50 Blockchain Terminologies Which are Commonly Used
Blockchain technology is disrupting almost every sector in the world. This technology is making revolutionary changes in many industries and growing rapidly, so the terminology surrounding it. There are many terminologies used in blockchain technology. Each has its own significance & meaning.
To utilize blockchain technology effectively, one must know all related key terms which are explained below:
An address is a very important term in the blockchain. It is nothing but a unique identifier used to identify the sender & receiver. A private key is used to generate an address that is unique to the address. Generally, the address is in the form of alphanumeric characters.
2. Application Specific Integrated Circuit (ASIC):
It is a type of computer processing chip that performs a singular function. ASIC boards have been used in the blockchain industry, to perform SHA256 hashing which is required for Proof-of-Work(PoW).
Airdrops are related to blockchain projects, specifically ICOs. It is all about distributing free tokens to people as rewards. Airdrop may or may not have incentives attached to it.
Transactions are stored into single and a new block of size 1MB is created every 10 minutes. Every block comprised 4 components: a summary of included transactions, a timestamp, reference to the previous block, and the Proof of Work.
5. Block Depth:
Block depth is defined as a block's position index in the blockchain relating to the most recently added block. A block that is seven blocks before the latest block will have a block depth of 6.
6. Block Height:
Block height is defined as a block's position index in the blockchain relating to zeroth block. The 10th block added in the chain will have a block height of 10.
7. Block Reward:
It is a reward that a miner gets after solving the block successfully. Miner adds the first transaction on the block, to claim the reward. The entire process starts with miners searching for blocks to be verified. After the block is found, transactions on the blocks are verified by solving a certain mathematical formula for the reward to be processed. Also, this reward is shared between the group of miners depending on the amount of work they have done.
Blockchain is distributed ledger technology. It consists of nodes that carry a copy of the decentralized ledger. It can be described as a structure that stores transactional records in chronological order while maintaining security, transparency, and decentralization.
9. Blockchain 1.0:
The first generation of blockchain technology performs simple token transactions. Bitcoin is the most prominent example of Blockchain 1.0
10. Blockchain 2.0:
The second generation of blockchain technology focuses not only on exchange transactions also on coding and programming in the form of smart contracts. Ethereum is the first of the blockchain 2.0 generation.
11. Blockchain 3.0:
This generation of Blockchain Development is an upgraded version of blockchain 2.0 with more focus on interoperability and scalability. The most promising blockchain 3.0 project is SkyCoin.
A coin is a digital asset that is native to its own blockchain. E.g. Bitcoin, Ether, Litecoin, etc. Bitcoin functions on its own blockchain i.e. Bitcoin blockchain similarly Ether operates on the Ethereum blockchain.
The consensus is the process through which nodes agree on a single point of the data value in the network. There are various types of consensus algorithms such as Proof of Work (PoW), Proof of Stake(PoS), and Delegated Proof of Stake (DPoS).
14. Consortium Blockchain:
It is a semi-private blockchain that is controlled by two or more groups of companies. These chains would be appropriate for two or more parties that need immutable communication.
A cryptocurrency is a digital currency created as a medium for exchange that used cryptography to secure financial transactions.
16. Cryptocurrency fork:
A cryptocurrency fork is a process by which existing software protocol is split into two versions. A cryptocurrency fork happens when developers alter the source code to add new features resulting in two chains.
17. Fork Hard:
It means a change in software protocol makes two co-existing versions incompatible with each other. New blocks do not support old ones. In this case, all users have to work on a newer version of the network to stay in sync with the network.
18. Fork Soft:
It is a software upgrade that is compatible with old & new versions. It is called backward compatible, which means users won't be cut off from the network if they fail to upgrade the software.
It is a technique used to secure communication between two or more parties by encrypting information.
20. Bitcoin: It is one of the blockchain cryptocurrencies stored on a digital wallet. People can send or receive Bitcoins with this digital wallet. Every transaction is stored in a public list i.e. blockchain.
21. DApp: DApp is an abbreviation for decentralized applications. These applications cannot be controlled by anyone without permission. That’s why decentralized! Decentralized apps need to be open-source, with the use of blockchain technology. DAPP is an open-source software platform implemented on decentralized blockchains. The token required for DApp has to be generated by the DAPP developers by programming the algorithms
22. Decentralization: Decentralization is the process of distributing information collected to each node in the network.
23. Decentralized Autonomous Organization (DAO): Decentralized Autonomous Organization is created by developers to automate decisions and facilitate cryptocurrency transactions.
24. Distributed Ledger Technology (DLT): Distributed Ledger Technology is a digital system used for storing transactions & their details at multiple places at the same time. Unlike, traditional systems, distributed ledgers do not have central data administrators.
25. Double Spend Attack: Double Spend Attack is a malicious activity performed by a miner or group of miners trying to spend crypto’s twice on the blockchain.
26. Ether: Ether is a cryptocurrency for the Ethereum blockchain. It is provided as a reward to the nodes which validate the blocks on the Ethereum blockchain.
27. Ethereum: Ethereum is an open-source platform with the ability to create a smart contract and develop, deploy, and maintain decentralized applications. This platform is fueled with its native tokens called Ether.
28. Ethereum Classic: Ethereum Classic (ETC) is another cryptocurrency that came into existence after a hard fork happened on the Ethereum blockchain. This is when the big Ethereum Decentralized Autonomous Organization was hacked. As it was hard forked means it carries the properties of the Ethereum chain.
29. Ethereum Gas: Ethereum gas is used as a basic unit to calculate the computational effort required to perform a transaction on the Ethereum blockchain.
30. Ethereum Virtual Machine: Ethereum Virtual Machine is a simulated state machine within each Ethereum node that is responsible for executing contract bytecode.
31. Federated Blockchain: Federated Blockchain is simply an updated form of the fundamental blockchain model, which makes it additionally perfect for some specific use cases. It provides a private blockchain and a more customizable perspective. Federated blockchains are very like private blockchains, with a few additional features.
32. Fiat Currency: Fiat money is issued and controlled by the government & is not backed by a physical commodity like gold or silver but instead backed by the government that issued it.
33. Gossip Protocol: It is the process by which nodes in the network transfer information with all other nodes. When a node receives new information, it sends it to every other node in the network. Eventually, all nodes will have some piece of information as they all are connected.
34. Hash: It is a cryptographic value that is generated by mapping the input of numbers and letters into an encrypted output.
35. Hash Collision: A hash collision occurs when two different inputs hash the same value.
36. Hashgraph: It is a distributed ledger that uses a gossip protocol to communicate transactions and tangle-style consensus algorithms.
37. Hashrate: Hashrate is the speed at which a particular machine performs a hashing function. It is calculated as the number of times that machines can perform specific hash functions per second.
38. Hash function: It is a cryptographic function that converts specific input into an encrypted output.
39. Hyperledger: A framework of tools offered by IBM & hosted by the Linux Foundation to develop enterprise-level consortium chains.
40. ICO: ICO stands for Initial Coin Offering. It is a fundraising mechanism through which new projects sell their crypto tokens in the exchange of cryptocurrencies.
41. Immutability: Immutability is the ability of blockchain to remain unaltered or unchanged. Immutability is achieved because of decentralization.
42. ERC20: ERC20 is the abbreviation of "Ethereum Request for Comments". It is the standard protocol used to issue tokens on the Ethereum network.
43. Proof-of-Work (PoW): Proof-of-Work is a famous consensus algorithm utilized in blockchain networks. The process starts with assigning a block to the miners then miners solve them with a computational puzzle. It requires computational power to do so. Upon succession, miners are rewarded with blockchain tokens or value.
44. Proof-of-Stake (PoS): Proof-of-Stake is another consensus algorithm. The nodes in a PoS based blockchain stake coins. Nodes with more stake coins have higher chances to be picked for making consensus decisions.
45. Smart Contract: A smart contract is a self-executing agreement embedded in computer code and managed by blockchain. This code contains a set of instructions agreed by parties to that smart contract.
46. Security Token Offering (STO): Security Token Offering is a kind of public offering in which security tokens are sold in cryptocurrency exchanges.
47. Stable Coins: Stablecoins are new types of cryptocurrencies whose value is backed by another fixed asset like the US dollar. These coins can be pegged to fiat currency, for example, the US dollar, different digital forms of money, valuable metals, or a combination of the three. Fiat is likely a mainstream alternative in the marketplace nowadays, which means one unit of a stable coin equals $1.
48. Token: The token is another synonym for cryptocurrencies that act as an asset or utility and reside on their own blockchain.
49. Utility Token: A utility token is a digital asset used to finance the network where its buyers can consume some of the network's products.
50. Security Token: A security token is another cryptographic token that is offered to investors after they invest in an ICO as a digital asset and act as financial security on the blockchain.
To explore Blockchain Development, it is crucial to understand the terminologies mentioned above. To know more about Blockchain Development, take a look at the solutions offered by RWaltz.
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