As Blockchain has gained its momentum in today’s technological era, it is essential to understand the blockchain terminologies in detail. Nowadays, it has been observed that there are a lot of terms related to the blockchain technology, which are used commonly and all of them have their significance and meaning. So, we have covered all the fundamental blockchain related terms from A TO Z in our Blockchain Glossary to make you undersatnd precisely.
51% Attack: An attack on the distributed ledger that results in miners group has controlled more than 50% of the mining hash rate of the network. The term “Attack,” is used mostly in context to Bitcoin.
Address: It refers to a string of alphanumeric characters or scannable QR code, which is used to transmit and receive transactions on the network. The address is an essential term in the cryptocurrency, generated using the private key.
Airdrop: It means distributing the free tokens to stakeholders as rewards. Airdrop is related to the blockchain projects, especially ICOs. Also, it might or might not include an incentive. Many blockchain projects perform airdrop for various reasons like community growth, fixing the bugs or incentivize a positive effort towards their idea.
Accidental Fork: It happens when two or more miners select the block simultaneously. Then, one chain becomes longer than other. Also, the network abandons blocks that are not included in the long chain. These blocks are referred to as “orphaned blocks.”
Agreement Ledger: It is considered as distributed ledger (DL), where two or more parties use it to negotiate and reach an agreement.
Altcoin: Altcoin is a currency or token that is different from the Bitcoin. Any coin that is introduced after Bitcoin is called “Altcoin” such as Litecoin, LEND, NEO and EOS. These coins offer better features and functionality than Bitcoin but don’t provide storage value.
ASIC: Application Specific Integrated Circuit (ASIC), also referred to Silicon Chip is created to do a single task with significant power savings. ASICs are more efficient as compared to conventional hardware like CPU and GPU. ASIC is designed to process SHA-256 hashing problems for mining more bitcoins.
API: Application Programming Interface (API) is referred to be a software intermediary that enables two different applications to interact with each other. These interfaces define ways to do communication between several components.
Attestation Ledger: It is an account book, created to provide evidence of individual transactions. The ledger is to used to check that agreement, statement or commitment of transaction was made.
Blockchain: It is a distributed ledger that comprises of immutable records. Each block is then linked to the next block with a cryptographic signature. It enables block chains to be used like a ledger that can be shared and accessed by anyone having the right permissions. The blockchain is the transparent ledger that is used to save identities, value, agreements, credentials and property rights. Once you add something to the ledger, it will stay there forever. Examples of the blockchain applications are Bitcoin, Ethereum and Namecoin.
Bitcoin: It is the first open-source and digital currency that runs on a global P2P network without involving intermediaries and a centralized issuer. The currency is one of these technologies that offer the miners with the incentive to mine.
- Capital ‘B’ in Bitcoin: refers to the Bitcoin network
- Lowercase ‘b’ in bitcoin: refers to the token/cryptocurrency bitcoin
Bounty: Business or startups run a bounty program to incentivize positive behavior like bug fixes, article writing and marketing. These are quite popular in the tech industry.
Blockchain Explorer: It is a type of tool, which is used to check the past or current transactions on a blockchain. Also, it provides you with more details like transaction growth and network hash rate. By understanding blockchain explorer, you can enhance your knowledge about blockchain definitions.
Block: A block contains the records of digital transactions. Once a block is written into the chain of records, it cannot be deleted or altered.
Block Reward: When miner solves the block successfully, they receive the reward as a block reward. Miner needs to add the first transaction on the block to claim the reward. The reward can also be shared with a group of miners based on the amount of work they have done.
Block Height: It represents the number of blocks linked together in the blockchain. For example, the height 0 is the first block that is also known as Genesis Block.
Block ciphers: A method of encrypting text in which algorithm and cryptographic key are applied to a data block at once as a group inspite of one bit at a time.
Central Ledger: The ledger, which is maintained by the central agency.
Chain linking: It is the process to connect two blockchains so that transactions between the chain could take place. Blockchain like bitcoin can communicate with other side chains by enabling the assets exchange between them.
Confirmation: It means the transactions occurred on the blockchain has been verified by the network. It happens through a process called mining in P-O-W system. When a transaction is confirmed, it cannot be double spent or reversed. As much as confirmations the transaction has, the harder it becomes to make a double spend attack.
Consensus Process: It is achieved when all the network participants agree on the validity of the transactions and ensure that ledgers are correctly copied with each other.
Cryptocurrency: A digital currency that is based on mathematics, where encryption techniques regulate the units of currency and verify the fund’s transfer. Also, cryptocurrencies are the representations of digital assets. Some of the popular cryptocurrencies are EOS, Bitcoin, NEO, Litecoin and Ethereum. Network stakeholders can buy or mine the cryptocurrency. Also, there are more ways to get hold of them including airdrop, staking or bounties.
Consortium Blockchain: It is a blockchain, where a pre-selected set of nodes handles consensus process. It is also called permissioned blockchain network that can be a hybrid model built between trusted entity model of private blockchains and low trust provided by the public blockchain. In this, the access to read the transactions can be public or restricted to the participants. Moreover, these types of blockchains may be referred to as “partially decentralized.”
Cryptoanalysis: The thesis of methods for understanding the meaning of the encrypted details, without accessing the secret details.
Cryptojacking: It is considered as a secret use of a device for mining cryptocurrency.
Cold Storage: Users can keep cryptocurrencies in the cold storage. It comes in three forms including QR code, USB drive or a hardware wallet.
dApp: It is an abbreviation for the “decentralized app.” Unlike a traditional application, it runs on the decentralized P2P network. For example, CryptoKitties is a famous cat breeding game. Also, it is an entirely open-source application, which operates autonomously and no entity can control the majority of its token.
A DAO: It stands for a decentralized autonomous organization that can be thought of as a corporation, which runs without involving human intervention under the control of a trusted set of business rules.
The DAO: Quite different from A DAO, it is a venture capital fund, built on the Ethereum and can cause a hard and soft fork.
Decryption: It is the process used to turn cipher-text into plain text.
Distributed Ledger: These types of databases are spread across various sites, institutions and countries. Records are stored across the network of decentralized nodes. Distributed Ledger doesn’t have its own currency and it can be either private or permissioned.
Digital Signature: It refers to the digital code, which is generated by public key encryption attached to an electronically transmitted document to check its content and the identity of the senders.
Double Spending: It occurs when some amount of money is spent twice.
Digital Commodity: It is an electronically transferrable, scarce, intangible with a market value.
Digital Identity: It is an online or networked identity that is claimed in cyberspace by a company, electronic device or individual.
DYOR: It is an abbreviation for “Do Your Own Research.” It is aimed at startups or entrepreneurs who are told to do their own research and didn’t rely on anyone else for their investment decisions. Since Cryptocurrency is a volatile platform, DYOR would be required whenever an investor decides to invest.
Difficulty: It refers to the difficulty level to verify blocks in the blockchain network in Proof-of-Work mining.
Encryption: It is the process to turn the plain-text into a data stream (cipher-text) that seems like a meaningless and random sequence of bits.
Ether (ETH): Ether is considered to be the native token of the Ethereum Blockchain. It is used to pay miner rewards and transaction fees on the network to execute the requested operations. Also, it acts as the fuel of the Ethereum ecosystem.
ERC20 Token Standard: It refers to the standard protocol, which is used in the Ethereum network to issue tokens. The “Ethereum Request for Comments” (ERC20) is used by ICOs to release the tokens and maintain the standards of trading assets. Also, dApps use the token to fuel its economy.
ERC721 Token Standard: It is a non-fungible Ethereum token standard. Non-fungible means that the token standard is used to present a unique digital asset, which cannot be interchanged.
ERC223 Token Standard: This is a token standard that has a focus on security and enables token transfers to act as ETH transactions, using event handling to prevent the loss of the tokens. Also, the standard is an improvement on the ERC20 critical bug.
Ethereum: It is an open source platform that can be used by the developers to develop and deploy decentralized apps. The blockchain based decentralized platform is aimed at resolving issues related to censorship, third-party involvement and fraud.
EVM: It stands for Ethereum Virtual Machine (EVM) that enables anyone to execute arbitrary EVM Byte Code. Every Ethereum node runs on the EVM to maintain consensus across the blockchain.
Exchange: It is a place where a user can purchase and sell cryptocurrency. It charges fees in various cases for withdrawals, deposits or transactions. Also, the exchange is a method to link fiat currency to a location where the user can buy cryptocurrency. Some popular centralized exchanges for cryptocurrency are Coinbase, Bittrex, Kraken and Quadriga while some are decentralized exchanges, which do not have a central authority.
Fiat: A currency that is declared by the government to meet the financial obligation like USD, EUR, CNY, JPY or INR. It means that Fiat is the only currency that can be used to buy, sell or trade goods.
Fork: It builds an alternative blockchain version by allowing two blocks to run simultaneously on different parts of the network. Forks generally happen in the crypto-world when new ‘governance rules’ are built into the blockchain’s code. It creates two parallel blockchains, where one among the two is the winning blockchain.
Genesis Block: The first block in the blockchain ledger refers to the Genesis Block. Also, the block is hardcoded so that no changes can be done once it is executed. Bitcoin’s first Genesis Block has 50 bitcoins.
Gas: It is the unit to measure computational effort required to make a transaction on the Ethereum network. Every operation that is taking place in Ethereum such as simple transaction, smart contract or ICO, it requires some amount of gas. It is used to calculate the fees amount that is required to be paid to the network to perform the operation.
Hyperledger: Linux foundations hosted the blockchain project known as Hyperledger. An open-source platform, Hyperledger aims to bring collaborative effort from the blockchain experts in the market for the enhancement of Blockchain technology. It comprises various systems and tools for developing open-source blockchains.
HashGraph: World’s first fast, secure and fair distributed ledger, Hedera Hashgraph can perform 500,000 transactions per second. It is a directed acyclic graph that has the properties of the DLT and doesn’t need Proof-Of-Work (POW) like Blockchain based platforms.
Hard Fork: It is a type of fork that makes previously invalid transactions valid and needs all users to upgrade their clients. On July 21, 2016, the Hardfork that happened in public blockchains was Ethereum Hardfork. It has changed the Ethereum protocol; thus a second blockchain emerged known as Ethereum Classic (ETC) that supports old protocols of Ethereum.
Hash: An alphanumeric string, Hash Value is a function that takes an input and output. It is used to do the confirmation of coins’ transactions on the blockchain.
Hot Wallet: A Hot Wallet refers to a cryptocurrency wallet which is connected to the internet.
ICO: It stands for Initial Coin offerings. It is a type of crowd fundings mechanism that is conducted on the blockchain. The core idea of an ICO is to fund new projects by pre-selling tokens to investors who are interested in the project.
Immutable: It refers to an inability to be changed or altered over time. Immutable data once added to the blockchain cannot be changed by any entity involved in the blockchain network.
Lightning Network: It is the best solution to Bitcoin’s inherent scalability issues. It enables payments fastly using Smart Contracts functionality. Also, it allows cross-blockchain payments if both users use the same cryptographic hash function.
Light Node: A computer on the blockchain network that verifies a finite number of transactions relevant to its dealings using SPV (simplified payment verification) mode.
Mining: Due to the cryptographic nature of cryptocurrencies, an enormous amount of computing power and specialized hardware would be required to verify the transactions. People who solve transactions get some cryptocurrency in exchange for computing power. The whole process is known as mining.
Multi-Signature (multisig): The addresses that enable several parties to need more than one key to authorize the transaction. These addresses have much higher resistance to theft.
Node: It refers to any computer, connecting to the blockchain network.
Non-Fungible Token: Special kind of cryptographic token that represents a unique digital asset, which is not interchangeable. It is in contrast to cryptocurrencies or utility tokens fungible in nature.
Oracle: It helps to communicate data with Smart Contracts by connecting the blockchain and real world. The Oracle searches and checks events and provides such details to the smart contract on the blockchain.
Off-Ledger Currency: It refers to the currency that is minted off-ledger and used on-ledger.
On-Ledger Currency: It refers to the currency, which is minted on-ledger and utilized like Bitcoin.
Peer-to-Peer: It refers to decentralized interactions held between two parties or more in a highly interconnected network. The participants involved in the peer-to-peer network can deal directly with each other via a single mediation point.
Participant: The person who is responsible for accessing the ledger, reading the records and adding them to the Blockchain.
Peer: Responsible for maintaining the integrity and identity of the ledger.
Private Currency: It refers to the currency that is secured against uninsured assets and issued by the private firm or institution.
Public Blockchain: Public Blockchain is an open network which allows anyone from the world to send or receive transactions.
Private Blockchain: Private Blockchain only allows authorized entities to send or receive transactions within the network. No one can write/read or audit the records stored on the private blockchain unless someone has permission to do.
Ripple: It is the payment method built on the distributed ledger, which can be used to transfer any cryptocurrency. It consists of gateways and payment nodes that are operated by authorities.
Ring Signature: It refers to the cryptographic technology that offers a good level of anonymization on the blockchain. These signatures make sure that individual transaction outputs on the blockchain cannot be detected.
Replicated Ledger: A ledger that has a one master copy of the data and multiple slave copies.
Scalability: A change in the scale for handling the demands of the network. It is referred to the ability of the blockchain’s project to manage future growth, network traffic and capacity.
Testnet: It is the second block chain used by developers for testing new versions of client software without putting a real value at risk.
Transaction Fee: All cryptocurrency transactions include a small amount of transaction fee.
Unpermissioned ledgers: It means that no one can own these ledgers like Bitcoin have no sole owner. It allows anyone to add data to the ledger and for everyone in ownership of the ledger to have identical copies.
Wallet: It is a file that contains a collection of private keys and communicates with the similar blockchain. Wallets hold keys, not coins. Also, it requires backups for security reasons.
Whisper: It is a part of the Ethereum P2P protocol suite, which allows for messaging between users via the blockchain network. Whisper’s main task is to provide a communication protocol between dApps.
XRP: It is the native cryptocurrency for the Ripple distributed ledger payment network that acts as a bridge currency to other currencies.
We at LeewayHertz, have in-depth of knowledge of the blockchain technology and understand all the fundamental blockchain terminologies and their significance. Contact us if you are looking for the Blockchain Development Team to build a Blockchain project.