This is a list of essential terminologies in blockchain with an excellent explanation of them. This Article explains several terms that are relevant to both newbies and experts.
Address: This is a unique identifier that represents a user or an account within a blockchain network. It is commonly used for sending and receiving cryptocurrencies or digital assets on the blockchain. An address usually consists of a string of alphanumeric characters and is associated with a cryptographic key pair, which includes a public key (the address itself) and a private key (used for signing transactions and accessing the associated funds).
Altcoin: This is a term commonly used in the cryptocurrency space to refer to any cryptocurrency that is not Bitcoin. It stands for “alternative coin,” indicating that it’s an alternative to Bitcoin. Examples of altcoins include Ethereum (ETH), Ripple (XRP), Litecoin (LTC), Cardano (ADA), and many others. These altcoins often have their own unique features, use cases, and underlying technologies that differentiate them from each other and from Bitcoin.
Atomic Swap: An atomic swap is a cryptographic technique that allows two parties to exchange different cryptocurrencies directly with each other in a secure and trustless manner, without the need for a centralized intermediary like an exchange. The term “atomic” in atomic swap refers to the indivisible nature of the exchange — it either happens entirely or doesn’t happen at all. This ensures that neither party can be left in a partially completed or unfair state during the exchange process.
BFT(Byzantine Fault Tolerance): This concept is a mechanism that helps a blockchain network maintain its integrity and functionality even when some members of the network are behaving maliciously or experiencing failures. It ensures the network’s reliability and consistency in the presence of adversarial nodes.
Blockchain: A blockchain is a decentralized digital ledger that holds and manages transaction records across a network of computers. Transactions are organized into blocks, which are interconnected sequentially, forming a chain-like structure. This architecture ensures transparency, security, and immutability of data.
Alternative Definition: A blockchain is a cryptographic framework designed to maintain a secure, decentralized, and tamper-resistant digital ledger. It involves grouping digital transactions or data into blocks, which are then linked using cryptographic signatures. This design makes it extremely challenging to fake, manipulate, or compromise the integrity of the recorded information.Blockchain Bridges: These are specialized smart contracts or protocols designed to establish a connection between two distinct blockchain networks. They serve as a means of enabling interoperability and communication between these separate chains. One of the key functions of blockchain bridges is to facilitate the secure and trustless transfer of assets and data between different blockchains, allowing users to interact with assets on one blockchain as if they were native to another blockchain.
Blockchain Layer: This refers to a distinct level or component within a blockchain architecture. Each layer serves a specific purpose and contributes to the overall functionality and capabilities of the blockchain system. The concept of layers is often used to enhance scalability, modularity, and interoperability in blockchain networks.
Blockchain Protocols: These are a set of predefined rules that govern the operations of a blockchain network. These protocols are designed to establish and maintain various aspects of the blockchain ecosystem, with a focus on security, network communication, and achieving consensus among participants. examples are security protocols, Network protocols, and consensus protocols.
Block: A block serves as a container that organizes and stores transactional data along with other pertinent information. Within a block, you’ll find the records of transactions, the block’s unique hash, a reference to the previous block’s hash, and additional data. With every new transaction added to a blockchain, a fresh block is generated to encapsulate it.
Block Creation: This is the process where Miners compete to create a new block containing a set of transactions from the mempool. This block also includes a reference to the previous block’s hash. forming a chain of blocks hence the term “Blockchain”.
Block Data: This refers to the information that is recorded and stored within the blocks of a blockchain, The block data consists of the Block Header, The list of transactions within the block, the block hash, etc.
Block Explorer: This is a tool, often in the form of a dApp, that allows users to explore and view information about a blockchain. It provides a user-friendly interface for accessing and visualizing various details related to blocks, transactions, addresses, and other data stored on the blockchain.
Block Header: The Block header is a critical part of a block, it includes the previous block’s hash, timestamp, Merkle root, nonce, difficulty target, version, and potentially other metadata. This information is crucial for ensuring the consistency, security, and proper functioning of the blockchain.
Block Height: This signifies the position or sequence of a specific block within the blockchain. If a block is the 6th one in the blockchain, its block height would be 6. It’s a simple yet important concept that helps establish the chronological order of blocks within the blockchain, allowing nodes and users to track and refer to specific blocks in the chain.
Block Interval: This refers to the amount of time it takes to generate a new block on the blockchain. It’s the time interval between the creation of consecutive blocks in a blockchain network. The block interval is a crucial parameter that directly influences the rate at which new transactions can be confirmed and added to the blockchain.
Block Reward: The miner who successfully adds the block to the blockchain receives a predetermined amount of newly minted cryptocurrency. the miner may also collect transaction fees paid by users for including their transactions in the block.
Block Validation: Once a miner solves the puzzle, other nodes in the network verify the solution. This involves checking whether the new block’s hash meets certain criteria, such as being below a target value. This validation ensures the integrity of the blockchain.
Bitcoin: Bitcoin is a decentralized digital currency and a groundbreaking technology that introduced the concept of a blockchain and cryptocurrencies to the world. It was created by an individual or group of individuals called Satoshi Nakamoto and was released as open-source software in 2009. Its primary purpose is to serve as a digital alternative to traditional currencies, allowing users to transact and store value in a decentralized and secure manner.
CEX(Centalized Exchange): This refers to a type of cryptocurrency exchange that operates with a centralized authority. While some CEXs might utilize certain blockchain technologies for specific features, such as token deposits and withdrawals, these operations, are usually not executed directly on a blockchain. They use their own centralized servers and databases to facilitate trading activities. Examples are Coinbase, Binance, etc.
Closed-source: This refers to software or technology for which the source code is not publicly available. In closed-source software, the underlying programming code is kept hidden and controlled by the company or individual that develops and owns the software. Users of closed-source software typically receive only the compiled executable version of the software, without access to the internal code.
Coins: Coins and Tokens can be used interchangeably but the major difference between them is that coins are the main currency of a blockchain, examples of coins are Bitcoin, Ethereum, Ripple, etc.
Cold Wallet: also known as a cold storage wallet, refers to a type of cryptocurrency wallet that is kept offline and disconnected from the internet. This deliberate isolation from online networks makes it highly secure against hacking and unauthorized access. They are typically used for long-term storage of cryptocurrencies, providing a strong level of protection against cyber threats.
Consensus: To record a transaction on the blockchain ledger, it is important for the majority of the members to validate it and be on the same page. This entire process of maintaining a “network-wide agreement” is called consensus. Examples of consensus protocols include Proof of Work (PoW), Proof of Stake (PoS), and more.
Cross-Chain Transactions: These are transactions that involve assets or data from multiple blockchains. Cross-chain solutions use techniques like atomic swaps or hash time-locked contracts to ensure that transactions occur simultaneously on both chains.
Cryptocurrency: This is one of the prominent use cases of blockchain technology. It refers to a type of decentralized digital asset or virtual currency that utilizes cryptographic techniques for secure transactions, control of new unit creation, and verification of asset transfers. Cryptocurrencies are often designed to work as mediums of exchange, utilizing blockchain technology to ensure secure and transparent transactions
DAO(Decentralized Autonomous Organisation): This is similar to a real-world Organization. They are like a team of computer programs and rules that run and work together on a blockchain, which is like a super secure digital ledger.
dApp(decentralized application): A dApp is a software application that operates on a decentralized network, typically a blockchain, utilizing smart contracts or other decentralized technologies. A dApp often includes a frontend interface that enables users to interact with the underlying blockchain or smart contracts, allowing for various functionalities such as voting, financial transactions, data storage, and more.
DeFi (Decentralized Finance): DeFi contains a wide range of applications, including DEXs, lending platforms, stablecoins, yield farming, liquidity provision, and more. Its growth has led to a significant increase in the adoption of blockchain technology for financial purposes, with the goal of creating a more open, transparent, and inclusive financial system.
Decentralization: It is an environment no single entity or individual has complete control or authority over the entire network. Instead, authority and decision-making are distributed among the participants or nodes within the network. This distribution of control ensures that no single point of failure exists, enhancing the security and resilience of the system. Each member or node in a decentralized network typically has an equal level of authority, which contributes to the overall balance and integrity of the network.
Decentralized Identity: This refers to an approach where individuals have full control over their personal data. It empowers users to securely manage, share, and verify their identity information without relying on centralized authorities. This concept uses blockchain technology, to ensure privacy, security, and user ownership of identity data. Decentralized identity aims to create a more secure, user-centric, and interoperable digital identity ecosystem.
Decryption: It’s the opposite of encryption and runs on the receiver’s end. An encrypted message must be changed to its original form so the receiver can understand it and for that purpose, the decryption algorithm validates the receiver to determine whether he is the rightful reader or not and then shows the message.
Delegators: Some proof-of-stake networks allow users to delegate their staked tokens to validators. Delegators contribute to the consensus mechanism by choosing a validator they trust and staking their tokens with that validator. The validator then uses the combined staked tokens to increase their chances of being selected to propose blocks.
DEX(Decentralized Exchange): This refers to a type of decentralized cryptocurrency exchange that operates on a Blockchain Network. allowing users to trade directly with one another without the need for an intermediary. Examples are Uniswap, PancakeSwap, SushiSwap, etc.
Difficulty Adjustment: The difficulty of the mathematical puzzle adjusts over time to maintain a consistent block creation rate, usually around 10 minutes in the case of Bitcoin. If more miners join the network, the difficulty increases; if miners leave, it decreases.
Distributed Ledger: It is a ledger that is maintained by many nodes in a decentralized network this ledger is used to record and manage transactions in a way that ensures transparency, security, and immutability and organizes them in chronological order. this ledger can be of two types, Permissioned and permissionless. based on who has access to view the ledger.
Double Spending: It is an attack executed by one of the members of the blockchain network, and the aim is to send two similar transactions to the nodes and convince the network that at least one of them is valid. However, in reality, both transactions conflict or somewhat contradict each other logically.
EVM(Ethereum Virtual Machine): This is a virtual engine that executes smart contracts code within Ethereum’s network allowing dApps to run on the Ethereum blockchain. This enables developers to create applications that can execute code and perform functions without the need for a centralized authority.
EWASM(Ethereum WebAssembly): It’s a project that brings the Wasm technology to the Ethereum blockchain with the aim of replacing EVM with WebAssembly. By integrating WebAssembly into Ethereum, developers could potentially write smart contracts in a wider range of languages and enjoy better execution speed.
Encryption: This is the process of a Blockchain network encoding its data to make it meaningless and unreadable for anyone outside the network. For instance, if you send a message to Alice on the network as plain text, it will immediately be changed into ciphertext.
Ethereum: Ethereum is a decentralized and open-source blockchain platform that serves as a foundation for developers to create and deploy smart contracts and dApps. Ethereum introduced the concept of a programmable blockchain, allowing developers to write code that automates complex processes, and it enabled the growth of a wide range of decentralized applications, spanning from finance and gaming to supply chain management and more.
Flash Loans: They are a unique and innovative concept in the world of DeFi that allows users to borrow a specific amount of cryptocurrency for a very short period, often within a single transaction block on a blockchain. Unlike traditional loans, flash loans don’t require collateral upfront. Instead, the borrowed funds and any potential profits from their use must be returned within the same transaction. If the borrower fails to repay the loan within the same block, the entire transaction is reversed.
Fork: This is the creation of a new blockchain network that branches off from an existing one. It can occur due to differences in consensus, rules, or features within the blockchain community. Forks can be categorized as hard forks or soft forks.
Gas Limit: This refers to the maximum amount of computational effort that a transaction or smart contract execution is allowed to consume on a blockchain platform. In other words, it represents the upper bound on the computational resources that a transaction can utilize.
Genesis Block: The first block in a blockchain, known as the Genesis Block, serves as the foundation of the entire network. It’s distinct because it doesn’t refer to a previous block. Developers craft it manually during network launch, imbuing it with setup details and operational rules. Beyond its technical role, the Genesis Block often bears a special message or symbolic meaning, signifying the start of the blockchain journey.
Governance Tokens: They are a type of cryptocurrency token that is issued by DAOs or blockchain protocols to enable holders to participate in the decision-making processes of the network. These tokens grant holders the right to propose and vote on changes, upgrades, and various parameters related to the network’s operation and development.
Hard Fork: This involves significant changes to the protocol that are not backward-compatible with the previous version. Nodes that upgrade follow the new protocol, while nodes that don’t remain on the old protocol. This can result in the creation of two separate chains with different transaction histories.
Hash: A hash refers to the unique output generated by a hash function. In the context of blockchain, hashes play a crucial role in connecting blocks within a blockchain.
Hash Collision: It refers to an event where two inputs fed to a hashing function deliver the same output. It should be noted that it’s almost impossible to create a hash collision on purpose as it’s entirely random and the output of a hash function is never known.
Hash Function: A hash function is a mathematical algorithm used to calculate the hash of a block’s header. It takes a combination of specific inputs, often referred to as a “message,” and then transforms this input into a standardized string of characters with a fixed size.
Hashrate: It’s the rate at which a machine or an algorithm executes a hashing function per second.
Hot Wallet: This refers to a type of cryptocurrency wallet that is connected to the internet and actively used for transactions and trading. they are potentially vulnerable to hacking, malware attacks, and other online threats. As a result, they are generally recommended for storing smaller amounts of cryptocurrencies that are needed for day-to-day activities, Examples are Trust Wallet, Exodus, MyEtherWallet, and more.
Hyperledger: This is an open-source collaborative effort, hosted by the Linux Foundation, that aims to advance and develop blockchain technologies and distributed ledger systems for various industries and use cases. It provides a platform for developers and organizations to collaborate on building enterprise-grade blockchain solutions.
Hyperledger Fabric: This is one of the prominent blockchain frameworks hosted by the Hyperledger project. It’s an open-source enterprise-grade distributed ledger platform designed to build, deploy, and operate permissioned blockchain networks. Fabric offers flexibility, modularity, and features that make it suitable for various business use cases.
Immutable: Once the data is published on the chain and a block is created for the data, it cannot be changed, whatsoever. Not even the developer who created the system can change it and this property is known as immutability.
Interoperability: This is the ability of different blockchain networks or systems to communicate, interact, and seamlessly share information and data with each other. It’s the concept of enabling compatibility and collaboration between various blockchains, allowing them to work together effectively despite differences in their protocols, consensus mechanisms, and designs.
Layer 1 — Base Layer: This is the foundational layer of a blockchain network. It includes the main blockchain protocol and its core features. This layer is responsible for maintaining the consensus mechanism, validating transactions, and storing the primary ledger. Examples of Layer 1 blockchains include Bitcoin and Ethereum.
Layer 2 — Scaling Solutions: L2 solutions are built on top of L1 to address scalability issues and improve the network’s throughput. They can enhance the scalability and performance of a blockchain network while maintaining the security and decentralization benefits of the base layer.
Liquidity Pools: They are a fundamental concept in DeFi and blockchain platforms that enable users to contribute their assets to facilitate trading, lending, and other financial activities without relying on traditional financial intermediaries. A liquidity pool is essentially a smart contract that holds a certain amount of multiple tokens in reserve.
Mainnet: This refers to the primary and fully functional blockchain network of a cryptocurrency or blockchain project. It’s the live version of the blockchain where real transactions occur, and it’s open to the public for actual usage. It stands in contrast to testnets, which are used for development and testing purposes
Mempool: This serves as a crucial component within a blockchain network where pending transactions are temporarily stored. These transactions wait in the mempool until they are validated and confirmed by miners or validators and subsequently added to a new block on the blockchain.
Merkle Tree: This is a clever way of arranging data in a tree-like structure. This structure allows for quick and efficient checking of whether a specific piece of information, like a transaction, is part of a larger set of data without needing to examine every detail. This is important for confirming the integrity of transactions on a blockchain in a fast and secure manner.
Middleware Platforms: These platforms provide a common layer that sits between different blockchains, acting as a bridge to facilitate communication and data sharing. These platforms often include standardized APIs and protocols. Examples are Cosmos, Polkadot, and more.
Mining: This involves the process of validating and adding new transactions to a blockchain by solving complex mathematical puzzles. Miners compete to create a new block that includes a set of transactions from the mempool. This block is then added to the blockchain after being validated through the consensus mechanism of the network, often utilizing proof-of-work (PoW) or other consensus algorithms.
Multi-Signature: This is a security feature that requires multiple authorized parties to provide their approval before a transaction or an action is executed. It adds an extra layer of protection and control, as it ensures that no single individual has complete authority over the process.
Network Protocols: These protocols facilitate communication between nodes in a blockchain network. They define how data is transmitted, routed, and validated across the network. Network protocols help maintain a reliable and efficient peer-to-peer communication system.
Nodes or Peers: This is a term we use to refer to a participant in a decentralized blockchain network, they maintain a copy of the blockchain and actively contribute to the network’s operations. Nodes work collectively to validate transactions, secure the network, and ensure the integrity of the blockchain.
Nonce: This is a special number used in the process of mining new blocks. Miners change the nonce value in their mining efforts, hoping to find a specific value that, when combined with other block data, produces a hash with certain properties. This hash must meet specific criteria to be considered valid.
Non-Fungible Tokens(NFTs): NFTs are a type of digital asset that represents ownership of a unique item, piece of content, or digital collectible on a blockchain. Unlike cryptocurrencies which are fungible and can be exchanged on a one-to-one basis, NFTs are indivisible and cannot be exchanged on a like-for-like basis due to their unique characteristics. Examples are Cryptokitties, Decentraland, CryptoPunks, etc.
Off-chain Transactions: These are transactions conducted outside the main blockchain to enhance speed and reduce fees, as they don’t require the same level of validation and consensus as on-chain transactions, They enable faster processing by sidestepping the full validation process and later settling on the main chain, preserving security.
On-chain Transactions: These are transactions that occur directly on the blockchain. These transactions are fully recorded and validated on the blockchain network, ensuring their security and immutability.
Open-source: This refers to software or technology that is made available with its source code accessible to the public. In other words, the underlying programming code of open-source software is openly shared and can be viewed, modified, and distributed by anyone.
Oracle: This refers to a specialized service or mechanism that acts as a bridge between the blockchain and the outside world, providing smart contracts with access to real-world data or events that are not directly available on the blockchain. Oracles enable blockchain applications, particularly smart contracts, to interact with external information, making them more versatile and powerful.
Peer-to-Peer(P2P): It signifies interaction that happens between peers or nodes in a network, P2P allows a node to communicate directly with other nodes, sharing resources, information, or services without the need for a central server.
Permissioned Blockchains: These require an invitation or permission to join the network, They are typically used in private and business settings and are tailored for certain use cases, power is restricted to a small group of validators who make most of the network decisions.
Permissionless Blockchains: They are open and anyone can have a hand in using and running them. you can even participate in their consensus mechanism given that you meet specific requirements. Bitcoin, Ethereum, and BNB Chain are examples of Permissionless Blockchains, which are typically transparent and decentralized.
Plasma: This is a framework designed to enhance the scalability and speed of blockchain networks, particularly Ethereum, The main idea behind Plasma is to reduce the burden on the main blockchain by moving a significant portion of transactions to the child chains. These child chains function independently but are still connected to the main blockchain. Each child chain can handle its own set of transactions and smart contracts, enabling faster and more efficient processing.
Private Blockchains: This is a Blockchain where the network is not generally available to the public and is entirely operated by a few individuals or an organization. This means only network members can read and write on the ledger and the transactions are not public and you can only view them if you have access.
Private Key: A private key is a cryptographic code that serves as a crucial element in asymmetric encryption systems like those used in cryptocurrencies. Your private key is used to sign transactions and messages, proving your ownership of certain assets or actions on the blockchain. It’s a highly sensitive piece of information that should be kept secret. Access to your private key provides control over the associated cryptocurrency holdings, allowing you to send funds and execute various actions.
Proof-of-Authority: This is a consensus algorithm used in blockchain networks to validate and secure transactions. Unlike traditional consensus algorithms like PoW or PoS, PoA does not rely on computational power or ownership of tokens to achieve consensus. Instead, it grants the right to validate transactions to a set of authorized nodes or validators based on their reputation or identity.
Proof-of-Stake: A consensus mechanism in cryptocurrencies for validating transactions and creating new blocks. Validators are chosen based on the tokens they “stake” as collateral. Validators’ reasons to act honestly are tied to their staked tokens, making malicious behavior risky.
Proof-of-work: It’s a mechanism that slows down the creation of a new block, in the case of Bitcoin it takes about 10 minutes to calculate the required proof-of-work and add a new block to the chain. this concept makes it hard to tamper with the blocks because if you tamper with one block you’ll need to calculate all the proof-of-work for the following blocks.
Provide Liquidity: This term refers to depositing funds into a liquidity pool on a decentralized platform, often a DEX or a lending protocol. However, the compensation you receive isn’t necessarily at the end; rather, you earn compensation based on the trading fees or interest generated by the deposited funds.
Public Blockchains: A public blockchain is a distributed digital ledger accessible to the general public over the Internet. It is characterized by transparency and openness, enabling anyone to view, read, or write data on the blockchain. While typically associated with permissionless participation, a public blockchain can also be permissioned, incorporating controlled access to certain actions or participants, making it a versatile platform for various use cases. Hyperledger Fabric is an example of a permissioned Public Blockchain.
Public Key: A public key is a cryptographic key that corresponds to your private key in an asymmetric encryption system. It’s used to generate a unique address on a network, often referred to as your “public address.” Anyone with your public address can send you money or transactions, but they can’t derive your private key from the public key. This is a fundamental aspect of the security provided by asymmetric encryption.
Simple Agreement for Future Tokens (SAFTs): This mechanism was designed particularly for investors which allows them to buy tokens for a project that is yet to be launched. The amount that the investor receives is in the percentage of total tokens, rather than the company’s equity.
Scalability: This refers to the capability of a system to handle increased demand, usage, or growth smoothly and efficiently. As the number of users, transactions, or data increases, a scalable system should be able to accommodate this growth without compromising its performance or responsiveness.
Security Protocols: These protocols are responsible for ensuring the security, integrity, and privacy of data on the blockchain. They include encryption, authentication, and authorization mechanisms that safeguard sensitive information from unauthorized access.
Security Tokens: Security tokens are a type of digital asset that represents ownership or rights in an underlying traditional financial asset, such as stocks, bonds, real estate, or other investment instruments. Examples are tZERO(TZROP), SPICE VC (SPICE), etc.
Sharding: This is a technique used in blockchain technology to improve scalability and network performance. It involves dividing the entire blockchain network into smaller segments called “shards,” each of which can process its own transactions and smart contracts independently. This allows for greater throughput and faster transaction confirmation times, as multiple shards can work simultaneously.
Slashing: Slashing is a mechanism designed to discourage validators from engaging in harmful or fraudulent behavior. When a validator is found to have acted against the network’s interests, a portion of their staked tokens can be “slashed.” This penalty serves as a deterrent to maintain the security and integrity of the network by discouraging validators from attempting to undermine the consensus process.
Smart Contracts: A smart contract is a self-executing program stored on a blockchain. It contains code that defines the rules and conditions for a specific agreement or transaction. Smart contracts are distributed across all nodes of the blockchain network and are immutable once deployed, meaning their code cannot be altered once they are set in motion.
Smart Contract Auditing: This is the process of reviewing and assessing the code and functionality of a smart contract to identify vulnerabilities, bugs, and security risks. Since smart contracts handle sensitive operations and valuable assets, it’s critical to ensure they are secure and free from vulnerabilities that could be exploited by malicious actors.
Soft Fork: This involves backward-compatible changes to the protocol. New rules are introduced, but nodes following the old protocol can still validate transactions. However, if the majority of the network adopts the new rules, it can lead to a consensus change.
Solidity: This is a programming language that is widely used in the blockchain industry for writing smart contracts on platforms like Ethereum. Its syntax is designed to resemble JavaScript, making it more accessible to developers who are already familiar with web development languages. Solidity enables developers to define the rules and behaviors of smart contracts, allowing them to create decentralized applications and automated agreements on blockchain platforms.
Staking: Staking is the act of holding and locking a certain amount of the network’s native tokens as collateral. While stakers may include validators, not all stakers necessarily validate transactions or propose blocks. Staking can also be a way to support the network’s security and participate in the consensus mechanism indirectly.
Staking Pools: also known as validator pools or node pools, are a concept in blockchain and cryptocurrency networks that allow individual users to combine their resources, usually tokens, for the purpose of participating in the network’s PoS consensus mechanism, Staking pools are particularly relevant in PoS-based networks.
State Channels: They are a scaling solution in blockchain technology that allows off-chain execution of transactions while still ensuring the security and trustworthiness of the blockchain. They enable participants to conduct a series of transactions without having to directly interact with the blockchain for each transaction, thereby reducing congestion and increasing the network’s throughput.
Testnet: This is a separate and isolated blockchain network specifically designed for testing and development purposes. It replicates the functionalities of a real blockchain but operates with tokens that have no real-world value, created to allow developers and users to experiment with new features, smart contracts, applications, and upgrades without risking real assets or transactions.
Testnet Tokens: These are tokens used on blockchain testnets. Testnet tokens have no real-world value and are meant solely for testing purposes. They allow developers to simulate transactions and interactions on a blockchain network without any financial implications.
Throughput: This refers to the rate at which data or transactions can be processed and transferred within a given time frame. throughput often indicates how many transactions the network can process per second (TPS)
Token Standards: define essential characteristics and behaviors of tokens, including how they can be created, transferred, managed, and interacted with by smart contracts and dApps. Standards ensure that tokens are interoperable and compatible across different blockchain networks, enabling seamless exchange and utilization.
Tokenization: Tokenization is the process of converting real-world assets, such as physical assets, financial instruments, or rights, into digital tokens that are recorded on a blockchain or another digital ledger. These tokens can represent ownership, value, or access to the underlying assets, and they can be traded, transferred, or utilized within a digital ecosystem.
Tokens: These are assets that are digitally transferable between two people. they are used for certain cases in the blockchain, Types of tokens are Utility Tokens, Security Tokens, Non-Fungible Tokens, etc. Tokens are bought using coins.
Transaction: This refers to an action that involves the exchange of assets, tokens, or data between two accounts on the blockchain network. Transactions can encompass various actions, such as transferring cryptocurrency from one wallet to another, executing smart contracts, recording ownership changes, and more.
Transaction Data: This contains the various pieces of information associated with a specific transaction on a blockchain. Including the sender’s address, the amount sent, the recipient’s address, the gas fee, timestamp, and transaction hash, are essential components that provide a comprehensive record of the transaction. This data is stored on the blockchain and contributes to the transparency and traceability of transactions within the network.
Transaction/Gas Fee: This is the cost required to execute a transaction on the network. these fees cover the computational resources, network bandwidth, and security measures needed to process and validate transactions.
Utility Tokens: They are designed to have a specific purpose within a particular ecosystem or platform. They provide access to certain features, services, or benefits provided by that ecosystem. examples are Binance Coin (BNB), Filecoin(FIL), Chainlink (LINK), etc.
Users: Users are individuals or entities who interact with a blockchain network for specific purposes, such as sending transactions, accessing dApps, or storing data. Users typically interact with the network as clients, using wallets, browsers, or other software to access and utilize blockchain functionalities.
Validators: They are participants in a blockchain network who typically hold and lock a certain amount of cryptocurrency as collateral. They play a key role in maintaining the integrity of the network by validating transactions and creating new blocks. Validators are often selected based on their stake in the network. This stake serves as an incentive for validators to act honestly and responsibly, as they have something to lose if they behave maliciously or inaccurately.
Wallets: A wallet in the context of crypto and blockchain is a digital holder used to manage your account in a network a wallet is also used to manage, store, and access private keys, public keys, etc. A wallet also provides an interface that allows the user to communicate with the network and sign transactions.
Wasm(WebAssembly): This is a binary instruction format that’s designed to be fast, efficient, and portable across different platforms. It’s often used to improve the performance of web applications. WebAssembly is considered to be more efficient in terms of speed and resource consumption compared to Ethereum’s current EVM.
Web3: This is a term that signifies the evolution of the Internet into a decentralized and user-centric ecosystem. It envisions a new paradigm where individuals have greater control over their digital experiences, data, and interactions. Unlike the current Web2, which relies heavily on centralized platforms and intermediaries, Web3 is built on blockchain and other decentralized technologies.
Whitepaper: This is a comprehensive and formal document that outlines the concept, technical details, objectives, and potential implementations of a blockchain and cryptocurrency, a whitepaper serves as a detailed introduction to a new cryptocurrency, blockchain platform, or dApp.
Wrapped Tokens: A wrapped token, often referred to as a wrapped version of an underlying asset, is a digital representation of a real-world asset or cryptocurrency that has been issued on a blockchain using a specific token standard. The concept of wrapped tokens is commonly used to bring assets from one blockchain to another, facilitating cross-chain interoperability and expanding the utility of the underlying asset.
Yield Farming: also known as liquidity mining, is a DeFi practice that involves earning rewards by providing liquidity to various cryptocurrency protocols and platforms. It’s a way for cryptocurrency holders to put their assets to work and generate returns in the form of additional tokens or interest.
Zero-Knowledge Proofs (ZKPs): They are a cryptographic method that allows one party (the prover) to prove to another party (the verifier) that a certain statement is true without revealing any specific information about the statement itself. In simpler terms, ZKPs enable someone to prove they possess certain knowledge without disclosing what that knowledge is.
Useful Links:
Ethereum Developer Docs
Introduction to Smart Contracts
Tokens and how they work
How Mining works
Dive deep into Blocks
Genesis Block
Hash Functions dive deep
Transactions dive deep
DAO dive deep
Consensus Mechanism Dive Deep
More on Merkel Trees
Top comments (0)