulation.

Sources: developer.bitcoin.org · ethereum.org

A cryptocurrency is a digital asset whose operation uses cryptographic techniques to authorize transfers and maintain records under a network's rules. Bitcoin and ether are native assets of their respective blockchains, while many other assets are tokens issued through applications on an existing chain. The category contains substantial differences in decentralization, supply policy, privacy, governance, and security. Cryptography can establish that an authorized key approved a transfer, but it does not by itself guarantee honest issuers, accurate prices, or useful economic rights. Most public cryptocurrency ledgers expose transaction information rather than encrypting every payment. Holding cryptocurrency also differs from holding an account balance at an intermediary, because the latter introduces the intermediary's custody and withdrawal arrangements. Understanding an asset requires identifying its network, the software that enforces its rules, and the people or mechanisms capable of changing those rules.

Sources: ethereum.org · bitcoin.org

Ethereum is a public blockchain platform designed to execute transactions and programmable smart contracts across a distributed network. Its native asset is ether, commonly abbreviated ETH, which is used to pay transaction fees and participates in the network's proof-of-stake security system. Applications can issue separate tokens using standards such as ERC-20 and ERC-721, but those tokens are not automatically equivalent to ETH. Ethereum's execution environment lets contracts maintain state and interact with one another, supporting exchanges, digital collectibles, and other applications. That flexibility also creates risks involving contract logic, permissions, and dependencies. Ethereum should be distinguished from Bitcoin, which has a different transaction model and uses proof of work. It should also be distinguished from Ethereum-compatible networks: software compatibility does not mean they share the same validator set, native asset, settlement guarantees, or bridge arrangements.

Sources: ethereum.org · ethereum.org