Blockchain revolution has introduced innovative practices in today's world, especially those relating to cryptocurrencies. As in most of the technology, terminology of cryptocurrencies and blockchain are in full development, that is, are continually incorporated new terms. Therefore, we have developed a glossary of technical terms that will help you to understand better the blockchain language as well as master this jargon.
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Airdrop – A token distribution from a cryptocurrency network operator. The tokens are given to all the owners of the cryptocurrency or are assigned with the condition of following a specific activity, such as advertising the cryptocurrency on social networks.
Altcoin – Whatever another cryptocurrency other than the Bitcoin is called "Altcoin" (that results from "alternative currency"). There are hundreds of "Altcoins" in which investors from all over the world can invest, for example, XRP, NEO, Stellar, among others.
ASIC – This abbreviation stands for "Application Specific integrated circuit". An ASIC is a chip specifically designed to follow a particular task. In the world of blockchain it is common to refer to this as a chip developed to work on a mining computer and is considered superior to CPU and GPU.
51% Attack - This term describes a situation in which there is too much computing power in a single point of blockchain. An operator or group of operators that controls 51% of the system could deliberately manipulate or perform transactions that could compromise the system.
Bitcoin – It’s the first created and the largest cryptocurrency (by market capitalization). Bitcoin was launched in 2009 as a decentralized currency created with blockchain technology. It is the first application of the blockchain in the real world. Bitcoin was created by a person or group that is hidden under the pseudonym of Satoshi Nakamoto.
Blockchain – A decentralized network created in a continuous string of codes segment of a default dimension (block). All network transactions are archived to a public registry, which exists across the network, which means that you do not need to have a central server to authorize such transactions.
Cold Storage – A security measure for storing cryptocurrencies in an offline environment. The latter could be a storage device (such as a USB flash drive) or a paper wallet.
Consensus – From the moment that many of the data on a blockchain public network are memorized at the same time in different areas of the network, all members needs to have the same copy of these code segments (such as a public record) throughout the Network.
Cryptocurrency –This is the first major application of the blockchain, a Cryptocurrency is a currency projected not to have a centralized property, and each of its tokens and transactions are unequivocally encrypted. Blockchain technology is the infrastructure that allows to memorize the Cryptocurrency and which tokens can be redeemed on the network.
DAO – Stands for "Decentralized Autonomous Organization". This term describes an organization that uses blockchain practices, such as smart contracts, to manage, without the need for a central authority.
DAPPS – Means "Decentralized apps". Fundamentally, these are programs that uses the blockchain to create almost any type of application that revolves around a decentralized network.
Digital signature-This is a term commonly used to identify an individual or an action on the Internet. In the blockchain, it is customary to refer to a unique identifier granted to a particular user, token, or transaction.
Fork – Since the blockchain is decentralized, each of the changes in the network must be accepted by the users to be implemented. If a sufficient number of users accepts an improvement or a change in the codes, it is deployed across the network. A modification that continues to support earlier versions is called the Soft fork, while one that doesn’t is called a hard fork. Sometimes, if a divergence in the community is verified in relation to the bifurcation, it could be the creation of a new parallel blockchain. As is the case of Bitcoin Cash and the Ethereum Classic.
Genesis Block –This is the first block of codes created in a blockchain network.
Hash function – It’s a practice of using an algorithm to assign a "fingerprint" to any data. When storing information in a blockchain, processing is used to create a unified way of identifying code blocks by converting them into a string of fixed-size numbers and letters.
ICO- Initial coin offering. This term describes a scenario in which a company collects funds by issuing tokens or a Cryptocurrency, which is sold to the first investors at a fixed price.
Liquidity – Ease with which a certain Cryptocurrency can be converted into money. Liquidity depends on many factors, such as supply and demand as well as the time it takes to process transactions.
Mining – This is the practice of allocating computing power to perform network transactions and receive tokens as a reward. Each transaction is encrypted by an equation and its process requires considerable computing power. The miners, who solves the equation first and then allows the transaction to be made, are rewarded with a small commission.
Mining Fund – This fund was created by a group of miners to elaborate more transactions and receive more commissions. The funds collected are divided between the members.
Node – This is a computer on the network that makes a copy of the blockchain log book. Nodes are scattered to help maintain decentralized formatting.
Paper Wallet – It’s a cold storage solution considered one of the safest ways to archive cryptocurrencies. The wallet can be printed on any printer and includes the private key and the user's public key encoded with a QR code. When users want to access their funds, all they need to do is scan their wallet.
Participatory test - A method that determines which operators can choose to add new blocks to the string, thus obtaining an extraction commission. This method favors, among those involved in the mining process, those who have more tokens than those who have less.
Peer-to-peer Network (P2P) – This is a practice of sharing information on a network that is determined directly between two parts, without needing to have a server through which data is passed.
Private Key – Here, each user on the network has a private key. Only the user knows this key, which would be the equivalent of a password.
Proof of work - This is a similar concept to proof of participation, since it is used to decide which miner has the power to create a block. However, with the proof of work methodology, the criterion of choice is determined by the computing power and not the digital richness of the miners.
Public key - If the previously mentioned private key is an equivalent of a password, the public key is a kind of user name, since everyone can see it in the public registry.
Red Lightning - "Second level” solution designed to dramatically increase the speed of transaction processing time in a blockchain. The red Lightning creates a P2P network to prepare the transactions before they are transmitted to the registry in the underlying block string.
Registration Book – A digital record of all transactions that occurred on a particular blockchain network. The system history is stored throughout the network and is continually updated to match each other, so that anyone can verify the transactions on the network.
SegWit - This abbreviation stands for "segregated witness". The term refers to a solution that increases the speed of a network of blocks. The SegWit could be implemented as a soft branch in a blockchain network, which would improve its functions without the need to create a new cryptocurrency or that previous versions of the network are incompatible.
Smart Contract –It’s an algorithm that uses blockchain technology to automatically execute a particular contract. When the conditions of a contract are fulfilled, it is executed, and its parts are rewarded according to the terms of this contract. The Ethereum blockchain network is the one that has made popular the use of smart contracts.
Tokens - An individual currency related to a specific blockchain, which represents its cryptocurrency, and which gives value to transactions made within the network. For example, the Litecoin network tokens are called LTC.
Transaction Commission - Since the transactions of the blockchain network requires a lot of computing power, miners of the network compete for the right to draw up the transactions giving to all the computing powers. The miner who ends up making the transaction receives the Commission.
Wallet – An online program or client that allows users to save, transfer and control their balance. There are some wallets that supports a specific cryptocurrency, meanwhile others, on the other hand, supports a variety of cryptocurrencies, but on a single platform.
White Paper — A document that serves as a report or guide to a complex problem. In the world of Cryptocurrency, the white paper is a description to transmit the vision, the plane or the structure of a Cryptocurrency or a blockchain network.
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