Common Blockchain Terms:
Altcoin is an abbreviation of “Bitcoin alternative”. Currently, the majority of altcoins are forks of Bitcoin with usually minor changes to the proof of work (POW) algorithm of the Bitcoin blockchain. The most prominent altcoin is Litecoin. Litecoin introduces changes to the original Bitcoin protocol such as decreased block generation time, increased maximum number of coins and different hashing algorithm.
ASIC is an acronym for “Application Specific Integrated Circuit”. ASICs are silicon chips specifically designed to do a single task. In the case of bitcoin, they are designed to process SHA-256 hashing problems to mine new bitcoins.
An online tool for exploring the blockchain of a particular cryptocurrency, where you can watch and follow live all the transactions happening on the blockchain. On each token’s resource page, we have links to block explorers if you want to check it out!
Block height refers to 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.
A confirmation means that the blockchain transaction has been verified by the network. This happens through a process known as mining, in a proof-of-work system (e.g. Bitcoin). Once a transaction is confirmed, it cannot be reversed or double spent. The more confirmations a transaction has, the harder it becomes to perform a double spend attack.
“The secret use of your computing device to mine cryptocurrency.” This happens within your browser, and doesn’t even need a program to be installed. Thanks to Ray Li from HackerBits, who contributed this definition. Check out his page on in-browser cryptojacking for more of an explanation on how it works, and how to protect yourself.
A decentralized organization where the method of governance is in some fashion “autonomous,” i.e., it’s not controlled by some form of discussion, process, or committee. The organization is run through rules encoded as computer programs called executable distributed code contracts (EDCCs or smart contracts).
Distributed ledgers are a type of database that are spread across multiple sites, countries or institutions. Records are stored one after the other in a continuous ledger. Distributed ledger data can be either “permissioned” or “unpermissioned” to control who can view it.
A digital signing algorithm is a process by which a user can produce a short string of data called a “signature” on a document, using a private key. Anyone with the corresponding public key, the signature, and the document can verify that (1) the document was “signed” by the owner of that particular private key, and (2) the document was not changed after it was signed.
Double-spending is the result of successfully spending some money more than once. Bitcoin is the first to implemented a solution in early 2009 which protects against double spending by verifying each transaction added to the blockchain to ensure that the inputs for the transaction had not previously already been spent.
The creation of an ongoing alternative version of the blockchain, by creating two blocks simultaneously on different parts of the network. This creates two parallel blockchains, where one of the two is the winning blockchain. The winning blockchain gets determined by its users, by the majority choosing on which blockchain their clients should be listening. You can watch a video about Bitcoin’s August 1st fork here!
The very first block in the blockchain.
A hardfork is a change to the blockchain protocol that makes previously invalid blocks/transactions valid, and therefore requires all users to upgrade their clients.
The number of hashes that can be performed by a miner in a given period of time (usually a second).
A protocol that allow users in low capacity environments (smart phones, browser extensions, notebooks and tablets) to interact with blockchain.
Smart contracts on the blockchain can not access the outside network on their own. Therefore oracles sit between a smart contract and the external world, providing the data needed by the smart contract to prove performance while sending its commands to external systems.
Private blockchains are private because of the genesis block they are using. Their blocks do not match with any other blockchains.
A private key is a string of data that shows you have access to bitcoins in a specific wallet. Private keys can be thought of as a password; private keys must never be revealed to anyone but you, as they allow you to spend the bitcoins from your bitcoin wallet through a cryptographic signature.
A cryptographic key that can be obtained and used by anyone to encrypt messages intended for a particular recipient, such that the encrypted messages can be deciphered only by using a second key that is known only to the recipient (the private key).
PROOF OF STAKE (PoS)
An alternative to the proof-of-work system (see next term), in which your existing stake in a cryptocurrency (the amount of that currency that you hold) is used to calculate the amount of that currency that you can mine. If you have more questions about proof-of-stake, our Ask an Expert about it may help!
PROOF OF WORK
A system that ties mining capability to computational power. Blocks must be hashed, which is in itself an easy computational process, but an additional variable is added to the hashing process to make it more difficult. When a block is successfully hashed, the hashing must have taken some time and computational effort. Thus, a hashed block is considered proof of work.
Ring signature is a cryptographic technology that could provide a decent level of anonymisation on a blockchain. These ring signatures make sure individual transaction outputs on the blockchain can’t be traced. A message signed with a ring signature is endorsed by someone in a particular group of people. One of the security properties of a ring signature is that it should be computationally infeasible to determine which of the group members’ keys was used to produce the signature.
Blockchains that are interoperable with each other and with Bitcoin, avoiding liquidity shortages, market fluctuations, fragmentation, security breaches and outright fraud associated with alternative cryptocurrencies.
A softfork is a change to the bitcoin protocol wherein only previously valid blocks/transactions are made invalid. Since old nodes will recognize the new blocks as valid, a softfork is backward-compatible. This kind of fork requires only a majority of the miners upgrading to enforce the new rules.
State channels are interactions which get conducted off the blockchain without significantly increasing the risk of any participant. Moving these interactions off of the chain without requiring any additional trust can lead to significant improvements in cost and speed. State channels work by locking part of the blockchain state so that a specific set of participants must completely agree with each other to update it.
A global environment built for developers to test platforms. Virtual currencies can be obtained, which have no actual value, for the purposes of troubleshooting or developing new applications, platforms, and ideas.
A small fee imposed on some transactions sent across the Bitcoin network. The transaction fee is awarded to the miner that successfully hashes the block containing the relevant transaction.