The Blockchain concept is easy to understand as an every day person. Once you get into the details and in-depth analysis of the technology its not so easy for some. The Blockchain terms below are designed to give you a bit more information on the common words used when talking about the Blockchain technology.We hope it helps you understand more and get into the exciting world of Blockchain!
When someone or a group of people are in control of or can hack 51% (majority) of the blockchain network. They can take control of the blockchain.It involves being able to cause forks, and preventing the confirmation of new transactions.
The address is where you send or receive cryptocurrency to. It’s usually linked to a wallet where you store your cryptocurrency. The address is basically an identifier of strings of alphanumeric characters, usually representing the public key belonging to an asymmetric key pair.
Airdrop is mainly a marketing strategy to give free tokens to existing holders of a cryptocurrency like Bitcoin or Ethereum. Its mainly done by start-ups to generate excitement about their crypto token in the crypto community. Users who want the free tokens are usually asked to give some basic information so they can used for promotional/lead generating material.
After Bitcoin which was the first cryptocurrency, so many other cryptocurrencies which have similarities with bitcoin have been created, as alternative coins to Bitcoin. The word “Altcoins” is simply a blending of the words “alternative to Bitcoins”.
Abbreviation for Application-Specific Integrated Circuit, they are chips created for specific purposes of solving mathematical calculations quickly. In the crypto world, ASICs are created specifically to solve algorithmic blocks. In other words ASIC machines are used for mining cryptocurrencies.
The encryption for each block in a blockchain. It is a security feature, like a text encryption method that involves the combination of a deterministic algorithm and a symmetric key, which gets applied or sent to a block (data) at one go, and as a whole. However, no two identical blocks get the same encryption.
This can be likened to your web browser, but in this case, the blockchain is the web. The block explorer allows you view information about blocks, transactions and addresses, coin transfer histories, block statistics etc.
A consensus in cryptocurrency is said to be reached when a given transaction is verified by multiple, unconnected number of computers over the decentralized network. When these computers reach the same conclusion over the validity of the transaction, it is then added to the blockchain.
Cryptojacking describes the process where someone gains unauthorized access to your computer, and secretly uses your computer for mining cryptocurrency.This could be in the form of Browser plugins which in the background use your computer’s processing power to mine coins.
DApp or decentralized application is any blockchain based application. They run on P2P network of computers, and exist such that no single entity controls the system. Ethereum’s smart contracts mean its technology gets used a lot for dApps.
A Distributed ledger simply refers to the feature of the blockchain technology where the whole roaster of transaction is replicated and distributed over the whole network. Every computer connected to the blockchain ha the exact copy of the record of all transactions making it impossible for anyone to tamper with the ledger.
ERC 20 token standard
It is used for Ethereum smart contracts, the standard states a list of rules applicable to every ERC20 token, and it is by this standard interaction is made possible between the tokes and others on the network.
This is an open source decentralized blockchain-based operating system and distributed computing platform and has functionality based on smart contracts. With Ethereum, developers can also create decentralized apps (DApps).
A Fork is a divergence in a blockchain system, resulting in two different branches. It can occur when a software’s structure is changed, or when there is a change in the consensus algorithm (like a 51% attack). Forks are divided into Hard Fork and Soft Fork.
This is the name given to a special Ethereum-based unit which measures how much effort is involved in the performance of an action or actions. Hence, every Ethereum-based operation performed by a contract or transaction costs gas.
Halving is simply the process where rewards for mining get reduced after a certain number of mined blocks.For example, for Bitcointhe total number of coins that will ever be is 21 million. To make the release of coins slower as time goes on, the hash solving mining process is made more complex for the miners. This means the number of bitcoins generated per block is decreased 50% which on average takes 4 years.The final halving should take place in the year 2140.
A hard fork is the splitting or permanent divergence of a blockchain from the original. The two branches are now incompatible and the networks are now two distinct blockchains. For example, when Bitcoin Cash split from Bitcoin to increase its block size. When Ethereum split into Ethereum and Ethereum Classic. Simply put, it is the permanent splitting of a cryptocurrency into two.
Master nodes are servers on a network with a decentralized attribute. They are used to execute special functions which ordinary nodes cannot. Special functions like private transactions, instant transactions or direct send functions.They are features of some cryptocurrencies like Dash.
Mining is simply the process through which any cryptocurrency is created, through the deployment of computers ( sometimes with specialized hardware like ASICs) to solve large amounts of mathematical algorithms, with the reward being the cryptocurrency itself at the end of the process.
A private key is an algorithmic variable for the encryption and decryption of texts, it allows users have access to their cryptocurrencies. Private keys are an important part of symmetric and asymmetric cryptography.It is important you keep your Private Key secure and private or it can be used to transfer your coins.
Proof of Authority
Proof Of Authority (PoA) means not all nodes are the same in verifying transactions. There are special nodes or approved accounts called Validators that have special software running on them that allows them to put transactions in a block. Normally PoAs are used for setting up private chains when you need more control of who can approve transactions and leave the other nodes to carry out other computational work and not continually in the process of solving complex mathematical problems.
Proof of Stake
This is where the miner of a block is per-selected, possibly by the the number of coins owned/held by the miner rather than just its computational power. This shows some faith in the miner as it already has a good reputation for mining. In most cases this invariably means that the more coins miners have, the more mining power they get. In Proof of Work (below) a bunch of miners compete to be the first to solve the complex algorithms which is quite inefficient as the miners use computational power and energy only to have it wasted as they lose out to another miner.
Proof of Work
Proof of Work is the process through which the transactions of Bitcoin and other similar cryptocurrencies are mined. Its the solving of complex mathematical algorithms. The more computational power you have the faster you can solve the algorithms. Many miners compete to be the first one to solve the algorithms.
This is short for Segregated Witness, which is an upgraded protocol that affects the storage of data. This process involves increasing the block size limit on a blockchain by taking off signature data from Bitcoin transactions.
SHA is an abbreviation for Secure Hash Algorithm. This is a cryptographic hash algorithm that generates a text signature of 256-bits, it does the job of taking an input data of a random size, and the output comes out fixed.
This is an unalterable agreement related to contracts in the real world and stored on the blockchain. The smart contracts are triggered when certain conditions are met. This is a big feature of the Ethereum platform.
A soft fork describes a change in the software protocol, when new rules are implemented in a blockchain. You can see a soft fork as an upgrade to the system. Soft forks are backward compatible and unlike hard forks don’t result in separate blockchains.
A Token is a unique digital asset with which a anyone uses to gain access to a certain digital ecosystem, be it cryptocurrency, or other blockchain services. The Token serves as the key or sort of digital money that allows someone to buy certain services of a given blockchain platform.
The list is not comprehensive so we always welcome any Blockchain Terms suggestions you have.