Blockchain : Related Technical terms

Blockchain is generally considered a topic of complex technical nature. An important requirement to advance in the blockchain space is to understand how certain technical elements mutually interact and cohere with each other (especially when trying to understand crypto-economics or crypto-law). This in turn requires a basic familiarity with its terminology. Here is a basic list of about 20 commonly used blockchain terms that should help you digest the more technical-heavy discussions.These terms are mostly based on technical stuff related Blockchain whatever the explaination given will be on regards of blockchain.

• Private Key
  A private key is the privately held key that allows a wallet owner to send signed transactions from their respective address (public key).
• Public Key
  A public key is your wallet address and is needed by other entities to send you messages or transactions.

Private & Public Keys

• Satoshi
  A Satoshi is the smallest granularity of a given cryptocurrency, aka the smallest decimal entity of a cryptocurrency. In example of Bitcoin, 0.00000001 BTC (8 decimals) is the smallest division of Bitcoin possible, and therefore reflects one Satoshi.
• Whitepaper
  A whitepaper is an in-depth paper on a specific topic that presents a problem and provides a possible solution. New blockchain ideas are often presented in the form of a whitepaper.

Whitepaper

• P2P (Peer-to-peer)
  Peer-to-peer stands for a decentralised network where all participants are directly connected with each other without some sort of central connectivity point. All peers (participants, nodes/miners) are directly connected with one another.

P2P

• dApp
  dApp stands for decentralized application. This could be any smart contract deployed on the Ethereum blockchain, as they all operate autonomous, aka decentralised. CryptoKitties is an example of a dApp.

Dapp

• Smart contract
  A smart contract is a digital contract programmed on a blockchain (specifically designed to host smart contracts, like the Ethereum blockchain). A smart contract is deployed on an address on this blockchain and cannot be moved nor changed afterwards. The contract (basically a script) operates and executes fully automatic without any interference from a third party. It is publicly available to anyone to read and use. A smart contract often comes with new tokens. These tokens are minted at the address of contract deployment. Here is an example of how the smart contract could work: a smart contract named ‘supercontract’ is deployed, and mints 1,000 ‘supercoin’ on the same address. The contract is programmed to automatically send 1 supercoin back to every address that sends the contract address 1 Bitcoin. Although smart contracts cannot be changed, there are some clever tricks to update smart contracts. An example is to include an override codeline referring to a non-existent contract that only you could create in the future (by including an address exclusively available to you for example) which is ignored if it doesn’t exist. Another example is by copying the smart contract, updating it, changing the address and deploy it on this new address. Then log in on the old smart contract address and send all tokens over to the new contract address.

Smart contracts

• Consensus Algorithm
  Perhaps one of the most important terms in the space and definitely crucial to understand essential differences between various cryptocurrencies. The consensus algorithm is the blockchain element that determines how consensus is reached on that blockchain. In other words; it is the part of the blockchain protocol that describes who gets to validate blocks of data (and thus is entitled to the reward) and how others can verify its legitimacy. All participating entities on the blockchain must adhere and follow the same consensus algorithm to participate on the blockchain.
• Consensus Algorithm — Proof-of-Work
  The Proof-of-Work consensus algorithm is perhaps the most common one, and is used on (amongst others) the Bitcoin blockchain. When the PoW algorithm applies, the first miner that presents a ‘proof of work’ for a block gets to validate it. This proof of work can be generated by repeatedly inserting transaction data (block) + a random strings of digits (nonce of block) into a (hashing) formulae, until a desirable outcome is found (the proof of work). Other miners can 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. PoW has been hotly debated as a controversial consensus algorithm because of the electricity costs involved in performing the formulae calculations.
• Hashing
  Hashing is the procedure that a miner on a Proof-of-Work blockchain constantly repeats in order to find an eligible signature (aka a proof of work). In other words; it is the procedure of repeatedly inserting a random string of digits into a hashing formulae until finding a desirable output. This is an example of a hashing formulae (HSA1).
• Nonce
  The nonce is an essential part of the blocks processed in a Proof-of-Work blockchain. The nonce is a small piece of data in the block that can be changed randomly and repeatedly all the time so miners can keep hashing the data of the entire block (changes every time the nonce changes) until they find a suitable outcome (signature).
• Transaction

A transaction is basically a completion of addition of block data.Or Confirmation.

• Confirmation
  The amount of confirmations a block has refers to how many blocks have been added on top of that block on the blockchain. Every added block counts as a confirmation because all nodes on the network indirectly also verifiy (confirm) the blocks before it again. Hence, if 5 blocks are added on top of a block, that block has 5 confirmations. The more confirmations a block has, the less likely it is to be altered (harder to attack), thus the safer the transaction is considered to be.

-Ledger

A blockchain is a decentralized, distributed, and oftentimes public, digital ledger consisting of records called blocks that is used to record transactions across many computers so that any involved block cannot be altered retroactively, without the alteration of all subsequent blocks.

• Miner (or forger)
  A miner is a node on the network attempting to add new blocks to the blockchain. On a Proof-of-Work blockchain a miner does this by hashing. On a Proof-of-Stake blockchain miners are often called ‘forgers’ instead, because they add blocks to the blockchain by staking.

Miner

• Node (validator) (client)
  A node is basically a small server that stores, updates and broadcasts a full copy of the blockchain. A blockchain exists on nodes. If no nodes are online, a blockchain is offline and can’t be updated or used. In case of Proof-of-Work, miners are always required to run a full-node in order to mine.

Nodes

• Lightning network
  The lightning network is an extra layer (“layer 2”) on top of a blockchain (on Bitcoin, for example) that enables faster transaction processing by using ‘payment channels’. A payment channel can be opened between peers (parties) that registers all transactions between these parties without sending them all straight to the actual blockchain. When the payment channel is closed, all transactions are settled with each other and the final outcome of all transactions is sent to the actual blockchain.
• Plasma
  Plasma is the Lightning Network concept implemented on the Ethereum blockchain.
• Fungible
  Fungible means that a given good is identical. In crypto,we often talk about fungible or non-fungible tokens. A fungible token is Bitcoin. One Bitcoin is and will always be one Bitcoin, just like any other Bitcoin. Some other tokens however, can be non-fungible, meaning that these tokens can have unique mutual differences. An example is CryptoKitties. The exchange of CryptoKitties is technically achieved by exchanging tokens, but each of the CryptoKitties tokens is unique, as it needs to reflect a different kitty (for example hair colour). These tokens are non-fungible, they have slightly different properties.

• Hyperledger
  Hyperledger is an open source collaboration effort created to advance cross-industry blockchain technologies. It is a platform that unifies companies and developers to coordinate and build blockchain frameworks across various industries. The Hyperledger initiative has over 100 members, including enterprises like IBM, Samsung, Deutsche Borse, American Express, BNP Paribas and Wells Fargo.

• Permissionless blockchains
  A permissionless blockchain is a blockchain where users don’t need permission from anyone on the network in order to perform certain actions, including joining the network. Therefore, it is publicly available to anyone, usually very transparent and decentralized. The (voting) power is equally distributed between all network participants. Example: Bitcoin (BTC), Litecoin (LTC).
• Permissioned blockchains
  Permissioned blockchains are the opposite. Specific nodes or entities on these blockchains have authorizing powers over others, allowing them to appoint validators and allow or deny access to the network. Permissioned blockchains have centralized authorities, can be closed and private ecosystems, and are often less transparent. Example: Ripple (XRP). These blockchains are often deployed in the area of internal business operations.