It can be hard sometimes to understand exactly whats going on with blockchain.
Words float on without meaning for beginners who struggle to understand the basics.
Each term comes with a resource to consult where you’re free to learn more.
The glossary contains content fromFlipside Cryptos guide on the blockchain and cryptocurrency sector.
Blockchain Glossary
Blockchain:The foundational technology behind the blockchain and cryptocurrency sector.
This is a new way of distributing both trust and data.
It is an alternative to traditional systems where a central organization holds all the data.
It’s free, every week, in your inbox.
Blockchain is a distributed ledger.
Resource to read:What is Blockchain Technology?
A Step-by-Step Guide For Beginners
Distributed ledger:This is an analogy often made about blockchains.
Distributed ledgers arent a new concept: the island of Yap used individual tables as early as 500 AD.
They yelled at one another whenever they made a new transaction.
Blockchains and cryptocurrencies offer the global, virtual web link equivalent of that system.
Resource to read:What is a Distributed Ledger?
CoinDesk
Cryptocurrency:A token or currency built on top of blockchain technology.
This token helps capture and distribute value from users of the blockchain.
it’s possible for you to think of Bitcoin as the first system and cryptocurrency stemming from the blockchain.
Cryptocurrencies are a subset of what are known as cryptoassets.
Two of the most prominent examples of these exchanges areCoinbaseandBinance.
Your public key is like your email address.
Its what allows other people to send you funds.
you’ve got the option to share your public key with the general public.
Services likeEtherscancan scan account balances and transactions associated with a public key.
Private keys are the password to your email account.
Resource to read:Why Do I Need a Public and Private Key on the Blockchain?
Cryptocurrency Wallets: Cryptocurrency wallets are ways of storing your private and public keys to your cryptoassets.
A wallet is a safe you might access to then get your keys.
The majority of cryptocurrency wallets are single-signature.
This means you only need one persons private key to control the balance within it.
MultiSig means you need more than one private key to spend funds.
This allows you to set up an M-of-M scheme.
Platforms likeBitGoandXapoprovide MultiSig wallets for their users.
How it works in some more detail: the cryptographic mining piece involves solving cryptographic puzzles.
A computer needs to find a nonce to combine with unverified transactions to output a verified string.
In practice, its a much less energy-intensive practice than mining.
Resource to read:What Are Bitcoin Nodes and Why Do We Need Them?
Decentralization is an ideal of the blockchain community.
However, it has not been perfectly achieved.
The control of mining resources is very centralized.
Resource to read:The Meaning of Decentralization
Public vs.
There are also private blockchains that have gatekeepers who determine who can join.
Resource to read:What Are Atomic Swaps?
Hash tables are a mainstay of computer science.
It is still the dominant cryptocurrency now.
One chain adopts one set of rules and another continues the original set of rules.
A hard fork is how Bitcoin and Bitcoin Cash split.
It separated out the unlocking signature with the scripts that send and receive data with the transactional data.
This allows the connection to process more transactions per second.
Users dont have to wait as long for bitcoin transactions.
It opens up bidirectional payment channels between different individuals, allowing Bitcoin to process many more transactions per second.
Payment channels have pre-deposited amounts of crypto placed into them.
They allow individuals with channels open between them to transact seamlessly without using the blockchain.
Once you get a final balance, it is validated into the blockchain.
This allows for many more payments to be done per second.
It also means there is some centralization between large payers.
It replaces the Elliptic Curve technique currently used to generate keys with the Schnorr technique.
This allows programmers to build distributed applications.
The cryptocurrency associated with the Ethereum blockchain is known as Ether.
Resource to read:What is Ethereum?
DApps seem like regular web applications.
The code can be audited by the public.
Smart contracts are often regarded as a compliment or a replacement to traditional legal contracts.
Resource to read:What Are Smart Contracts?
A Beginners Guide to Smart Contracts
Gas: Gas is used as a transactional cost in the Ethereum blockchain.
Gas is correlated with how much computational work your request takes.
This ensures that transactional costs are rightly set for the amount of work the system needs to do.
Resource to read:What is meant by the term gas?
The entire organization is run on the blockchain.
Shareholders buy tokens that give them the right to vote on future decisions.
Ethereum used to be able to process 20 transactions a second.
Bitcoin could only process 4.
Visa and Mastercard can process about 20000 transactions a second.
Casper is an in-between step for the Ethereum blockchain to change over from proof-of-work to proof-of-stake.
ERC20 allows anybody to create a token built on top of Ethereums blockchain.
It is the basis of the initial coin offering craze and the advent of new altcoins.
These are collateralized or not with other cryptoassets.
Resource to read:Stablecoins Flipside Crypto
Initial Coin Offering:Another way to originate tokens for a blockchain.
Note that there is no standard way of conducting initial coin offerings.
