Blockchain Terminology

Account

A public and private keypair that "holds" your funds.

Your funds are actually stored on the blockchain, not in the wallet or account. Just like your Reddit account has a username (public) and password (private), so does your Ethereum account–the difference being that you are the custodian of your Ethereum keys, while Reddit holds your login information for their site. For additional security, you can use a password to encrypt your private key which would result in a username (public) and password (private) and password for that password (private + more secure). See also ‘keystore file’.

Actor

In the blockchain industry, any entity that is capable of participating in an action or a network.

Address

In the blockchain industry, the public address of a private key. Addresses serve as an actor's or an account’s identity and are typically represented in hexadecimal notation.

A blockchain address is a collection of unique numbers and letters that points to a specific destination where cryptocurrency can be sent and received within a blockchain network.

Used to send and receive transactions on a blockchain network. An address is an alphanumeric character string, which can also be represented as a scannable QR code. In Ethereum, the address begins with 0x. For example: 0x06A85356DCb5b307096726FB86A78c59D38e08ee

Much like a URL, a blockchain address is the location to or from which transactions occur on the blockchain.

Air-Gapping

A method for securing computers in which the device does not connect to the internet or any other open networks.

Airdrop

A token distribution method used to send cryptocurrency or tokens to wallet addresses. Sometimes airdrops are used for marketing purposes in exchange for simple tasks like reshares, referrals, or app downloads.

Altcoin

Any blockchain-based coin or token that is considered an alternative to Bitcoin. Popular Altcoin examples include Ether, Litecoin and Dogecoin.

Any digital currency alternative to Bitcoin. Many altcoins are forks of Bitcoin with minor changes (e.g., Litecoin).

Any coin or token other than Bitcoin.

Aml (Anti-Money Laundering)

A set of international laws enacted to diminish the potential for criminal organizations or individuals to launder money. These rules and laws are applied to cryptocurrencies with varying effects in different jurisdictions.

Api (Application Programming Interface)

A software intermediary that allows two separate applications to communicate with one another. APIs define methods of communication between various components.

Application-Specific Integrated Circuit (Asic)

A type of computer processing chip that performs a singular function.

Due to its specialization, an ASIC is much more efficient and cost-effective than a generalized computer processor that can perform many functions. In the blockchain industry, ASIC boards have been used to perform the SHA256 hashing required for Proof-of-Work (PoW), greatly outstripping the hashrate of even the most powerful GPU miners.

ASICs are silicon chips designed to do a specific task. In ASIC use for mining cryptocurrencies, the ASIC will perform a calculation to find values that provide a desired solution when placed into a hashing algorithm.

Attestation

Under the Proof of Stake mechanism (on the Beacon Chain), every validator other than the one proposing a new block will provide an attestation, or vote, in favor of a block with which it agrees, hereby forming consensus and confirming the block and the transactions it contains. See also ‘Proof of Stake’.

Attestation ledger

To prove the authenticity of a cryptocurrency transaction and to verify that a transaction has been completed, a record book -- also called an attestation ledger -- is used to show a receipt of the transaction.

A register or account book created for the purpose of providing support/evidence of individual transactions. Normally, an attestation ledger is used to verify that a transaction has been carried out, or to verify the authenticity of products or transactions.

Bitcoin (Btc)

A decentralized blockchain that specifically transacts tokens between accounts.

Bitcoin is the original blockchain-based cryptocurrency. Bitcoin uses Unspent Transaction Outputs (UTXOs) to store data and a Proof-of-Work (PoW) consensus algorithm.

Bitcoin's base unit token is the satoshi, named after Satoshi Nakamoto, the original developer of the Bitcoin protocol.

First created in 2008, Bitcoin is the first cryptocurrency that uses a decentralized model with no need for a central bank.

The first cryptocurrency based on a Proof of Work (PoW) blockchain. Bitcoin was created in 2009 by Satoshi Nakomoto — a pseudonym for an individual whose real identity is unknown — and the concept of cryptocurrency was outlined in a white paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System." Use "Bitcoin" for the blockchain/network; "bitcoin" for the cryptocurrency. The plural of bitcoin is just bitcoin; the abbreviation is BTC, with a space: I have 250 BTC.

Block

A single section of discrete data. Blocks typically comprise a list of transactions or actions to be performed when processing the data in the block.

A record that stores data -- commonly transactional in nature.

Think of a blockchain as consisting of a ledger that is being constantly updated, and those changes synced between any number of different nodes (indeed, "distributed ledger technology" is another phrase used to describe it).

After a certain number of transactions have been added to the ledger and consensus has been reached among the nodes that the transactions are valid, then they are cryptographically locked into a "block" and officially recorded. This "block" forms the basis for the next one; in this way, they are all linked together in a chain, hence–blockchain.

A group of transactions entered into a blockchain; analogous to a page of a ledger or record book.

Block, Canonical

A block that has been included in the primary blockchain and is directly or indirectly referenced by future blocks. Blocks that are not canonical may have been valid but were discarded in favor of the canonical block.

Block, Genesis

The original block in a blockchain. The genesis block has a block height of zero, and all other blocks are intrinsically linked to it.

Genesis blocks can be configurable to create a fork of a chain for purposes such as pre-loading accounts with tokens for a test network or specifying different block parameters.

The Genesis Block is the first block of data ever created on a blockchain network.

The initial block of data computed in the history of a blockchain network.

The first or first few blocks of a blockchain

Block Depth

A block's position index in the blockchain relative to the latest (most recently added) block. A block that is five blocks before the latest block will have a block depth of 5.

Block Explorer

A software, generally with a graphical user interface (GUI), that allows users to read and analyze the data contained on a blockchain.

Block Height

A block's position index in the blockchain relative to the genesis (zeroeth) block. The 5th block added to a chain will have a block height of 5.

The number of blocks connected together in the blockchain. For example, Height 0 would be the very first block, which is also called the Genesis Block.

Block, Ommer

Under the Proof of Work (PoW) consensus mechanism, miners received rewards for being the first to mine a new block. However, at times a block would be mined just after, and in competition with, the last block; this block, known as an ommer and previously as an uncle, could get rolled into subsequent blocks and the miner of the original ommer would get a partial block reward. All of this functionality is deprecated as of the Beacon Chain.

Block Reward

For blockchains with a native cryptocurrency, miners that produce a block are allowed to allocate a designated number of tokens to be spontaneously generated and sent to an address of their choosing. This reward serves as compensation for the miner's support of the network and incentivizes additional miners to join.

The reward given to a miner after it has successfully hashed a transaction block. Block rewards can be a mixture of coins and transaction fees. The composition depends on the policy used by the cryptocurrency in question, and whether all of the coins have already been successfully mined. The current block reward for the Bitcoin network is 12.5 bitcoins per block.

Block Time

When we talk about ‘block time’, we’re referring to how long it takes for a block of transactions (see ‘block’) to be confirmed by the network, either by miners under PoW or by validators under PoS. See also ‘Proof of Work’, ‘Proof of Stake’.

Blockchain

A method of storing data in discrete sections (blocks) that are linked together. Blockchains specify criteria for what data can be stored in a block and reject invalid data.

The submission of blocks to a decentralized blockchain is governed by its consensus mechanism.

A series of blocks that are bound together using cryptographic signatures. Because of the use of secure encryption methods and a distributed database structure, blockchains are helpful in securing important data such as cryptocurrency.

A digital ledger comprised of unchangeable, digitally recorded data in packages called blocks. Each block is ‘chained’ to the next block using a cryptographic signature. Ethereum is a public blockchain, open to the world; its digital ledger is distributed, or synced, between many nodes; these nodes arrive at consensus regarding whether a transaction is valid before encrypting a number of transactions into a block. For more on blockchain technology, see here. See also ‘block’.

A mathematical structure for storing digital transactions or data in an immutable, distributed, decentralized digital ledger consisting of blocks that are linked via cryptographic signature that is nearly impossible to fake, hack or disrupt.

Blockchain 1.0

The generation of blockchain technology that focused on performing simple token transactions. Blockchain 1.0 chains have limited scope and ability, but served to prove the fundamental technologies of blockchains and show that a market existed for those technologies.

Bitcoin was the first of the Blockchain 1.0 generation.

Blockchain 2.0

The generation of blockchain technology that enabled smart contracts and generalized processing on chain. Blockchain 2.0 chains are typically built on Turing-complete programming languages and provide expanded capabilities beyond simple peer-to-peer (P2P) value exchange.

Ethereum was the first of the Blockchain 2.0 generation.

Blockchain 3.0

The generation of blockchain technology that focuses on scalability and interoperability. This generation of blockchain typically enables the use of smart contracts.

Blockchain 3.0 chains are currently in early development with no front-runners as of yet. Two promising Blockchain 3.0 projects are SkyCoin and EOSIO.

Blockchain storage

An emerging technology for decentralized data storage. It's appealing because it's transparent, verifiable, traceable and tamper-proof.

Public Blockchain

A globally open network where anyone can participate in transactions, execute the consensus protocol to help determine which blocks get added to the chain, and maintain the shared ledger.

Blockchain (Private a.k.a. Permissioned)

A blockchain that resides on a private network of computers that is only accessible to those with permission.

Blockchain (Public a.ka. Permissionless)

A blockchain that resides on a network of computers around the world that is accessible to everyone.

Banking Secrecy Act (Bsa)

Legislation passed in the United States in 1970 that requires financial institutions to assist government agencies in detecting and preventing money laundering. BSA requirements include mandatory reporting of certain activities, record keeping for all customers, and limitations on what kind of monetary instruments may be purchased or exchanged.

Bounty / Bug Bounty

A reward offered for exposing vulnerabilities and issues in computer code.Byzantine Fault Tolerance

The ability of a network to properly reach consensus at any time, assuming that no more than 1/3 of its actors are malicious.

A mechanism used to adapt to node failures or malicious attacks where the distributed system can continue operating.

Brain Wallet

A blockchain account generated from a seed phrase or password or passphrase of your choosing. Humans are not capable of generating enough entropy, or randomness, and therefore the wallets derived from these phrases are insecure; brain wallets can be brute forced by super fast computers. For this reason, brain wallet are insecure and should not be used. See also ‘Seed phrase / Secret Recovery Phrase’.

Buidl

Ostensibly coined (see what we did there) by Gitcoin’s Kevin Owocki. It reflects the Ethereum-focused mindset of not just investing in a cryptocurrency as a store of value, but rather investing in it as an ecosystem and a platform for public goods and software; it complements, in this sense, the now-infamous HODL.

Bytecode

Bytecode is a "low-level" computer language, that is, meant to be processed by a computer, rather than a "high-level", more human-readable, language. In Ethereum, higher-level Solidity is compiled into Ethereum bytecode, which is read by the Ethereum Virtual Machine (EVM).Certificate Authority (Ca)

A centralized authority that correlates identities with a public/private key pair in a private key infrastructure.

Example

On the internet, a certificate authority is responsible for providing a website’s security certificate and determining whether it is valid, allowing servers to prove the site belongs to a specific domain.

Byzantine Fault Tolerance (BFT)

A property of a distributed, decentralized system to resist complete failure even when some of the nodes fail or act maliciously.

Centralized

A system or process for which there is a singular (i.e., central) source of authority, control and/or truth.

Chain

Chain, Beacon

The Beacon Chain (always capitalized) is one element in the infrastructure being built to scale Ethereum, and is the foundation for a transition from a Proof of Work (PoW) consensus mechanism to Proof of Stake (PoS).

Chain, Off

A storage mechanism where transaction data is stored outside the blockchain in a nonpublic location. The sender and receiver must approve transactions in an off-chain scenario. It must also be validated by a third-party system prior to the transaction being added to the network ledger. Off-chain transactions are more "private" and faster than on-chain alternatives.

Chain, On

A storage mechanism where transaction data can be publicly accessed. Using this process, each node on the chain must verify the transition before it can be marked as completed in the network's public ledger.

Chain, Open

This open source blockchain platform is used to manage and preserve digital assets.

Chaincode

Another name for a smart contract.

Chain of Custody

The entire chain of documentation of ownership of a product during its lifecycle from raw materials to the final end user.

Chain of Custody (CoC)

The complete history of ownership. A chain of custody helps prove data integrity and tamper-proof protections.

Client (Ethereum)

An Ethereum client is software that accesses the Ethereum blockchain via a local computer and helps to process transactions. A client usually includes a cryptocurrency software wallet. See an up-to-date list of clients here.

Light Client

A client that downloads only a small part of the blockchain, allowing users of low-power or low-storage hardware like smartphones and laptops to maintain almost the same guarantee of security by sometimes selectively downloading small parts of the state.

Closed Source

Closed source software is proprietary software with source code that cannot be accessed by the public. The compiled binaries may be available in the form of an executable program (files that end in .exe, .dpkg, etc.) but are not human-readable or available for modification by anyone but the original software developer.

Compare to open source.

Codefi

Derived from "Commerce & Decentralized Finance", Codefi, part of ConsenSys, is building a suite of commerce and financial applications.

Coin

See Token

Coin, Stable

See Token, Stable

Coinbase (Company)

Coinbase is a U.S.-based cryptocurrency brokerage. In terms of customer base and transaction volume, Coinbase is the largest exchange in the United States and one of the largest in the world. However, compared to other exchanges, it maintains a small number of cryptocurrency offerings, with only a couple dozen tradable cryptocurrencies out of the thousands available in the ecosystem.

Coinbase (Mining)

The coinbase of a block is the address to which block rewards are delivered.

Cold wallet

A method of storing cryptocurrency that is not connected to the internet. Cold wallets are added protection against malicious activities to steal or disrupt the integrity of digital coins/tokens.

Command-Line Interface (Cli)

A text-based user interface.

CLIs can provide more core functionality and access to system resources than a graphical user interface (GUI), but at the cost of usability. Because of this, CLIs are generally directed toward developers over the average user. They can be used to demonstrate the functionality underlying a program without expending development time building a more robust user interface.

Confirmation

The determination of how immutable the information in a blockchain is.

For many consensus protocols, chain reorganizations occur (and are expected) during the confirmation process. Different blockchains have different metrics for what blocks can be considered immutable and therefore confirmed.

Example

If two valid blocks are submitted for the same block height, one of them will eventually be discarded, while the other one will become the canonical block from which future blocks are built. The highest blocks in a chain are more likely to be reordered or discarded, with a probability that is inversely correlated to their block depth.

In some contexts, confirmations refer to the number of nodes that have accepted a transaction, the number of transactions that reference it, or the number of blocks that are above it. In Bitcoin, a transaction has five confirmations when five blocks have been produced after the block containing the transaction.

A confirmation happens when the network has verified the blockchain transaction. Under a Proof of Work (PoW) consensus mechanism, this happens through a process known as mining; under Proof of Stake (PoS), the process is known as validation. Once a transaction is successfully confirmed it theoretically cannot be reversed or double spent. The more confirmations a transaction has, the harder it becomes to perform a double spend attack.

Consensus

In the blockchain industry, the process by which distinct sections of a network determine a single truth. Blockchain networks use consensus algorithms to establish agreement regarding which blocks are to be added to the chain and which nodes are valid.

The process used by a group of peers, or nodes, on a blockchain network to agree on the validity of transactions submitted to the network. Dominant consensus mechanisms are Proof of Work (PoW) and Proof of Stake (PoS).

Consensus Mechanism - Proof of Authority (PoA)

PoA is an alternative form to the PoS algorithm. Instead of staking cryptocurrency (wealth), in PoA you stake your identity. This means voluntarily disclosing who you are in exchange for the right to validate blocks. Any malicious actions you undertake as a validator will reflect back on your identity. PoA blockchains require a thorough form of KYC (Know Your Customer - a verification process that determines you actually are who you claim to be).

Consensus Mechanism - Proof of Burn (PoB)

PoB allows the miners to "burn" or destroy cryptocurrency which grants them the right to add blocks in proportion to the coins destroyed. Essentially, miners burn coins/tokens to buy virtual mining rigs that give them the power to mine blocks. The more currency burned by the miner, the bigger the ensuing virtual mining rig. To burn, miners send currency to a verifiably un-spendable address. This process does not consume many resources, thus PoB is often called PoW without energy waste. Depending upon the implementation, miners are allowed to burn the native currency or the currency of an alternative chain, and in exchange, they receive a reward in the native currency of the blockchain.

Consensus Mechanism - Proof of Capacity (PoC)

PoC allows the mining devices in the network to use their available hard drive space to decide the mining rights, instead of using the mining device’s computing power (as in PoW) or the miner’s stake in the cryptocurrency (as in PoS).

Consensus Mechanism - Proof of Stake (PoS)

In PoS, miners put up(i.e., "stake") some of the blockchain's cryptocurrency (e.g., ether for the Ethereum blockchain) in order to increase their chances of being selected to validate a block. The stake is locked up as a deposit to ensure the miner validates the block according to the rules. If the miner violates the rules, the deposit will be "burned" or destroyed. PoS is less resource intensive than PoW since fewer miners are racing to solve the mathematical formula.

Consensus Mechanism - Proof of Work (PoW)

In PoW, transaction data (block) + a random strings of digits (nonce of block) are repeatedly applied to a (hashing) mathematical formula by miners, until a desirable outcome is found (the proof of work). Other miners then verify the proof of work by taking the alleged input string and applying it to the same formulae to see if the outcome is indeed that what was presented. If the results are the same, the transaction is verified and added to the blockchain. As many miners are racing to solve the formula which requires a great deal of computing power, PoW is resource intensive.

Consensus Mechanism (a.k.a. Consensus Protocol)

The process used to validate a transaction across a distributed blockchain network designed to achieve Byzantine Fault Tolerance.

ConsenSys

Short for Consensus Systems, ConsenSys is the software engineering leader of the blockchain space.

Consortium

A private blockchain network run by a company or a group of companies. Consortium chains deal with information that would not be appropriate for public release but still needs to be immutably communicated between two parties.

Crypto-

Even though this prefix is originally Greek, our current usage comes from cryptography. Technologies that are referred to with the blanket term of "crypto" tech are underlain by cryptographic tools and processes (such as public/private key pairs) that enable them, and enable them to be secure. Of course, "cryptocurrency" often gets shortened to simply "crypto", so this emerging field is full of instances where something "crypto" is being added to or shortened.

Crypto Bounties

Bounties paid for in cryptocurrency. See also "bug bounties".

Crypto-Compliance

A blanket term used to refer to ensuring crypto projects conform with applicable regulations and laws.

Cryptoeconomics

The economic analysis of decentralized finance; notably, the MIT Cryptoeconomics Lab.

Cryptoassets

A useful blanket term that covers on-chain assets: cryptocurrencies, NFTs, and other, still emerging, products.

Cryptocurrency

Digitally distributed and traded currencies for which proof of ownership is established via cryptographic methods. For example, Ether cannot be transferred from an account without having control of the private key that is associated with that account.

A digitized form of currency that is secured with cryptography and decentralized networks using blockchain technologies.

Digital currency that is based on mathematics and uses encryption techniques to regulate the creation of units of currency as well as verifying the transfer of funds. Cryptocurrencies operate independently of a central bank, and are kept track of through distributed ledger technology.

Digital money which uses encryption and consensus algorithms to regulate the generation of coins/tokens and transfer of funds. Cryptocurrencies are generally decentralized, operating independently of central authorities.

Cryptography

The use of math and logical problem solving to encipher or decipher encoded messages. Computer cryptography is heavily reliant upon mathematical proofs and the computational difficulty of specific mathematical problems

The science of creating secure communications using codes. These codes are protected so only the sender and receiver of the information can access the contents of the communications.

A method for secure communication using code. Symmetric-key cryptography is used by various blockchain networks for transfer of cryptocurrencies. Blockchain addresses generated for wallets are paired with private keys that allow transfer of cryptocurrency. Paired public and private keys allow funds to be unlocked.

The science of securing communication using individualized codes so only the participating parties can read the messages.

Currency

A system of abstract representations of the ability to reconcile debts that is generally accepted or in use. Money is a currency. In the United States of America, the U.S. Dollar is the national currency.

Dapp

A decentralized application.

DApps operate similarly to regular web applications; however, they retrieve their state and data from a blockchain network (or multiple blockchain networks). DApps do not require a central web server to function and can communicate to each other over the messaging protocol of the blockchain network(s) to which they're connected.

An open source, software application with backend code running on a decentralized peer-to-peer network rather than a centralized server. You may see alternate spellings: dApps, DApps, Dapps, and Đapps.

Software which does not rely on a central system or database but can share information amongst its users via a decentralized database, such as a blockchain

Decentralization

The movement of data, actions, and other interests away from a single actor in favor of distribution amongst all actors.

In a decentralized system, no actor or group of actors can control the system without the consent of the rest of the actors.

The transfer of authority and responsibility from a centralized organization, government, or party to a distributed network.

A system with no single point where the decision is made. Every node makes a decision for its own behavior and the resulting system behavior is the aggregate response.

Decentralized Autonomous Organization (Dao)

A company or group of like-minded entities that operate based on the rules set forth in a smart contract. DAOs are used to transform business logic into software logic recorded on a blockchain.

A company whose funds are locked in a multisignature wallet that is controlled by a smart contract is an example of a DAO.

In that same example, board of directors decisions might be voted on, recorded, and effected through a smart contract rather than by holding physical board meetings.

A Digital Decentralized Autonomous Organization (DAO, pronounced like the Chinese concept) is a powerful and very flexible organizational structure built on a blockchain.

Alternatively, the first known example of a DAO is referred to as The DAO. The DAO served as a form of investor-directed venture capital fund, which sought to provide enterprises with new decentralized business models. Ethereum-based, The DAO’s code was open source. The organization set the record for the most crowdfunded project in 2016. Those funds were partially stolen by hackers. The hack caused an Ethereum hard-fork which lead to the creation of Ethereum Classic.

A governance structure without a central authority which rewards good behavior and penalizes bad behavior by a set of pre-defined rules which can only be changes by a vote, which typically requires a stake, adding risk to the process to discourage bad actors, amongst the participants.

Decentralized Exchange (Dex)

A decentralized exchange is a platform for exchanging cryptocurrencies based on functionality programmed on the blockchain (i.e., in smart contracts). The trading is peer-to-peer, or between pools of liquidity. This is in contrast with a centralized exchange, which is more akin to a bank or investment firm that specializes in cryptocurrencies. There are important technical and regulatory differences between the two which are constantly evolving.

Deposit

Digital property put into a contract involving a different party such that if certain conditions are not satisfied that property is automatically forfeited to the identified counterparty.

Derive / Derivation

To derive something is to obtain it from an original source. In the context of crypto-technology, we often discuss "deriving" wallets and accounts from seed phrases / Secret Recovery Phrases.

Devcon

This is shorthand for the Ethereum Developers’ Conference.

Difficulty

The concept outlining how hard it is to verify blocks in a blockchain network during Proof of Work mining. In the Bitcoin network, the difficulty of mining adjusts every 2016 blocks. This is to keep block verification time at ten minutes.

Difficulty Bomb

The difficulty bomb, along with the Beacon Chain and others, is an element of Ethereum’s upgrade to Ethereum 2.0 and a Proof of Stake (PoS) consensus mechanism. As the name indicates, the difficulty bomb is a mechanism that will increase the block verification difficulty, making it more expensive and difficult–eventually, prohibitively so–to mine a new block. The intention is to force the shift to PoS consensus. See also ‘Proof of Stake’.

Digital Asset

A digital commodity that is scarce, electronically transferable, and intangible with a market value.

Digital Identity (a.k.a. Self-Sovereign Identity)

The network or Internet equivalent to the real identity of a person or entity (like a business or government agency). Advocates of blockchain-based digital identity is to return ownership and control of personal information to the individuals. In any given transaction, personal information is not disclosed, but rather the information required by one party is verified by the digital identity application.

A digitized identity that operates on the network and is attached to users, businesses and connected devices. Blockchain is one way that digital identities can maintain integrity.

An online or networked identity adopted by an individual, organization, or electronic device.

Digital Signature

A code generated by public key encryption and attached to an electronically transmitted document in order to verify the contents of the document.

A mathematical scheme for verifying digital messages or documents satisfy two requirements - they have authenticity (from a known sender) and integrity (were not altered in transit.

Digital Signature - Multi-signature

In order to increase security, mutisig addresses require more than one digital signature (and therefore multiple keys) to sign a transaction or message.

Digital Signature - Ring

A digital signature that can be performed by any of a group of people that each have keys. A property of a ring signature is that it is impossible to determine which of the group signed the transaction.

Distributed Denial Of Service (Ddos) Attack

A type of cyber-attack in which the perpetrator continuously overwhelms the system with requests in order to prevent service of legitimate requests.

Directed Acyclic Graph (Dag)

A directed graph structure (e.g., flow chart) that has no recursive routes (i.e., traversing the graph will never go twice through the same route or branch).

In the blockchain industry, DAGs are used to create links between blocks, transactions, and data storage structures.

Distributed

As opposed to decentralized, a distributed system shares processing and/or data across multiple nodes, but the decisions may still be centralized and use complete system knowledge.

Distributed Ledger

A type of database which spreads across multiple sites, countries, or institutions. Records are stored sequentially in a continuous ledger. Distributed ledger data can be either "permissioned" or "unpermissioned" to control who can view it.

A database that has been developed to be distributed/replicated across many nodes on a network. Blockchain is a type of distributed ledger.Double Spend Attack

A malicious attempt to convince two separate parties that one of two conflicting transactions is valid. In such a situation, both transactions appear individually valid, but their combination is not. Thus, only one is included in the blockchain.

Example

Let’s say Alice has only 100 tokens and tells Bob that she is sending him all 100. She also tells Charles that she is sending him all 100 tokens.

Bob and Charles are unaware of Alice's duplicate promises. They assume that their transactions are valid and complete their ends in good faith. However, only one of the transactions can possibly be valid on the blockchain, and either Bob or Charles ends up losing out.

Due to the nature of blockchain reorganizations (natural forks), simply showing that a transaction is included in a block is not enough to verify that it is immutable. Transactions are only immutable once they have reached a depth in the chain where a chain reorganization is unlikely to affect them.

Double spend attacks can be mitigated by waiting to ensure that a transaction is confirmed by the network and is acceptably immutable before acting on it.

Distributed Ledger Technology (DLT)

The larger class of technology of which blockchain is a subset. A digital system for recording the transaction of assets in which the transactions and their details are recorded in multiple identical copies at the same time with no central data store or administration.Distributed Ledger Technology (DLT)

The larger class of technology of which blockchain is a subset. A digital system for recording the transaction of assets in which the transactions and their details are recorded in multiple identical copies at the same time with no central data store or administration.

Double Spend

An event during which someone on the Bitcoin network tries to send a specific bitcoin transaction to two different recipients at once. However, as each bitcoin transaction is confirmed, double spending becomes almost impossible. The more confirmations that a particular transaction has, the decreased likelihood of double spending successfully.

A unique problem to cryptocurrency where the same coins or tokens are spent or traded twice.

Eip (Ethereum Improvement Proposal)

EIPs describe standards for the Ethereum platform, including core protocol specifications, client APIs, and contract standards. They are, precisely, proposals for modifications to the network and the way it functions; the official repository is here.

Encrypted Vs Unencrypted Keys

As discussed elsewhere, public and private crypographic key pairs are one of the technologies that underpins cryptocurrencies and "crypto" tech in general. In MetaMask, an unencrypted private key is 64 characters long, and it is used to unlock or restore wallets. An encrypted key is also 64 letters long and is a regular private key that has gone through the process of encryption.

For example, if the world ‘Apple’ was your private key, then it was encrypted three letters down the alphabet, your new shortened encrypted key would be ‘Dssoh’. Since you know the way to encrypt this key, you could derive the original private key from it by reversing the method of encryption. Usually encrypted private keys are kept within the extension or device they are encrypted by, and they remain out of sight from the user. This is meant to add another layer of security to keep a user’s wallet information safe.

Encryption

There are many types of encryption, but for our purposes, it is a process that combines the text to be encrypted (plaintext) with a shorter string of data referred to as "a key" in order to produce an output (ciphertext). This output can be "decrypted" back into the original plaintext by someone else who has the key.

Ens

The Ethereum Name Service is a protocol to assign human-readable and easy-to-remember addresses to Ethereum addresses and assets, homologous to the traditional internet’s DNS.

Enterprise Ethereum Alliance (Eea)

A group of Ethereum core developers, startups, and large companies working together to commercialize and use Ethereum for different business applications.

Entropy

In the context of cryptography, ‘entropy’ refers to ‘randomness’; generally, the more random something is (the more entropy it has), the more secure it is.

Eosio

EOS is a Blockchain 3.0 chain that focuses on transaction throughput. It uses a Delegated Proof-of-Stake (DPoS) consensus mechanism and web assembly (WASM) for smart contracts.

Epoch

An epoch, in general, is a measure of time, or of blockchain progression, on a given blockchain. For the Ethereum Beacon Chain, an epoch consists of 32 slots, each lasting 12 seconds, for a total of 6.4 minutes per epoch. There is additional functionality built upon the epoch measure in the Beacon Chain to help ensure security and proper operation of the Chain.

Erc

Ethereum Request for Comment, or ERC, is a bit of a misnomer, as it is used to refer to suggestions for modifications that have already made it through the Ethereum Improvement Protocol (EIP) process and have been made standard on Ethereum. An ERC is, essentially, a set of standards for a given operation or topic on the Ethereum network.

Erc-20 Token Standard

ERC is the abbreviation for Ethereum Request for Comment and is followed by the assignment number of the standard. ERC-20 is a technical standard for smart contracts which is used to issue the majority of tokens (in particular, cryptocurrency tokens) extant on Ethereum. This list of rules states the requirements that a token must fulfill to be compliant and function within the Ethereum network.

A type of fungible Ethereum token (i.e., smart contract) standard which is defined by a series of functions that must be supported, including functions to retrieve the total supply, transfer from one wallet to another, and approve a transaction. Typically, any given ERC-20 token has many copies which are held in a variety of crypto wallets.

Erc-721 Token Standard

As stated above, this is another standard for Ethereum smart contracts, which allows for the issuance of a non-fungible token, also known as an NFT. This token standard is used to represent a unique digital asset that is not interchangeable.

A type of non-fungible Ethereum token (i.e., smart contract) standard which is defined by a series of functions that must be supported, including functions to retrieve the total supply, transfer from one wallet to another, and approve a transaction. Each ERC-721 token is unique and non-interchangeable with other tokens (i.e., non-fungible).

Ether (Eth)

The base cryptocurrency for the Ethereum blockchain network.

Ether is used as the currency to pay transaction fees to miners. It is stored on an account basis, rather than in Unspent Transaction Outputs (UTXOs).

Ether's base unit is wei, and one ETH is equivalent to 1018 wei.

Ether is the native currency of the Ethereum blockchain network. Ether—also referred to as ETH (pronounced with a long "e", like "teeth" without the "t")—functions as a fuel of the Ethereum ecosystem by acting as a medium of incentive and form of payment for network participants to execute essential operations. The cryptocurrency of Ethereum has a lowercase e. The plural of ether is just ether; its abbreviation is ETH, with a space: I have 10 ETH.

Ethereum

Ethereum is a decentralized Blockchain 2.0 chain. It was the first major smart contract platform and has widespread support from Fortune 500 companies through the Ethereum Enterprise Alliance (EEA).

Ethereum currently uses a Proof-of-Work (PoW) consensus algorithm, but future changes to the protocol will update it to a more scalable algorithm, most likely based on Proof-of-Stake (PoS).

An open source blockchain platform and cryptocurrency developed in 2013 that is currently the most active blockchain in the world. The platform enables other developers to build distributed, blockchain-backed applications. The native cryptocurrency of the platform is called Ether and is Bitcoin's main competitor.

A public blockchain network and decentralized software platform upon which developers build and run applications. As it is a proper noun, it should always be capitalized.

Ethereum Enterprise Alliance (Eea)

A collection of medium- to large-sized companies that have publicly committed to supporting the development of Ethereum and the creation of applications for the protocol.

Notable EEA partners include Intel, AMD, Microsoft, JP Morgan Chase Bank, and Microsoft.

Ethereum Virtual Machine (Evm)

A simulated state machine that uses eWASM bytecode to process transactions and perform state transitions for the Ethereum blockchain. Its operation is guaranteed; that is, for any given block, the state of the EVM will be exactly the same on each node in the network, and it is impossible to generate a different state using the same inputs.

The EVM is a virtual machine that operates on the Ethereum network. It is Turing complete and allows anyone, anywhere to execute arbitrary EVM bytecode. All Ethereum nodes run on the EVM. It is home for smart contracts based on the Ethereum blockchain.

Ewasm

A web assembly (WASM) version implemented by the Ethereum Virtual Machine that provides additional functionality for blockchains.

Exchange

A service for trading cryptocurrency tokens for other tokens or fiat.

Exchanges are highly regulated in the European Union, eastern Asia, and the United States of America; thus, many exchanges are located in countries with less oversight.

Exchanges are one of the only ways to change cryptocurrencies into fiat and transfer that value into a bank account.

A business that provides a convenient online location for the exchange of cryptocurrencies -- or to exchange traditional fiat currencies with cryptocurrencies. Popular cryptocurrency exchanges include Binance, Coinbase and Kraken.

A place to trade cryptocurrency. Centralized exchanges, operated by companies like Coinbase and Gemini, function as intermediaries, while decentralized exchanges do not have a central authority.

An application to buy, sell and trade cryptocurrencies.

Exchange, Decentralized

A cryptocurrency exchange that is hosted entirely through a DApp on a blockchain.

Decentralized exchanges typically do not allow the exchange of cryptocurrency to fiat. Decentralized exchanges are more difficult than standard exchanges to regulate or sanction.

The 0x exchange on the Ethereum network is a prime example of a decentralized exchange.

Faucet

A faucet is an application, sometimes a very simple website, other times more complex, that dispenses cryptocurrency for use on test networks only. These faucets are used by developers to test out dapps or smart contracts before deploying them on Ethereum Mainnet, or users who want to practice an action on the blockchain with no risk. Tokens dispensed by a test faucet stay on the test networks and cannot be exchanged for mainnet equivalents.

Fiat

A nationally adopted currency with government support, such as U.S. Dollars or Euros. Fiat currencies are desirable due to their legal status and traditional use.

Legal tender the value for which is backed by a government or governmental body (e.g., US dollars, Euros)

Fiat currency

A currency issued by a government that is not backed by any type of commodity. Instead, the currency is backed -- or guaranteed -- by the issuing government. Fiat currency is different from traditional commodity money that was originally backed by real assets such as gold, salt and tea.

Government-issued currency. For example, US Dollars (USD), Euros (EUR), Yuan (CNY), and Yen (JPY).

Final, Finality

A transaction is considered "final" once it can no longer be changed. In a sense, this happens once there are sufficient confirmations of the transaction, but for all intents and purposes, a transaction is final once the block that contains it is mined or validated. Keep in mind that this reflects a fundamental rule of blockchains: unlike traditional financial systems where charges can be "reversed", there is no "undoing" a transaction on the blockchain. Once finality is reached, the transaction is immutable.

Financial Crimes Enforcement Network (Fincen)

The U.S. federal agency responsible for investigating and prosecuting financial crimes, such as money laundering.

FinCEN regulations cover many aspects of cryptocurrency use.

Finney

A denomination of ether. See ether (denomination).

Fork

In the blockchain industry, a unique network created using the same protocol or consensus as a previously existing network. Forks can contain the original network’s state or instantiate their own state.

Forks happen naturally when a blockchain network is not at 100% consensus and resolve when the network reaches consensus.

Forks can also be forced by refusing to adhere to the consensus of the network.

A split, change or alternative version of a blockchain. For blockchain technology to work, all nodes within a blockchain network must run the same underlying core software. If enough nodes wish to change or alter the core software, a fork occurs, splitting the nodes into two separate networks.

A fork creates an alternative version of a blockchain, and are often enacted intentionally to apply upgrades to a network. Soft Forks render two chains with some compatibility, while Hard Forks create a new version of the chain that must be adopted to continue participation. In the instance of a contentious Hard Fork, this can create two versions of a blockchain network. See also "hard fork".

A collectively agreed upon software update by all nodes in a distributed network. Sometimes, the previous version continues in parallel with the new version.

Fork, Hard

A fork that is permanently incompatible with the original network.

Hard forks typically change transaction data structures, consensus algorithms, or add/remove blocks that would not have otherwise been included.

Bitcoin Cash is a hard fork of Bitcoin, and Ethereum Classic is a hard fork of Ethereum.

A hard fork occurs when there is a change in the blockchain that is not backward compatible (not compatible with older versions), thus requiring all participants to upgrade to the new version in order to be able to continue participating on the network.

Fork, Soft

A fork that is compatible with the data on the original chain.

Blocks created on the original chain after a soft fork would be valid on the forked chain; however the reverse does not have to be true.

Example

A protocol upgrade allows transactions to include an additional memo field where no field previously existed. These transactions would not have been valid on the previous version of the chain. However, transactions without that field are still valid formats in either version.

When Ethereum upgraded to the Byzantium version, it was affected through a soft fork.

A protocol change in blockchain software that renders new blocks or transactions as invalid for nodes still using the old software. Thus, the only way for any node to participate on the blockchain network is to ensure that everyone is on the same revision of software.

Unlike a hard fork, soft forks are changes to blockchain software that is backward compatible with older/outdated version. While older versions recognize new blocks as valid, the newly forked software will consider blocks generated by old software as invalid.

A change to the software protocol where only previously valid blocks/transactions are made invalid. Since old nodes will recognize the new blocks as valid, a soft fork is backward-compatible. However, this can result in a potential divide in the blockchain, as the old software generates blocks that read as invalid according to the new rules.

Fork, Byzantium

A "hard fork" in the Ethereum network that occurred in October of 2017.

Fork, Constantinople

Constantinople Fork One of the "hard forks" made to the Ethereum network, in February 2019. For more detailed information, see here; see also "hard fork".

Fungible

The ability to replicate data in such a way that each replicated unit can replace any other. From a cryptocurrency perspective, each coin or token is fungible as each one has the same value. Thus, each coin/token is considered identical and interchangeable.

The property an item of being exchangeable with other like items. For example, USD and Euros are fungible. The value of USD can be expressed in Euros.

Gas

In the blockchain industry, a measure of the computational difficulty required to process a smart contract function. More complex functions use more gas.

Gas can be hardcoded values for each opcode (as is the case for Ethereum) or subjective values based on the preferences of the miner (as is the case for EOSIO).

Writing a transaction into a public blockchain requires the use of computing power. This is accomplished by miners who allocate compute resources on a distributed network. Gas is a fee charged by the miner as a form of compensation. Usually, the fee is paid in the form of cryptocurrency.

A measure of the computational steps required for a transaction on the Ethereum network. This then equates to a fee for network users paid in small units of ETH specified as Gwei. See also "ether (denominations)".

A fee charged to write a transaction to a public blockchain. The gas is used to reward the miner which validates the transaction.

Gas Limit

The gas limit is the maximum amount you’re willing to pay for any given transaction to go through the Ethereum network. Another way of looking at it is as a "rough estimate" of how much computing power your transaction will take.

Gas Price

In the blockchain industry, the number of tokens that will be charged as a fee for each unit of gas consumed by a smart contract’s function.

Gas prices allow a network to dynamically respond to changes in bandwidth demand based on market forces.

The gas price is what it sounds like: the cost the network is paid for the computational work being performed in a given transaction. It is paid in units of ETH called Gwei. Depending on network congestion, the gas price may vary significantly.

Gossip Protocol

A process by which actors in a network exchange information with all other members.

When an actor receives new information, it relays it to every other actor it's connected to that does not already have that information. Since all actors are cumulatively connected, eventually they all receive the information.

Governance

Establishment of policies and continuous monitoring of their proper implementation of an organization or system.

Graphical User Interface (Gui)

A way of displaying information to the user through stylized, on-screen elements, such as windows and taskbars.

Compare to command-line interface (CLI).

Gwei

A minuscule and common denomination of ETH, and the unit in which gas prices are often specified. See ‘ether (denominations)’ entry for more information.

Halving

Many cryptocurrencies have a finite supply, which makes them a scarce digital commodity. For example, the total amount of Bitcoin that will ever be issued is 21 million. The number of bitcoins generated per block is decreased 50% every four years. This is called "halving." The final halving will take place in the year 2140.

Hash

The output of a cryptographic function that maps inputs to specific, but seemingly arbitrary, outputs. Hashes are used to efficiently identify data.

A function within encryption that captures an arbitrary-length input string and computes a fixed-length output. Hashes are created using a hashing algorithm that uses cryptography to form a one-way function. This means that the hash theoretically cannot be reverted without a key.

A programmatic function that takes an input, and then outputs an alphanumeric string known as the "hash value" or "digital fingerprint." Each block in the blockchain contains the hash value that validated the transaction before it followed by its own hash value. Hashes confirm transactions on the blockchain.

Hash Collision

Two inputs that map to the same output hash.

While hash collisions are possible, providing two sets of meaningful data whose hashes collide is nearly impossible. Hashes are one-way streets; they can be constructed from data, but data cannot be reconstructed from hashes.

Hashgraph

A decentralized ledger that uses a gossip protocol to communicate transactions and a tangle-style consensus mechanism.

Hashrate

The rate at which a particular machine can perform a specific hashing function.

Hashrate is similar to general CPU speed, but where processor speed is measured based on the number of arbitrary instructions a machine can carry out per second, hashrate is measured based on the number of times a machine can perform that specific function per second, allowing application-specific integrated circuits (ASIC) to have a much higher hashrate than a processor with the same clock speed.

Hash Function

A cryptographic function that maps inputs to specific, but seemingly arbitrary, outputs.

Hash functions and their qualitative differences are an incredibly important field of research in cryptography.

A function that receives an input of any size and returns a unique string of a uniform length.

Hexadecimal

Hexadecimal is a base 16, rather than base 10, counting system. Used all over Ethereum for a variety of things, a hexadecimal string is comprised of the numbers 0 1 2 3 4 5 6 7 8 9 and letters A B C D E F.

Hexadecimal Notation

The expression of raw data in base 16 (hexadecmial; 0-f), rather than base 2 (binary) or base 10 (counting; 0-9).

Hyperledger

A suite of tools offered by IBM and hosted by The Linux Foundation to create enterprise-level consortium chains.

Hyperledger is an ecosystem of open-system tools, libraries, and products designed to enable and support enterprise-grade blockchain technology. In general, the products focus on creating solutions for permissioned blockchains–that is, non-public blockchains, with alternative consensus mechanisms other than Proof of Work (PoW) or Proof of Stake (PoS).

That said, there are use cases where such institutions would want to integrate with public blockchains, and for that reason Hyperledger Besu and Hyperledger Burrow are actively developed projects, the former being a Java-based Ethereum client, the latter being a smart contract platform which supports EVM bytecode.

Hyperledger Fabric

IBM's private (permissioned) blockchain toolset.

Identicon / Addressidenticon / Addressicon

The colorful blob of colors that corresponds to your address. It is an easy way to see if your address is correct. More specifically, you can choose between jazzicons (created by the MetaMask team!) or blockies.

Identity

A method to use secure and tamper-proof information to represent a specific person, entity or device.

The information on an entity used by computer systems to uniquely represent a person, organization, application, or device.

Immutability

The property of data to be resistant to alterations. Immutable data is considered ‘set in stone’ and can be relied upon to remain unchanged for the remainder of time.

Data can be functionally immutable, meaning that it is possible to change it, but it would require prohibitively excessive resources to do so.

The inability to be altered or changed. This is a key element of blockchain networks: once written onto a blockchain ledger, data cannot be altered. This immutability provides the basis for commerce and trade to take place on blockchain networks.

The property of being unchangeable. Once a transaction has been added to a block and written to a blockchain, it cannot be changed and therefore is immutable.

Infura

Part of ConsenSys, Infura offers backend access to the Ethereum network over established HTTP and WebSockets technology. This enables developers of dapps and websites seeking to interact with the Ethereum blockchain to do so, and at scale.

ICO | ITO | ILO

ICO : Initial Coin Offering

Much like an initial public offering of stock, an initial coin offering is a way for a tokenized business to generate investment from the public.

ICOs are regulated by the Securities and Exchange Commission (SEC), even if the tokens are not specifically securities because the language used in promoting a sale can serve to classify tokens as a security offering.

ICOs gained popularity in 2017 as a way to circumvent the traditional startup fundraising process. However the lack of functional products from those startups resulted in over 90% of all ICO’d projects failing.

The first sale of cryptocurrency coins on an exchange.

An Initial Coin Offering (also called ICO) occurs when a new cryptocurrency sells advance tokens in exchange for upfront capital. These have been a vehicle for fraud and scams, and as such are subject to ever-evolving regulation and legislation.

ILO : Initial Liquidity Offering

See ICO (Initial Coin Offering)

ITO : Initial Token Offering

See ICO (Initial Coin Offering)

Interoperability

The ability of two or more systems to communicate and exchange data. Due to various design decisions (e.g., consensus protocol) most blockchains are not interoperable, however there are many projects that are working to connect various blockchains.

Interplanetary File System (Ipfs)

A decentralized file storage and referencing system for the Ethereum blockchain. IFPS is an open source protocol that enables storing and sharing hypermedia (text, audio, visual) in a distributed manner without relying on a single point of failure. This distributed file system enables applications to run faster, safer and more transparently.

A peer-to-peer hypermedia protocol for storing and sharing data in a distributed file system using content-addressing to uniquely identify each file in a global namespace connecting all computing devices.

Java

Java is a programming language that was developed by Oracle. It can be compiled before runtime or interpreted by the Java Virtual Machine (JVM). Java is a popular programming language for server-side applications.

A popular programming language considered a prime language in the blockchain space.

Javascript

JavaScript is a programming language that was developed for web pages and browsers but has since found its way into a variety of applications due to its flexibility. It conforms to the ECMAScript and is an interpreted language.

JavaScript can be used to develop both front-end and back-end solutions, making it a popular choice for aspiring full-stack developers.

Keystore File

A keystore file is a special, encrypted version of a private key in JSON format. See also ‘private key’.

Know The Customer (KTC)

A set of processes with the goal of identifying business customers. Common identifiable information includes names, addresses and financial material that can be tied to a single person or business.

Know Your Customer (KYC)

A process in which a business must verify the identity and background information (address, financials, etc) of their customers. For example, current regulations and laws require banks and other financial institutions to keep and report customers’ personal information and transactions.

The legal process of a business identifying and verifying the identity of its clients. KYC requirements vary from jurisdiction to jurisdiction.

Layer 2

Layer 2 is a set of upcoming scaling solutions for Ethereum

Ledger

An account or record used to track transactions. From a blockchain perspective, ledgers are distributed across many nodes within in a blockchain network.

Liquid Democracy (Delegative Democracy)

A government system where votes can be delegated or proxied to other individuals such as friends, politicians, or subject matter experts. For example, in a liquid democracy, Bernadette could give Ahmad her vote and Ahmad would then vote for both himself and Bernadette. A liquid democracy has been explored as a governance mechanism for Decentralized Autonomous Organizations where every participant is able to vote or delegate their vote to another individual.

Liquidity

The ease at which a cryptocurrency can be converted into some other form of crypto or fiat currency.Mainnet

The largest blockchain network a specific protocol runs, or the most valuable chain as decided by the community.

Mainnets are typically where real value is derived and represent the truest intent of the core developers.

The availability of liquid assets to a company or market. An asset is considered more liquid if it can easily be converted into cash. The harder the ability to turn an asset into cash the more illiquid the asset. For example, stocks are considered relatively liquid assets as they can be easily converted to cash while real estate is considered an illiquid asset. The liquidity of an asset affects its risk potential and market price.

The ease of converting an asset (or, in this case, cryptocurrency) to cash (fiat).

Mainnet

A type of blockchain network that is responsible for the transport of cryptocurrency from a sender to a receiver.

The primary network where actual transactions take place on a specific distributed ledger. For example, The Ethereum mainnet is the public blockchain where network validation and transactions take place.

Market Cap

Short for Market Capitalization, this term refers to the total value held in a particular industry, market, company, or asset. For a publicly traded company, the market cap is the total dollar market value of a company’s outstanding shares. For Bitcoin or Ethereum, the total market cap is a reflection of the current existing supply times the market price.

Merkle Tree

A data tree where the end of every branch (the leaves) is labelled with a unique identifier (a cryptographic hash) for the branch it is on, and every branch is labeled with all of the leaves and sub-branches on it. This redundancy ensures that anyone who has the tree can reliably prove that the data in it is complete and the same as another actor’s tree by simply observing the leaves.

In a typical blockchain, the Merkle tree’s leaves are transactions and the branches are blocks.

Merkle Patricia Trie

Merkle tree, Often referred to simply as a "Merkle trie" (pronounced "tree"), a Merkle Patricia trie is a data structure in which a single hash code function (a type of cryptographic code) splits into smaller branches. In a similar way to a family tree, where a parent branch splits into child branches, which are then extrapolated into grandchild branches, a Merkle Patricia trie keeps a record of the filiation and history of each element. This type of data structure enables for faster verification on a blockchain network.

Merkle Proof

The process of traversing a Merkle tree from a leaf to the root, hashing each level with the previous to produce a unique hash for the structure of the tree.

Providing the final hash allows other actors to determine if the data in a Merkle tree is the same as their own.

Merkle Root

The cryptographic hash of all hashes in a Merkle tree.

In a blockchain, this is a hash of all transaction hashes in the chain. Providing this hash is a succinct way of showing that a chain’s data is complete and in consensus with the rest of the network.

Mesh

ConsenSys Mesh is a network of loosely coupled, tightly aligned teams, products, and investments advancing the Ethereum ecosystem and the arrival of Web 3.0.

Metamask

MetaMask, either in its mobile app form on iOS and Android, or in its browser extension form, is a tool to access and interact with blockchains and the decentralized web. Its functions include that of a wallet, a dapp permissions manager, and token swap platform.

Minecraft

Minecraft is a popular video game in which elements of the environment are represented as blocks or cubes. Minecraft does not use blockchains.

Miner

A miner is an actor in a blockchain network that has the ability to create and submit new blocks to the chain. Which miner is allowed to produce a specific block may be predetermined, or miners may simultaneously compete to add the next block to the chain.

Miner, Cpu

A miner that utilizes its central processor to perform block validation and production. CPU miners are used for mining algorithms that require more generalized processing and cannot be done in parallel (i.e., each operation depends upon the result of the previous one).

Miner, Gpu

A miner that utilizes its graphics processor to perform block validation and production. GPU miners excel at mining algorithms that can be performed in parallel and have a limited number of unique operations (such as Proof-of-Work).

GPU miners are several orders of magnitude more efficient at performing parallel mining algorithms than CPU miners.

Miner, Asic

A miner that utilizes an application-specific integrated circuit (ASIC) to perform block validation and production.

ASIC miners excel at mining algorithms that can be performed in parallel, have a limited number of unique operations, and have low hard disk input/output rates. Algorithms that fail to meet those criteria are known as "ASIC Resistant."

ASIC miners are orders of magnitude more efficient at processing compatible mining algorithms than GPU miners; however, ASIC miners also cost more to produce and generally have limited supply.

Mining

In the blockchain industry, mining is the process of creating a new block and submitting it to the blockchain.

The processes of using computers to process token or coin transactions. The reward for the allocation of computational power to calculate these transactions comes in the form of a quantity of tokens/coins that is issued as new currency.

The process by which blocks or transactions are verified and added to a blockchain using a Proof of Work (PoW) consensus mechanism. In order to verify a block a miner must use a computer to solve a cryptographic problem. Once the computer has solved the problem, the block is considered "mined" or verified. In the Bitcoin or Ethereum PoW blockchains, the first computer to mine or verify the block receives bitcoin or ether as a reward.

Mining Pool

A group of miners that agrees to work together to generate the next block in a blockchain before the rest of the network.

Proof-of-Work (PoW) mining pools can increase miner efficiency because the work is distributed, and any invalid work is not repeated by other miners in the pool.

Mnemonic Phrase

See ‘seed phrase / secret recovery phrase’.

Monero (Xmr)

A Blockchain 1.0 chain that uses ring signatures to provide a level of anonymity beyond public key addresses. Only the parties to a transaction are able to determine the data in the transaction, including the amount, sender, and recipient.

Money Transmitting

The movement of value from one person to another through an intermediary.

Money transmitting and money transmitters are highly regulated due to their ability to easily launder money.

Multi Signature (Multisig)

A crypto-asset wallet that requires multiple keys to access. Typically, a specified number of individuals are required to approve or "sign" a transaction before they are able to access the wallet. This is different from most wallets which only require one signature to approve a transaction.

Network

A set of actors that are collectively interconnected for a common purpose.

Nonfungible Token (NFT)

See Token, Non-Fungible (Nft).

Node

A participant in a blockchain network that is connected to peers and is capable of validating and propagating new blocks.

Within a blockchain network, nodes are computing devices that store and replicate blockchain data in a distributed architecture.

Any computer connected to the blockchain network is referred to as a node. A full node is a computer that can fully validate transactions and download the entire data of a specific blockchain. In contrast, a "lightweight" or "light" node does not download all pieces of a blockchain’s data and uses a different validation process.

Node, Full

A node that has the complete state of the blockchain available.

Node, Light

A node that has enough block data to validate the chain but lacks the complete state data for each block.

Nonce

As an abbreviation for "number only used once," a nonce number is generated to create an encrypted -- or hashed -- block that connects to a blockchain. When rehashed, a nonce meets specific algorithmic difficulty levels. It is the first number a blockchain miner looks for when mining cryptocurrency.Opcode

A machine-level instruction for a processor.

Opcodes are extremely basic commands, such as addition, multiplication, and bit shifting. Higher-level programs are compiled from human-readable instructions into opcodes before being sent to the processor.

The word ‘nonce’ has a few different meanings, and in different contexts, it ends up getting used a lot of different ways. Originally formed from a contraction of a phrase meaning "not more than once", on the Ethereum mainnet, "nonce" refers to a unique transaction identification number that increases in value with each successive transaction in order to ensure various safety features (such as preventing a double-spend). Note that due to its broader use in cryptography, you may encounter ‘nonce’ being used differently on other sidechains or decentralized projects.

Non-Fungible

The property an item of not being exchangeable with other like items. For example, USD and Euros are fungible. For example, a Stratovarius violin is non-fungible because the value of it cannot be expressed in a number of other violins.

Open Source

Open source software is software for which the source code that is available to the public.

One of the benefits of open source software is that people from outside the core development team can support it, collaboratively creating new features or fixing bugs. Open source licenses typically include language that prevents anyone from reselling the core code without significant changes.

Compare to closed source.

Optimistic Rollup

A rollup that assumes the validity and good faith of transactions, and only runs a fraud proof in the case of fraud being alleged. See also ‘rollup’.

Oracle (Company)

A company based in California that produces enterprise-level software systems. It is notable for having created the Java programming language.

Oracle (Service)

Services that connect real-world data with blockchain applications.

Oracles are necessary to provide input that cannot be independently verified, such as temperature measurements. Oracles typically rely on the security of a trusted source rather than the security of trustlessness.

A third-party person, business or device that provides external information to a blockchain network via the internet. Oracles feed information from outside of the blockchain network to share smart contracts, which can trigger changes on the blockchain.

Typically, an oracle is any entity or person that is relied on to report the outcome of an event. In a blockchain network an oracle (human or machine) helps communicate data to a smart contract which can then be used to verify an event or specific outcome.

Parity

Parity Technologies is the name of a blockchain technology company that is developing a number of significant projects in the Ethereum space; however, one of its first projects was an Ethereum client, now known as Parity Ethereum; often this client is simply referred to as ‘Parity’. See also ‘client’.

One part of a public/private key pair used for asymmetric encryption and decryption.

A private key can be used to decrypt a message that is symmetrically encrypted using the corresponding public key. Private keys are kept secret from anyone that isn’t the owner. Once a private key is made public, it is useless as a point of authentication.

A key, code or string of characters that unlocks or decrypts data that has been encrypted. Private keys must be kept safe from others and cannot be recovered.

Peer-To-Peer (P2p)

Interactions between actors without a central intermediary.

P2P networks allow each peer to connect directly to all other peers in the network. P2P payments transfer value directly between actors without a processor or bank intermediary.

Cash payments are an example of P2P transactions.

P2P refers to interactions that happen between two parties, usually two separate individuals. A P2P network can be any number of individuals. In regards to a blockchain network, individuals are able to transact or interact with each other without relying on an intermediary or single point of failure.

Permissioned Ledger

A blockchain network in which access to ledger or network requires permission from an individual or group of individuals, as opposed to a public blockchain. Permissioned ledgers may have one or many owners. Consensus on a permissioned ledger is conducted by the trusted actors, such as government departments, banks, or other known entities. Permissioned blockchains or ledgers contain highly-verifiable data sets because the consensus process creates a digital signature, which can be seen by all parties. A permissioned ledger is much easier to maintain and considerably faster than a public blockchain. For example, Quorum or Hyperledger Besu are permissioned ledgers that can be more easily set up for large enterprises. In contrast, the public Ethereum blockchain is a permissionless ledger which anyone can access.

Plasma

Plasma is a term that is used to refer to one of the scaling solutions being deployed to create Layer 2 of the Ethereum network. A Plasma network functions similarly to an Optimistic rollup, inasmuch as it relies on Layer 1 Ethereum mainnet to maintain the record of transactions, and as the source for arbitration or fraud resolution. However, a Plasma network differs in other important technical ways from rollups, and is currently limited to simple operations, such as swaps and token transfers.

Private Blockchain

A blockchain or distributed ledger that has a closed network where participants are controlled by a single entity. A private blockchain requires a verification process for new participants. A private blockchain may also limit which individuals are able to participate in consensus of the blockchain network. See also ‘permissioned ledger’.

Private Currency

A currency or token issued by a private individual or firm. Typically, the token or currency is limited to use within the network of that particular firm or individual. This is not to be confused with a "privacy cryptocurrency" which are cryptocurrency with specific privacy features, such as hidden user identities.

Private Key

A private key is an alphanumeric string of data that, in MetaMask, corresponds to a single specific account in a wallet. Private keys can be thought of as a password that enables an individual to access their crypto account. Never reveal your private key to anyone, as whoever controls the private key controls the account funds. If you lose your private key, then you lose access to that account.

Private Key Infrastructure (Pki)

A set of rules and policies used to manage identification through public-key encryption in a network.

Typically, a certificate authority is also involved to certify that a specific private key corresponds to a specific user or domain. Private keys are typically stored in secure, unique files just for that key, while public keys are broadcast to everyone.

Public/private key pairs are a stronger form of authentication than username/password combinations because the owner of a private key never needs to reveal the private key in order to prove that he or she holds it. A private key can be used to sign messages using symmetric cryptography and probably assert that they came from a specific user.

The principles underlying private key infrastructures are also applied for many zero-knowledge proof applications.

Poa, Pos, Pow

Acronyms standing for Proof of X consensus mechanisms: Assignment, Stake, Work. The "o" is lowercase since you wouldn’t capitalize "of" when writing out the phrase. See also ‘consensus’, ‘Proof of Authority’, ‘Proof of Stake’, ‘Proof of Work’.

Proof Of Authority (Poa)

A consensus mechanism used in private blockchains, granting a single private key the authority to generate all of the blocks or validate transactions.

Pos/Pow Hybrid

A hybrid consensus model that utilizes a combination of Proof of Stake (PoS) and Proof of Work (PoW) consensus. Using this Hybrid consensus mechanism, blocks are validated from not only miners, but also voters (stakeholders) to form a balanced network governance.

Proof-Of-Liquidity

A cryptographically signed assertion by a trusted third-party auditor that an actor holds the declared number of resources. Proof-of-Liquidity is used for cryptocurrencies that are pegged to a real-world security or commodity.

Proof-Of-Stake (Pos)

A consensus mechanism in which the ability to produce a block is proportional to the amount of the blockchain's native cryptocurrency an actor holds. The more cryptocurrency the actor holds, the more likely it becomes that he or she will be assigned as a block producer.

A consensus mechanism in which an individual or "validator" validates transactions or blocks. Validators "stake" their cryptocurrency, such as ether, on whichever transactions they choose to validate. If the individual validates a block (group of transactions) correctly then the individual receives a reward. Typically, if a validator verifies an incorrect transaction then they lose the cryptocurrency that they staked. PoS requires a negligible amount of computing power compared to Proof of Work consensus.

Proof-Of-Stake, Delegated (Dpos)

A consensus mechanism built on the principles of Proof-of-Stake (PoS) in which stakeholders may nominate block producers.

DPoS is useful for pooling stakes, allowing many small-value accounts to meaningfully participate by collectively appointing the same block producer.

Proof-Of-Work (Pow)

A consensus mechanism in which actors race to solve a computationally difficult problem in order to win the ability to produce the next block in a blockchain.

Generally, the process involves a degree of randomness that makes it impossible to find a solution based upon previous inputs; the only information obtained from a solution is that the particular solution is valid. Multiple solutions may by valid for solving the problem, although the odds of finding two unique solutions is incredibly small.

While finding the solution to these problems requires significant processing time, proving that a solution is correct is trivial in nature. Whoever solves the problem in the context of a specific block’s data is allowed to submit that block to the blockchain. The network must then start the race over with the updated data.

Proof-of-Work’s security is rooted in the computational difficulty of the algorithm. Because it is an essentially random process to find a solution, the probability of solving the problem is related to the actor's processing speed and the acceptance criteria for the solution (the difficulty). Stricter acceptance criteria reduce the speed at which the network finds a solution, and varying the acceptance criteria can allow a network to control the solution rate.

Example

If a network is producing solved proofs every 10 seconds at 100 attempts per second, and it wants to reduce the time to five seconds, the acceptance criteria can be changed to allow twice as many possible solutions, or the network can double its processing speed.

Let’s say there are 10 good actors with machines running 10 attempts per second, making the total network rate 100 attempts per second.

For a bad actor to replace a previous solution with his or her own, he or she would need to have enough machines to make an additional 100 attempts per second. To take over all production of blocks requires only half of that though; the bad actor only needs to solve the problem faster on average than the rest of the network.

Because this threshold is 1⁄3 of the total network processing rate, the system is considered byzantine fault tolerant.

A consensus mechanism in which each block is ‘mined’ by a group of individuals or nodes on the network. Hashing a block, which is in itself an easy computational process, under PoW requires each miner to solve for a set, difficult variable. In effect, the process of hashing each block becomes a competition. This addition of solving for a target increases the difficulty of successfully hashing each block. For each hashed block, the overall process of hashing will have taken some time and computational effort. Thus, a hashed block is considered Proof of Work, and the miner that successfully hashes the block first receives a reward, in the form of cryptocurrency. PoW is singificantly more energy-intensive than other consensus mechanisms, such as Proof of Stake.

Proof-Of-Work, Delegated (Dpow)

In Delegated Proof-of-Work, the solution-finding process remains the same as in Proof-of-Work, but the actor that finds the solution may assign block-producing rights to another actor.

Protocol

A set of rules that dictate how data is exchanged and transmitted. This pertains to cryptocurrency in blockchain when referring to the formal rules that outline how these actions are performed across a specific network.

Provenance

The entire history of a product during its lifecycle including its chain of custody and all documentation of value added services and activities which were used to produce that product or service.Provenance

The entire history of a product during its lifecycle including its chain of custody and all documentation of value added services and activities which were used to produce that product or service.

Public Key

A cryptographic equation or set of parameters that corresponds to a paired private key. A public key can be used to decrypt a message that is symmetrically encrypted using the corresponding private key.

A string of unique characters created from the private key that is used to encrypt data. The only way to theoretically decrypt the data is if the user/device has the private key.

In cryptography, you have a keypair: the public and private key. You can derive a public key from a private key, but cannot derive a private key from a public key. The public key, therefore, is obtained and used by anyone to encrypt messages before they are sent to a known recipient with a matching private key for decryption. By pairing a public key with a private key, transactions not dependent on trusting involved parties or intermediaries. The public key encrypts a message into an unreadable format and the corresponding private key makes it readable again for the intended party, and the intended party only.

Quantum computing

A field within the computer sciences that focuses on developing advanced computing techniques based on principles discovered with quantum physics principles. Instead of using bits to create, store and transfer data across networks, quantum computers use qubits. Qubits allow for faster computations compared to traditional binary structures.

Relayer

A person or organization that hosts an off-chain ledger and works as a transaction intermediary between the sender and receiver.

Any party or entity which hosts an off-chain orderbook. Relayers help traders discover counter-parties and cryptographically move orders between them. 0x is an example of a popular Ethereum relayer protocol.

Ring Signature

A private-key-based cryptographic signature that can be decrypted or verified using multiple valid keys.

Ring signatures are used to obfuscate the actual parties to an action or to provide group-level permissions.

Ripple

A Blockchain 1.0 chain that seeks to connect payment providers and banks.

Ripple is backed by a number of large players in the industry, including American Express and Santander.

Rollups

Rollups (pronounced "roll ups") are one element in the set of tools and infrastructure being built as Layer 2, the scaling solutions for the Ethereum network. They consist, in general, of solutions in which the transaction data is still kept on Layer 1, the original Ethereum network, while transaction computation occurs on a side network, freeing up computational power on Layer. There are different ways of approaching this problem from a technical point of view, namely Zero Knowledge, or ZK, rollups, and Optimistic rollups. See the entries on both of these types of rollup for more, and more in-depth discussion here.

Rpc

The Remote Procedure Call is a protocol that, while not blockchain-specific, is used to transfer data between endpoints. You may often see it referred to as JSON-RPC, which is its full name.

Rug Pull

Similar to the traditional financial scam of a pyramid scheme, a ‘rug pull’ is a cryptocurrency or crypto-token based scam in which the creators of the token create hype, through injecting liquidity into their token, airdropping, and other schemes, and once investors pile in and boost the price of the token up to a certain point, the creators liquidate their share of the tokens, leaving their investors with next to nothing.Rug Pull

Similar to the traditional financial scam of a pyramid scheme, a ‘rug pull’ is a cryptocurrency or crypto-token based scam in which the creators of the token create hype, through injecting liquidity into their token, airdropping, and other schemes, and once investors pile in and boost the price of the token up to a certain point, the creators liquidate their share of the tokens, leaving their investors with next to nothing.

Satoshi Nakamoto

A pseudonymous individual or entity who created the Bitcoin protocol, solving the digital currency issue of the "double spend." Nakamoto first published their white paper describing the project in 2008 and the first Bitcoin software was released one year later.

The name used by the person or entity who developed bitcoin, authored the bitcoin white paper, and created and deployed bitcoin's original reference implementation. As part of the implementation, Nakamoto also devised the first blockchain database.

Scalability

In the blockchain industry, the ability of a network to continue functioning when the number of actors increases to infinity.

Non-scalable networks slow down and degrade as more actors enter the system.

Scalability can be defined in terms of required hard drive space, computational requirements, messaging throughput, bandwidth, and other factors.

Scatter

A wallet software for use with Ethereum, EOS, and Bitcoin.

Secure Hash Algorithm (Sha)

A cryptographic hashing function designed by the United States National Security Agency.

The specific implementation of the algorithm is denoted by its numeric suffix. For example, SHA256 creates a 256-bit hash digest.

Scalability

A change in size or scale to handle a network’s demands. This word is used to refer to a blockchain project’s ability to handle network traffic, future growth, and capacity in its intended application.

Securities And Exchange Commission (Sec)

A federal government body in the United States of America that is responsible for the oversight and regulation of investments. The nature of some cryptocurrencies designates them as a security under current laws, and they must be registered with the SEC to be legally used in the United States.

Security Token Offering (Sto)

A token offering where the token is officially classified as a security, and the token is sold to accredited investors through a regulated exchange.

STOs are registered with the SEC.

Seed (Phrase) / Secret Recovery Phrase

The seed phrase, mnemonic, or Secret Recovery Phrase is a crucial part of public blockchain technology, originally created for Bitcoin, and goes by many names. However, they all refer to a set of ordered words which correspond to determined values. These values never change, and therefore the same string of words in the same order will always produce the same number–this is the underlying functionality that allows seed phrases to back up wallets. The Secret Recovery Phrase is exactly what it sounds like: something that is secret, and should be known only to the owner of the account. If the seed phrase is given to someone else, that person has complete control over the account; they can drain it of tokens and funds, execute transactions with it, etc.

Self-Executing

Functioning by itself, not controlled by any other party other than itself. Self-executing smart contracts cut costs/overhead by removing the need for an arbitrator and trust toward a third party.

Serialization

The process of converting a data structure into a sequence of bytes. Ethereum internally uses an encoding format called recursive-length prefix encoding (RLP).

Sha256

A secure hash algorithm (SHA) with a 256-bit hash digest.

Shard

A process developed to streamline transactional speeds and create blockchain networks that are highly scalable. Sharding takes a database and partitions it into many smaller pieces called shards. These smaller shards are distributed and networked together to increase transactional performance when compared to databases that are not partitioned.

Sharding

Sharding refers to splitting the entire network into multiple portions called "shards." Each shard would contain its own independent state, meaning a unique set of account balances and smart contracts. Usually, shards must be tightly coupled and side-chains must be loosely coupled.

A type of database partitioning that separates very large databases the into smaller, faster, more easily managed parts called data shards. Sharding can potentially be used to improve blockchain performance

Sidechain

A disconnected blockchain created with the purpose of linking to a primary blockchain. This creates additional transaction processing channels, increasing speed and scalability of the blockchain network.

A sidechain is what it sounds like — it is a separate blockchain that is Ethereum-compatible. While a sidechain is a sort of scaling tool, as a class they aren’t part of Layer 2; they simply represent a way in which developers can build and enable cheaper transactions for the user (on the sidechain, in sidechain-native tokens or currencies) while maintaining compatibility with the Ethereum network. This often requires routing tokens through a special portal or bridge, as sending tokens from a sidechain to Ethereum mainnet or vice versa would result in token loss.

A discrete blockchain that is linked to a main blockchain via two-way pegs which enable assets to be interchanged between the main blockchain and the sidechain. Sidechains are a method to enable scaling and increase transaction speed by only performing necessary transactions on the main blockchain.

Simple Agreement For Future Tokens (Saft)

An investment mechanism for investors to obtain tokens from a project that has not yet launched. These agreements are similar to a Simple Agreement for Future Equity (SAFE) but are denominated in a percentage of tokens rather than a percentage of company equity.

Skycoin

A Blockchain 3.0 chain that uses an in-development consensus model known as Web-of-Trust and is capable of natively supporting all other blockchains.

SkyCoin can be used to create trustless, ad-hoc mesh networks, eliminating the need for an ISP. According to the developers, it will be able to reach thousands of transactions per second and allow users to maintain only the blockchains they are interested in (e.g., a restaurant does not need to store an auto-body shop’s transaction data).

Slashing Condition

Under a Proof of Stake (PoS) consensus mechanism, a slashing condition is one that causes the validator’s deposit to be destroyed when they trigger it. See also ‘Proof of Stake’.

Slot

A slot, on the Ethereum Beacon Chain, is a 12-second period of time during which a new block may (or may not) be proposed. Every 32 slots composes an epoch.

Smart Contract

Code that is executable within the environment of a virtual machine.

Blockchains use smart contracts in the context of the chain’s state to extend the functionality of the chain and provide trustless program execution.

Smart contracts in blockchains are particularly useful because their outputs are deterministic, meaning anyone who processes a function in a smart contract will get the same output as anyone else performing the same function.

Programs or code stored within a blockchain that automate the agreement process between two parties that wish to complete a transaction without the need for an intermediary acting as a transaction bridge.

Smart contracts are programs whose terms are recorded in computer code. While they often contain agreements or sets of actions between parties that emulate a traditional legal contract, they are not, in and of themselves, legal documents. Smart contracts are automated actions that can be coded and executed once a set of conditions is met, and are the dominant form of programming on the Ethereum Virtual Machine.

The programming language developers use to write smart contracts on the Ethereum network. Try it out on Remix. See also ‘smart contract’.

Self-executing computer code deployed on a blockchain to perform a function, often, but not always, the exchange of value between a buyer and a seller.

Solidity

A smart contract programming language built for the Ethereum Virtual Machine. Syntactically it resembles C++ and Javascript and compiles to eWASM.Staking

In the Ethereum context, ‘staking’ of tokens or currency carries the traditional meaning of ‘setting aside currency for a determined purpose’; however, ‘staking’ can happen in a variety of venues with different effects. For example, on decentralized exchanges (DEXes), there is no centralized authority or bank putting up the funds to allow transfers to happen between parties; rather, the parties amongst themselves have to establish liquidity pools in order to facilitate swaps. In this context, someone might ‘stake’ tokens into a liquidity pool, often for a promised rate of return in exchange for the use of their tokens, with the option to withdraw their tokens later.

On the Beacon Chain and Ethereum 2.0, ‘staking’ means something a bit different: 32 ETH may be staked at a determined smart contract address in order to operate a validator on the Beacon Chain; in this way, you help ensure the good functioning and safety of the network, and are rewarded for your staking.

A JavaScript-like object-oriented programming language for Ethereum for implementing smart contracts on the Ethereum blockchain.

State

The set of data that a blockchain network strictly needs to keep track of, and that represents data currently relevant to applications on the chain.

State Channels

State channels are part of the set of tools and platforms involved in scaling Ethereum and enabling Layer 2. While a complex topic, state channels are essentially methods through which the current ‘state’ of the blockchain can be exported, and based on that any given number of transactions can take place off-chain, and then be moved back onto the main Ethereum chain.

A process by which blockchain transactions are executed off-chain, collected and then written to the main chain as a single transaction in order to improve performance and reduce cost.

State Machine

A model of computation.

At any moment, a state machine has precisely one of a finite set of states. Changing to a new state requires transforming it through a state transition function. Blockchains are state machines because each block represents a change to the state, and transactions represent state transition functions.

Compare to Turing machine.

State machines are less powerful than abstract Turing machines due to the requirement of a finite number of states rather than infinite.

Szabo

A denomination of ETH. See also ‘ether (denominations)’.

Tangle

A consensus mechanism in which transactions must confirm the validity of at least two preceding transactions.

The more a specific a transaction is, the more immutable it becomes. The immutability of a transaction depends on how many transactions refer back to it and how immutable the references are

Testnet

A fork of a blockchain network that has relaxed access requirements in order to allow rapid development of applications without the overhead of a main network.

Testnets can be used to prove out new features before they are deployed to the main chain.

An alternative blockchain developers use to test applications in a near-live environment.

A staging blockchain environment for testing application before being put into production (or onto the mainnet)

Testnet Koven

Ethereum testnet that uses Proof of Authority consensus, available through MetaMask.

Testnet Rinkeby

Ethereum testnet that uses Proof of Authority consensus, available through MetaMask.

Testnet Ropsten

Ethereum testnet that uses Proof of Work consensus and is available through MetaMask.

Token

In the blockchain industry, tokens are the generalized base unit of a cryptocurrency. A token is the lowest unit possible; it cannot be divided further.

The use of blockchain to represent the value of a digital asset that is native to the blockchain network. Examples of coins include Bitcoin, and Altcoins such as Ether, Litecoin and Dogecoin.

Digital assets that are built on existing blockchain networks. They are considered non-native to the blockchain -- unlike coins, which are native to the blockchain.

A coin, in cryptocurrency, is a representation of digital asset value that is generated via its own independent blockchain.

A token represents an asset built on an existing blockchain. There are many types; see also ‘ERC-20’ and ‘ERC-721’ entries.

Cryptographic tokens represent programmable assets or access rights, managed by a smart contract and an underlying distributed ledger. They are accessible only by the person who has the private key for that address and can only be signed using this private key.

Token generation event

The process of generating the very first token in a token utility blockchain network. This signifies the launch of the network onto the open market.

The creation and first sale of a blockchain coin or token.

Token, Non-Fungible (Nft)

Single token units that cannot be combined with others, even if they are the same type. NFTs can be used to represent distinct goods, such as a land deed or a particular piece of artwork.

Data that is stored on a blockchain that certifies a digital asset is completely unique and impossible to copy or interchange.

When discussing Non-Fungible Tokens (NFTs), "fungibility" refers to an object’s ability to be exchanged for another. For example, an individual dollar is considered fungible as we can trade dollars with one another. Artwork is usually deemed non-fungible as paintings, sculptures, or masterpieces are likely to be unequal in quality or value. A non-fungible token is a type of token that is a unique digital asset and has no equal token. This is in contrast to cryptocurrencies like ether that are fungible in nature.

Token, Security

Tokens that represent a share of a company or other security.

Security tokens have specific mechanisms in place for transferring ownership in compliance with regulations. Similar to preferred shares in a company, security tokens may grant additional rights to their owners, such as voting rights in a decentralized autonomous organization (DAO).

Token, Stable

A cryptocurrency that attempts to remain a fixed value in relation to another currency, typically fiat.

Some stable tokens rely on market forces and arbitrage to maintain a consistent value, while others rely on a ratio of stored value.

Stable tokens reduce the risk associated with the traditional market volatility of cryptocurrencies.

Any cryptocurrency pegged to a stable asset, like fiat currency or gold. It theoretically remains stable in price as it is measured against a known amount of an asset less subject to fluctuation. Always spelled as one word.

A cryptocurrency which is underwritten by an asset or assets (e.g., fiat currency, commodities, etc.) designed to minimize the volatility of the price of the coin/token.

Token, Utility

A cryptocurrency that has a use case beyond simply transferring value between actors.

A cryptocurrency that is used in conjunction with a DApp to perform actions is an example of a utility token.

Tokenless Ledger

A ledger that doesn't require a native currency to operate.

Tokenization

The concept of translating business strategies, goods, or services into discrete, tradeable units that are recorded on a blockchain or other system.

Physical goods can be tokenized by associating their unique identifiers with on-chain references.

Tokenomics

The study, design and implementation of monetary management and distribution based on blockchain technology.

Total-Complete

A functional programming language that is less universal than a Turing-complete language but may have more desirable characteristics due to the lack of non-deterministic functions.

Total-complete languages cannot perform infinite loops. They can therefore be optimized by the compiler, since it always knows the number of iterations a loop will perform. Total-complete functions are guaranteed to provably terminate.

Base SQL is a total-complete language.

Transaction

A singular input into a blockchain that affects some change in the blockchain’s data.

Depending on the blockchain’s implementation, transactions can transfer cryptocurrencies, create log events, or execute smart contract functions.

Block, Transaction

A collection of transactions on a blockchain network, gathered into a set or a block that can then be hashed and added to the blockchain.

Internal Transaction

An internal transaction on the Ethereum network is one that occurs between smart contracts, rather than between addresses. Notably, they are not included on the blockchain, and therefore do not incur gas fees, but they are often crucial to carrying out the action in question, and can be viewed on Etherscan.

Fee, Transaction

An amount of cryptocurrency, typically a blockchain’s native cryptocurrency, that is charged by a miner to manipulate data on the chain.

Transaction fees are generally variable and heavily dependent upon market conditions.

Example

If many transactions are being requested, and a limited number can be included in a block, a miner chooses to include whatever transactions have the highest profit margins, i.e., the transactions with the highest fees.

Higher transaction fees can be set to incentivize miners to prioritize including a specific transaction in a block.

In the reverse, if fewer transactions are being requested than will fit in a block, miners include all transactions that meet a minimum profitability requirement, and lower transaction fees can be set.

A small fee imposed on some transactions sent across a blockchain network. The transaction fee is awarded to the miner that successfully hashes the block containing the relevant transaction.

Pool, Transaction

A list of all transactions that have been propagated through a network but not yet included in a block.

Transaction pools may vary from node to node based on which transactions they have been made aware of.

Transactions Per Second (TPS)

A measurement of the speed of a blockchain. The low TPS of most blockchains is a significant barrier to using blockchain for business, especially financial, applications.

Transparency

A primary property of public blockchains whereby any participant in a system or transaction can view the transactions on the blockchain.

Trust

Confidence in the integrity of an entity (e.g., person, organization, etc.).

Trustless

The quality of not requiring trust.

In trustless systems, bad actors are unable to negatively impact the system without the coordination of the rest of the network. Trustless systems use verifiable information or actions to operate and validate the quality of other actors.

‘Trustless’ is a term that gets used a lot in the decentralized web, and it deserves some explanation. Traditionally, to call something ‘trustless’ would sound like a negative thing. In the context of decentralized technology, it has a more technical meaning: since everyone has a copy of the ledger of all transactions ever executed, there is no need for a third-party repository of ‘truth’ in whom trust resides. We don’t rely on some centralized server somewhere that could be hacked or changed arbitrarily; anyone can verify the transactions themselves. In a way, the rules and assurances built into the blockchain provide the basis for greater trust, because the system works the same for everyone.

The elimination of trust from a transaction. Blockchain is called a trustless system because the two entities performing a transaction do not need to trust one another. The properties of blockchain - digital signatures, cryptography, etc. - provide the trust.

Turing-Complete

Turing completeness refers to the ability of a programming language to simulate a Turing machine.

Any machine that can calculate on a level equal to a programmable computer is Turing Complete, or computationally universal. The EVM, despite not existing on a single physical computer, is Turing Complete.

Turing-Machine

A machine that's capable of performing any algorithm or task that can be accomplished by a computer.

Compare to state machine.

Unconfirmed transaction

A transaction state where the blockchain network is still in the process of being verified. Depending on the blockchain network, transactions can be in an unconfirmed state for seconds, minutes, hours or days -- depending on how busy blockchain nodes are at any given moment.

Unspent Transaction Output (Utxo)

In blockchains that use UTXOs, each transaction references a previous transaction's output and consumes 100% of the output’s tokens. The desired payment amount is assigned to the recipient’s address, and ‘unspent’ tokens are assigned back to the owner’s address. This reinforces the immutability of the blockchain, as no transaction may reference a UTXO that has already been consumed.

Validator

A participant in Proof of Stake (PoS) consensus. On the Beacon Chain, validators need to stake 32 ETH, that is to submit a sort of security deposit, in order to get included in the validator set. See also ‘staking’.

Validity Proof

The proof submitted along with certain types of rollups to prove that the transactions are valid. See also ‘rollups’.

Validium

One of the technologies developed for Layer 2 scaling of the Ethereum network; see more here.

Valid block

A block that is considered to be "valid" occurs when its hash has a value that's less than the one that preceded it.

Virtual Machine (Vm)

A computer operating system that is running within another operating system.

Virtual machines can simulate a unique computer on a subset of the resources of a larger machine.

Cloud architectures use VMs to allocate the processing power of large servers to smaller applications.

Vyper

A programming language similar to Serpent that is used to build smart contracts.

Vyper can be compiled into eWASM for Ethereum.

A Python-like programming language for the Ethereum blockchain built for security, language and compiler simplicity, and auditability.

Wallet

A file or software that contains the private keys for interacting with a Private Key Infrastructure (PKI).

Typical wallet software has functionality for signing messages and transactions for the corresponding network.

A digital storage file that contains coins or tokens that are held by a user or entity. Every wallet in a blockchain network has a unique address to identify it so it can transmit/receive coins or tokens.

A designated storage location for digital assets (cryptocurrency) that has an address for sending and receiving funds. The wallet can be online, offline, or on a physical device.

Wallet, Cold / Cold Storage

An offline wallet that is never connected to the internet. These wallets protect cryptocurrencies from getting hacked online.

Wallet, Hardware

A physical device that can be connected to the web and interact with online exchanges, but can also be used as cold storage (not connected to the internet).

Wallet, HD

Hierarchical Deterministic wallets were first created for Bitcoin, and enable the creation of a very large number of accounts based on an initial seed phrase. This technology was later adopted in Ethereum wallets; when restoring a MetaMask wallet from the Secret Recovery Phrase, for example, if you "create" accounts, they will be the same accounts as previously created from that same phrase; they are derived from it.

Wallet, Hot / Hot Storage

A wallet that is directly connected to the internet at all times, for example one that is held on a centralized exchange. Hot wallets are considered to have lower security than cold storage systems or hardware wallets.

Cryptocurrency storage that is directly connected to the internet. When Bitcoin or Altcoins are stored in an exchange, this is a type of hot wallet

Wallet, Multisignature

A wallet that requires multiple private key signatures to generate a valid transaction.

Multiple actors may share a multisignature wallet, but they may not all have to participate in each transaction.

Example

A group of eight managers may be authorized to use a multisignature wallet for company expenditures, but the wallet may be set up so that a transaction can be completed with approval of any two of those managers.

Web3 / Web 3.0

Web3, or Web 3.0, are terms used synonymously with "the decentralized web" and are often used to refer, broadly, to the blockchain and decentralized technology ecosystems as a whole.

Web Assembly (Wasm)

A binary instruction format for a virtual machine implemented by all major web browsers.

WASM allows developers to add functionality that would otherwise not be possible using standard HTML/JavaScript.

Many high-level programming languages can be compiled to WASM, including C++ and Rust.

Ethereum’s virtual machine implements a version of WASM that provides additional functionality for blockchains, known as eWASM.

xPub

Short for "extended public" key, xPub is a public key that is used to house sub-keys or child keys in a wallet hierarchy.

Zcash

A cryptocurrency with enhanced privacy/security for network users.

Zeppelin/Open Zeppelin

A community of like-minded Smart Contract developers.

Zero Address

The Zero Address is an address on the Ethereum network that is the recipient of a special transaction used to register the creation of a new smart contract on the network.

Zero-Knowledge (Zk) Proof

A mathematical representation of an assertion whose output value can be determined without the input information.

Zero-knowledge proofs are used to prove that an actor is in possession of certain information without actually revealing that information. They are especially useful in cryptocurrencies because they can be used to show that a transaction is valid without revealing the sender, recipient, or amount of the transaction.

ZK research is still in its infancy.

A mechanism used to prove that a person or device holds specific data without sharing or revealing what the data or information actually is.

Zk-Snark

Zero-Knowledge Succinct Non-interactive ARguments of Knowledge are an incredible technology, and vital to the scaling of blockchain technology and the decentralized web. They are mathematically complex and can be daunting; this explanation from the Ethereum Foundation is a good primer.

51% Attack

If more than half the computer power or mining hash rate on a network is run by a single person or a single group of people, then a 51% attack is in operation. This means that this entity has full control of the network and can negatively affect a cryptocurrency by taking over mining operations, stopping or changing transactions, and double-spending coins.

When more than 50% of the miners in a blockchain launch an attack on the rest of the nodes/users to attempt to steal assets or double spend.

Last updated 3 years ago