Blockchain glossary

Address
Cryptocurrency addresses are used to send or receive transactions on the network. An address usually presents itself as a string of alphanumeric characters. Works similar to a traditional bank account number and can be shared publicly with others.

Altcoins
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

Anti Money Laundering (AML)
Laws and regulations in the United States and other countries to prevent illegal activities. Compels exchanges and other money transmitters to report suspicious activity.

Arbitrage
Taking advantage of the price difference of an asset on two different markets or exchanges, often internationally. The price difference is used for a quick profit.

ASIC
Short form for ‘Application Specific Integrated Circuit’, it’s a silicon chip specifically designed to do a single task. Often compared to GPUs, ASICs are specially made for mining and may offer significant power savings.

Backup Phrase
A mnemonic passphrase made up of 12 or 24 words. It acts as a backup, ensuring that you can always access your funds. In the event that you forget your password or lose your device, your Backup Phrase is the only way you have to restore the wallet and retrieve access to your funds.

Bitcoin
Bitcoin is the first decentralized, open source cryptocurrency that runs on a global peer to peer network, without the need for middlemen and a centralized issuer.

Bitcoin Cash
A clone (AKA "fork") of Bitcoin that focuses on processing high volumes of transactions differently. Created because of disagreements about how to best grow digital currency.

Bitcoin Gold
A clone (AKA “fork”) of Bitcoin that focuses on handling high volumes of transactions differently. Similar to Bitcoin Cash and also created because of community disagreements.

Block
Blocks are packages of data that carry permanently recorded data on the blockchain network. Each block memorizes what took place in the minutes before it was created. Each block contains a record of some or all recent transactions and a reference to the block that came immediately before it. It also contains an answer to a difficult-to-solve mathematical puzzle – the answer to which is unique to each block. New blocks cannot be submitted to the network without the correct answer – the process of “mining” is essentially the process of competing to be the next to find the answer that “solves” the current block. The mathematical problem in each block is extremely difficult to solve, but once a valid solution is found, it is very easy for the rest of the network to confirm that the solution is correct. There are multiple valid solutions for any given block – only one of the solutions needs to be found for the block to be solved.

Blockchain
A blockchain is an encrypted, secure, tamper-resistant shared ledger where transactions are permanently recorded by appending blocks. The blockchain serves as a historical record of all transactions that ever occurred, from the genesis block to the latest block, hence the name blockchain. A blockchain is a perfect place to store value, identities, agreements, property rights, credentials, etc. Once you put some information inside it, it will registered forever. It is decentralized, disintermediated, cheap and censorship-resistant.

Block Explorer
Block explorer is an online tool to view all transactions, past and current, on a particular blockchain. They provide useful information such as network hash rate and transaction growth.

Block Reward
A form of incentive for the miner who successfully calculated the hash in a block during mining. Verification of transactions on the blockchain generates new coins in the process, and the miner is rewarded a portion of those.

Bug Bounty
A reward offered for finding vulnerabilities and other issues in computer code. Often offered by cryptocurrency companies like exchanges and wallet providers to prevent hacks.

Client
A software program a user executes on a desktop, laptop or a mobile device to launch an application

Cold Storage
The offline safekeeping of private keys which allow for access to cryptocurrency funds. Typically this is done through hardware wallets, USB drives, and paper wallets.

Confirmation
The successful act of hashing a transaction and adding it to the blockchain.

Consensus
Consensus is achieved when all participants of the network agree on the validity of the transactions, ensuring that the ledgers are exact copies of each other.

Cryptocurrency
A digital currency that uses strong computer code (cryptography) and a decentralized system to allow for transactions without using middlemen like banks. AKA digital currency

Dapp
A decentralised application (Dapp) is an application that is open source, operates autonomously, has its data stored on a blockchain, incentivized in the form of cryptographic tokens, with no entity controlling the majority of them and operates on a protocol that shows proof of value.

Decentralized Exchange
A peer-to-peer exchange that allows users to buy and sell cryptocurrency and other assets without the control or fees of a central authority.

Digital Signature
Private keys are used for signing transactions. Each time a transaction is sent over the blockchain it gets signed by the user’s private key. The signed transaction is broadcast over the network together with the corresponding public key. Each miner is able to verify the signature by verifying the signature with the public key.

Distributed Ledger
Distributed ledgers are ledgers in which data is stored across a network of decentralized nodes. A distributed ledger does not have to have its own currency and may be permissioned and private.

Distributed Network
A type of network where processing power and data are spread over the nodes rather than having a centralized data centre.

Double Spending
Double spending occurs when a sum of money is spent successfully more than once.

Encryption
The use of mathematics and computer code (cryptography) to protect sensitive data like digital wallets, private keys, and personal information from unauthorized access.

Equity Tokens
A token that represents an ownership interest in a company. Equity tokens work similar to traditional stocks and may include voting rights. Equity tokens are also used to represent ownership rights in company debt. They are designed to improve transparency and liquidity (the ability to buy and sell the equity when investors need it).

ETH
ETH is the short ticker symbol for Ethereum, which is often used on exchanges and other financial platforms. Ethereum is a platform for creating and running smart contracts.

Ether
The digital currency of the Ethereum network. Ether is used to pay the transaction and processing fees of Ethereum decentralized applications and smart contracts.

Ethereum
Ethereum is an open software platform based on blockchain technology that enables developers to write smart contracts and build and deploy decentralized applications(Dapps). The native token of the blockchain is called Ether which is used to pay for transaction fees, miner rewards and other services on the network. The main innovation of Ethereum is the Ethereum Virtual Machine (EVM) which runs on the Ethereum network and enables anyone to run any application. The EVM makes the process of developing blockchain applications much easier. Before the emergence of Ethereum developers had to develop a dedicated blockchain for each application they wanted to create. This process is time-consuming and resource-intensive. Ethereum will enable the development of many applications on the same platform, making the process much easier and accessible for developers. The Ethereum Project, based in Switzerland, raised millions in seed money by pre-mining and selling ethers to supporters & investors. As opposed to Bitcoin, its scripting language is Turing-complete and full-featured, expanding the kinds of smart contracts that it can support. The Ethereum project wants to “decentralize the web” by introducing four components as part of its roadmap: static content publication, dynamic messages, trust-less transactions and an integrated user-interface

EVM
The Ethereum Virtual Machine (EVM) is a Turing complete virtual machine that allows anyone to execute arbitrary EVM Byte Code. Every Ethereum node runs on the EVM to maintain consensus across the blockchain.

Fiat currency
Any money declared by a government to be to be valid for meeting a financial obligation, like USD or EUR

Fork
Forks create an alternate version of the blockchain, leaving two blockchains to run simultaneously on different parts of the network.

FUD
Internet culture term that stands for Fear, Uncertainty, and Doubt. It means negative information that is being purposefully spread about an asset to make people sell.

Hard Fork
A type of fork that renders previously invalid transactions valid, and vice versa. This type of fork requires all nodes and users to upgrade to the latest version of the protocol software.

Hash Rate
The number of hash computations that can be performed by a cryptocurrency miner with their computer hardware. The rate determines their mining effectiveness and profit.

Halving
A reduction in the block reward given to crypto-currency miners once a certain number of blocks have been mined

Hybrid PoS/PoW
A hybrid PoS/PoW allows for both Proof of Stake and Proof of Work as consensus distribution algorithms on the network. In this method, a balance between miners and voters (holders) may be achieved, creating a system of community-based governance by both insiders (holders) and outsiders (miners).

Initial Coin Offering (ICO)
ICOs are types of crowdfunding mechanisms conducted on the blockchain. Originally, the main idea of an ICO was to fund new projects by pre-selling coins/tokens to investors interested in the project. Entrepreneurs present a whitepaper describing the business model and the technical specifications of a project before the ICO. They lay out a timeline for the project and set a target budget where they describe the future funds spending (marketing, R&D, etc.) as well as coin distribution (how many coins are they going to keep for themselves, token supply, etc.). During the crowdfunding campaign, investors purchase tokens with already established cryptocurrencies like Bitcoin and Ethereum.

Know Your Customer (KYC)
Laws and regulations that require banks and other financial institutions to keep and report many details of their customers' personal information and transactions.

Merkle Tree
A system that splits complicated hash code functions into smaller chunks (creating a tree-like shape). This allows faster verification on large-scale blockchains

Market Capitalization
The total value of an asset, calculated by multiplying the total number of outstanding shares (or coins) and the price per share (or coin). Represents total size and popularity.

Mining
Mining is the act of validating blockchain transactions. The necessity of validation warrants an incentive for the miners, usually in the form of coins. In this cryptocurrency boom, mining can be a lucrative business when done properly. By choosing the most efficient and suitable hardware and mining target, mining can produce a stable form of passive income.

Mining Pool
A group of people or organizations who come together to pool and share their computer resources for cryptocurrency mining. They then also split the rewards.

Monero
A secure, private, and untraceable cryptocurrency. Monero is focused on being anonymous internet money, hiding your accounts and transactions from anybody but you.

Multi-Signature
Multi-signature addresses provide an added layer of security by requiring more than one key to authorize a transaction.

Node
A copy of the ledger operated by a participant of the blockchain network. Any computer that connects to the blockchain network is called a node. Nodes that fully enforce all of the rules of the blockchain (i.e., Bitcoin) are called full nodes. Most nodes on the network are lightweight nodes instead of full nodes, but full nodes form the backbone of the network

Oracles
Smart contracts on the blockchain cannot access the outside network on their own. Oracles work as a bridge between the real world and the blockchain by providing data to the smart contracts.

Peer to Peer
Peer to Peer (P2P) refers to the decentralized interactions between two parties or more in a highly-interconnected network. Participants of a P2P network deal directly with each other through a single mediation point.

Public Address
A public address is the cryptographic hash of a public key. They act as email addresses that can be published anywhere, unlike private keys.

Private Key
A private key is a string of data that allows you to access the tokens in a specific wallet. They act as passwords that are kept hidden from anyone but the owner of the address. Each time a user runs a cryptocurrency wallet for the first time a public-private key pair gets generated. The private key is a randomly generated number which allows users to transact over the blockchain. It is locally stored and kept secret. When a wallet asks users to do a backup what this means is that the users must secure their private key. There are different types of wallets such as online wallets, mobile wallets, desktop wallet, hardware wallets or paper wallets. The category of each wallet is determined by where private keys are stored.

Proof of Stake
A consensus distribution algorithm that rewards earnings based on the number of coins you own or hold. The more you invest in the coin, the more you gain by mining with this protocol.

Proof of Work
A consensus distribution algorithm that requires an active role in mining data blocks, often consuming resources, such as electricity. The more ‘work’ you do or the more computational power you provide, the more coins you are rewarded with.

Pump & Dump
Investment scheme that advertises the benefits of a certain asset, with the hope that a lot of people buy it and raise the price. The asset is then sold by the originator for profit.

Ripple
A Blockchain payment system for banks, payment providers, digital asset exchanges, and other companies. Designed to move large amounts of money quickly and reliably.

Satoshi
The smallest unit of Bitcoin, equal to 0.00000001 BTC

Satoshi Nakamoto
A person or group of people who created the bitcoin protocol and reference software, Bitcoin Core (formerly known as Bitcoin-Qt). In 2008, Nakamoto published a paper on The Cryptography Mailing list at metzdowd.com describing the bitcoin digital currency. In 2009, they released the first bitcoin software that launched the network and the first units of the bitcoin cryptocurrency, called bitcoins

Scrypt
Scrypt is a type of cryptographic algorithm and is used by Litecoin. Compared to SHA256, this is quicker as it does not use up as much processing time.

Seed
Look at Backup Phrase.

Segregated Witness (SegWit)
A proposed change to Bitcoin's blockchain that would increase the block size limit from 1MB to 2MB for faster transactions. The implementation would be a fork (see above).

Smart Contracts
Smart contracts encode business rules in a programmable language onto the blockchain and are enforced by the participants of the network. Smart contracts aim to provide security superior to traditional contract law and to reduce other transaction costs associated with contracting.

Soft Fork
A soft fork differs from a hard fork in that only previously valid transactions are made invalid. Since old nodes recognize the new blocks as valid, a soft fork is essentially backward-compatible. This type of fork requires most miners upgrading in order to enforce, while a hard fork requires all nodes to agree on the new version.

Solidity
Solidity is Ethereum’s programming language for developing smart contracts. Its syntax is similar to that of JavaScript, and it is intended to compile into bytecode for the Ethereum Virtual Machine(EVM)

Testnet
A test blockchain used by developers to prevent spending assets on the main chain.

Token
In the context of Blockchains, a token is a digital identity for something that can be owned. Historically, tokens started as meta information encoded in simple Bitcoin transactions, thereby taking advantage of the Bitcoin blockchain’s strong immutability. Today, modern tokens are created as sophisticated smart contract systems with complex permission systems and interaction paths attached. Smart contracts can be understood as software agents, which act deterministically and autonomously, within the scope of a given network, according to a predefined rule set. If the governance rules around issuance and management of a token are sufficiently complex regarding how they coordinate a group of stakeholders, token smart contracts may be understood as organizations sui generis.

Transaction Block
A collection of transactions gathered into a block that can then be hashed and added to the blockchain.

Transaction Fee
All cryptocurrency transactions involve a small transaction fee. These transaction fees add up to account for the block reward that a miner receives when he successfully processes a block.

Utility Token
A token that grants owners access to Blockchain products or services for specific projects. These tokens are not intended to be investments or to grant equity ownership in a project, though some investors speculate on a potential future price increase. Utility tokens are also known as utility coins, app coins, and user tokens.

Vanity Address
A cryptocurrency public address (see above) that includes custom letters and numbers that are human-readable. An example would look like 1r4523COINCOIN7u01174234kf.

Vitalik Buterin
Rusian-Canadian programmer and creator of the decentralized application platform Ethereum. Born 1994, Vitalik also contributed to other open-source projects.

Wallet 
A file that houses private keys. It usually contains a software client which allows access to view and create transactions on a specific blockchain that the wallet is designed for.

Wei
The smallest fraction of an Ether coin (Ether is the native currency of the Ethereum network). One Ether is made of 1000000000000000000 Wei, making Ether very divisible.

Whale
An investor that holds a very large amount of an asset. For cryptocurrencies, whales are often early buyers of a coin or large, institutional buyers that hold a massive stake.

Whitepaper
A formal, scientifically-written description of an idea or project. Whitepapers cover the theory and practical applications of cryptocurrencies, as well as many technical details.

XMR
XMR is the short ticker symbol for Monero, which is often used on exchanges and other financial platforms. Monero is a privacy-focused, untraceable cryptocurrency.

Zero Confirmation Transaction
Cryptocurrency transactions are confirmed at regular intervals. New transactions have zero confirmations, which means they have not been verified yet and are less reliable.