Blockchain Glossary

Blockchain is a challenging topic, especially for newbies in the industry, since it tends to have complex technical terms. Just like the internet in its beginnings, this technology can be hard-to-explain and let alone grasp.


Hence, despite the good will to dive in this world, getting familiar with its terminology seems to be a ‘must’. So first things first! Here is a list of the most commonly used words which are most likely to construct the path down to your domain knowledge.

101: Blockchain Terminology

We say to you:

“Don’t be afraid to ask!”

51%

  • Else known as Majority Attack – the event happening when one group of miners is controlling more than half of the network power posing a threat to the integrity of the blockchain.

A

Address

  • Unique string of text that is utilized to recognize who sends and receives in cryptocurrency exchange

Airdrop

  • Distribution of token assets to the public, particularly regarding blockchain’s ICOs, either as a reward for positive activity or for no incentive at all Algorithm

Algorithm

  • The process of clear instructions to be followed for problem-solving purposes

All-Time High

  • The highest level a digital money or equity has reached

Altcoin

  • Any alternatives to Bitcoin such as Ethereum

API(Application programming interface)

  • A set of keys and functions that a program or application uses to communicate with another (i.e exchange) in order to have access to its features

Arbitrage

  • The process of taking advantage in different markets through buying and selling of the same asset over specific period of time

ASIC

  • Integrated circuit chip which intends and dedicates to one specific purpose

ASIC-resistant

  • A cryptocurrency that is mining-resistant towards dedicated (ASIC) machines

Asynchronous

  • Occasions that don’t occur simultaneously and do not dependent on the principle program flow.

Atomic Swap

  • Smart contracts that make sure users exchange the cryptocurrencies without the need of using centralized exchange.

B

Bitcoin

  • Digital currency, firstly depicted as a “Peer-to-Peer e-cash”

Bitcoin Core

  • The execution of the product that allows people to use the Bitcoin network

Block explorer

  • 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.

Block Height

  • The quantity of blocks in the chain among itself and the block 0 on that blockchain

Block Reward

  • The entirety of coins granted by the blockchain protocol to digital money miners for each approved block.

Blockchain

  • A distributed ledger technology (DLT) that contains nodes/blocks with sequential recordings of the exchange data on the cryptocurrency using a consensus to agree on the value

Bounty

  • An incentive posted in order to boost a particular activity, conduct or advancement.

C

Cryptocurrency

  • A virtual/digital currency verified by cryptography in order to be distributed, exchanged and traded in a Peer-to-Peer network

Cryptocurrency Fork

  • The process of creating another adaptation of the blockchain from its current accessible version

Cryptography

  • The study of utilizing numerical hypotheses and calculation so as to encrypt and decrypt data

Cypher

  • A method used in encryption and decryption of values, which can be done either asymmetrically or symmetrically depending on the key type

D

DApp

  • Applications that run in decentralized networks and are not controlled  by a solitary entity

DAO

  • Decentralized Autonomous Organization – system made popular due to Ethereum, that states hard-coded rules or decentralized organizations but has vulnerabilities that can’t be rolled back

DEX

  • Decentralized Exchange – exchange systems where people can access trading legitimately from their wallets without having to store or hold their assets initially

Decryption

  • The process of turning indiscernible information into coherent information

Difficulty

  • It refers to the difficulty level to verify blocks in the blockchain network in Proof-of-Work mining.

Distributed ledger

  • Ledgers that hold data across the blockchain without the need to contain its own currency

Distributed Network

  • Instruction and Decision-making mechanisms do not execute on one single entity, but instead are distributed over blocks (nodes).

Digital Signature

  • An identifier code that derives from encrypting public key and goes along with the verification document of the sender.

E

Encryption

  • The process of turning coherent information into indiscernible information for security reasons related to unauthorized availability to the data.

ERC-20

  • The standard protocol that refers to the tokens issuing on Ethereum.

ETC

  • Ethereum Classic – a hard fork of the original Ethereum blockchain that happened right after the DAO hack

Ethereum

  • Platform technology that, unlike Bitcoin, enables the developing and functioning of  blockchain-based applications by running smart contracts

Ethereum Gas

  • The basic unit of the network effort to go through with the exchange data on Ethereum

F

Federated Blockchain

  • Else known as Consortium blockchain – a partly private system that consists of a user group with controlled access and that can function across different companies

Fiat

  • Money that is formally authorized by a government

FOMO

  • Fear of missing out – When the user makes a decision based on fearful perception he/she may have on the going opportunity of making profit when crypto coin price rises, i.e Bitcoin price increase.

FUD

  • Fear, Uncertainty and Doubt – In relation with the cryptocurrency’s whole concept, i.e Bitcoin’s FUD on being a bubble.

Full Node

  • A machine that does the complete implementation of the protocols of the blockchain and makes sure the transactions and blocks that go through it are validated.

G

Gas

  • The mechanism that Ethereum has implemented for calculating the pricing and fees of smart contract operations and transactions.

Gas Limit

  • The highest level a user is willing to pay for a transaction’s or smart contract’s fee.

Genesis Block

  • The initiating block on a specific blockchain, else known as Block 0 or 1

Github

  • A web-based version-control and collaboration platform/repository for software developers to store the code they own or an open source one.

H

Halving

  • The predetermined process of a block reward of a crypto asset decreasing by 50% with the purpose to reach a finite supply of this specific asset.

Hash

  • A function that aims to produce a new mapped version of data inputted.

Hash Rate

  • The speed at which a machine can calculate new hashes (hashes/second)

HD wallet

  • An HD Wallet, or Hierarchical Deterministic wallet, is a digital wallet that automatically generates a hierarchical tree-like structure of private/public addresses (or keys), thereby addressing the problem of the user having to generate them on their own.

HTLC

  • Hashed TimeLock Contract – a feature that creates smart contracts in cryptocurrency which can edit its channels by implementing time-bound transaction and eliminating risk.

HFT

  • High-Frequency Trading – type of algorithmic trading that enables the execution of a large number of orders in a very short period of time.

HODL

  • Hold on for Dear Life – hold on to the ownership of the asset and not sell

I

ICO

  • Initial Coin Offering – The stage at which the new digital coin assets are offered and sold to investors

IEO

  • Initial Exchange Offering – The stage at which a credible intermediary is put between the coin offering team and the user in order to facilitate and reduce risky purchases

IPO

  • Initial Public Offering – The stage at which the private companies’ shares are offered and sold to the public for the first time

Integrated Circuit

  • A chip that consists of transistor, resistors or capacitors that is used for different functions such as for computer memory or microprocessor.

Interoperability

  • The process of validating the compatibility of blockchains which allows for further usage of their features

J

K

KYC(Know your customer)

  • A process in which a business must verify the identity and background information (address, financials, etc) of their customers.

L

Latency

  • Time taking from the submission of the transaction until the confirmation of its acceptance to the  blockchain

Ledger

  • Physical or digital file where transactions are tracked and recorded

Legacy Wallet

  • The original BTC locations which are supported by all wallets for transactions.

Lightning Network

  • The layer 2 payment protocol that executes on top of the blockchain-based cryptos that enables speed increase in transactions within nodes and aims to solve scalability problem.

M

Mainnet

  • A blockchain protocol that offers users the possibility to send and receive digital assets. Unlike Testnet, Mainnet is fully developed and deployed for the end-user.

Mainnet Swap

  • Migrating coin from one blockchain network to another by replacing it with a new digital asset.

Maker 

  • A user that is placing an order  which doesn’t not get traded right away and as such it is maintained in the order book.

Malware

  • A program or application that operates with the intention to produce threat to a computer system.

Merged Mining

  • The process of merging two or more mining processes without putting the overall performance at risk.

Merkle Tree

  • A type of data structure that contains hash functions and that facilitates the organization and structuring when dealing with lots of data

Miner

  • An actor in blockchain technology which is capable of creating new predetermined number of blocks or by competing to add to the network.

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.

N

Node

  • A unit of the blockchain that enables communication between other units for security and integrity purposes

NEO

  • A decentralized blockchain platform that is open-source and that creates efficient dApps through smart contracts 2.0

NFT

  • Non-fungible token – A token that the user can’t substitute and is useful for unique asset representation.

O

Off-chain

  • Transaction that is not happening on a blockchain for cost and speed facilitation

P

Paper wallet

  • A physical print of the digital asset’s address with the private keys in accordance

Peer to Peer

  • Instruction and Decision-making mechanisms do not execute on one computer, but the workload is instead shared with the participating computers

Progressive Web application

  • A web-app developed using modern technologies and that meets certain web standards

PoS

  • Proof-of-Stake – an algorithm that doesn’t need a lot of powering energy, where the more digital assets are staked, the higher is the probability that the block will be picked for deciding on the consensus

PoW

  • Proof of Work – an algorithm where work is considered to be the activity done in mining which determines the amounts of reward the miner receives

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.

Private key

  • The text string that is used for enabling security in a block chain by going through encryption and decryption processes and additionally for having wallets and transactions accessible on the blockchain

Public blockchain

  • Public Blockchain is an open network which allows anyone from the world to send or receive transactions.

Q

Quantum Computing 

  • The study where data encoding is done not in the traditional bits but into bits that can represent a one, a zero, or some combination

R

Routing attack

  • The process of posing threat in an ISP level in order to affect blockchain

S

Satoshi

  • Smallest unit in Bitcoin named after Satoshi Nakamoto, the creator

Security Token 

  • A device which is used to grant access to a restricted resource and are given to investors after participating in an ICO

Segregated Witness (SegWit)

  • A process that enables a higher number of transactions to be part of a block by separating them from coin bitcoin transactions

SegWit Wallets

  • Segregated Witness Wallets – service that is executed on Bitcoin blockchain and is concerned on separating particular transaction signature information and it can either be nested or native.

Smart Contracts

  • Non-physical contracts that programmatically state business conditions, which are derived from the participants, into the network

Stablecoin

  • A digital asset that is intended to keep its stable value and not go through changes

State Channel

  • An interaction channel between two participants, either users or blocks, on a network

Solidity

  • A programming language used in the Ethereum blockchain for smart contract creation

T

Testnet

  • A type of software used by cryptocurrency with the sole purpose of testing changes while not affecting the overall functioning of the main blockchain

Ticker

  • The short version name of the coin on the trading platform (i.e BNB)

Token sale

  • Else known as ICO – Issuance of tokens and then selling them to another digital asset

Transaction ID (TXID)

  • Else known as Transaction has – The users use it to recognize and reference transactions in the network.

Transaction Per second (TPS)

  • The quantity of transactions that the processing power of a blockchain can operate each second

Turing complete

  • A system that represents the automation of solving any kind of problem given enough resources

U

User interface

  • The establishment of the interaction ways between a machine and a user

Utility token

  • Token aimed for accessing a specific product and that are also used in the ICOs processes

UTXO

  • Unspent Transaction Output – abstract chain ownership that takes care for starting and finalizing each transaction. 

V

Vladimir Club

  • The concept of being a member as longs as the user has 1/10,000th of all the mined Bitcoin

W

Wallet

  • The software, hardware or paper location where a user can keep private keys, and that he uses for sending and receiving cryptocurrencies.

Weak Subjectivity

  • The necessity of particular node to rely on the other nodes when defining the current state of the system. It is a prerequisite on PoS.

Wei

  • The smallest denomination of ether, the digital coin on the Ethereum blockchain.

Whale

  • Entities that own a high number of digital currencies

Wrapped Ether

  • ERC-20 token – Shows Ether at 1:1 ratio and enables users to trade it with ETH.

X

xPub

  • Extended public Key – key containing information on public keys in cryptocurrencies’ transactions which permits complete read-only view to a particular wallet regarding locations, transactions and balances compatible with Legacy wallets

Y

yPub

  • Key containing information on public keys in cryptocurrencies’ transactions which permits complete read-only view to a particular wallet regarding locations, transactions and balances, compatible with Nested SegWit Wallets

Z

Zero-Knowledge Proofs

  • Technology used to verify transactions happening on blockchain without posing threat to the privacy of the wallets or the data which is being exchanged
Blockchain API
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