Blockchain Explained: Common Terms You Must Know

Blockchain Explained: Common Terms You Must Know

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Blockchain

With time & technological advances, blockchain’s wide-reaching implications have entirely revamped not only financial services but other businesses & enterprises as well. Industries suchlike Automobile, Real-Estate, Insurance, Pharmaceutical and even Food & Farming has adapted this promising technology in order to survive & last longer in this dynamic environment with enhanced security & transparency.

Blockchain Technology has a lot more than we can imagine. To make people familiar with the most common terms, so that they do not feel let out from an aggressive high-tech discussion.

Common Terms You Must Know blockchain

Here we have brought a miniature Blockchain wiki & other words related to blockchain technology for you!

Blockchain For Dummies: Understanding Blockchain

Dig deeper & grasp Blockchain info from the beginning!

1. Address

Blockchain Address is a random string of alphanumeric characters which are used to transmit & receive cryptocurrency transactions on the Blockchain network. In layman’s language, Address can be defined as the bank account number of an individual to which sender transfers money. The blockchain address is shared by receiver to the sender.

bitcoin address
Image Source: Bitcoin Stack Exchange

2. Agreement Ledgers

Can be defined as a simple business ledger where certain agreements are defined that are used by two or more parties to negotiate & reach agreement.

3. Altcoin

There are thousands of alternatives to Bitcoin comprising of unique differences, purposes & functionalities, those alternatives are known as Altcoins. They can be expressed as any digital cryptocurrency (except bitcoin), withal Altcoin is an abbreviation of “Alternative to Bitcoin”.

They were introduced after the success of Bitcoin (first digital currency) so that other peer-to-peer currencies can attempt to imitate the same success in the crypto world. Altcoin is every other cryptocurrency apart from Bitcoin.

altcoin address
Image Source: Just Keep Shipping

4. ATH

Short form for All Time High, ATH is used in respect to any asset (cryptocurrency) that has reached to its highest value ever.

ath coin
Image Source: newsbtc.com

5. ASIC

An acronym for Application-Specific Integrated Circuit. To broke down into simple terms, “Application-Specific” means built for specific purpose & “Integrated Circuit” is a computer chip, that helps in achieving the desired goal. It’s basically a computer or hardware solely dedicated to mining.

They help in recording transactions on Blockchain!

6. Bitcoin

Introduced back in 2009, Bitcoin Blockchain is the first digital cash that started the cryptocurrency movement. It’s an open-source, decentralized cryptocurrency that doesn’t require any middlemen or centralized issuer to run and the transactions are taken place between users directly.

bitcoin coin
Image Source: cryptocomes

7. Blockchain

Still confused about Blockchain Technology? Are you among those millions of people who search for Blockchain Definition each day. Here’s an unambiguous essence about Blockchain for you.

In layman terms, it’s a revolutionary technology that allows you to create permanent yet secured digital transactions.

In technical terms, it’s a decentralized public ledger & peer-to-peer platform where people meet to transact without any interference of a centralized authority. The ledger contains blocks of data of every transaction made within the chain.

8. Block Explorer

Block Explorer is simply a Blockchain’s search engine where you can learn & follow live transactions happening on the Blockchain.       From all the latest blocks discovered by miners to see how block rewards are distributed to miners & others.

It is referred as a website or an online tool that allows you to read & search about Blockchain’s data. Those websites let you explore different transactions, & other useful information including hash rate, coin supply & transaction growth. Most famous Blockchain Explorers are: Blockcypher, Blockr, BTC.com.

At first you may get confused with all the data surfaced on the screen, but once you get better understanding blockchain than everything quickly starts to fall into place.

blockchain expolorer
Image Source: Coinsutra

9. Block Height

Indicates to the number of blocks that are connected on the single Blockchain. For example, block height “zero” will be referred to as the very first block (which is also known as Genesis Block) on the blockchain.

10. Block Reward

Block Reward is known as the incentive for miners who successfully cracks the calculations during mining process. Each time a miner finds a new block, they have to verify the transactions on the Blockchain, which in turn generates new coins. For that miners are paid with Block Rewards (Number of blocks created + Transaction fees).

11. Central Ledger

Also known as general ledgers that stores all the transactions and other related information, maintained by a central agency.

12. Chain Linking

It is the process of linking two blockchains to one another and letting them to allow transactions between the chains. Chain liking solves the problem, when cryptocurrencies will be able to communicate & exchange assets between them.

chain linking blockchain
Image Source: Hacked

13. Cipher

Most of you might be aware of the term. For those who have no clue, Cipher is basically an algorithm used for the purpose of encrypting & decrypting an information. Ciphers are just series of steps that makes any information unreadable, and you’ll be needing a secret key in order to unlock the cipher.

See Also:-
8 Common Encryption Terms & Their MeaningsEncryption is the process of protecting your data by using “secret codes”. We encounter with the word ‘encryption’ everyday but...

14. Coinbase

It’s the most famous online cryptocurrency exchange platform where people meet to purchase/sell, manage & store their digital currency. The platform incorporates all the trading activities, including offering a software to businesses so that they can accept digital coins as payments as well.

Want to start trading in crypto world, Join Coinbase.com!

See other popular cryptocurrency exchanges here!

15. Confirmation

Confirmation is a term used when a block is hashed & added on the Blockchain successfully.

16. Consensus

The term ‘Consensus’ is used when all the people on a particular Blockchain network agrees to the validity of a transaction. The process is hold by group of peers which maintains the ledger and ensures its reliability & security before its added or recorded on the Blockchain.

If we talk particularly about Bitcoin Blockchain, the process requires electricity in order to assure the security of the system.

Consensus coin
Image Source: Blockgeeks

17. Cryptocurrency

Also known as currency tokens, Cryptocurrency is a short for ‘Cryptography’ a technology that is basically used for security & hiding information purpose. Referred as e-money or digital assets that are quicker, cheaper & most importantly reliable than using cash.

Transactions made with this digital currency are anonymous, untraceable & also creates a niche for illicit transactions as well. Additionally, they operate independently of a central bank.

18. Cryptography

As described above, cryptocurrencies are based on the technology known as ‘Cryptography’, which is dedicated towards preventing manipulation, fraud, keeping information confidential & making sure that only the original sender could read the message.

The whole process takes place by encrypting & decrypting the information.

There are various types of cryptography, with digital coins, cryptography process is used to hide money & make the people and transactions unreadable to others.

19. dApp

dApp is an abbreviated form of Decentralized Application that consist of backend codes that run on a decentralized P2P network (peer-to-peer), hence immutable & tampering proof.

Decentralized Application is something that must be completely open-source & moves autonomously without any interference of any entity in majority of its tokens. They are diffused with several Blockchain security mechanisms in order to secure data, make it accessible to all & have complete transparency for users & third-parties.

dApp coin
Image Source: Make Tech Easier

20. DAO

DAO stands for ‘Decentralized Autonomous Organization’ that runs on Blockchain. As the name self explains it’s a leaderless or self-governing organization supported by network of computers. Idea behind forming DAO was to work with popular cryptocurrencies & digital ledgers with the initiative to move forward with utmost transparency & anti-corruption innovations for all governments & businesses.

21. Dash

A type of cryptocurrency that has all the capabilities of Bitcoin, actually even more than that including the anonymity functionalities that Bitcoin doesn’t have. Developed by a lead developer Evan Duffield in 2014 as XCoin, later it was rebranded to DarkCoin and now it’s well known by the name Dash.

Learn more about Dash here & here!

22. DEVCON

The name DEVOCM short for Developer Conference is an event held annually about Ethereum Blockchain. The conference is considered as the most anticipated gathering for blockchain application and platform developers to talk about some list of various topics.

This year’s DEVCON will be held in Prague from 30TH October to 2nd November.

devcon
Image Source: CryptoCurrency Times

23. Digital Signature

A mathematical technique used to validate the authenticity of a message, document or software. A digital signature is a proof that no alterations or tampering has been done with the contents of a message.

24. Distributed Ledger

Can be referred to as a system where independent computers records, share & synchronize data simultaneously. With the help of distributed ledger technology, replicas of recording are stored by each PC and instead of keeping data centralized as in traditional ledger. Blockchain uses DLT (Decentralized Ledger Technology) to organize data in blocks that are chained together in an append only mode.

25. ERC-20

ERC-20 (Ethereum Request for Comment) is a technical standard meant for issuing tokens that can be solely used on Ethereum Platform. Token here, can be represented as digital assets that have wide varieties of value attached to it.

ERC-20 is token standard that defines common list of rules that all Ethereum tokens must follow.

erc 20 coin
Image Source:Cryptosominiac

26. Ethereum

Back in 2008, a digital coin known as Bitcoin was introduced as the new way of sending values over the Internet. Since it was an open-source platform, certain programmers tried their hands to invent something similar to Bitcoin. After four years, a 19-year programmer developed a platform based on Bitcoin’s innovation and reformed the Internet entirely- that platform was Ethereum.

It’s a blockchain based decentralized platform that aims to solve issues related to fraud, censorship & third-party. Not only this, it’s actually programmable blockchain that not only provides set of pre-defined functionalities (to so transactions) but it also allows users to create their own operations according to themselves.

Therefore, it will be safe to say that Ethereum is a next generation Blockchain & it’s actually more than just a cryptocurrency.

Want to know more about Ethereum, click here!

27. EVM

EVM stands for Ethereum Virtual Machine, is a Turing complete, stack based virtual machine embedded within each Ethereum node that are responsible to perform arbitrary EVM Byte Codes (Ethereum’s own programming language).

evm token
Image Source: Token Desk

28. Fiat Currency

Fiat Currency can be determined as the asset that doesn’t hold user value but declared to be valuable by the government or other official organizations or parties that agrees to exchange it.

In layman terms, any currency that’s not bitcoin or altcoin is Fiat Currency.

See difference between Fiat Currency & Cryptocurrency for better understanding!

29. Fork

Fork can be simplified as an alternative version of Blockchain. When two blocks are simultaneously chained on different networks, so that two parallel block chains are created, from which one is winning blockchain.

30. Genesis Block

The first ever block of Bitcoin on Blockchain.

genesis block
Image Source: My Bitcoin Site

31. Going Long

Going Long is known as the margin trade that is treated as profit when price of a particular cryptocurrency increases.

32. Going Short

Going Short is known as the margin trade that is treated as profit when price of a particular cryptocurrency decreases.

33. Halving

Comes from the word ‘Half’, and in instance with cryptocurrencies, halving is the process of reducing bitcoin mining rewards issued to users by half. For example: At the time of mining process, whatever number of coins is generated per block, that will be simply decreased by 50%. This process is called ‘Halving’. 

34. Hardware Wallet

Similar to your regular wallet, hardware wallet is a device that securely stores your cryptocurrency. Sometimes also called Hardwallet. Some of the most reputed hardware wallets are: Trezor, Keep Key, Ledger etc.

hardware blockchain
Image Source: Crypto Income

35. Hash Function

Hash Function is any type of function that is used to map data by producing a fixed-size & unique hash values in a transaction input.

36. Hashing

Is the process of applying a hash function to encrypt or decrypt data? Hashing is used to protect & confirm the transactions on blockchain.

37. ICO

Stands for ‘Initial Coin Offering’ is a means of crowdfunding for cryptocurrencies. It is more or less similar to the concept of an IPO (Initial Public Offering) of a stock, where ICO plans on funding people who want to create new cryptocurrency & wants to start selling to the public.

initial coin offer
Image Source: cointora

38. Lightning Network

Admit it, Blockchains are super slow, and also expensive! If anyone has to send some number of Bitcoins, he has to wait for couple of hours and also pay heavy transaction fees. With such status, how Blockchain would ever be able to take over the world?

We need some concept that has ability to solve the non-scalability of Blockchains, and what’s that idea? Lightning Network!!

The idea behind Lightning Network is, that not all transactions are necessary to be added on the Blockchain.

So, how this should actually work? Suppose, if you and I transact on regular basis, in such case we can bypass the adding of transactions on the blockchain and we’ll actually open a payment channel between us. We’ll record its opening on the Blockchain and transact through the channel as & when required, the channel would remain open for number of hours, months, or decades. The only time we have to touch the Blockchain again is when we’ll close the channel. And ultimately recording the final status of our transactions that occurred all of the while.

With such payment channels, we can make millions of transactions and that too without waiting for long hours & hefty transaction fee needed for transacting.

And it’s all possible because of Lightning Network technology!

39. Litecoin

Created by an ex-Google employee named Charlie Lee, Litecoin is a type of cryptocurrency that works on the basis of Bitcoin’s innovations with improvisation of transaction speed & reduced transaction cost. He wanted to create a lighter version of Bitcoin, that is not only cheap but focuses on using latest technology to provide greater performance & user experience.

lietcoin
Image Source: crypto crimson

40. MCap

Short for Market Capitalization, that means the total market worth of a company.

41. Microtransaction

As the name is self-explanatory, Microtransactions in context with digital currency is any transaction that is relatively small & its transaction value is as low as sending a penny.

42. Mining

You may have heard about cryptocurrency mining several times, it’s actually little confusing at first, but I’ll try to keep it simple, so that novices can understand the concept easily.

Mining is simply an act of recording transactions on the large distributed ledger (blockchain). The term is used for discovering & solving blocks (which are actually a combination of complex mathematical calculations & algorithms), which is done with the help of special hardware & software.

Now why to record transactions? To keep an authenticate & permanent entry of data that has carried out between parties. Once the transaction is verified by entire network, it is recorded on the chain.
After that, Miners are given block rewards & coins. This is certainly a process of generating new digital coins.

Want to Mine Bitcoin? Learn here!

43. Mining Pool

Mining Pool is a place where group of miners meet. Combine their computer power, share hardware & other resources to solve complex mathematical calculations for generating rewards.

Joining pools certainly increases the chances of solving problems, so that higher block rewards can be created which gets split among all the members in a group. Possibly the best way for novices to start with mining!

Want to join Best Ethereum Mining Pools? Go here!

mining pool
Image Source: aBit Greedy

44. Mooning

Mooning is a term said, when the movement of the price of a specific cryptocurrency goes way up, sky-high, and to the moon.

45. xMulti-Signature

Adding multi-signature to any transaction simply adds an extra layer of security to safeguard & authorize a transaction. The signatures of several keys to unlock funds is Multi-Signature or Multisig.

46. Node

Any device such as computer or cell phone that is linked to a Blockchain network is said to be a node. It can be able to send, receive & contribute to the Blockchain.

47. Oracle

Oracle is a bridge between Blockchain & external world to provide data needed by smart contracts to prove performance.

Read in Depth here!

48. P2P

P2P stands for Peer-to-Peer network, means those computer systems that are linked to one another over the Internet. In context with Blockchain, P2P network is the decentralized interaction between nodes in order to share, store information, files or data directly.

p2p token
Image Source: ASD Team

49. Private Key

A string of alphanumeric characters that is used to initiate a transaction over Blockchain. Ans as the name suggests, it should be kept hidden & secret.  Each time a user sends Bitcoins, the private key is needed to sign the transaction. The private key decrypt those messages, which are encrypted with matching public key.

50. Private Blockchain

It’s a secret blockchain place where selected or invited users can participate.

51. Public key

As private keys re intended to be secret & not to be disclosed to anyone. Public key is a cryptographic key which can be used by anyone to encrypt messages not decrypt.

52. PoA

Proof of Authority (PoA) is a consensus mechanism implemented in Private Blockchains, in order to assign specific number of clients with particular private keys so that they have an authority to mine certain or all the blocks in the blockchain.

53. PoS

Proof of Stake is another consensus algorithm that works upon by generating rewards to people, on the basis of number of digital assets they already own or hold. Therefore, the more coins you own the more you can gain by staking with this mechanism.

54. PoW

Proof of Work is a protocol that rewards you on the basis of how much you perform. Basically, the more you mine, more computation power you provide during the process, the more coins you will be awarded.

Learn more about PoS & PoW from our previous blog!

pow coin
Image Source:Software Engineering Daily.com

55. Ripple

Meet Ripple, a cryptocurrency with an exceptional technology that allows banks, companies & other institutions/organizations to instantly send money at almost no cost.

This cryptocurrency employs a payment network known as ‘RippleNet’ that allows users to send & receive any currency throughout the world.

56. Ring Signature

Ring Signature is an amazing anonymity cryptographic technology that just makes sure that no individual can trace transaction outputs on the blockchain.

57. RSI

Refers to Relative Strength Index, which is a measurement tool used in Crypto and Stock Analysis.

58. Satoshi

Denoted as the smallest unit of a Bitcoin. 1 Satoshi = 0.00000001 Bitcoin.

59. Satoshi Nakamoto

Exactly nobody knows who he is, but everybody knows what he did. He is the man, behind the invention of Bitcoin Blockchain. To date it is unclear that it’s the name of a single person or a group. The pseudonymous inventor suddenly evaporated in 2011 from the web, leaving the responsibility of Bitcoin Blockchain to group of Bitcoin enthusiasts.

60. Sell Wall

With reference to a depth chart, traders can study the current limit of buy & sell points.

Sell wall is referred to a situation when the amount of sell orders for a particular digital coin is comparatively higher than its buy orders. And vice versa happens in Buy Wall.

sell wall
Image Source: stackoverflow.com

61. SEPA

Stands for Single European Payments Area, it is responsible for harmonizing the way cashless payments are made across Europe and other member states. In context with cryptocurrencies, SEPA is a European-led agreement to make Bitcoin & other exchanges go smoother & faster.

62. SHA-256

It’s a type of hashing algorithm that is utilized within the Bitcoin blockchain network. Mainly under mining process to capture gains & for creation of bitcoin addresses.

63. Smart Contracts

Smart Contacts just acts as an automated legal tender on Blockchain Network that is entirely coded.

Read further about Smart Contracts here!

64. Tanking

An opposite of ‘Mooning’ term.

65. Testnet

Testnet is basically a pseudo version of Bitcoin Blockchain Network. Developers & testers use the platform for testing. Its basic purpose is to experiment without worrying about expending assets on the main chain.

Even the coins used on the Testnet platform are separate & distinct from actual bitcoins.

testnet
Image Source: medium

66. Token

In general, token is represented as a physical or virtual object. In crypto world, Token acts just as another alternative to cryptocurrencies. The three main tokens built with Blockchain Technology are: Utility, Security & Equity Token.

67. Transaction Block

A set of cryptocurrency transactions that are packed into a block which is further hashed & recorded on the Blockchain network.

68. Transaction Fee

All cryptocurrency transactions incur a nominal amount of fees. Every time a miner solves a block, he receives Block reward with added transaction fees.

69. Orphan Block

They are those blocks which are no longer part of the blockchain network. Due to the time lag in acceptance of blocks in the network as compared to other qualifying blocks is referred as Orphan Blocks. They are also acknowledged as rejected blocks.

70. Utility Token

Utility Token refers to a token that is attached with usability. That are used for accessing a product or service.

71. Volatility

It’s a measurement of the price movement of an investment. Like, crypto market is well-known for its high volatility.

72. Wallet

Wallet is a file that collects your private keys & bitcoin address keeping them safe from any fraud or illicit activity. Remember it should not be share with anyone. It usually contains a software client which are meant to send, receive & store your cryptocurrencies as well.

wallet coin
Image Source: live bitcoin news.com

73. Wei

Smallest denomination of Ethereum.

74. Whale

The term is used to acknowledge the person who’s an extremely wealthy trader or has strong power to be a market mover.

75. Zero Coin

A secret protocol that is created fundamentally to keep the identities of cryptocurrency exchangers hidden or anonymous.

76. 51% Attack

51% Attack is a situation where a vulnerability arises with Blockchain Technology, when an entity or group of miners try to issue conflicting transactions in order to harm the network.

Sometimes also referred as Double Spend Attack. When miners or group of miners try to sell a particular cryptocurrency twice on the Blockchain Network.

Blockchain Explained:

Hope this blog was able to solve all your queries regarding Blockchain Technology. Have confusion about any other blockchain keywords? Do give us a chance to explain you. Drop the terms in the comment section below!

See Also:-
Top 10 Frequently Asked Questions About CryptocurrencyStill confused about Cryptocurrencies? No worries, this blog explores the most common questions to ask about cryptocurrency. Find answers to...
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