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BLOCKCHAIN GLOSSARY

2FA (Two-factor Authentication)

A procedure that is meant to provide increased security of sensitive information in an age of increasing cybercrime. The security protocol calls for both a password and an additional piece of information, often something that is in the physical possession of the user such as a smartphone or credit card.

51% Attack

An attack on the blockchain that results in a group of miners controlling over 50% of the network’s mining hash rate. A term used mostly in reference to Proof of Work coins.

A

Accidental Fork

An accidental fork happens when two or more miners find a block almost simultaneously. One chain then becomes longer than the other, and the network eventually abandons the blocks that are not in the longer chain. These blocks are then classified as ‘orphaned blocks.’

Address

Cryptocurrency addresses are used to receive and send transactions on the network.

Agreement Ledger

An distributed ledger used by two or more parties to negotiate and reach an agreement.

Altcoin

Any cryptocurrency that exists as an alternative to bitcoin.

API (Application Programming Interface)

A software intermediary that helps two separate applications communicate with one another.

ASIC (Application Specific Integrated Circuit)

Often compared to GPUs, ASICs are specially made for cryptocurrency mining and may offer significant power savings.

Atomic Swaps

Atomic swaps involve cryptocurrencies across Blockchains that are tradeable with one another without needing an exchange in the middle.

Attestation Ledger

A distributed ledger providing a durable record of agreements, commitments, or statements, providing evidence (attestation) that these agreements, commitments, or statements were made.

B

bitcoin (lowercase)

Refers to the token/cryptocurrency.

Bitcoin (Uppercase)

The first, and most popular, cryptocurrency based off the decentralized ledger of a blockchain.

Block

A collection of transactions that have happened during a certain amount of time. The transactions are bundled in a block and added to the blockchain.

Block Ciphers

A method of encrypting text in which algorithm and cryptographic key are applied to a data block at once as a group instead of one bit at a time.

Block Explorer

An online tool for exploring the blockchain of a particular cryptocurrency, where you can watch and follow all the transactions happening on the blockchain. Block explorers can serve as blockchain analysis and provide information such as total network hash rate, coin supply, transaction growth, etc.

Block Halving

Bitcoin’s supply of new coins issued to miners is cut in half about every four years to keep it scarce. This 50% cut is known as the halving. The next halving will be around 2020.

Block Height

Refers to the total number of blocks on a given cryptocurrency blockchain. It starts with the first block, also known as the Genesis Block (Height 0) and counts up from there.

Block Reward

Payment made to the volunteers who offer their computers to facilitate transactions on a blockchain network. The payment can be a mix of new coins and transaction fees.

Block Size

Shows the file size of each block on a blockchain and therefore, how many transactions can be bundled and processed in each one. For Bitcoin, the current block size is 1MB.

Blockchain

A decentralized, unchangeable record of all transactions that have ever happened. It bundles transactions in order on blocks and stores them permanently.

Burning

Burning coins is the action of sending them to an address where they are irretrievable.

Byzantine Fault Tolerance

The ability of a network to properly reach consensus at any time, assuming that no more than 2/3 of its actors are malicious. Checkpointing is commonly used alongside to make data stored on the blockchain final.

C

Casper

Consensus algorithm that combines Proof of Work and Proof of Stake. Ethereum is going to use Casper as a transition to Proof of Stake.

CDN (Content Delivery Network)

Allows for a quick transfer of digital media needed to load internet content (HTML, JavaScript, CSS, etc.) by storing copies in data centers across continents.

Centralized Ledger

A record of transactions which is maintained by the central agency/party/person.

Chain Linking

The process of connecting two blockchains with each other, thus allowing transactions between the chains to take place.

Chaincode

A program that initializes and manages a ledgers state through submitted applications. It is the Hyperledger Fabric equal to Smart Contracts.

Cloud Mining

Classical cryptocurrency mining requires huge investments in hardware and electricity. Cloud mining companies aim to make mining accessible to everybody. People just can log in to a website and invest money in the company which already has mining datacenters.

Cold Storage (Cold Wallet)

The offline safekeeping of private keys which allow for access to cryptocurrency funds. Typically this is done through hardware wallets, USB drives, and paper wallets.

Composer CLI

Hyperledger Fabric command line allowing for administrative tasks.

Composer Rest Server

Generates a rest server and associated API from a deployed blockchain that makes accessing data on blockchain easier by generating REST API service.

Consensus

When a majority of participants of a network agree on the validity and order of a transaction inside the blockchain ledger.

Consensus Algorithm

The blockchain element that determines how consensus is reached on that blockchain. In other words; it is the part of the blockchain protocol that describes who gets to validate blocks of data (and thus is entitled to the reward) and how others can verify its legitimacy.

Consensus Point

A point – either in time, or defined in terms of a set number or volume of records to be added to the ledger – where peers meet to agree with the state of the ledger.

Consortium Blockchain

A blockchain where a pre-selected set of nodes handles the consensus process. It is also called a permissioned blockchain network that can be a hybrid model built between the trusted entity model of private blockchains and low trust provided by the public blockchain.

Cryptocurrency

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

Cryptographic Hash Function

A function that returns a unique big number that is commonly represented as fixed-length string. The returned string is unique for every unique input. Used to create a “digital ID” or “digital thumbprint” of an input data(bits).

Cryptography

The encryption and decryption of data. There are two main cryptographic concepts used in the blockchain – Hashing and Digital Signatures. In general, there are three forms of encryption that are widely used – symmetric cryptography, asymmetric cryptography, and hashing.

Cryptojacking

An unauthorized use of a device owned by others, to mine cryptocurrency. The first widely known attempt for cryptojacking was the torrent tracker Piratebay. They enabled an in-browser mining software, so when somebody visits the website, his/her computer will start mining cryptocurrency via the browser with no indication of it happening.

D

DAICO

A method for decentralized funding of projects. It combines ideas from Decentralized Autonomous Organizations (DAOs) and Initial Coin Offerings (ICOs). Project investors have the ability to vote and, if dissatisfied with the progress of the project, could get their money back.

DAO (Decentralised Autonomous Organization)

A corporation that runs without any human intervention and surrenders all forms of control to an incorruptible set of business rules.

Dapp

Applications that run without the control of a central authority (like a software company or government).

Darknet

A peer-to-peer layer of the Internet that can only be accessed with special software. It is known as Darknet because it often involves illegal marketplaces and illicit activity.

DDos Attacks

A denial-of-service attack is a cyber-attack in which the perpetrator seeks to make a machine or network resource unavailable to its intended users by temporarily or indefinitely disrupting services of a host connected to the Internet.

Decentralized Exchange

A peer-to-peer exchange that allows users to buy and sell cryptocurrency and other assets without the control or fees of a central authority.

Decentralized Organization

An organization that operates and coordinates work without the control of a central authority like person, company, or the government.

Decryption

The process used to turn cipher-text into plain text.

Delegated Proof of Stake (DPoS)

A delegated model where those with a stake don’t buy a lottery ticket to be able to create blocks, but they use them to vote and elect witnesses.

Design Goals

Refer to the first step in the Blockchain 3 layer model. They are a set of concepts or properties that you wish your smart contract to have. These include Distribution, Decentralization, Immutability, and Peer-to-Peer.

Digital Asset

Any text or media that is formatted into binary data.

Digital Currency

Paperless money that is stored on computers of Private/Public institutions to replace cash

Digital Identity

Anything used by friends or institutions to identify you online, such as email address/Twitter handle, etc. On the blockchain, when you sign something (with the private key), you are also proving your identity.

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.

Distributed

A system that is not controlled and cannot be changed by a central authority like a person, company, or the government

Distributed Ledger

A type of computer database that is stored on many private computers at the same time, instead of central company servers. A distributed ledger does not have to have its own currency and may be permissioned and private. Blockchains are also known as distributed ledgers.

Distributed Network

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

Double Spend

A problem in which somebody fraudulently sends digital money to two different receivers (even though they only have enough for one transaction).

E

Encryption

The process of turning the plain-text into a data stream (cipher-text).

Equity Tokens

A token that represents an ownership interest in a company. Equity tokens work similar to traditional stocks and may include voting rights.

ERC20 Token Standard

Stands for Ethereum Request for Comment followed by the assignment number. A technical standard for smart contracts the majority of Ethereum tokens follow.

ERC223 Token Standard

A token standard with a focus on security that allows token transfers to act as ETH transactions, using event handling (transaction management) to prevent lost tokens. This standard is an improvement on the ERC20 critical bug.

ERC721 Token Standard

A non-fungible Ethereum token standard. Non-fungible meaning that the token standard is used to represent a unique digital asset that is not interchangeable.

Ether

The digital currency of the Ethereum network.

Ethereum

A platform for creating and running smart contracts. These are programmable applications that run exactly as promised – without downtime, censorship, or interference.

EVM (Ethereum Virtual Machine)

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.

F

Fiat

A term used to describe traditional government-issued and backed currencies like dollars, euros, and yen. Not backed by physical commodities but by legal tender laws.

Fork

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

Fungible

Fungible means that a given good is identical (a.k.a., interchangeable). In crypto, we often talk about fungible or non-fungible tokens. A fungible token is Bitcoin. One Bitcoin is and will always be one Bitcoin, just like any other Bitcoin.

G

Gas

To run decentralized applications and smart contracts on the Ethereum network, apps calculate their usage using an internal pricing unit called Gas. Actual fees are then paid in Ether.

Genesis Block

The very first block of a blockchain.

H

Hard Fork

A type of fork that makes previously invalid transactions valid and needs all users to upgrade their clients.

Hardware Wallet

A physical storage device for private keys that uses special technologies to protect access to the keys so that they do not get misused.

Hash

A function that takes an input and outputs an alphanumeric string known as the “hash value” or “digital fingerprint.”

Hash Rate

The number of hashes that can be performed by a bitcoin miner in a given period of time (usually a second).

HashGraph

The 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 like blockchain-based platforms.

Hashing Functions

Transforms the input data into a hash value that is sent to the receiver as a digital fingerprint. The receiver uses the same hash function to generate the hash value and then compares it to that received with the message. If the hash values are the same, it is likely that the message was transmitted/stored without errors.

Hot Wallet

A cryptocurrency wallet which is connected to the internet and immediately available for transactions.

Hybrid PoS/PoW

A hybrid PoS/PoW allows for both Proof of Stake and Proof of Work as consensus distribution algorithms on the network.

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.

Hyperledger Composer

Blockchain Application Development framework which simplifies the blockchain application development on Hyperledger Fabric.

Hyperledger Fabric

Hyperledger project hosted by Linux which hosts smart contracts called chaincode.

I

Immutable

“Unable to be changed”. Data stored in a blockchain system is unable to be changed after it is written/solved (not even by administrators).

Initial Coin Offering (ICO)

A public, crowdfunded sale of cryptocurrency tokens to raise money for a project.

Initial Token Offering (ITO)

Initial Token Offerings are similar to ICOs (initial coin offerings), but different in that not every blockchain project that is tokenized has developed a new coin.

Intentional Fork

Helps to reverse and repair the damages related to hacking or a catastrophic bug on a blockchain.

IPFS

Distribution protocol that started as an open source project at Interplanetary Networks. The p2p method of storing and sharing hypermedia in a distributed file system aims to help applications run faster, safer, and more transparently. IPFS allows objects to be exchanged and interact without a single point of failure. IPFS creates trustless node interrelations.

J

K

Keccak-256

A type of cryptographic hashing function. Ethereum uses Keccak-256.

L

Ledger

An immutable store of records that can only be appended (added to). Blockchains use decentralized ledgers as their core technology.

Ledger Nano S

A popular hardware wallet, designed and sold by the French company Ledger Wallet.

Light Node

A computer on a blockchain network that only verifies a limited number of transactions relevant to its dealings, making use of the simplified payment verification (Bitcoin SPV) mode.

Lightning Network

A proposed feature extension to the Bitcoin’s Blockchain technology that’s designed to facilitate faster transactions and better scaling by off-chain agreements.

Linkable Ring Signatures

The property of linkability allows one to determine whether any two signatures have been produced by the same member (under the same private key). The identity of the signer is nevertheless preserved. One of the possible applications can be an offline e-cash system.

M

Masternode

A full node that keeps the full copy of the blockchain in real-time but has additional roles such as participating in governance and voting. On cryptocurrencies with masternodes such as DASH, they are a key component to the functioning of the blockchain network.

Merkle Root

The cryptographic hash of all hashes in a Merkle tree. In a blockchain, this is a merkle hash of all transaction hashes in the chain.

Merkle Tree

A system that splits complicated hash code functions into smaller chunks (creating a tree-like shape). This allows faster verification on large-scale blockchains.

Miner

An important participant in the blockchain network, who bundles transactions and gets paid in new coins and transaction fees in return for helping to run the system.

Mining

The process by which transactions get verified, bundled, and added to the blockchain.

Mining Pool

A group of people or organizations who come together to pool and share their computer resources for cryptocurrency mining.

Mining Reward

The payment resulting from volunteering computer resources to process cryptocurrency transactions.

Mining Rig

A computer setup that’s specially designed for mining a cryptocurrency.

Mist

Browser for installing and using Dapps.

MSP (Membership Service Provider)

A Hyperledger Fabric blockchain network can be governed by one or more MSPs.

Multi Signature (MultiSig)

Some cryptocurrency wallets and addresses are protected by multiple keys. Several people are required to approve (sign) transactions before they can take place.

N

Native Token

Multiple tokens can be secured on a blockchain, but normally only one token is used to rewards participants and miners on the networks and pay the transaction fees, this token is the Native token.

Node

A participant in a cryptocurrency network that provides a copy of the entire blockchain to the network. All miners host a node, but not all nodes have to mine cryptocurrency.

Non-Fungible Token (NFT)

A special type of cryptographic token that is a representation of a unique digital asset that is not interchangeable.

Nonce

A number only used once in a cryptographic communication (often includes a timestamp).

Nothing-at-Stake Problem

This is caused by validator nodes approving all transactions on old and new forks after a hard fork occurs.

O

Off-Ledger Currency

A currency that has no history recorded on a ledger of when it was minted, or how it has changed hands, but is later on represented as tokens on the blockchain, e.g., Fiat currency.

On-chain governance

A system for managing and implementing changes to a cryptocurrency blockchain.

OPcodes

A digital currency that is originally originated on the ledger, e.g., Bitcoin.

Open Source

Collaborative and open software development approach that encourages experimentation and sharing.

Oracle

An external data feed/source of info coming from outside the blockchain from the real world. Oracles work as a bridge between the real world and the blockchain by providing data to the smart contracts.

Orderer Network

A computer network that allows nodes to share resources.

P

Paper Wallet

A type of cold storage where private and public keys (and often a QR code) are printed or written on physical paper to prevent hacking and theft.

Peer-to-Peer (P2P)

A peer-to-peer network that distributes computing tasks among many, private computers (decentralized servers), instead of using company computers (centralized servers).

Permissioned Ledger

Similar to a ledger (see above) but designed with restrictions, so that only a select group of people or organizations have permission to access the full features.

PKI (Public Key Infrastructure)

A set of roles, policies, and procedures needed to create, manage, distribute, use, store, and revoke digital certificates and manage public-key encryption.

Plasma

The Lightning Network concept implemented on the Ethereum blockchain.

Private Blockchain

Only allows authorized entities to operate or participate within the network. E.g., just like a private road has access only for the authorized members.

Private Key

A string of letters and numbers that are used for sending cryptocurrency. The private key should be kept secret because it enables spending with the cryptocurrency wallet.

Proof of Authority (PoA)

A consensus mechanism in a private blockchain which essentially gives one entity (or a specific number of entities) with one particular private key the right to make all of the blocks in the blockchain. This is similar to root certificate authorities used in TLS/HTTPS.

Proof of Stake (PoS)

Miners still process and validate transactions, but do so by proving that they have ownership of a certain amount of the asset, rather than by performing energy-intensive computations.

Proof of Work (PoW)

Miners process transactions by using computers to solve complicated mathematical puzzles. They prove that they did this computational work by finding solutions to those puzzles.

Protocol

A set of rules that dictate how data is exchanged and transmitted.

Public Blockchain

A network on the global internet allowed to participate in all available transactions and participate in the consensus protocol to help determine who gets to add blocks on the chain and maintain the shared ledger. E.g., just like a public road has open access to anyone.

Public Key

A string of letters and numbers that are used to receive cryptocurrency. Works similar to a traditional bank account number and can be shared publicly with others.

Public Key Cryptography

A cryptographic system that uses both a private key and public key to safeguard transactions.

R

Raiden Network

An upcoming protocol change to the Ethereum blockchain that is designed to allow for high-speed transfers and better scaling. Similar to Bitcoin’s proposed Lightning Network.

RBF (Replace by Fee)

Refers to a method that allows a sender to replace a “stuck” or unconfirmed transaction with a new one that uses a higher fee. This is done to make sure a transaction confirms as quickly as possible. The “replacement” transaction uses the same inputs as the original one. This is not considered a double spend, as the receiving address(es) typically remain the same.

Ring Signature

A type of digital signature that can be performed by any member of a group (1-of-M). One of the security properties of a ring signature is that it should be computationally infeasible to determine which of the members’ keys was used to produce the signature.

Ripple

A real-time gross settlement system, currency exchange, and remittance network created by Ripple Labs Inc. Ripple is built upon a distributed open-source protocol and supports tokens representing fiat currency, cryptocurrency, commodities, or other units of value such as frequent flier miles or mobile minutes.

S

Satoshi Nakamoto

Bitcoin’s existence began with an academic paper written in 2008 by a developer under the name of Satoshi Nakamoto. Satoshi is the name used as the original inventor of Bitcoin.

Scalability

The ability of the blockchain project to manage future growth, network traffic, and capacity in anticipation of future demands.

Schnorr

Schnorr proposes to give users a new way to generate the private and public keys critical to cryptocurrencies. It replaces the Elliptic Curve technique currently used to generate keys with the Schnorr technique. This update increases both privacy and security by grouping together MultiSig and regular transactions in the same category, allowing the blockchain process to more transactions and hiding whether or not a transaction is MultiSig or not.

Segregated Witness (SegWit)

An important Bitcoin protocol that removes the signature information, otherwise known as the ‘witness information’ and storing it outside the base transaction block. It enables a greater number of transactions to fit within a block. It also makes the lightning network and better scripting possible.

SHA (Secure Hash Algorithm)

A family of cryptographic hash functions published by the National Institute of Standards and Technology (NIST) as a U.S. Federal Information Processing Standard (FIPS). A cryptographic hash function is special because it maintains certain desirable properties vs. a non-cryptographic hash function.

SHA 256

A very strong cryptographic standard that is used as the basis for Bitcoin’s and other Blockchains.

Sharding

A scaling solution for blockchain such that instead of every other node holding a full copy of the Blockchain data, they only own partial copies.

Sidechains

Emerging mechanisms that allow tokens and other digital assets from one blockchain to be securely used in a separate blockchain and then be moved back to the original blockchain if needed. Sidechain functionality holds tremendous potential to enhance the scalability of existing blockchains.

Silk Road

A now-defunct marketplace on the Darknet (see above) that was shut down by the FBI. It was best known for selling drugs and other illegal products and accepting Bitcoin as a form of payment.

Smart Contract

Self-running computer code that enforces a set of pre-set rules that later cannot be changed, therefore this is like a contract between two or more parties that is enforced digitally on the blockchain.

Soft Fork

A change to the rules of a blockchain protocol that are backward compatible with previous rules but creates a temporary divergence in the blockchain network.

Solidity

A computer programming language that is used to develop smart contracts and decentralized applications on the Ethereum platform and other blockchains.

State Channel

A mechanism that allows interactions to be conducted off the blockchain without significantly increasing the risk of any participant. Moving these interactions off of the chain without requiring any additional trust can lead to significant improvements in cost and speed. State channels work by locking part of the blockchain state so that a specific set of participants must completely agree with each other to update it.

T

Testnet

An alternative blockchain network that runs similar software, but is not meant for general use by the majority of the users. It is used to test new code and doesn’t transact any real money or value. Allows developers to experiment and learn.

Threshold Ring Signatures

Unlike standard “t-out-of-n” threshold signature, where t of n users should collaborate to decrypt a message, this variant of a ring signature requires t users to cooperate in the signing protocol. Namely, t parties (i1, i2, …, it) can compute a (t, n)-ring signature, σ, on a message, m, on input (m, Si1, Si2, …, Sit, P1, …, Pn).

Token

Refers to a unit of value on a blockchain system.

Tokenless Ledger

Refers to a distributed blockchain system that doesn’t require a native digital currency (or unit of value) to function and to pay for transactions.

Traceable Ring Signature

In addition to the previous scheme, the public key of the signer is revealed (if they issue more than one signatures under the same private key). An e-voting system can be implemented using this protocol.

Transaction Fee

Payment made to the volunteers who process transactions on a blockchain (miners).

Trustless

Blockchains are trustless because no participant needs to trust any other participant for transactions to work out. Trust comes from the system itself, which is impartial.

Turing Complete

Refers to the ability of smart contracts or scripts on a Blockchain to perform calculations and enforce complex rules that most general-purpose programmable computers are currently capable of. This means that the programming language should support (or emulate) features such a conditional branching and storing-data-in-memory in order to satisfy Turing’s concept of a complete machine. In the past, not all computers, even those that are programmable (e.g., Casio calculator) are Turing complete. Not all Blockchains have virtual machines that are Turing complete, even if they do support some form of scripting or smart contracts.

U

Unpermissioned Ledger

A ledger (see above) that doesn’t require the approval of a central authority to be used. It is not owned by anyone and open to participation. A good example is Bitcoin itself.

Utility Token

A token that grants owners access to useful products or services on the Blockchain, thus providing utility to its owners.

UTXO (Unspent Transaction Outputs)

Certain blockchain systems such as Bitcoin use the UTXO model. In this model, the Unspent Transaction Output describes some digital money that has been sent from one wallet address to another but has not yet been “spent” by the receiver (i.e., transferred from the receiver to somebody else). Therefore, the outputs of a blockchain transaction are represented as different unique notes/bills (e.g., $1 or $10 bill), and this helps prevent double-spending each UTXO or “digital note” is accounted separately by such a blockchain system.

V

Vanity Address

A cryptocurrency public address (see above) that includes custom letters and numbers that are human-readable. An example would look like 1r4523COINCOIN7u01174234kf.

W

Wallet

A digital wallet is where cryptocurrencies like Bitcoin are stored. More specifically, coins are actually stored in the blockchain itself – to which the wallet merely gives access.

Web Wallet

A type of cryptocurrency wallet that is online (hot storage).

Whitepaper

A formal, scientifically-written description of an idea or project. Whitepapers cover the theory and practical applications of cryptocurrencies, as well as many technical details.

Z

Zero Confirmation Transaction

Cryptocurrency transactions are confirmed at regular intervals. New transactions have zero confirmations, which means they have not been verified yet and are less reliable.

Zero Knowledge Proof

In cryptography, it enables one party to provide evidence that something happened to another party – all without revealing private details.

 

 

 

 

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