Blockchain Glossary: From A-Z

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51% Attack

When more than half of the computing power of a cryptocurrency network is controlled by a single entity or group, this entity or group may issue conflicting transactions to harm the network, should they have the malicious intent to do so.

Address

Cryptocurrency addresses are used to send or receive transactions on the network. An address usually presents itself as a string of alphanumeric characters. These addresses generally manifest in a long string of alphanumeric characters and will look something like: 1MhN5qfH1vgx9CLL17i3DK9D2gzrHR7dZF A wallet address is the public portion of the two encrypted keys necessary for a holder to accept or verify a transaction.

Altcoin

An altcoin is the community accepted name for any coin that isn’t Bitcoin.

ASIC

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

Authentication

The process of verifying an identity or credential, to ensure you are who you said you were.

Bitcoin

Bitcoin is the first decentralised, open source cryptocurrency that runs on a global peer to peer network, without the need for middlemen and a centralised issuer.

Block

Blocks are packages of data that carry permanently recorded data on the blockchain network.

Blockchain

A blockchain is a shared ledger where transactions are permanently recorded by appending blocks. The blockchain serves as a historical record of all transactions that ever occurred, from the genesis block to the latest block, hence the name blockchain.

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

Block height is the number of blocks preceding the genesis block (first block) on the chain. A genesis block will always have a height of zero because nothing precedes it. It’s a metric used to create a bearing on time in the programming world as well as a few other functions such as maintaining counter-party and betting in the crypto world. Considering that a new Bitcoin block is made every 10 minutes, you can work out certain time related pieces of information if you have the total length of the chain.

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.

Cipher

A secret form of writing, using substitution or transposition of characters or symbols.

Ciphertext

The plaintext after it has been encrypted.

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

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

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.

Cryptography

Another name for cryptology

Cryptology

The science and study of writing, sending, receiving, and deciphering secret messages. Includes authentication, digital signatures, the hiding of messages (steganography), cryptanalysis, and several other fields.

Dapp

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

DAO

Decentralised 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.

DES

The Data Encryption Standard, proposed in 1977 by the National Bureau of Standards (now NIST), with assistance from the National Security Agency. Based on the "Lucifer" cipher developed by Horst Feistel at IBM, DES is a secret key cryptosystem that cycles 64-bit blocks of data through multiple permutations with a 56-bit key controlling the routing. "Diffusion" and "confusion" are combined to form a cipher that has not yet been cryptanalyzed (see "DES, Security of"). DES is in use for interbank transfers, as a cipher inside of several RSA-based systems, and is available for PCs.

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 centralised data centre.

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. Analogous to a written signature on a document. A modification to a message that only the signer can make but that everyone can recognize. Can be used legally to contract at a distance.

Double Spending

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

Ethereum

Ethereum is a blockchain-based decentralised 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.

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 or first few blocks of a blockchain.

Halving

Halving is the reduction of minable reward every so many blocks. For Bitcoin the reward is halved after the first 210,000 blocks are mined and then every 210,000 thereafter.

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.

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).

Mining

Mining is the act of validating blockchain transactions. The necessity of validation warrants an incentive for the miners, usually in the form of coins. In this cryptocurrency boom, mining can be a lucrative business when done properly. By choosing the most efficient and suitable hardware and mining target, mining can produce a stable form of passive income.

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. A node is essentially a computer connected to the Bitcoin network. A node supports the network through validation and relaying of transactions while receiving a copy of the full blockchain itself.

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

A consensus distribution algorithm that rewards earnings based on the number of coins you own or hold. The more you invest in the coin, the more you gain by mining with this protocol.

Proof of Work

A consensus distribution algorithm that requires an active role in mining data blocks, often consuming resources, such as electricity. The more ‘work’ you do or the more computational power you provide, the more coins you are rewarded with.

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.

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

Smart contracts encode business rules 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

Some representation, such as ID cards, subway tokens, money, etc., that indicates possession of some property or value.

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.