The blockchain revolution has introduced many new practices into todayu2019s world, most notably, cryptocurrencies. As with most new technologies, the blockchain and crypto terminology is evolving and changing, with new phrases being coined constantly. Therefore, weu2019ve put together this handy glossary of technical terms that will give you a better understanding of the language of blockchain and help you master the jargon. n n # n A-C n D-H n I-M n N-P n S-W n n # n
51% Attack u00a0u2013 This term describes a situation in which too much of the blockchain networku2019s power is concentrated in one place. A user, or group of users, controlling 51% of the system can manipulate it on purpose, or inadvertently conduct conflicting transactions that can compromise the system. n A-C n
Airdropu00a0 u2013 A distribution of tokens by the operators of a cryptocurrency network.
The tokens are either given away to all holders of the cryptocurrency for free, or conditioned by some sort of activity, such as promoting the crypto on a social network.
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Altcoin u00a0u2013 Any cryptocurrency other than Bitcoin is called an altcoin (short for u2018alternative coinu2019).
There are hundreds of altcoins being traded around the world, includingu00a0 XRP ,u00a0 NEO ,u00a0 Stellar u00a0and many others. n
ASIC u00a0u2013 An abbreviation of u201cApplication Specific Integrated Circuit,u201d an ASIC is a chip designed specifically for a certain task. In the world of blockchain, it usually refers to chips developed to run on mining computers, and is considered superior to CPUs and GPUs. n
Bitcoin u00a0u2013 The first and largest cryptocurrency (by market cap).
u00a0 Bitcoin u00a0was launched in 2009 as a decentralized currency, built on on blockchain technology. It is the first real-world application of blockchain. Bitcoin was created by a person or group of people identifying themselves under the pseudonym Satoshi Nakamoto.
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Blockchain u00a0u2013 A decentralized network, built from a continuous chain of code segments of predetermined size (blocks).
All transactions on the network are stored on a public ledger, which exists throughout the network, meaning there is no need for a central server to authorize transactions on the network. n
Cold storage u00a0u2013 A security measure for storing cryptocurrencies in an offline environment. These can be a storage device (such as a USB flash drive) or a paper wallet. n
Consensus u00a0u2013 Since so much of the data on a public blockchain network is stored simultaneously on multiple areas of the network, the members want to have the same copy of these segments of codes (such as a public ledger) across the network. n
Cryptocurrency u00a0u2013 The first major application of blockchain, a cryptocurrency is a currency designed to have no central ownership, with each token and transaction uniquely encrypted. Blockchain technology is the infrastructure that enables cryptocurrencies to be stored and for tokens on the network to change hands. n D-H n
DAO u00a0u2013 an abbreviation of Decentralized Autonomous Organization. This terms describes an organization that uses blockchain practices, such as smart contracts, to manage itself, without the need for a central authority.
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Dapps u00a0u2013 Short for Decentralised apps. Essentially, these are programs that use blockchain to create any kind of application that runs on a decentralised network. n
Digital signatureu00a0 u2013 A common term used to identify a single individual or action on the Internet. In blockchain, it usually refers to a unique identifier given to a certain user, token or transaction.
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Fork u00a0u2013 Since blockchain is decentralized, each change to the network has to be accepted by its users in order to go through. If enough users accept an upgrade or code change, it is rolled out across the network. A change which still supports older versions of the network is called a Soft Fork, while one which makes it backwards incompatible is called a Hard Fork. On occasion, if thereu2019s a split in the community regarding a Hard Fork, it could result in a whole new, parallel blockchain network being created.
Such was the case with the creation ofu00a0 Bitcoin Cash andu00a0 Ethereum Classic . n
Genesis blocku00a0 u2013 The first block of code created on a blockchain network. n
Hash u00a0u2013 The practice of using an algorithm to give any piece of data a u2018digital fingerprint.
u2019 When storing information on blockchain, hashing is used to create a unified form for identifying blocks of code, by converting them into a string of numbers and letters of a fixed size. n
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ICO u00a0u2013 Initial Coin Offering. This term describes a situation in which a company raises funds by issuing cryptocurrency tokens, sold at a fixed price to early investors. n
Ledger u00a0u2013 A digital log of all of the transactions which took place on a certain blockchain network. Copies of the ledger are stored across the network and are constantly updated to match each other, so transactions can be verified by anyone on the network.
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Lightning Networku00a0 u2013 A u201csecond layeru201d solution, designed to greatly increase the speed of transaction processing time on a blockchain network. The Lightning Network creates a P2P network to process transactions, before broadcasting them to be logged on the underlying blockchain public ledger. n
Liquidityu00a0 u2013 The ease with which a certain cryptocurrency can be converted into cash. Liquidity is dependent on many factors, including supply and demand and transaction processing times. n
Mining u00a0u2013 The practice of allocating computer power to carry out transactions on the network and being rewarded with tokens.
Each transaction is encrypted by an equation which requires significant computing power to be processed. Miners who solve the equation first, thus enabling the transaction to take place, are rewarded with a small fee. n
Mining pool u00a0u2013 A construct created by a group of miners in order to process more transactions and receive more fees.
The funds are then split between the poolu2019s members. n N-P n
Node u00a0u2013 A computer on the network which operates a copy of the blockchain ledger.
Nodes are scattered around the network, helping it keep its decentralised form. n
Paper walletu00a0 u2013 A cold storage solution, which is considered one of the safest ways of storing cryptocurrencies. The paper wallet can be printed out on any printer and includes that useru2019s unique public and private key, encoded as QR codes. When users wish to gain access to their funds, all they need to do is scan their paper wallet.
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Peer-to-Peer (P2P) u00a0u2013 The practice of sharing information on a certain network directly between two parties, without the need of a server through which to pass the data. n
Private Key u00a0u2013 Each user on the network holds a private key.
The private key is known only to the user, and could be equated with a password. n
Proof of Stake u00a0u2013 A method which determines which users are eligible to add new blocks to the blockchain, thus, earning a mining fee. Using this method, of the users who participate in the mining process, those with more tokens are favoured over those with less. n
Proof of Work u00a0u2013 Preceding Proof of Stake, proof of work is a similar concept, as it is used to decide which user is eligible to create a block. However, with the Proof of Work method, eligibility is determined by computing power, and not by the minersu2019 digital wealth. n
Public Key u00a0u2013 If the aforementioned private key could be equated with a password, the public key is a username of sorts, as it is available for all to see on the public ledger. n
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SegWitu00a0 u2013 Short for u2018Segregated Witness,u2019 this terms refers to a solution that makes a blockchain network faster. SegWit could potentially be implemented as a soft fork on a blockchain network, improving its functions without the need to create a new currency or make the network backward incompatible.
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Smart Contract u00a0u2013 An algorithm which uses blockchain technology to automatically execute a certain contract. When the terms of a smart contract are met, it is executed, with the participating parties being rewarded according to the contractu2019s terms. Smart Contracts were made popular by theu00a0 Ethereum u00a0blockchain network. n
Token u00a0u2013 An individual coin related to a specific blockchain network, representing its currency, giving value to transactions within the network.
For example, theu00a0 Litecoin u00a0networku2019s token is called LTC. n
Transaction Fee u00a0u2013 Since transactions on a blockchain network require significant computing power, miners on the network compete for the right to process the transaction, by allocating their computing power.
The miner who ends up processing it, receives the transaction fee. n
Wallet u00a0u2013 An online program, or a native client program, which enables users to store, transfer and view their balance.
Different wallets support different cryptocurrencies, with many wallets offering support for various cryptocurrencies on a single platform. n
Whitepaper u00a0u2013 A document which serves as a report or guide to a complex issue. In the cryptocurrency world, white papers are used as a means of conveying a blockchain network or a cryptou2019s structure, plan and/or vision. n
Cryptocurrencies can fluctuate widely in prices and are, therefore, not appropriate for all investors.
Trading cryptocurrencies is not supervised by any EU regulatory framework. Your capital is at risk. This content is intended for educational purposes only, and shouldnu2019t be considered investment advice. n
Want to learn more about trading Ethereum and other cryptos? Visit u00a0 www.
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