Blockchain A-Z

Blockchain A-Z covers all of the important keywords that you need to know if you are just getting into blockchain!

51% Attack

When more than half of the computing power of a cryptocurrency network is controlled by a single entity or group, this entity or group may issue conflicting transactions to harm the network, should they have the malicious intent to do so.

Address

Cryptocurrency addresses are used to send or receive transactions on the network. An address usually presents itself as a string of alphanumeric characters. It will look something like - 1MhN5qfH1vgx9CLL17i3DK9D2gzrHR7dZF

Altcoin
An altcoin is the community accepted name for any coin that isn’t Bitcoin. Examples are Dash and Monero.

ASIC

Short form for ‘Application Specific Integrated Circuit’. Often compared to GPUs, ASICs are specially made for mining and may offer significant power savings.

Bit 

There are 1,000,000 bits per bitcoin so 1 bit = 0.000001 BTC.   Cheaper items are denominated in bits.

Bitcoin

Bitcoin is the first decentralised, open source cryptocurrency that runs on a global peer to peer network, without the need for middlemen and a centralised issuer.


Block

Blocks are packages of data that carry permanently recorded data on the blockchain network.

Blockchain

A blockchain is a shared ledger where transactions are permanently recorded by appending blocks. The blockchain serves as a historical record of all transactions that ever occurred, from the genesis block to the latest block, hence the name blockchain.

Block Explorer

Block explorer is an online tool to view all transactions, past and current, on the blockchain. They provide useful information such as network hash rate and transaction growth.

Block Ciphers

Block Ciphers are a method of encrypting text (to produce ciphertext) in which a cryptographic key and algorithm are applied to a block of data at once as a group rather than to one bit at a time.

Block Height

The number of blocks connected on the blockchain.

Block Reward

A form of incentive for the miner who successfully calculated the hash in a block during mining. Verification of transactions on the blockchain generates new coins in the process, and the miner is rewarded a portion of those.

BTC

A common unit to describe one bitcoin, as USD represents one United States Dollar

Central Ledger

A ledger maintained by a central agency.

Chain Linking

Chain Linking is the process of connecting two blockchains with each other, thus allowing transactions between the chains to take place. This will allow blockchains like Bitcoin to communicate with other sidechains, allowing the exchange of assets between them

COLD STORAGE

Moving crypto-currency ‘offline’ Paper/hardware wallet.


Confirmation

The successful act of hashing a transaction and adding it to the blockchain.

Consensus

Consensus is achieved when all participants of the network agree on the validity of the transactions, ensuring that the ledgers are exact copies of each other.

Consortium Blockchain

Consortium Blockchain is a blockchain where the consensus process is controlled by a pre-selected set of nodes; for example, one might imagine a consortium of 15 financial institutions, each of which operates a node and of which ten must sign every block for the block to be valid. The right to read the blockchain may be public or restricted to the participants. There are also hybrid routes such as the root hashes of the blocks being public together with an API that allows members of the public to make a limited number of queries and get back cryptographic proofs of some parts of the blockchain state. These blockchains may be considered “partially decentralized”

Cryptocurrency

Also known as tokens, cryptocurrencies are representations of digital assets.

Cryptographic Hash Function

Cryptographic hashes produce a fixed-size and unique hash value from variable-size transaction input. The SHA-256 computational algorithm is an example of a cryptographic hash.

Dapp

A decentralised application (Dapp) is an application that is open source, operates autonomously, has its data stored on a blockchain, incentivised in the form of cryptographic tokens and operates on a protocol that shows proof of value.

DAO

Decentralised Autonomous Organizations can be thought of as corporations that run without any human intervention and surrender all forms of control to an incorruptible set of business rules.

Distributed Ledger

Distributed ledgers are ledgers in which data is stored across a network of decentralized nodes. A distributed ledger does not have to have its own currency and may be permissioned and private.

Distributed Network

A type of network where processing power and data are spread over the nodes rather than having a centralised data centre.

Difficulty

This refers to how easily a data block of transaction information can be mined successfully.

Digital Commodity

A digital commodity is a scarce, electronically transferrable, intangible, with a market value.

Digital Identity

A digital identity is an online or networked identity adopted or claimed in cyberspace by an individual, organization, or electronic device.

Digital Signature

A digital code generated by public key encryption that is attached to an electronically transmitted document to verify its contents and the sender’s identity.

Double Spending

Double spending occurs when a sum of money is spent more than once.

Ethereum

Ethereum is a blockchain-based decentralised platform for apps that run smart contracts, and is aimed at solving issues associated with censorship, fraud and third party interference.

Ethereum Classic

Ethereum Classic is a split from an existing cryptocurrency, Ethereum after a hard fork.

EVM

The Ethereum Virtual Machine (EVM) is a Turing complete virtual machine that allows anyone to execute arbitrary EVM Byte Code. Every Ethereum node runs on the EVM to maintain consensus across the blockchain.

Fiat Currency

Fiat currency is any money declared by a government to be to be valid for meeting a financial obligation, like USD or EUR.

FOMO

Fear of Missing Out.

Fork

Forks create an alternate version of the blockchain, leaving two blockchains to run simultaneously on different parts of the network.

FUD

Fear, Uncertainty, and Doubt. (Alleged) propaganda to lower prices.

Full Node

A Full Node is a node that fully enforces all of the rules of the blockchain

Gas

Gas is a measurement roughly equivalent to computational steps (for Ethereum). Every transaction is required to include a gas limit and a fee that it is willing to pay per gas; miners have the choice of including the transaction and collecting the fee or not. Every operation has a gas expenditure; for most operations it is ~3–10, although some expensive operations have expenditures up to 700 and a transaction itself has an expenditure of 21000.

Genesis Block

The first or first few blocks of a blockchain.

Hard Fork

A type of fork that renders previously invalid transactions valid, and vice versa. This type of fork requires all nodes and users to upgrade to the latest version of the protocol software.

Hash

The act of performing a hash function on the output data. This is used for confirming coin transactions.

Hashcash

Hashcash is a proof-of-work system used to limit email spam and denial-of-service attacks, and more recently has become known for its use in bitcoin (and other cryptocurrencies) as part of the mining algorithm.

Hash Rate

Measurement of performance for the mining rig is expressed in hashes per second.

Halving

Halving is the reduction of minable reward every so many blocks. For Bitcoin the reward is halved after the first 210,000 blocks are mined and then every 210,000 thereafter.

Hybrid PoS/PoW

A hybrid PoS/PoW allows for both Proof of Stake and Proof of Work as consensus distribution algorithms on the network. In this method, a balance between miners and voters (holders) may be achieved, creating a system of community-based governance by both insiders (holders) and outsiders (miners).

Initial Coin Offering (ICO)

Initial Coin Offering (ICO) is an event in which a new cryptocurrency sells advance tokens from its overall coinbase, in exchange for upfront capital. ICOs are frequently used for developers of a new cryptocurrency to raise capital.

Ledger

A ledger is an append-only record store, where records are immutable and may hold more general information than financial records.

Litecoin

Litecoin is a peer-to-peer cryptocurrency based on the Scrypt proof-of-work network. Sometimes referred to as the silver of bitcoin’s gold.

Mining

Mining is the act of validating blockchain transactions. The necessity of validation warrants an incentive for the miners, usually in the form of coins. In this cryptocurrency boom, mining can be a lucrative business when done properly. By choosing the most efficient and suitable hardware and mining target, mining can produce a stable form of passive income.

Multi-Signature or multisig

Multi-signature addresses provide an added layer of security by requiring more than one key to authorize a transaction. It refers to having more than one signature to approve a transaction. This form of security is beneficial for a company receiving money into their BTC wallet. If a company wants to keep it so that one employee doesn’t have sole access to a transaction, multisig allows for a transaction to be verified by two separate employees before it’s complete.

Node

A copy of the ledger operated by a participant of the blockchain network.

Oracles

Oracles work as a bridge between the real world and the blockchain by providing data to the smart contracts.

Peer to Peer

Peer to Peer (P2P) refers to the decentralized interactions between two parties or more in a highly-interconnected network. Participants of a P2P network deal directly with each other through a single mediation point.

Permissioned Ledger

A Permissioned Ledger is a ledger where actors must have permission to access the ledger. Permissioned ledgers may have one or many owners. When a new record is added, the ledger’s integrity is checked by a limited consensus process. This is carried out by trusted actors — government departments or banks, for example — which makes maintaining a shared record much simpler that the consensus process used by unpermissioned ledgers.

Permissioned Blockchain

Permissioned Blockchains provide highly-verifiable data sets because the consensus process creates a digital signature, which can be seen by all parties.

Protocols

Protocols are sets of formal rules describing how to transmit or exchange data, especially across a network.

Public Address

A public address is the cryptographic hash of a public key. They act as email addresses that can be published anywhere, unlike private keys.

Private Key

A private key is a string of data that allows you to access the tokens in a specific wallet. They act as passwords that are kept hidden from anyone but the owner of the address.

Proof of Authority (PoA)

Proof of Authority is a consensus mechanism in a private blockchain which essentially gives one client (or a specific number of clients) with one particular private key the right to make all of the blocks in the blockchain

Proof of Stake (PoS)

A consensus distribution algorithm that rewards earnings based on the number of coins you own or hold. The more you invest in the coin, the more you gain by mining with this protocol. Proof of stake has been considered the greener alternative to Proof of Work (PoW). Where PoW requires the prover to perform a certain amount of computational work, a proof of stake system requires the prover to show ownership of a certain amount of money, or stake.

Proof of Work (PoW)

A consensus distribution algorithm that requires an active role in mining data blocks, often consuming resources, such as electricity. The more ‘work’ you do or the more computational power you provide, the more coins you are rewarded with. The proof of work for Bitcoin is referred to as a “nonce,” or number used only once.

Protocols

Protocols are sets of formal rules describing how to transmit or exchange data, especially across a network.

Ripple

Ripple is a payment network built on distributed ledgers that can be used to transfer any currency. The network consists of payment nodes and gateways operated by authorities. Payments are made using a series of IOUs, and the network is based on trust relationships.

Satoshi

The penny of bitcoin.  1 Satoshi = 0.00000001 BTC  This is the smallest measurement of bitcoin.

Scrypt

Scrypt is a type of cryptographic algorithm and is used by Litecoin. Compared to SHA256, this is quicker as it does not use up as much processing time.

SHA-256

SHA-256 is a cryptographic algorithm used by cryptocurrencies such as Bitcoin. However, it uses a lot of computing power and processing time, forcing miners to form mining pools to capture gains.

Signature

A signature is the mathematical operation that lets someone prove their sole ownership over their wallet, coin, data or on. An example is how a Bitcoin wallet may have a public address, but only a private key can verify with the whole network that a signature matches and a transaction is valid. These are only known to the owner and are basically mathematically impossible to uncover.

Smart Contracts

Smart contracts encode business rules in a programmable language onto the blockchain and are enforced by the participants of the network.

Soft Fork

A soft fork differs from a hard fork in that only previously valid transactions are made invalid. Since old nodes recognize the new blocks as valid, a soft fork is essentially backward-compatible. This type of fork requires most miners upgrading in order to enforce, while a hard fork requires all nodes to agree on the new version.

Solidity

Solidity is Ethereum’s programming language for developing smart contracts.

Stream Ciphers

Stream Ciphers are a method of encrypting text (cyphertext) in which a cryptographic key and algorithm are applied to each binary digit in a data stream, one bit at a time.

Token

A token is a digital identity for something that can be owned.

Tokenless Ledger

A tokenless ledger refers to a distributed ledger that doesn’t require a native currency to operate.

Testnet

A test blockchain used by developers to prevent expending assets on the main chain.

Transaction Block

A collection of transactions gathered into a block that can then be hashed and added to the blockchain.

Transaction Fee

All cryptocurrency transactions involve a small transaction fee. These transaction fees add up to account for the block reward that a miner receives when he successfully processes a block.

Turing Complete

Turing complete refers to the ability of a machine to perform calculations that any other programmable computer is capable of. An example of this is the Ethereum Virtual Machine (EVM).

Unpermissioned Ledgers

Unpermissioned ledgers such as Bitcoin have no single owner — indeed, they cannot be owned. The purpose of an unpermissioned ledger is to allow anyone to contribute data to the ledger and for everyone in possession of the ledger to have identical copies.

Wallet

A file that houses private keys. It usually contains a software client which allows access to view and create transactions on a specific blockchain that the wallet is designed for.

WHALE

Someone who owns lots of crypto.