Crypto Glossary

The Skrill Cryptocurrency Service is currently available in selected countries only. If you don’t see a Crypto section in your account, this means you can’t perform crypto transactions.

Bitcoin address - an identifier of 26-35 alphanumeric characters, beginning with the number 1, 3 or bc1 that represents a possible destination for a Bitcoin payment. It can be generated by an associated Bitcoin wallet. For privacy and security reasons a unique address should be used for each transaction.

Ethereum address - an identifier of 42 alphanumeric characters beginning with ‘0x’ that represents a possible destination for a payment on the Ethereum network. Unlike the Bitcoin address, an Ethereum address is permanent i.e., the same one is used for each transaction performed via one crypto wallet.

Blockchain - a growing list of records, called blocks, that are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp and transaction data. It is managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks.

Cryptocurrency - a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds. Most cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. They are generally operating independently of a central bank.

Digital currency - a form of currency that is only available in digital or electronic form, and not in physical form. It is also called digital money, electronic money, electronic currency, or cyber cash.

Stablecoins - digital currencies with value tied to that of another currency, commodity, or financial instrument. The aim of stablecoins is maintaining price stability by keeping reserve assets as collateral or through algorithmic formulas controlling supply. 

Dollar Cost Averaging - an investment strategy, which consists in dividing up the total amount to be invested across periodic purchases in an effort to reduce the impact of volatility on the overall purchase. The purchases occur at regular intervals, regardless of the asset's price. As the price will likely vary each time a purchase is made, the investment is not as highly subject to volatility.

Double-Spending - the risk that a digital currency can be spent twice. This is possible because a digital token consists of a digital file that can be duplicated or falsified. It leads to inflation by creating a new amount of fraudulent currency that did not previously exist.

Fiat - a currency that a government has declared to be legal tender, but it is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material from which the money is made.

Hash - a function that converts an input of letters and numbers into an encrypted output of a fixed length. Using a fixed-length output increases security since anyone trying to decrypt the hash won’t be able to tell how long or short the input is simply by looking at the length of the output.

ICO(Initial Coin Offering) - a type of funding using cryptocurrencies. It is often a form of crowdfunding, however a private ICOs which does not seek public investment is also possible.

Miners and Validators - confirm and secure crypto transactions by adding new blocks to the blockchain.

Mining fee – small amounts of crypto given to the miners as a reward for the services they are providing. The mining fee depends on the current networking congestion, the size of the bitcoin transaction (in data) and the priority of the transaction. This is why the mining fee is constantly changing.

Gas fee – small amounts of crypto charged to cover the computational power used for processing a transaction and keeps the network secure. It also serves as an incentive for validators to stake and validate transactions on the Ethereum blockchain. The gas fee for each transaction depends on the supply, demand, and network capacity at the time of processing.  

Mining - a process of verifying transactions on a blockchain performed by miners via solving complicated mathematical problems with cryptographic hash functions that are associated with a block containing the transaction data.

Staking – a process of transaction validators offering their own coins or tokens as collateral for the chance to validate transactions on a blockchain and collect fees in return.

Nodes - can be any kind of electronic device that maintains copies of the blockchain and keeps the network functioning.

Nonce - "a number only used once," refers to the first number a blockchain that a miner needs to discover before solving for a block in the blockchain.

Private Key - a sophisticated form of cryptography that allows a user to access their cryptocurrency securely. It protects a user from theft and unauthorized access to funds.

Public key – an encrypted message, a key, shared with the public allowing you to receive cryptocurrency to a crypto address. It is used in pair with the private key, which makes it, when received, readable again for the intended party.  

Consensus mechanism – the full set of protocols, incentives, and principles that allow a network of nodes to agree on a blockchain's state thus validating the creation of new blocks on a blockchain and ensuring they are secure. 

Proof-of-Work (PoW) - a consensus mechanism which uses a huge amount of computing power to verify transactions and create new blocks on a blockchain via the mining process. 

Proof-of-Stake (PoS) – a consensus mechanism that requires several transaction validators to validate new blocks on the blockchain via staking. It uses significantly less energy than the PoW mechanism. 

Crypto spread – refers to the difference between the buying and selling prices of a cryptocurrency, representing the profit or loss margin for traders. It may also include foreign exchange and other trade fees if applicable. 

Crypto slippage - refers to the difference between the expected price of a cryptocurrency trade and the actual price at which the trade is executed. It occurs when market conditions change rapidly, causing the execution price to deviate from the initially presented one, potentially resulting in higher costs or losses.

Cryptocurrencies are complex, unregulated, without consumer or financial protections. Capital Gains Tax or other taxes may apply. Prices are volatile; only risk what you can afford to lose.

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