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The key terms and their definitions

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Blockchain Glossary

Address

A secure identifier marked by a unique string of characters that enables payments to an individual or entity via blockchain transactions. It usually requires a private key to exclusively access the funds. For example, Bitcoin addresses are alphanumeric strings that begin with a 1 or 3; Ethereum addresses begin with '0x'.


Altcoin

A cryptocurrency or a category of cryptocurrencies that are an alternative to bitcoin. Many altcoins project themselves as better alternatives to bitcoin in various ways (e.g. more efficient, less expensive, etc.).


ASIC

Short form for ‘Application Specific Integrated Circuit’. Often compared to GPUs, ASICs are specially made for mining and may offer significant power savings.


Bitcoin (BTC)

A type of cryptocurrency created by Satoshi Nakamoto in 2009. It was one of the first digital currencies that enabled instant P2P payments. Bitcoins are created through a process known as bitcoin mining that requires a massive amount of computing power.


Bitcoin Cash (BCH)

A type of cryptocurrency that was created in August 2017 and is essentially a clone of the Bitcoin blockchain but has increased block size capacity (from 1 MB to 8 MB) as a way to solve the scaling problem.


Block

Refers to a collection of data related to transactions that are bundled together with a predetermined size and are processed for transaction verification and eventually becomes part of a blockchain.


Blockchain

A decentralized, digital ledger where transactions made in Bitcoin or other cryptocurrencies are recorded chronologically and publicly. The block contains information that, once it goes into the blockchain, it becomes part of the permanent and immutable database, connecting to other blocks in the blockchain like the links in a chain.


Block Explorer

Block explorer is an online tool to view all transactions, past and current, on the blockchain. They provide useful information such as network hash rate and transaction growth.


Block Height

The number of blocks connected on the blockchain.


Block Reward

A form of incentive for the miner who successfully calculated the hash in a block during mining. Verification of transactions on the blockchain generates new coins in the process, and the miner is rewarded a portion of those.


Central Ledger

A ledger maintained by a central agency.


Confirmation

The successful act of hashing a transaction and adding it to the blockchain.


Consensus

Consensus is achieved when all participants of the network agree on the validity of the transactions, ensuring that the ledgers are exact copies of each other.


Cryptocurrency

A type of digital currency that is generally decentralized and uses cryptography (i.e. data is converted into a format that is unreadable for unauthorized users) for added security, making it difficult to counterfeit or manipulate.

Also known as tokens.


Cryptographic Hash Function

Cryptographic hashes produce a fixed-size and unique hash value from variable-size transaction input. The SHA-256 computational algorithm is an example of a cryptographic hash.


Dapp

A decentralized application (Dapp) is an application that is open source, operates autonomously, has its data stored on a blockchain, incentivized in the form of cryptographic tokens and operates on a protocol that shows proof of value.


DAO

Decentralized Autonomous Organizations can be thought of as corporations that run without any human intervention and surrender all forms of control to an incorruptible set of business rules.


Decentralized

A state where there is no central control, power or function, or in reference to infrastructure, no central point of failure.


Distributed Ledger

Distributed ledgers are ledgers in which data is stored across a network of decentralized nodes. A distributed ledger does not have to have its own currency and may be permissioned and private.


Distributed Network

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


Difficulty

This refers to how easily a data block of transaction information can be mined successfully.


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.


Double Spending

Double spending occurs when a sum of money is spent more than once.


ERC-20

A type of token standard for Ethereum which ensures the tokens perform in a predictable way. This allows the tokens to be easily exchangeable and able to work immediately with decentralized applications that also use the ERC-20 standard. Most tokens released through ICOs are compliant with the ERC-20 standard.


Ether (ETH)

A type of cryptocurrency that is used for operating the Ethereum platform and is used to pay for transaction fees and computational tasks. In the platform, transaction fees are measured based on the gas limit and gas price and ultimately paid for in Ether.


Ethereum

Ethereum is a blockchain-based decentralized platform for apps that run smart contracts, and is aimed at solving issues associated with censorship, fraud and third-party interference.


EVM

The Ethereum Virtual Machine (EVM) is 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.


Fiat money

Refers to currencies that have minimal or no intrinsic value themselves (i.e. they are not backed by commodities like gold or silver) but are defined as legal tender by the government, such as paper bills and coins.


Flipping

A type of investment strategy (popular in real estate investing) where you buy something with the goal of reselling for a profit later, usually in a short period of time. In the context of ICOs, flipping refers to the strategy of investing in tokens before they are listed on the exchanges and reselling them for a profit when they are trading in the secondary market.


Fork

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


Genesis Block

The first block of data that is processed and validated to form a new blockchain, often referred to as block 0 or block 1.


Hard Fork

A type of fork that renders previously invalid transactions valid, and vice versa. This type of fork requires all nodes and users to upgrade to the latest version of the protocol software.


Hash

The act of performing a hash function on the output data. This is used for confirming coin transactions.


Hash Rate

Measurement of performance for the mining rig is expressed in hashes per second.


HODL

A type of passive investment strategy where you hold an investment for a long period of time, regardless of market volatility. The term was made famous by a typo made in a bitcoin forum. Also referred to as 'buy and hold' or 'hold on for dear life'.


Hybrid PoS/PoW

A hybrid PoS/PoW allows for both Proof of Stake and Proof of Work as consensus distribution algorithms on the network. In this method, a balance between miners and voters (holders) may be achieved, creating a system of community-based governance by both insiders (holders) and outsiders (miners).


Initial coin offering (ICO)

An unregulated means by which a cryptocurrency venture, typically early stage, can raise money from supporters by issuing tokens. It is often referred to as a crowdsale as ICO participants may potentially earn a return on their investments (as opposed to crowdfunding, where supporters donate money to a project or cause).


Lightning Network

A low latency, off chain P2P system for making micropayments of cryptocurrencies. It offers features such as instant payments, scalability, low cost and cross-chain functionality. Participants do not have to make individual transactions public on the blockchain and security is enforced by smart contracts.


Litecoin (LTC)

A type of cryptocurrency that was created by former Google employee Charlie Lee in 2011. It offers features such as Segregated Witness and the Lightning Network which allows for faster processing at lower cost.


Market capitalization (market cap)

The market value of a company, market or sector at a point in time commonly used to rank relative size. In equities, it refers to the total market value of a company's outstanding shares. In cryptocurrency investing, it refers to either price multiplied by the circulating supply (i.e. free float market cap) or price multiplied by the total supply (i.e. fully diluted market cap).


Mining

A process where transactions are verified and added to a blockchain. It is also the process where new bitcoins or certain altcoins are created. In theory, anyone with the necessary hardware and access to the internet can be a miner and earn income, but the cost of industrial hardware and electricity has limited mining for bitcoins and certain altcoins today to large-scale operations.


Multi-Signature

Multi-signature addresses provide an added layer of security by requiring more than one key to authorize a transaction.


Node

A copy of the ledger operated by a participant of the blockchain network.


Oracles

Oracles work as a bridge between the real world and the blockchain by providing data to the smart contracts.


Peer to Peer

Peer to Peer (P2P) refers to the decentralized interactions between two parties or more in a highly-interconnected network. Participants of a P2P network deal directly with each other through a single mediation point.


Public Address

A public address is the cryptographic hash of a public key. They act as email addresses that can be published anywhere, unlike private keys.


Private Key

A private key is a string of data that allows you to access the tokens in a specific wallet. They act as passwords that are kept hidden from anyone but the owner of the address.


Proof of Stake (PoS)

An algorithm that rewards participants that solves difficult cryptographic puzzles to achieve distributed consensus. Unlike proof of work or PoW, a person can validate transactions and create new blocks based on their individual wealth (i.e. stake) such as the total number of coins owned. One of the key advantages that PoS has over PoW is lower energy consumption.


Proof of Work (PoW)

An algorithm that rewards the first person that solves a computational problem (i.e. mining) to achieve distributed consensus. Miners compete to solve difficult cryptographic puzzles in order to add the next block on the blockchain. It prevents spam and cyber-attacks such as DDoS as it requires work (i.e. processing time) from the service requester.


Scrypt

Scrypt is a type of cryptographic algorithm and is used by Litecoin. Compared to SHA256, this is quicker as it does not use up as much processing time.


Segregated Witness (SegWit)

The process where the block size limit on a blockchain is increased by removing digital signature data and moving it to the end of a transaction to free up capacity. Transactions are essentially split (or 'segregated'), into two segments: the original data segment and the signature (or 'witness') segment.


SHA-256

SHA-256 is a cryptographic algorithm used by cryptocurrencies such as Bitcoin. However, it uses a lot of computing power and processing time, forcing miners to form mining pools to capture gains.


Smart Contracts

An automated mechanism involving two or more parties where digital assets are put in and redistributed at a later date based on some preset formula and triggering event. The contract can run as programmed without any downtime, censorship, fraud or third-party interference.

Smart contracts encode in a programmable language onto the blockchain and are enforced by the participants of the network.


Soft Fork

A soft fork differs from a hard fork in that only previously valid transactions are made invalid. Since old nodes recognize the new blocks as valid, a soft fork is essentially backward-compatible. This type of fork requires most miners upgrading in order to enforce, while a hard fork requires all nodes to agree on the new version.


Solidity

Solidity is Ethereum’s programming language for developing smart contracts.


Testnet

A test blockchain used by developers to prevent expending assets on the main chain.


Token

Crypto tokens enable the creation of open, decentralized networks, and provides a way to incentivize participants in the network (with both network growth and token appreciation). This innovation, made popular with the introduction of Ethereum, has given rise to a wave of token networks (e.g. prediction markets, content creation networks, etc.) and token pre-sales, or ICOs.


Total supply

The total number of coins or tokens that are in existence, including those circulating in the public market and those that are locked or reserved.


Transaction Block

A collection of transactions gathered into a block that can then be hashed and added to the blockchain.


Transaction Fee

All cryptocurrency transactions involve a small transaction fee. These transaction fees add up to account for the block reward that a miner receives when he successfully processes a block.


Turing Complete

Turing complete refers to the ability of a machine to perform calculations that any other programmable computer is capable of. An example of this is the Ethereum Virtual Machine (EVM).


Wallet

A file that houses private keys. It usually contains a software client which allows access to view and create transactions on a specific blockchain that the wallet is designed for.

There are 4 different types of wallets: Software Wallets, Online Wallets, Paper Wallets, Hardware Wallets.


Whitepaper

An informational document that generally informs readers on the philosophy, objectives and technology of a project or initiative. Whitepapers are often provided before the launch of a new coin or token.

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