Blockchain - Glossary

Blockchain - Glossary

Key Terms and Concepts:

1. Blockchain:

A decentralized digital ledger that records transactions across multiple computers in such a way that the registered transactions cannot be altered retroactively. It is the foundational technology behind cryptocurrencies like Bitcoin and Ethereum.

2. Decentralization:

The distribution of control or authority away from a central point. In blockchain, decentralization ensures that no single party has control over the entire network.

3. Distributed Ledger Technology (DLT):

A database that is spread across several locations or among multiple participants. Blockchain is a form of DLT, where every participant has a copy of the database.

4. Smart Contracts:

Self-executing contracts where the terms of the agreement are directly written into lines of code. Smart contracts run on blockchain platforms, and automatically execute and enforce themselves when predefined conditions are met.

5. Consensus Mechanism:

The process by which all participants in a blockchain network agree on the validity of transactions. Common consensus mechanisms include Proof of Work (PoW), Proof of Stake (PoS), and Delegated Proof of Stake (DPoS).

6. Mining:

The process of validating and adding new transactions to the blockchain. In cryptocurrencies like Bitcoin, miners solve complex mathematical puzzles to secure the network and validate transactions, earning rewards in the process.

7. Cryptocurrency:

A type of digital or virtual currency that uses cryptography for security. Bitcoin, Ethereum, and Litecoin are popular examples of cryptocurrencies that operate on blockchain technology.

8. Node:

A participant in the blockchain network. Each node maintains a copy of the blockchain and may contribute to validating and relaying transactions across the network.

9. Token:

A digital asset or unit of value that is issued and managed on a blockchain. Tokens can represent anything from assets (e.g., real estate) to voting rights or access to specific services within a network.

10. Ledger:

A record of transactions, typically maintained in a digital form on the blockchain. Each block in the blockchain contains a list of transactions, and every transaction is time-stamped and immutable once recorded.

11. Hash:

A fixed-length string of characters generated by a cryptographic function. A hash is used to uniquely identify a block of transactions in the blockchain and ensure data integrity.

12. Block:

A collection of transactions that are bundled together and recorded on the blockchain. Each block contains a hash of the previous block, linking the blocks together in a chain.

13. Fork:

Occurs when a blockchain network splits into two separate chains. Forks can happen either as a result of a software upgrade (soft fork) or due to a disagreement within the community (hard fork).

14. Public Key:

A cryptographic key that is shared publicly and is used to receive digital assets on a blockchain. It is part of a pair, with a corresponding private key used to sign and authorize transactions.

15. Private Key:

A cryptographic key kept secret by the owner. It is used to sign transactions and provide proof of ownership of digital assets. Anyone with access to the private key can control the associated assets.

16. Wallet:

A digital tool or software that allows users to store, send, and receive cryptocurrencies or tokens. A wallet can be either hot (connected to the internet) or cold (offline and more secure).

17. Gas:

The fee required to perform transactions or execute contracts on a blockchain network like Ethereum. Gas is typically paid in the native cryptocurrency of the network (e.g., ETH for Ethereum).

18. Initial Coin Offering (ICO):

A fundraising mechanism in which new cryptocurrency tokens are sold to investors, often to fund the development of a new blockchain-based project.

19. Stablecoin:

A type of cryptocurrency designed to maintain a stable value by being pegged to an asset, such as a fiat currency (USD) or a basket of commodities. Examples include USDT (Tether) and USDC.

20. Decentralized Application (dApp):

A software application that runs on a decentralized network, typically a blockchain. dApps are built to be transparent, secure, and resistant to censorship.