The complete Blockchain Technology Industry Definitions and Explanations
a term used mostly in reference to Bitcoin, it results in a group of miners controlling over 50% of the computing power of a cryptocurrency network, this condition can be controlled by a single malicious miner or group of miners. this control can give him the power to spend the same coins multiple times.
simply it is any digital currency alternative to Bitcoin, The most prominent altcoin is Litecoin that introduces changes to the original Bitcoin protocol. Currently, the majority of altcoins are forks of Bitcoin with usually minor changes to the proof of work (POW) algorithm of the Bitcoin blockchain.
A condition that 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 long chain. These blocks are then classified as orphaned blocks.
“Application Programming Interface” It is a software intermediary that helps two separate applications communicate with one another.
“Application Specific Integrated Circuit” It is silicon chips specifically designed to do a single task. In the case of bitcoin, they are designed to process SHA-256 hashing problems to mine new bitcoins.it is considered to be much more efficient than conventional hardware(CPUs, GPUs).
it is cryptocurrency that runs on a global “peer to peer network”, decentralized “no single entity can control it”, open source “wallet & transaction verification”, bypassing middlemen or central authority, anyone with a computer or smartphone can use it a global peer to peer network, without the need for middlemen and a centralized issuer.
A cash point where people can trade fiat currency and bitcoins
Blocks are packages of data that carry permanently recorded data on the blockchain network, it is considered a record of some or all of the most recent Bitcoin transactions that have not yet been recorded in any prior blocks.
a shared ledger where transactions are permanently recorded by appending blocks, that everyone can inspect but which no single user controls. It is a cryptographed, secure, tamper-resistant distributed database. It solves a complex mathematical problem to exist. A blockchain is a perfect place to store value, identities, agreements, property rights, credentials, etc.
refers to the number of blocks connected together in the blockchain. For example, Height 0, would be the very first block, which is also called the Genesis Block.
An amount of crypto-currency a miner receives for processing transactions in a given block, it can be a mixture of coins and transaction fees, depending on the policy used by the cryptocurrency in question, and whether all of the coins have already been successfully mined. The current block reward for the Bitcoin network is 25 bitcoins for each block.
the process of connecting two blockchains with each other, that allows transactions between the chains to take place.
A software program user executes on a desktop, laptop or a mobile device to launch an application and process its transactions. a client usually includes a cryptocurrency software wallet.
The successful act of hashing a transaction and adding it to the blockchain. This happens through a process known as mining, in a proof-of-work system -e.g. “Bitcoin”.
A fundamental problem in distributed computing that 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.
a group of peers responsible for maintaining a distributed ledger use to reach consensus on the ledger’s contents. Developers suggest bitcoin improvements/modifications, small or big.
Also known as tokens, it is a form of digital currency based on mathematics, where encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds.
an address that is used to receive and send transactions on the network. An address is a string of alphanumeric characters, but can also be represented as a scannable QR code.
A method for securing communication using code, “The cryptographic hash function” is a mathematical algorithm that takes a particular input which can be any kind of digital data be it a password or jpeg file and produces a single fixed length output. Some examples of different hash function algorithms are MD5, MD4 or SHA256.
decentralized application for an application to be considered a Dapp or it must be completely open-source -operate autonomously- , must be cryptographically stored in a public -decentralized blockchain- , must use a cryptographic token -bitcoin or a token native to its system– , must generate tokens according to a standard cryptographic algorithm؛ “Bitcoin uses the Proof of Work Algorithm”.
Decentralized Autonomous Organization, It is a decentralized network of narrow-AI autonomous agents which perform an output-maximizing production function. The DAO served as a form of investor-directed venture capital fund that seeks to provide an enterprise with new decentralized business models. Built on the Ethereum blockchain, The DAO’s code was open source.
A digital code that is used for signing transactions, it is generated by public key encryption that is attached to an electronically transmitted document to verify its contents and the sender’s identity.
an online or networked identity adopted in cyberspace by an individual, organization, or electronic device.
are ledgers in which data is stored across a network of decentralized nodes. it does not have to have its own currency and maybe permission and private.
A type of network where processing power and data are spread over the nodes rather than having a centralized data center.
It occurs when a sum of money is spent more than once. it refers to a scenario -in the Bitcoin network- where someone tries to send a bitcoin transaction to two different recipients at the same time. However, once a bitcoin transaction is confirmed, it makes it nearly impossible to double spend it.
a blockchain-based decentralized platform for apps that enables developers to write smart contracts and build and deploy decentralized applications Dapps. The native token of the blockchain is called Ether which is used to pay for transaction fees, miner rewards, and other services on the network.
The Ethereum Virtual Machine is a Turing complete virtual machine that allows anyone to execute arbitrary EVM Byte Code.
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.
ERC721 Token Standard
A non-fungible Ethereum token standard that is used to represent a unique digital asset that is not interchangeable.
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. it is an improvement on the ERC20 critical bug.
Any money declared by a government to be to be valid for meeting a financial obligation, like USD or EUR.
Forks create an alternate version of the blockchain, leaving two blockchains to run simultaneously on different parts of the network.
The very first block in a blockchain.
A way to measure computational steps necessary for a transaction on the Ethereum network that then equates to a fee for network users. More intensive actions require more gas.
a change to the blockchain protocol that makes previously invalid blocks transactions valid, and therefore requires all users to upgrade their clients. The most recent example of a hard fork in public blockchains is the Ethereum hard fork which happened on July 21st, 2016.
A function that takes an input and outputs an alphanumeric string known as the “hash value” or “digital fingerprint”. it is used to confirm coin transactions on the blockchain.
is a proof-of-work system used to limit email spam and denial-of-service attacks, it was proposed in May 1997 by Adam Back.
A reduction in the block reward given to crypto-currency miners once a certain number of blocks have been mined. The number of Bitcoins generated per block is decreased by 50% every four years. This is called “halving”.
Measurement of performance for the mining rig is expressed in hashes per second.
A physical device like the famed Ledger Wallet that can be connected to the web and interact with an online exchange, but can also be used as cold storage.
A wallet that is directly connected to the internet at all times.
It allows for both Proofs of Stake and Proof of Work as consensus distribution algorithms on the network.
Initial Coin Offering is a type of crowdfunding mechanisms conducted on the blockchain used for developers of a new cryptocurrency to raise capital. it is an event in which a new cryptocurrency sells advance tokens.
The InterPlanetary File System is a hypermedia distribution protocol that started as an open source project at Interplanetary Networks. it enables the creation of completely distributed applications. It aims to make the web faster, safer, and more open.
a decentralized network using smart contract functionality on the blockchain to enable instant payments across a network of participants. it will allow bitcoin transactions to happen instantly, without worrying about block confirmation times. It will allow millions of transactions in a few seconds, at low costs, even between different blockchains, as long as both chains use the same cryptographic hash function.
An append-only record store, where records are immutable and may hold more general information than financial records.
The availability of assets as determined by the ability for that asset to be converted into cash without dramatically affecting market prices.
Litecoin is A peer-to-peer cryptocurrency based on the Script proof-of-work network.
is to have some piece of data that is linking to another. You can do this by linking things together with a cryptographic hash.
the process of adding transaction records to Bitcoin’s public ledger of past transactions or blockchain. it is the act of validating blockchain transactions. By choosing the most efficient and suitable hardware and mining target, mining can produce a stable form of passive income.
Mining difficulty measures how hard it would be to find the next Bitcoin block.
In a mining pool, different users organize together in order to provide computing power for the bitcoin network. If a Bitcoin block is newly created, each of the users in the mining pool receives its fair share proportionately to his mining power. To become a member of a mining pool, the user needs to run software provided by the mining pool. The advantage of the mining pools is that block rewards get distributed across the pool providing more stable income.
Multi-signature addresses provide an added layer of security by requiring more than one key to authorize a transaction, they have a much greater resistance to theft.
A copy of the ledger operated by a participant of the blockchain network. A computer connected to the blockchain network is referred to as a “node”. Most nodes on the network are lightweight nodes instead of full nodes, but full nodes form the backbone of the network.
Non-Fungible Token A special type of cryptographic token that is a representation of a unique digital asset that is not interchangeable.
A currency minted off-ledger and used on-ledger. An example of this would be using distributed ledgers to manage a national currency.
A currency minted on-ledger and used on-ledger. An example of this would be the cryptocurrency, Bitcoin.
Oracles work as a bridge between the real world and the blockchain by providing data to the smart contracts, sit between a smart contract and the external world, providing the data needed by the smart contract to prove performance while sending its commands to external systems
An actor that shares responsibility for maintaining the identity and integrity of the ledger.
Peer-to-peer (P2P) refers to the decentralized interactions that happen between at least two parties in a highly interconnected network. P2P participants deal directly with each other through a single mediation point.
a blockchain where write permissions are kept centralized to one organization.
a randomly generated number which allows users to transact over the blockchain. It is locally stored and kept secret. Each time a Bitcoin gets sent a private key has to sign the transaction.
A currency issued by a private individual or firm, typically secured against uninsured assets.
Proof-of-Authority is A consensus mechanism in a private blockchain that grants a single private key the authority to generate all of the blocks.
Proof-of-stake is a method by which a cryptocurrency blockchain network aims to achieve distributed consensus. While the proof-of-work (PoW) method asks users to repeatedly run hashing algorithms or other client puzzles, to validate electronic transactions, proof-of-stake (PoS) asks users to prove ownership of a certain amount of currency (their “stake” in the currency).
Proof of Work is an economic measure to deter denial of service attacks and other service abuses such as spam on a network by requiring some work from the service requester, usually meaning processing time by a computer.
A set of rules that dictate how data is exchanged and transmitted. This pertains to cryptocurrency in blockchain when referring to the formal rules that outline how these actions are performed across a specific network.
Verifiers that provide proof that results are fair, commonly used in association with blockchain-based gaming applications.
a blockchain that anyone in the world can read, it is a globally public network where anyone participates in transactions.
A payment network built on distributed ledgers that can be used to transfer any currency.
A cryptographic technology that could provide a decent level of anonymization on a blockchain. It makes sure individual transaction outputs on the blockchain can’t be traced.
the smallest unit of the Bitcoin cryptocurrency 0.00000001 BTC.
a person or group of people who created the bitcoin protocol and reference software having successfully solved the digital currency issue of the “double spend”.
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.
Secure Hash Algorithm is 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).
The cryptographic function used as the basis for bitcoin’s proof of work system.
are contracts whose terms are recorded in a computer language instead of legal language. they can be automatically executed by a computing system, such as a suitable distributed ledger system, usually also have a user interface and often emulate the logic of contractual clauses.
The programming language developers use to write smart contracts on the Ethereum network.
are blockchains that are interoperable with each other and with Bitcoin, avoiding liquidity shortages, market fluctuations, fragmentation, security breaches and outright fraud associated with alternative crypto-currencies.
a change to the bitcoin protocol wherein only previously valid blocks/transactions are made invalid. Since old nodes will recognize the new blocks as valid, a softfork is backward-compatible.
Simplified Payment Verification clients are Bitcoin lightweight clients which do not download and store the whole blockchain locally. These wallets provide a way to verify payments without having to download the complete blockchain. An SPV client only downloads the block headers by connecting to a full node.
interactions which get conducted off the blockchain without significantly increasing the risk of any participant.
a distributed storage platform and content distribution service.
It is a digital identity for something that can be owned, it represents an asset built on an existing blockchain (different from a coin).
a second blockchain used by developers for testing new versions of client software without putting a real value at risk
It refers to a distributed ledger that doesn’t require a native currency to operate.
A collection of transactions on the bitcoin network gathered into a block that can then be hashed and added to the blockchain.
A small fee imposed on some transactions sent across the bitcoin network. The transaction fee is awarded to the miner that successfully hashes the block containing the relevant transaction.
It 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).
Unpermissioned ledgers such as Bitcoin have no single owner, they cannot be owned. The purpose of an unpermissioned ledger is to allow anyone to contribute data to the ledger and for everyone in possession of the ledger to have identical copies. This creates censorship resistance, which means that no actor can prevent a transaction from being added to the ledger.
a file that contains a collection of private keys and communicates with the corresponding blockchain. Wallets contain keys, not coins, and require backups for security reasons.
a part of the Ethereum p2p protocol suite that allows for messaging between users via the same network that the blockchain runs on. The main task of whisper will be the provision of a communication protocol between dapps.
An authoritative report or proposal that is used in the web 3.0 community as an integral marketing tool to attract investors. Almost every ICO or ITO has a whitepaper on their website that is essentially an informative sales pitch.
the native cryptocurrency for the Ripple distributed ledger payment network. it acts as a bridge currency to other currencies.