“The Non-Tech Newbie’s Guide to Understanding Crypto Lingo”
In my previous article, Decentralized Cryptonomics = Freedom for All, I touched on the basics of the advancing crypto revolution. How gold, as the standard measure of human resource, is being re-thought through the integration of a new emerging decentralized, encrypted technology. I introduced the concept of greater security and efficiency using technologies like peer-to-peer and encryption. And I encouraged readers to start investigating the new cryptonomics platforms by following the links I provided.
Now let’s take a look at, what I think, is the most important next step; understanding crypto language.
How I got started with cryptonomics
In 2012 I was introduced to Bitcoin, a form of digital currency that is created and held electronically, with no middle man. What drew me to investigate it further was the idea that this “currency” was decentralized and it was independent of any central authority. No one controls it! There is no bureaucracy, no monetary policy. It is a currency based on mathematics, not gold or silver!
When I first started learning about Bitcoin it was like learning a foreign language because of all the geeky computer terms and concepts I had to grasp. Learning how all the terms worked together was my second challenge. While I am educated in many areas, computer language was not one of them!
Today, many newbies I talk to about the rising crypto revolution share my former sentiments of cryptonomics, “I have heard about Bitcoin on the news, but I don’t know how it works” or “I’ve heard about Bitcoin, but I am not a technical person and it sounds too complex”. I get that! I use to feel the same way!
Curiosity got the best of me though and I eventually started to dig deeper to wrap my mind around this new technology.
The emerging crypto technology’s (previously) less than hospitable integration of the new platforms offered to non-tech newbies (who have learned to navigate technology only by using super simple “yes” and “no” button clicks), has created an initial divide, delaying mass adoption. It’s been too hard for the average, non-tech Joe, to figure out how to install the crypto application, let alone use it!
There have been some recent breakthroughs in how crypto technology is being presented to the public, as programmers have realized the user interface dilemma and bridged some ease-to-use gaps. In order to help get some newbies over to the other side and start exploring this evolving crypto eco-system, I am going to break this up into digestible amounts of information over a series of articles.
Getting over the hump – with vocabulary
The purpose of this article is to introduce a few key vocabulary terms to familiarize you with the crypto lingo. We’ll expand on these in later articles.
Peer-to-peer – what is it?
A commonly used term in the crypto world is peer-to-peer, or as it is often referred to, P2P. This is a decentralized communication model in which computer systems are connected to each other. Each computer (peer) essentially becomes a file server, a client, a relayer, and possibly so much more. All that is needed to create a P2P system are two or more computers networked together and P2P software.
For example; in today’s tech, when you want to download something off the internet, you click a button on the screen and a request for the file is sent out. The request goes to a single server which then transfers you the entire file. That same action could occur P2P as a request for small parts of the same file is made to multiple hosts. The P2P client (your computer) combines all the incoming chunks of data to create the file. This approach allows for higher file size transfers and reduces costs by eliminating the need for single source servers.
Why is it important to know about P2P?
P2P was designed so that computers could send information directly to each other without having to pass through a centralized server. This is good for privacy and reduced bandwidth constraints.
Also, as a decentralized file sharing system, P2P computers can download and store data that is eventually shared with another peer (computer) – so it becomes a form of mass anonymous cooperation. In P2P you can chat with a friend without going thru Skype, Google Hangouts, Facebook or any other centralized server.
Blockchain – what is it?
Blockchains are strings of computer data represented as distributed public ledger technology that is stored on participating computers throughout the world.
Many things that can be done on the internet can also be done better and more securely using a blockchain overlay. It is maintained by the public instead of being maintained by a centralized “third party.” Users no longer have to trust that a third party is being honest or is secured because all the information is on the blockchain, visible to all and mathematically verifiable to be true. It can also be thought of as consensus based since all participants have a duplicate of the ledger.
Why is it important to know about Blockchains?
Many of today’s newer crypto solutions are built on the blockchain concept, though newer versions of blockchain type technology have been developed. It’s good to know the basics of how it works. Down the road, as you investigate new coins and assets available, they will likely use this model – and for accountability purposes, this is important!
Although Blockchains are generally discussed as ledgers of financial transactions, they don’t have to be just financial in nature. There are plenty of other non-financial applications in which a blockchain type technology could be utilized. Because of its ledger based history, blockchains would be ideal as voting mechanisms, secure messaging systems, a new distributed version of the internet….the list goes on.
Protocol – what is it?
Protocols are the language and/or rules that computer applications use to communicate to each other. Blockchains use protocols to process transactions.
As you delve into crypto chatter, you will hear about Bitcoin protocol, blockchain protocol, Gen2 protocol, or some other crypto coin/asset protocol. We’ll talk more about it later. For now, just know that protocol = computer (code) language that programmers use to create technology.
Why is this important to know about protocols?
When you understand the language and use of protocol, you will be able to better determine if a new crypto asset or coin offers a real world service.
BitTorrent/Torrent – what is it?
These terms are used interchangeably. The best way I can think to describe this concept to a newbie is to use a simple analogy of this technology. Imagine ice on a mountain top melting down into hundreds of locations along the mountain, eventually meeting at the river and then flowing into the ocean. In this case, your computer is the ocean and you are collecting all the drops of melting ice that trickled from the mountain top.
In a more technical explanation, a torrent is a protocol to distribute files – often very large files (like music or movies). It acts as a swarm feature that distributes file content sent over the internet. It scatters information as it sends.
So, an originating file (the ice on top of the mountain) is broken down into small pieces (melting ice), scattered to various peers (streams down the mountain, collects in the river) and then is eventually reassembled (collects in the ocean – your computer). This spreads out the bandwidth across many points on the internet which reduces the need for large servers AND allows for greater anonymity in file sharing because peers carrying and redistributing the message never have the entire message content (and they rarely even know what it is they are relaying).
Why is it important to know about Torrents?
Torrents are a sharing mechanism and need to be shared to survive. The more torrents available to pull from, the faster the data transfer speeds.
Tor – what is it?
Tor stands for The Onion Router. Despite any ignorant mainstream media hype you may hear about the Tor service, it was originally designed as a way to anonymously browse the internet. Today, it is a non-profit organization whose core goal remains providing anonymity while using the internet.
Tor is a software overlay that you download to your computer so that it disguises your computers identity by moving your traffic around different Tor servers. Further, it encrypts the internet traffic so that it isn’t traced back to you. This is great for keeping your personal information and data from being exposed to advertisers and other web sites.
The Tor network relies on people to volunteer their internet connection as a relay point for other Tor users. Essentially, other users relay points are the various Tor servers. The connections are always bouncing around making it very difficult to locate the source computer.
Why is it important to know about Tor?
Here is my teenage daughter’s explanation for why it’s important to know about Tor, “Do you remember the line in the Captain America, Winter Soldier Movie when Captain America’s asks Jasper Sitwell about Zola’s algorithm’s ability to gather data on people worldwide? Sitwell says, ““The 21st century is a digital book. Zola told HYDRA how to read it. Your bank records, medical histories, voting patterns, emails, phone calls, your damn SAT scores!”” Tor protects you from that kind of data gathering”.
My daughter is correct. Tor provides a level of anonymity that keeps you protected from this type of data collection and it is sometimes used in new crypto technology.
Open source – what is it?
The best way I know how to explain open source is to share a description I heard a while back. Open source is like sharing a recipe. Imagine you baked cookies for your friends and instead of delivering just the cookies, you also provide the recipe for them to make their own at a later point in time. If they enjoyed your cookies, they may use your recipe to make their own. If they prefer nuts or almonds added in, they will adjust the recipe. The point is, they are using your recipe and adding flavors to it they also enjoy. If they, in turn, share the recipe with someone else, then there is greater exposure to the originating recipe.
In tech terms, open source refers to a computer program in which the source code is available to the general public for use and/or modification from its original design. This allows others to be able to analyze the source code to make sure there is no malware or spying built into the program. It also promotes collaborative efforts so that programmers can improve upon the original source code as it is shared within the community. Open source has a more decentralized model of production compared to a centralized corporate model.
Why is it important to know about open source?
The main principle of open source is no cost peer production that benefits the general public. Meaning, it is people working together to create something better, for everyone.
Putting it all together:
Let’s combine the concepts I just covered and put them into a real world crypto tech example.
Let’s say you are a musician and you have a song you want to share on the new NxT crypto network. A team of programmers could create a Peer 2 Peer file sharing Application using BitTorrent to handle the FileSharing, and integrate in a BlockChain to DeCentrally monetize the File Sharing app.
The application could be programmed to share your music for the price of 100 NxT. As soon as the BlockChain has confirmed the 100 NxT deposit the BitTorrent can be initiated to send the Music.
Easier translation: You have music to sell. You want to sell it for 100 NxT per download. You have a decentralized website with integrated BitTorrent to house your song and an NxT address for payment. When the NxT transaction is recorded on the ledger, your music is sent via the BitTorrent.
This can be further expanded. Using the same example above, lets say you are away on a trip and your Music server BitTorrent is not accessible. Your song can be encrypted and stored on dozens of peoples computers, and once the BlockChain confirms the 100 NxT deposit, the song can be downloaded from dozens or hundreds of other DeCentralised BitTorrents – even when you’re not around! Lets also say 5 of the 100 NxT you charge for the download is equally distributed to all those who participated in the BitTorrent File Sharing Service (as a minimal transaction fee) thus creating incentives for other peers to join the network.
This, of course, is just one rough example of the innumerable opportunities available using this new crypto technology. For now, this is a good starting point to better grasp the enormity of this new emerging market and the importance of understanding some of the technological language behind it.
Time for homework:
Learning the crypto language behind these emerging technologies gives you distinct advantage by knowing how to assess coins, assets and new marketplace ideas. Through understanding the language concepts, you will understand HOW they work and WHY they work.
As the first crypto currency, Bitcoin pioneered new technology that is quickly being adapted for entirely new eco-systems of innovations. Keep referring to the terms listed above until you feel confident you understand the concepts. Then, go to the internet and look up Bitcoin news articles from 2012 to today as a starting point for testing your understanding of the language covered in this article. Baby steps.
We’ll cover more crypto language and delve into new technology platforms in the next article.
The future is at your fingertips!
Until next time,