Many people use blockchain terms to mention different things. In fact, beginners but also enthusiasts use these terms often inappropriately. Blockchain terminology can be a feat to figure out if you’re a beginner. This blockchain vocabulary will help you to learn blockchain. In case you want to implement a DLT application you should also read about combining blockchain and machine learning. To get you started, below you can find a basic terminology for blockchain- and crypto-related terms. Especially if you’re trying to understand crypto-economics or certain technical elements you may consider blockchain as complex in nature. Here is our comprehensive list of commonly used blockchain terms to help you understand how this technology works.
Essential Blockchain Terminology
A 51% attack is a potential hacker attack on a blockchain network, where a single entity or organization can control the majority of the mining hash rate, or computer power.
A wallet address is needed to send and receive transactions on a blockchain network. It is an alphanumeric string. It can also be represented as a scannable QR code.
Airdrop is a distributed method to send tokens or cryptocurrencies to a wallet address. Airdrops are also used for marketing purposes. For a simple task like sharing, referrals, or app downloads advertisers pay affiliates with Airdrops.
Air-gapping is a method for securing computers. It’s a disconnected network and a security measure. The device does not connect to the internet or to any other open network.
Altcoin (or alternative Coin) refers to any alternative cryptocurrency to Bitcoin. While Bitcoin was the very first cryptocurrency thousands of Altcoins followed. Many of these Altcoins are forks of Bitcoin with minor changes. The most popular Altcoins are Ethereum, Binance Coin, Cardano, Dogecoin, and Litecoin, just to name a few.
Anti-Money Laundering (AML)
AML refers to the laws, regulations, and procedures intended to prevent criminals from laundering money through cryptocurrencies.
Application Binary Interface (ABI)
In computer software, an application binary interface is an interface between two binary program modules. Often, one of these modules is an operating system or a library, and the other is a program that is being run by a user.
Application Programming Interface (API)
In computing, an application programming interface defines interactions between multiple software applications. This concept applies everywhere from command lines to enterprise blockchain applications.
Application Specific Integrated Circuit (ASIC)
An application-specific integrated circuit is an IC chip customized for a particular use. ASICs are usually silicone chips. In cryptocurrency mining, an ASIC is used to perform a calculation to find values that provide the desired solution which is solving and confirming the hash algorithm.
An attestation ledger is a register or account book created to provide support or evidence of individual transactions. In distributed ledger technology the AL is used for trustworthy device levels where attestations permit nodes in the network.
Bitcoin was the very first cryptocurrency on the market. Its network is based on the Proof-of-Work blockchain. BTC was launched in 2009 by a group or individual named Satoshi Nakamoto, a pseudonym as his real identity is unknown. The concept of this cryptocurrency was outlined in this white paper.
A Bitcoin ATM or automated teller machine is a kiosk that allows a person to purchase Bitcoin. Some ATMs offer other cryptocurrencies as well. By using your cash, debit, or credit card you can buy Bitcoins. To find a Bitcoin ATM near you simply use the Coin ATM Radar service.
A block in blockchain terminology is recording some or all transaction data not yet entered in any prior blocks. A block is like a piece of a ledger. Each time a block is completed, it gives way to the next block. Multiple blocks chained together make one Blockchain.
Blockchain is a system of recording data or information on a distributed ledger. Distributing data of a blockchain makes it difficult to be changed or tampered with. Thus, blockchain is a system of storing sensitive data in sections called blocks. Each block has its own capacity. All participants on a blockchain network are distributed across an interconnected network. The technology uses decentralized consensus to maintain the network and to keep it secure.
The block explorer in simple terms is a blockchain search engine. It allows us to search for a particular piece of information on the blockchain. Each transaction on a blockchain is traceable. One of the most used blockchain explorers is the Bitcoin Explorer. You will find information for BTC including historical prices, recently mined blocks, the mempool size of unconfirmed transactions, and data for each and every single transaction.
The block height of a particular block is defined as the number of blocks preceding it in the blockchain. As a blockchain is an encrypted database that records transactions in a ledger the data structure is also known as blocks.
A block reward refers to the number of cryptocurrencies you get if you successfully mine a block in the network. Cryptocurrency mining is part of every Proof-of-Work (PoW) blockchain. Miners get an award for solving the math. The first miner who can confirm the transaction is automatically getting paid through the block reward.
Bounty Program or Bug Bounty
A bounty program or a bug bounty is a deal offered by website owners, organizations, or software developers by which individuals are invited to receive recognition if they identify and submit vulnerability reports. Security researchers and hackers apply to participate and get paid if they find a bug.
Business Logic Layer (BLL)
A business logic layer usually handles things that are a part of the business domain and not part of the database or the UI. It will handle anything related to your business logic layer.
Business Network Card (BNC)
A business network card provides all the information to connect to a business blockchain network. On the Hyperledger network, users create a business identity by using a business network card and add this to their wallets. A BNC is not issued by your employer. Instead, you create your own identity on a blockchain network.
Byzantine Fault Tolerance (BFT)
The Byzantine fault tolerance is the dependability of a fault-tolerant computer system to such conditions. The term was conceived in 1982 as a logical dilemma that illustrates how a group of Byzantine generals communicated problems when trying to agree on their next move. The dilemma assumes that each general has his own army. Each group is situated in a different location. The Byzantine generals had to agree on either attack or retreat. The only thing that mattered was to reach a consensus and agree on a common decision. This translated to our blockchain terminology means that the only way to achieve consensus on a blockchain is by having at least 2/3 or more reliable nodes on the network.
Casper is a consensus algorithm that combines Proof-of-Work (PoW) and Proof-of-Stake (PoS). Ethereum is going to use Casper as a transition for ETH 2.0 to use PoS instead of PoW.
Centralized in blockchain terminology means that a network, blockchain, or a ledger is not controlled by a single authority and not managed in one place. Distributed ledgers are decentralized to enhance security (51% attack principle), increase speed, and ensure transparency.
Chain of Custody
Chain of custody is a legal term referring to the order and manner in which physical or electronic evidence has been handled. A blockchain-based chain of custody is leading towards real-time tamper-proof evidence management. It is imperative to demonstrate proof and shape the investigation of misconduct cases involving corruption, misbehavior, or violation.
Chaincode in blockchain is the term for programs that run on top of a blockchain network. It is used to implement the business logic and defines how applications interact with the ledger. When a transaction is proposed, it triggers a chain code that decides what state change should be applied to the ledger. Furthermore, a chain code is also used by administrators to group related smart contracts for deployment on hyperledger fabric.
Chainlink is a decentralized Oracle network that provides real-world data to smart contracts on a blockchain. This technology can solve one of the biggest challenges for the practical implementation of smart contracts – connecting blockchains. LINK is the token related to the Chainlink network.
A client is a participant or computer on a network. In terms of blockchain technologies, we have four basic client types: 1. full node; 2. archival node; 3. light client; 4. stateless client.
Cloud mining is a mechanism to mine a cryptocurrency, such as Bitcoin. It allows anyone to use rented cloud computing power without having to install anything yourself. By utilizing a remote data center with shared processing power, miners can sell, buy, or lease hashing instances.
A coin is usually a small piece of metal that is used as money. The crypto community uses the same term for their tokens, such as the Bitcoin (Bit-Coin). In crypto terminology, a coin is a digital or virtual currency – a cryptocurrency – that is secured by cryptography, which makes it nearly impossible to counterfeit our double-spend.
The term coin exchange is used for cryptocurrency exchange. It is a business that allows customers to buy, sell, or trade cryptocurrencies. On coin exchange platforms such as Binance, Coinbase, Robinhood, and others, you can exchange assets, for example, fiat money into Bitcoin or the other way around.
Cold Wallet or Cold Storage
A hardware wallet that is disconnected from the internet. A cold wallet is the safest way to store your digital assets.
Composer Rest Server
A composer rest server is used for Hyperledger. It is a simple application that prompts the user for details of a connection profile, BNI, participant id, and participant password. The Hperledger composer offers a lot of advantages which include the faster creation of blockchain applications, smooth and low-cost modeling, and multiple testing options.
Confirmation or Block Confirmation
A block confirmation is simply the act of your transaction being included in a block on the blockchain. The network has verified the block. This happens through the mining process on Proof-of-Work (PoW) networks. Once a transaction is successfully confirmed it cannot be changed nor double-spent.
Consensus or Consensus Mechanism
A consensus is a fault-tolerant mechanism that is used in blockchain systems. Herewith, we achieve the necessary agreement on a single data value or a single state of the network among distributed ledgers or multi-agent systems, such as a cryptocurrency.
A consortium blockchain is semi-private. It uses controlled user groups and works across different organizations. In blockchain terminology, we also use the term “Federated Blockchain” for the same.
Content Delivery Network (CDN)
A content delivery network, or content distribution network, is a geographically distributed network. Proxy servers and multiple data centers are used. The goal is to provide high availability and performance (such as speed) as close as possible to end users all around the globe.
In computer programming, CRUD stands for create, read, update, and delete. These are the four basic operations of persistent storage. In blockchain terminology, you still can perform CRUD operations. However, a blockchain is designed to be an append-only structure. A user can only add more data in the form of additional blocks.
A cryptocurrency is a digital or virtual currency. Transactions are maintained, verified, and recorded on a decentralized system called the blockchain. No centralized authority is needed while cryptography is used to eliminate the double-spending problem. Bitcoin is one type of cryptocurrency.
Cryptocurrency Exchange Platform
A cryptocurrency exchange platform is a service that facilitates the trading of cryptocurrencies. Exchanges can be done for fiat and other types of cryptocurrencies. An exchange platform acts as an intermediary between a buyer and a seller or a network and makes money through commissions and transaction fees.
Cryptography is a method of protecting information and communications through the use of computer codes. A blockchain makes use of two different kinds of cryptographic algorithms, asymmetric-key algorithms, and hash functions.
Cryptographic Hash Function
Cryptographic hash functions are used to provide the functionality of a single view of the blockchain to every participant (node). Blockchains use the SHA-256 hashing algorithm. Along with encryption keys, the cryptographic hash function leverages blockchain applications for digital signatures.
Decentralization means the transfer of control of an activity or organization to several locations or authorities rather than one single one. In blockchain terminology, decentralization refers to the transfer of control and decision-making from one entity to a distributed network. Decentralized blockchains are immutable and eliminate several risks.
Decentralized Application (dApp)
Decentralized Applications (dApps) are digital programs or applications that exist and run on a blockchain network. Distributed computing is another term used for the same. Compared to running an application on a single computer or server, the P2P network is outside the purview and control of a single authority. A dApp can have a frontend and interfaces written in any programming language that can make calls to its backend. Its front end can also be hosted on a decentralized blockchain or decentralized storage such as Swarm or IPFS.
Decentralized Finance (DeFi)
Decentralized Finance (DeFi) is a blockchain-based form of finance. It does not rely on a central financial intermediary. There are no brokers, no exchanges, no banks involved. Traditional financial instruments are being replaced by smart contracts. The most common blockchain network used today is Ethereum. DeFi is disrupting the financial sector by disintermediating all types of financial transactions, such as P2P loans from borrowing to lending, but also asset management, insurance, and predictive markets.
A deposit is usually a sum of money paid into a bank or building society account. It can also refer to a purchase of something the balance being payable later. However, in crypto terms, a cryptocurrency deposit has nothing to do with transferring money. When users deposit coins into a crypto exchange, they transfer the ownership and access of the cryptocurrency to the exchange.
Difficulty is a term used in the crypto market. It is a measure of how difficult it is to mine a block on a blockchain. A high cryptocurrency difficulty means it takes very high or additional computing power to verify transactions on a blockchain. Especially on the Bitcoin network, it’s getting harder and harder to find a hash below a given target.
A digital asset can be anything that exists in a digital format and comes with the right to use the same. Data alone cannot be considered an asset unless it contains a value from photos, videos, or in the form of a cryptocurrency.
Digital Autonomous Organization (DAO)
A digital autonomous organization (DAO) is sometimes also called DAC or decentralized autonomous corporation. It is a form of organization that represents rules encoded as a computer program that is transparent, controlled by members, and not influenced by a central authority or government.
A digital identity is a compilation of information about you as a person or of a civil identity that exists in a digital form. This can include almost everything, from your name, and date of birth, to something you liked on social media. In blockchain terminology, a digital identity is an online identity claimed by an individual, organization, or electronic device, featuring characteristics associated with a unique and identifiable individual.
A digital signature is a mathematical scheme for verifying the authenticity of digital documents or messages. Sometimes people also use the term electronic signature but not all electronic signatures use digital signatures, as the authenticity and integrity must be validated for the same.
Distributed Denial of Service Attack (DDoS)
A distributed denial of service attack (DDoS) is used by hackers. Multiple systems flood the bandwidth or resources of a targeted system. It’s a malicious attempt to disrupt normal traffic to a web property.
Distributed Ledger Technology (DLT)
Distributed ledger technology (DLT) refers to the network infrastructure that allows simultaneous access, validation, and record-keeping. Ledgers are spread across multiple nodes (computers), entities, or locations, and stay immutable. A distributed ledger is also called a shared ledger and is used for data exchanges as well as for transactions of assets. Blockchain on the other hand is only one type of DLT.
Double spending is a problem or rather a risk that a digital currency can be spent twice. This potential issue is unique to digital currencies. While a fiat coin can only be given away once there is a risk of copying a digital asset. Thus, it is crucial to technologically eliminate this possibility. Bitcoin for example manages the double-spending problem by implementing a confirmation mechanism called mining and by maintaining a universal ledger on the blockchain.
Encryption is the process of converting information or data into a code, especially to prevent unauthorized access. Plaintext is encrypted in cryptography. Only authorized people can decipher an encrypted ciphertext back to plaintext.
Enterprise Ethereum Alliance (EEA)
The enterprise Ethereum alliance is the largest blockchain ecosystem. The EEA enables organizations and individuals to adopt and use Ethereum in their daily business operations. This member-led industry organization is backed by the largest developer community.
Enum is the short term of enumerated. It is a data type that consists of predefined values. Enums are used in computer programming languages such as C, C++, C#, and Java.
ERC is a crypto term and stands for “Ethereum Request for Comment”. It is a further development of the RFC “request for comment” published by the Internet Society (ISOC) which is the principal technical development and standard-setting body for the Internet.
ERC-20 is the most used blockchain protocol to create tokens. Thousands of tokens (cryptocurrencies) using ERC-20 on the Ethereum network. It’s a standard and used for creating and issuing Smart Contracts on Ethereum as well. ERC-20 is, in some respects, similar to Bitcoin, Litecoin, and many other Altcoins.
The ERC-721 token is a standard protocol for Non-Fungible Tokens (NFTs). ERC-721 tokens are a subnet of Ethereum tokens. ERC-721 or Ethereum Request for Comments 721 was first proposed in January 2018 by William Entriken, Dieter Shirley, Jacob Evans, and Nastassia Sachs.
Ether (ETH) is the native cryptocurrency used on the Ethereum network. Ether is used to pay for transaction fees and computational services. Users also can send and receive Ethers. Developers can write smart contracts that receive, hold, and send Ether. The Ethereum network is also based on the Proof-of-Work (PoW) protocol. Therefore, Ether comes into existence by validating transactions through the process called cryptocurrency mining.
Ethereum is a decentralized and open-source blockchain network created by Vitalik Buterin. It was proposed in 2013 and went live on July 30, 2015. The platform allows developers to build and operate decentralized applications. Ethereum is the No 1 for applications related to decentralized finance (DeFi), Smart Contracts, and NFTs (non-fungible tokens).
Ethereum Improvement Proposals (EIPs)
Ethereum improvement proposals (EIPs) describe standards for the Ethereum platform. Furthermore, it offers an overview of potential new features, processes, core protocol specifications, client APIs, and cases of Smart Contract uses. Anyone within the community can create such an EIP.
Ethereum Virtual Machine (EVM)
The Ethereum Virtual Machine (EVM) is a software platform that allows developers to create decentralized applications (dApps) on the Ethereum blockchain. Programmers love to use EVM because there are no downtimes and created objects are always kept safe from modification.
Exchange or better say Crypto Exchange (aka digital currency exchange) is a business that allows customers to exchange fiat currency for cryptocurrency or the other way around. The most important exchange platforms today are Binance, Huobi Global, Coinbase, and Kraken, just to name a few. On a cryptocurrency exchange platform, a registered user gets his/her own software wallet. Furthermore, most exchange platforms also offer trading tools for crypto-based transactions.
Externally Owned Account (EAO)
An Externally Owned Account (EAO) is an account controlled by a private key. If you own that private key associated with the EAO you can send Ether. Each contract has its own code and is also controlled by code.
A federated blockchain is semi-private. It uses controlled user groups and works across different organizations. In blockchain terminology, we also use the term “Consortium Blockchain” for the same.
The term Fiat derives from the Latin word “let it be done” and fiat currencies are traditional currencies such as the US dollar, the Euro, or the Japanese Yen. Banknotes and coins are printed by governments. Their values are dependent on economic policies and the strengths of each country’s economy.
In blockchain terminology, a fork can have various definitions. Essentially, forks are a split in the blockchain network. It can be a change in protocol or it can be a situation that occurs when two or more blocks have the same block height. In the same way, a fork is what happens when a blockchain diverges into two potential paths forward.
Fungible in crypto terminology is an asset in which units are interchangeable with one another. In other words, an asset class is fungible when each unit of the same asset has the same validity and market value. Therefore, most cryptocurrencies are considered fungible assets.
Gas in blockchain terminology is related to the Ethereum blockchain. Gas refers to the cost of performing a transaction on the Ethereum network. The price of Gas is set by miners and it’s based on supply and demand. Miners are paid for their work validating transactions and adding blocks to a blockchain network.
The Genesis Block is the very first block of a block-chain. The genesis block is mostly hardcoded into the software or application that uses its blockchain. Usually, the version number of the genesis block is Block 0. On the Bitcoin network, the genesis block was the very first mined block. Every blockchain consists of a series of blocks.
GitHub is a web service platform offering code hosting for software development, version control, and collaboration. It offers distributed source code management of Git, plus many other features. It lets you and the community work together on projects from anywhere. GitHub is the place where most open-source software providers publish their source codes.
Golang or in short Go is a statically typed, compiled programming language. It was designed by tech giant Google. Go is somehow similar to C, but tends to be memory-safe and offers garbage collection, structural typing, and CSP-style concurrency. This programming language was first distributed on Golang. Go is open source and makes it easy to build simple and efficient software.
The gossip protocol is a communication protocol. On a blockchain, each node sends out some data to another node. When a new node is added to the network cluster, it also registers with the gossiper. Distributed ledger systems using peer-to-peer gossip to ensure that data is disseminated to all participants within the network.
In general, governance is the rule of a political system to solve conflicts and the proper functioning of institutions and acceptance by the public. It’s about legality and legitimacy. Governance in blockchain terminology describes the system for managing and implementing changes to cryptocurrency blockchains. Rules are encoded into the blockchain protocol. Hence, the community calls it on-chain governance.
Gwei is short for gigawei, or 1,000,000,000 Wei. Wei is the smallest unit and the denomination of the cryptocurrency Ether (ETH). It is widely used as a measure of gas prices on the Ethereum network.
Halving in crypto terminology refers to the event when the number of coins that miners receive for adding new transactions to the blockchain is cut in half. In simple words, Bitcoin halving is the process of halving the rewards of mining Bitcoin after each set of 210,000 blocks is mined.
Hard-fork related to blockchain terminology is a radical change to a network’s protocol. It makes previously invalid blocks and transactions valid, or the other way around. A hard-fork requires all nodes to upgrade to the latest version of the software. Each hard fork marks an unstable time for a cryptocurrency. Communities are often divided over the issue.
In crypto terminology, a hardware wallet is a piece of hardware that stores private keys. Your private key is the critical piece of information used to authorize outgoing transactions on the blockchain network. Storing your private keys on a cryptocurrency hardware wallet is the only secure way of keeping your coins. Hardware wallets are also called cold wallets as the keys are kept offline. Meaning, that the keys cannot be hacked.
A hash in blockchain terminology is a function that meets the encrypted demands needed to solve blockchain computation. Hashes have no fixed length which makes it almost impossible to hack a hash on a blockchain.
Hashcash is a Proof-of-Work system. Widely used to limit email spam or denial-of-service attacks. Hashcash is also used on the Bitcoin network as part of the mining algorithm.
The definition of a hash function is a function that takes a set of inputs of any arbitrary size and fits them into a table or data structure that contains fixed-size elements. In crypto terminology, a cryptographic hash function (CHF) is a mathematical algorithm that maps data (also called messages) to a bit array of fixed size. In simple words: A CHF converts a numerical input value into another compressed numerical value.
Hot Wallet or Hard Storage
A hot wallet in crypto terminology is a software wallet that is connected to the internet. Cryptocurrency Exchange platforms are using hot wallets within their software. It is easy to use but not safe at all because users do store their private keys on a website which makes it vulnerable to hacker attacks. Furthermore, if the software is down you cannot send or receive cryptocurrencies and your assets might be gone forever.
Hybrid Consensus Model (PoS/PoW)
The hybrid consensus model combines the inefficient Proof-of-Work protocol with the most efficient Proof-of-Stake model. It is used to bootstrap fast permissionless consensus. It can reduce mining power consumption. A hybrid blockchain rather agrees on rotating committees than on transactions. It executes permissioned consensus protocols to agree on transactions.
Hyperledger is an open-source project hosted by the Linux Foundation. It creates advanced blockchain technologies for multiple industries. The community is focusing on the development of stable frameworks, tools, and libraries for enterprise-grade blockchains.
Hyperledger Composer is a set of collaboration tools for building enterprise-grade blockchain networks. It makes it simple and fast to create smart contracts or blockchain applications to solve business problems.
Hyperledger Fabric allows blockchain components, such as consensus and membership services, to be plug-and-play. It’s a sub-platform of the Hyperledger project. This distributed ledger platform offers advanced privacy controls. Hyperledger Fabric is comprised of unique organizations or members that interact on the network.
In general, identity is the fact of being who or what a person or thing is. In crypto terminology, a blockchain enables more secure storage and management of digital identities. DLT provides a unified, interoperable, and tamper-proof infrastructure with huge benefits to governments, enterprises, IoT management systems, and any kind of user.
Immutable or Immutability
Blockchain technology offers the ability for ledgers to remain a permanent, indelible, and unalterable history of transactions. Therefore, a distributed ledger on a blockchain is immutable. Immutability as a blockchain term means that a ledger will always remain unaltered and unchanged.
Initial Coin Offering (ICO)
An ICO or Initial Coin Offering is the blockchain industry’s equivalent to an Initial Public Offering (IPO). ICOs are also called initial coin offerings as the cryptocurrency industry is offering a type of funding using a new coin. It’s often a form of crowdfunding. This term also relates to Token Sales or Token Generating Events (TGE).
Instantiate or Instantiated
In programming, instantiation is the creation of a real instance. In object-oriented programming, some coders say that you instantiate a class to create an object or a concrete instance of the class.
Integrated Development Environment (IDE)
An Integrated Development Environment (IDE) is software for building applications that combine common developer tools into a single GUI (graphical user interface).
Interoperability is the ability of computer systems or software to exchange and make use of information.
Inter-Planetary File System (IPFS)
The Inter-Planetary File System (IPFS) is a peer-to-peer hypermedia protocol designed to make the web faster, safer, and more open. It is a powerful protocol for storing and sharing data in a distributed P2P file system.
The common meaning of Invariant is a function, quantity, or property that remains unchanged when a specified transformation is applied. In blockchain terminology, we do have invariants such as block rate.
No blockchain or crypto-related term here yet? Please contact us if you have an idea of what we can add to this section.
Know Your Customer (KYC)
KYC or Know Your Customer or Know Your Client is a required guideline in financial services. A KYC check is a mandatory process of identifying and verifying the client’s identity when opening an account. It is an ongoing periodic process. This process, also called the KYC compliance framework contains 3 steps: 1. Customer Identification; 2. Customer Due Diligence (CDD); 3. Enhanced Due Diligence (EDD)
A Light Node or Light Client is a piece of software that connects to one or more full nodes. It enables users to interact with a blockchain. These Light Nodes are also called SPV nodes. Typically it’s a downloaded wallet and connects to full nodes to further validate information stored on the blockchain.
The Lightning Network is a layer 2 payment protocol on top of a blockchain-based cryptocurrency such as Bitcoin or Litecoin. It allows participants to transfer cryptocurrency between each other without paying fees. Also called off-chain transactions payment channels are created between two users. Meaning, that they can transact with each other directly and no need to use a third-party service.
Cash is considered the most liquid asset available. Therefore, Liquidity refers to the ease with which an asset, or security, can be converted into ready cash without affecting its market price. In crypto terminology, liquidity describes how easy and quick it is to convert cryptocurrency into cash.
Liquid Democracy or Delegative Democracy
Liquid Democracy is a form of delegative democracy. An electorate engages in collective decision-making through direct participation and dynamic representation. In blockchain terminology, a liquid democracy uses blockchain to fix political issues. If trust is broken, citizens can deviate their votes to others. Liquid or delegative democracy refers to blockchain use cases such as e-voting.
Mainnet in blockchain terminology is used to describe when a protocol is fully developed and deployed. As a crypto-related term, the mainnet reports that a cryptocurrency transaction is broadcasted, verified, and recorded on the distributed ledger.
Market Cap is short of Market Capitalization and refers to the total value in US dollars. As a crypto term, the market cap for a cryptocurrency like Bitcoin, is the total value of all coins mined. To calculate the market cap the number of coins in circulation is multiplied by the current market price of one single coin.
Membership Service Provider (MSP)
Membership Service Provider (MSP) is a component of Hyperledger Fabric. It offers an abstraction of membership operations. The MSP abstracts away all cryptographic mechanisms and protocols behind issuing and validating certificates, and user authentication.
In computing and cryptography, the Merkle Tree (or hash tree) is a tree in which every leaf node is labeled with the cryptographic hash of a data block. Every non-leaf node is labeled with the cryptographic hash of the labels of its child node(s).
A miner is a person who works in a mine. As a crypto term, a blockchain miner is an operator of a mining computer, mining grid, or mining farm. The miners’ function is to authenticate the transfer of a cryptocurrency in the PoW network to another. A miner is getting paid as soon as they add a new block to the distributed ledger.
Mining as a blockchain term describes the Proof-of-Work (PoW) process. Computer power is used to check blockchain data, validate every step, add new blocks, and operate transactions of Bitcoins or other cryptocurrencies.
Mining Difficulty is a crypto term and refers to a measurement of how difficult it is to maintain and add new blocks to a blockchain. The difficulty indicates how complex it is to solve the cryptographic puzzle of validating and processing a cryptocurrency transaction.
A Mining Pool is a joint group of cryptocurrency miners. They combine their computing resources over the blockchain network to strengthen the probability of finding and successfully mining a new block.
Mist in blockchain terminology is the browser for installing and using dApps (decentralized applications) on the Ethereum network until 2019. Furthermore, Mist was the very first desktop Crypto Wallet with a graphical user interface (GUI).
Multi-Signature or MultiSig
A wallet that requires multiple digital signatures to execute a transaction.
Node or Full Node
A Node in blockchain terminology is a single-user computer or network point running the same application. It is a point where a message can be created, received, or transmitted. A peer-to-peer network allows nodes to communicate with each other and transfer information. A Full Node comprises a single copy of the entire Blockchain history including transactions, timestamps, and all created blocks.
Node Package Manager (NPM)
Non-Fungible Token (NFT)
A Non-Fungible Token (NFT) is a blockchain term used for a unit of data stored on a digital ledger. It certifies that a digital asset, such as photos, videos, audio, or any other type of digital file, is unique and therefore, not interchangeable. It’s a cryptographic token built using the same kind of programming as cryptocurrency, like Bitcoin or Ether, and NTFs enabling digital creators to store and sell their artwork online.
Nonce in blockchain terminology refers to a number added to an encrypted or hashed block in a Blockchain. Nonce is an abbreviation for “number only used once” and when such is “rehashed” it meets the difficulty level restrictions.
Nothing-at-Stake is a theoretical security issue in Proof-of-Stake (PoS) consensus models. It refers to potential hacking attack problems as validators have a financial incentive to mine on every fork of the blockchain. This could be disruptive as block creators do not have anything at stake when the network forks.
The OAuth Protocol is an enhanced security level in computing. OAuth doesn’t share passwords but uses an authorization token instead. It’s a more secure identity level between users and service providers. Therefore, it allows us to approve the interaction with an application without giving away a password.
In blockchain terms, off-chain refers to a transaction outside of the main blockchain and it’s not published on the main ledger. One form of such a second layer is an off-chain transaction where two parties agree to a dept between them.
Ommer is a gender-neutral alternative to aunt or uncle. An Ommar Block is a stale block on the Ethereum network that contributes to the security of the main chain. Usually called Uncle Block by the general public. Meanwhile, an Ommar Block is not considered to canonical “truth” for that particular chain height. In contrast to orphan blocks, which have no parent, Ommar blocks are linked to the chain but are not part of the final section.
On-chain transactions occur on a blockchain that is reflected on the public distributed ledger. These transactions have been validated, completed, and fully registered on the overall blockchain network.
On-chain Governance refers to a system for managing and implementing changes to cryptocurrency-related blockchains. It is a rule for instituting changes and encoded into the blockchain protocol. This type of governance is part of the open-source initiative on public blockchains where developers can propose changes, while each node can vote whether to accept or reject the proposed change.
Open Source is computer software that is released under an OSD-compliant license. The copyright holder grants all users the rights to use, study, change, and distribute the software. Furthermore, the source code is accessible to the public as well and for any purpose.
Oracles is a blockchain term and refers to a third-party service that provides Smart Contracts with external information. It’s a bridge between a blockchain network and external sources.
An Order Network in blockchain terminology is a computer network that allows nodes to share resources.
Peer-to-peer (P2P) is a type of computer network that allows data transfer from one computer, or node, to another without using an intermediate server.
A Permissioned Ledger, or Permissioned Blockchain, is a network system with enhanced security. Compared to public blockchains, an access control layer can allow certain actions to be performed only by identifiable participants. Therefore, a permissioned blockchain is also called a private blockchain.
A Permissionless Ledger, or Permissionless Blockchain, is a network system open to everyone. No permission is required to join and interact. Therefore, a permissionless blockchain is also called a public blockchain. Cryptocurrencies do use permissionless blockchains.
Plasma refers to a framework that allows the creation of child blockchains on the Ethereum network. This enables us to handle much larger data sets than is usually possible.
Pragma Line is a part of the Solidity programming language. Instruction for the compiler about how to treat the source code. A Smart Contract in the sense of Solidity is a collection of code and its functions, together with data, and its state, that resides at a specific address on the Ethereum network.
In crypto terminology, a Privacy Coin is a class of cryptocurrency used on private blockchains. Privacy Coins power an anonymous blockchain transaction by obscuring their origin and destination.
A Private Blockchain is a network system with enhanced security. Compared to public blockchains, an access control layer can allow access or certain actions to be performed only by identifiable participants. Therefore, a private blockchain is also called permissioned blockchain.
A Private Currency is a limited and non-legal tender issued by a private person, firm, or group as an alternative to a fiat currency.
A Private Key is also known as a secret key. It is a variable in cryptography that allows a user to access their cryptocurrency. An algorithm is used to encrypt and decrypt code.
Proof of Activity
Proof-of-Activity is a blockchain consensus algorithm. Mainly used in cryptocurrencies and similar network systems. It is used to ensure that all transactions occurring on the network are genuine. Furthermore, this type of algorithm ensures that all miners arrive at a consensus.
Proof of Authority
Proof-of-Authority is a blockchain consensus algorithm. It delivers fast transactions based on identity. It is also called reputation-based consensus and offers very practical and efficient blockchain transactions.
Proof of Burn (PoB)
Proof-of-Burn is an alternative consensus algorithm. It addresses the high energy consumption issue of a PoW network. It operates on the principle of allowing miners to burn virtual tokens.
Proof of Capacity (PoC)
Proof-of-Capacity is a consensus algorithm allowing miners to use their available hard drive space to decide mining rights and validate transactions. Burst is one example of a popular blockchain built with the proof-of-capacity mechanism.
Proof of Elapsed Time (PoET)
Proof-of-elapsed time is another consensus mechanism. It is often used on permissioned or private blockchains. Each node in the blockchain network generates a random wait time and goes to sleep for a specified time. This way, the network administrators can decide the mining rights and who is going to validate and process transactions.
Proof of Stake (PoS)
Proof-of-Stake is a protocol that allows users to mine and validate blockchain transactions according to how many coins they hold. The more coins you hold, the more coins you can win as a miner.
Proof of Work (PoW)
Proof-of-work is the algorithm used for blockchains with low requirements on the consensus mechanism. It requires a not insignificant but feasible amount of effort to prove a transaction. It is a form of cryptographic zero-knowledge concept in which one party (the prover) proves to others (the verifiers) that a specific amount of computational effort has been expended.
Protocols in blockchain terminology are crucial components of blockchain networks. Protocols do enable information to be shared automatically across networks. It is a very important part of cryptocurrency networks to ensure a secure and reliable flow of data.
Provenance is a blockchain project that provides an open data platform mainly for supply chain businesses. It gathers and shares key product information on a ledger. It can hold the most important information and allows anyone to check its validity.
Pub-Sub, short for publish/subscribe, in blockchain terminology, refers to a new architecture called secure pub-sub (SPS) which is a blockchain-based fair payment system. It offers tamper-resistance, decentralization, strong consistency, and traceability as well.
A Public Blockchain is a network system open to everyone. No permission is required to join and interact. Therefore, a public blockchain is also called a permissionless blockchain. Cryptocurrencies do use public blockchains.
In crypto terminology, a Public Key is a cryptographic value that is used to encrypt data. It is used to facilitate cryptocurrency transactions between parties. The public key allows users to receive cryptocurrency. A public key is always paired with a private key.
Public Key Infrastructure (PKI)
A Public Key Infrastructure is a set of roles, policies, hardware, software, and procedures to manage digital encryption, digital certificates, or cryptocurrencies. It is used to protect sensitive data.
Python is a high-level programming language for general purposes. The philosophy behind Python is to emphasize code readability with notable use of significant indentation. This programming language is open source. Furthermore, as Python is considered a scripting language, like Ruby or Perl, it is often used for creating dynamic web content or web applications.
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Relayer 0x Network
Relayer is a 0x protocol for blockchains to host an off-chain order book. Users can find, create, fill, or cancel orders by using relayers. Cryptocurrency orders can be kept as a depth between two traders. On top of, two or more relayers can “talk” together and create a pool of orders to increase liquidity.
Representational State Transfer (REST API)
The Representational State Transfer (REST) is a paradigm for software architecture. A style that uses a subset of the HTTP protocol. The REST API, also known as RESTful API, is an application programming interface that conforms to the architectural style. It allows for interaction with RESTful web services.
In crypto terminology, a Ring Signature is a type of digital signature. It can be performed by a member of a set of users that each has keys. A message signed with a ring signature is endorsed by someone in a particular set of people. Ring signatures are used for group-based blockchains to have a certain level of anonymization, without the risk of identity escrow.
Remote Procedure Call (RPC)
In distributed computing, and therefore also used in distributed ledger technology, a Remote Procedure Call refers to a computer program that causes a procedure to execute in a different address space. It is coded as if it were a normal procedure call but without the programmer explicitly coding the details for the remote interaction. RPC is an interprocess communication technique.
A Satoshi is the smallest unit of a Bitcoin. 1 satoshi is equal to one hundred millionth of a single bitcoin. 1 satoshi = 0.00000001 BTC.
Satoshi Nakamoto is the name used by a pseudonymous person or group who invented Bitcoin. As part of the implementation of the Bitcoin network, the very first blockchain-based application, the project was first introduced in this white paper, published back in 2008.
Scalability has always been a question for people in the world of blockchain. Scalability refers to the ability of a computing process to be used or produced in a range of capabilities. In context, scale-out data storage, scalability is defined as the maximum storage cluster size that still guarantees full data consistency. When a blockchain system is called “scalable”, it indicates that this system achieves a higher TPS (Transaction Per Second) by modifying its consensus mechanism and adjusting some system parameters.
SDK is short for Software Development Kit and in blockchain terminology, it refers to a development environment for developers. SDKs usually contain the platform, test applications, and other tools to develop a new application. Good SDK tools for automating blockchain services are Hyperledger Fabric, Cosmos SDK, Samsung Blockchain SDK, or the Oracle Blockchain Platform SDK.
Secure Hash Algorithm (SHA)
Secure Hash Algorithm is a family of cryptographic functions. They were designed to keep data secured. Data can be transformed using a hash function. The development of SHA functions started in 1992 with the MD5 algorithm. Today we know 4 more variants starting with the SHA-0, offering 160-bit output size, up to the SHA-3, offering 224 to 512-bit output size.
Seed Phrase in blockchain terminology refers to the recovery or backup seed phase. A list of words that store all the information needed to recover cryptocurrency funds on-chain. Hardware, as well as a software wallet, will typically generate such a seed phrase for new users. The seed phrase needs to be written down on a piece of paper.
Self-Sovereign Identity (SSI)
Self-Sovereign Identity is the approach to giving individuals control of their digital identities. There are several approaches to integrate SSI with authentication protocols, such as OIDC or SAML. SSI uses selective identity disclosure technology. The IC owner chooses what attributes or his/her identity they want.
Serialization in computing is the process of translating a data structure or object state into a format that can be stored and/or transmitted and reconstructed later. Blockchain technology is used in Serialization Operations as well. A ledger is simply a record of transactions. Blockchains can provide secure storage of data in supply chain operations, including change of custody events or detailed product information.
Shard or Sharding
A Shard refers to a database shard. A horizontal partition of data in a database. Sharding is the key to allowing blockchains to scale while maintaining privacy and security features. Sharding will be a part of Ethereum 2.0 which should be rolled out in 2021.
A Sidechain is a secondary blockchain that is linked to another blockchain with a two-way peg. A sidechain is an emerging mechanism that allows tokens or other digital assets from one blockchain to be securely used in a separate blockchain.
Simple Payment Verification (SPV)
Simple Payment Verification or Simplified Payment Verification is a technique described in the Bitcoin white paper. It allows a lightweight client to verify that a transaction is included in the Bitcoin network, without downloading the entire blockchain. The BTC network uses the Bitcoin SPV wallet client to use Bitcoin without running a full network node.
The Slashing Condition is the set of rules which if violated by the validators will end up deleting the cryptocurrency deposits. Slashing is a mechanism built within all Proof-of-Stake blockchains to discourage misbehavior. The Minimal Slashing Conditions is a key goal of Casper on the Ethereum network with a set of rules to work with many hashes and some number of nodes to finalize a block.
A Smart Contract is a self-executing digital contract with terms and triggers between a seller and a buyer. It is a computer program or a transactional protocol but legally relevant. Smart Contracts are stored on a blockchain and run when predetermined conditions are met.
Self-executing is a blockchain term used for Smart Contracts. It refers to an automated digital transaction that is self-executing as soon as a buyer agrees to a seller’s offer.
In blockchain terminology, a Soft Fork is a change to the software protocol, in which only previously valid transaction blocks are made invalid. A soft fork is backward-compatible and old nodes will recognize the new blocks as valid. While a hard fork contains major changes a soft fork has less necessary or minor changes.
Stablecoin is a crypto term and refers to a cryptocurrency where its price is pegged to another cryptocurrency, fiat currency, or exchanged-traded commodities. Stablecoins are designed to stay at a fixed value. Most Stablecoins are pegged to the US dollar. Top Stablecoin tokens are Tether, USD Coin, or Binance USD.
A State Channel in blockchain terminology refers to the process in which users transact with one another but directly outside of the blockchain. An example of a State Channel is the Web3Torrent introduced by statechannels.org. It’s a browser-based torrenting client that supports incentivized peer-to-peer file sharing using micropayments.
Swarm is a system of peer-to-peer networked nodes that create a decentralized storage and communication system. It is a censorship-resistant, permissionless infrastructure. The Swarm network can be used to easily create and manage digital assets.
Testnet refers to the alternative Bitcoin blockchain. It is also called the “worthless” Bitcoin network. Trading Bitcoin on the Testnet is exactly the same process as on the main network.
Testnet Kovan is the alternative Ethereum network for testing transactions. It uses Proof-of-Authority consensus and currently only supports parity clients.
Testnet Rinkeby is the alternative Ethereum network for testing transactions. It uses Proof-of-Authority consensus and currently only supports geth clients.
Testnet Ropsten is the alternative Ethereum network for testing transactions. It uses Proof-of-Work consensus and it supports geth as well as parity clients. Testnet Ropsten is very similar to the mainnet.
A Token in crypto terminology is a cryptocurrency and represents a digital asset. This asset could be exchanged in other currencies such as fiat money or other cryptocurrencies. Besides that, specific Tokens can grant the use of software applications or services. Every crypto token resides on a specific blockchain.
A Tokenless Ledger describes a blockchain based on distributed ledger technology, that doesn’t require a cryptocurrency to operate.
Tokenomics, also known as token economy or crypto-economics, refers to the whole crypto-market economy to understand the demand and supply of cryptocurrencies.
Token Generation Event (TGE)
A Token Generation Event is a technical act of a new business with a limited duration to generate a token in a blockchain-based network. TGE is synonymous with ICO (initial coin offering) but describes the technical elements of the process.
Token Sale is the sale of a predefined number of new crypto tokens to the public within a limited period. An initial coin offering (ICO) is the same as Token Sale. Typically, a new crypto token can be bought in exchange for existing major cryptocurrencies, such as Bitcoin or Ether.
Transaction Block in blockchain terminology is a digital file where one can store or record transaction data.
A Transaction Fee on a blockchain is a cryptocurrency fee. A user is charged and the fee is collected to process transactions on the network. Some networks allow lower and higher fees to prioritize the speed of a transaction.
Transaction per Second (TPS)
Transaction per Second is a computer measurement for software and hardware. It represents the number of transactions completed within one second.
Transparency in blockchain terminology means anyone who has access to the network can view all information. On cryptocurrency networks, everyone can look through the history of all transactions. On distributed ledger networks, no one can attempt to manipulate, amend, or remove data that has been stored as all nodes own a copy of the ledger.
Trust in blockchain terminology means putting trust in a collaborative economy. Due to the immutability and transparency of blockchain networks, trust is no longer based on reputation or brand. Distributed Ledger Technology is a tool to automate trust.
Trustless in blockchain terminology refers to the mechanism that is in the place where all parties can reach a consensus on what the canonical truth is.
A Turing Complete blockchain is a network where we can use code to perform virtually any task. Ethereum’s Turing Completeness is such an application. As long as it has the correct instructions, enough processing power, and time, we can perform almost any task we want. Some other blockchain networks are Turing Incomplete systems.
Ubuntu (“humanity”) is a complex Linux operating system. It’s an open-source software with community and professional support. Ubuntu is just one of over 600 different Linux distros.
An Uncle Block is a stale block on the Ethereum network that contributes to the security of the main chain, also called Ommar Block. Meanwhile, an Uncle Block is not considered to be canonical “truth” for that particular chain height. In contrast to orphan blocks, which have no parent, uncle blocks are linked to the chain but are not part of the final section.
Unspent Transaction Output (UTXO)
Unspent Transaction Output is a crypto term used in cryptocurrency transactions. Similar to the change after a cash transaction, the UTXO can be used as input in a new transaction.
A Validator on a blockchain network verifies every new transaction. Transactions can only be completed and added to the distributed ledger if verified by the Validator.
A programming language similar to Python to use on the Ethereum blockchain and built for security, language, compiler simplicity, and auditable.
A Wallet in crypto terminology is a digital file on software or hardware that holds coins and tokens. The wallet also has a blockchain address to which transactions can be sent.
Whisper is a decentralized messaging application which is also known as the Ethereum Whisper protocol. In the Ethereum ecosystem, Whisper is an extension of Web 3.0 and acts as a secure and decentralized messaging protocol.
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Zeppelin or OpenZeppelin
OpenZeppelin is a framework for Ethereum with a community of like-minded Smart Contract developers.
zk-SNARK is short for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge and is a novel form of zero-knowledge cryptography. The acronym refers to a proof construction where one can prove possession of certain information, e.g. a password or secret key, without revealing that information and without any interaction between the provider and verifier.
The comprehensive blockchain dictionary
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