Some key terminologies a newbie should know in the cryptocurrency space
Nov 10, 2024

Less than a minute read

1. Proof of Work (PoW)
A consensus mechanism where miners compete to solve computational problems, and the first to solve it gets to add a new block to the blockchain and is rewarded with cryptocurrency. Example: Bitcoin uses PoW.

2. Proof of Stake (PoS)
A consensus mechanism where validators are chosen to create new blocks based on the number of coins they hold and are willing to "stake" as collateral. Example: Ethereum 2.0 is transitioning to PoS.

3. Smart Contract
A self-executing contract with the terms of the agreement directly written into code. It automatically executes and enforces the terms when certain conditions are met. Example: Used on the Ethereum blockchain