The aim of this piece is to help you understand the A to Z terms used for reading cryptocurrency charts. In short, we will break down blockchain terms for you, from the most common ones, all the way to the programming language used to create smart contracts.
Blockchain Glossary: A – Z
- 51% Attack – Basically, this happens when a group of nodes controls more than half of the network’s computing capacity. The danger of this attack is that the group or individual may decide to harm the network.
- Address – Cryptocurrency address, or also “addy,” is a unique string of characters used to distinguish a node. Addresses are used to send and receive coins on the network.
- ASIC – This acronym represents Application Specific Integrated Circuit. ASIC is a specially designed mining tool so that it has an energy-saving advantage.
- Bitcoin – Bitcoin is the first decentralized cryptocurrency that is built on a peer-to-peer, trustless network. In addition, it has no central authority to control the users.
- Block – A block is data packets that hold immutable records of activities that took place on the network.
- Blockchain – A blockchain is a distributed ledger that holds a record of transactions which took place in the network. It serves as the holder of immutable records of all the transactions. It also holds all the transactions from the first day the block was mined.
- Block explorer – A block explorer is a web tool that is used for viewing transactions within the blockchain. A block explorer determines transaction growth and hash rate.
- Block height – This is the total number of blocks that are connected to a given blockchain.
- Block reward – Block reward is the incentive a miner gets for successfully solving the hash in a given blockchain. When a miner verifies a transaction, the node is rewarded.
- Central ledger – This is a ledger that is maintained by a central authority.
- Confirmation – This is the successful act of verifying a propagated transaction and its addition to the blockchain.
- Consensus – A consensus is reached when all the connected nodes agree to validate a transaction. It also ensures that the transaction is unique (devoid of double spending).
- Cryptocurrency – Cryptocurrency/token/virtual currency/digital currency/internet currency/coin is a representation of digital assets.
- Cryptographic hash function – Cryptographic hashes produce a hash value that is unique and fixed from transaction input. A typical cryptographic hash is SHA-256 computational algorithm.
- Dapp – Dapp or also DApp means decentralized applications. Dapp is an open-source application whose data is stored in the blockchain. Dapps function like normal websites that allow users to access records stored in the blockchain.
- DAO – Decentralized Autonomous Organization is a business entity that runs without human control. It is guided by a set of business rules with which every member complies.
- Distributed ledger – Distributed ledger is a ledger that holds the data shared among all the nodes connected to the network.
- Difficulty – Difficulty defines how easy a block of a transaction can be mined.
- Digital signature – Digital signature is a code that is randomly generated by a public key. Also, it gets attached to an electronic document with a sender’s identity and the entire content verified by the system.
- Double spending – Double spending occurs when a user manipulates the network, thereby sending coins more than once.
- Ethereum – Ethereum is a blockchain-based decentralized platform that enables developers to build apps on it. Also, it works with the aid of smart contracts.
- Ethereum Virtual Machine – Ethereum Virtual Machine is a computer that allows a user to execute bytecode. Every node connected to the Ethereum network runs on the bytecode to enable it to maintain a network consensus.
- Fork – Fork is the name given to an upgrade of an existing blockchain. When forks are created, they run simultaneously on the network.
- Hard fork – A hard fork is a fork type that makes existing blockchain invalid. When it happens, users are expected to upgrade to the latest version.
- Hash – The process of converting an input string of any length to an output.
- Hash Rate – This is the measurement for the mining capacity of rigs. It is expressed in hashes per second.
- Hybrid PoW/PoS –This allows both Proof of Work and Proof of Stake as the consensus protocol in a network.
- Mining – This is the process of validating a block of transactions in the network. When miners validate transactions, there is a system reward for them.
- Multi-signature – Multi-signature addresses increase the security of the transaction by demanding that more than one key is required to authorize transactions.
- Node – A computer or any other device connected to the blockchain network.
- Oracles – Oracles act as the necessary intermediary between the blockchain and the real world by supplying data to the smart contracts.
- Peer to peer (P2P) – This is the decentralized connection that exists between two persons/nodes in a blockchain network.
- Public Address – This is public key’s cryptographic hash.
- Public Key – A public address is an alphanumeric character that represents the destination of a wallet.
- Proof of Stake – A consensus algorithm that rewards system participants based on the number of coins they are willing to contribute.
- Proof of Work – A consensus protocol that rewards miners in the network based on the amount of work they have put in.
- Scrypt – This is a cryptographic algorithm used in Litecoin. When compared with SHA-256, it is faster.
- SHA-256 – This is a cryptographic algorithm used in Bitcoin.
- Smart contracts – These encode a set of business rules in a programming language that is executed by network participants.
- Soft fork – A soft fork is quite different from a hard fork because only previously valid blocks are rendered invalid. Here, only the miners are required to upgrade to the new system.
- Solidity – This is a contact-oriented programming language used to develop Ethereum smart contracts.
- Testnet – A test blockchain that developers use for testing.
- Transaction block – A collection of transactions in one block.
- Transaction fee – An amount in cryptocurrency that a user of a given service is required to pay.
- Turing Complete – This is the capacity of a machine to solve a problem using calculations just like other programmable machines.
- Wallet – A digital file used to save private keys.
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