9 Key Terms All Blockchain Technology Companies Want You To Know

It seems like everyone is talking about the blockchain right now.

However, if you don’t know the right keywords, it can be hard to know what blockchain technology companies are talking about. That’s why we’ve put together this list of essential terms blockchain technology companies think you should know.

Some believe that the blockchain revolution will be as big as the internet revolution of the ’90s. It’s important to get caught up on the current blockchain terminology so you don’t get left in the dust.

The blockchain is basically a digital log that permanently stores information. This storage can be public, private, or even a combination of both. All the copies of digital information are synced, and activity can’t be deleted or changed once it’s there.

This decentralized technology creates a brand new platform for digital transactions. Now, let’s take a look at the key terms you need to know to talk about the blockchain.

1. Cryptocurrency

Since the meteoric rise of bitcoin, many people have heard of cryptocurrency. However, hearing it and knowing what it means are two different things.

Cryptocurrency is a digital form of exchange that takes the place of cash or credit. Bitcoin is the best-known form of cryptocurrency because it was the first. However, many other cryptocurrencies have been developed since. Today, there are more than a thousanddifferent kinds.

Bitcoin, in particular, is closely related to blockchain technology companies. It’s decentralized: no particular institution or individual runs bitcoin. Instead, it’s controlled by the people who use it, just like the blockchain is.

The reason these two things are so closely related is that the blockchain was actually a direct result of bitcoin. The blockchain was developed as a component of bitcoin, to allow this digital currency to be spent on a decentralized digital platform.

2. Encryption

Truthfully, everyone with an internet connection should know what encryption is.

Encrypting information means it is hidden so that no one can view it without the right login code or password. This helps keep sensitive information safe if it’s stored online.

Security is important for all online exchanges, so encryption is a word you’ll definitely want to know before you start moving more of your transactions online.

3. Digital Mining

New bitcoins hit the market through a process known as “mining.” The people who make this happen are called “miners.”

These miners use powerful computers to be sure that all the necessary transactions are correctly validated. Miners not only create bitcoins, but they are also paid in them.

Although the process by which bitcoins are created can be difficult to explain to a layperson, it’s important to at least understand what people mean when they talk about mining in the digital world.

4. Ethereum

This is another decentralized online platform. In fact, Ethereum uses a blockchain of its own.

It was meant to simply be an improvement upon the technology but ended up having even bigger applications that reach far beyond the financial.

Ethereum can also be used to make “smart contracts.” These “contracts” are software that can automatically execute orders that have been programmed in. Ether, the cryptocurrency used here, is the second-most popular after bitcoin.

5. Nodes

The blockchain is formed by a network of computers. Those computers are known as “nodes.”

Nodes have to both store and distribute the most recent copies of transactions performed on the blockchain. This information is updated in real time, or as it happens.

Miners are also nodes in the network. However, not every node that makes up the network is a miner.

6. Hash

Blockchain miners have to find groups of blocks, and then have them validated properly. “Block” refers to the digitally stored records in the chain.

This is how bitcoin is created and given value. To get the blocks validated, miners have to be able to identify them with a unique digital password, known as a hash.

These passwords are like fingerprints. They’re unique and can never be repeated. Whenever a hash gets discovered by a miner, it’s automatically updated in all the nodes in real time.

Hashes are what give bitcoin its value: they’re unique and rare. The hash is like a precious stone, and bitcoin is the valuable jewel that comes from it.

7. Token

Tokens take the place of money — chips in poker games are examples of tokens, as are the special coins used for subway fare in the past.

When it comes to blockchain technology companies, “token” has a very similar meaning. Tokens represent a value that can be used to purchase goods or services in the blockchain.

Tokens are similar to cryptocurrencies like bitcoin, but not quite the same. They can be used to buy many different services, while bitcoin has more specific applications.

8. Initial Coin Offerings

Initial Coin Offerings, or ICOs, are a way of financing blockchain technology companies.

These companies offer tokens, just like other companies may offer shares of company stock to consumers. Company shareholders use digital coins to buy their shares in the blockchain.

Of course, ICOs operate differently from the actual stock market, since the blockchain is completely decentralized and doesn’t have the same strict regulations that the stock market does.

9. Forks

The decentralized blockchain is great because it’s completely democratic. There is no leader but the people. Information is updated in real time and made accessible to everyone.

However, there is a bit of a catch-22 there. It can be hard to make changes or upgrades when everyone has to be in agreement in order to make a change.

Centralization and authority would allow more changes to be made but would take away something vital to blockchain technology. Therefore, forks result when decisions are made without total user agreement.

Forks are splits that happen when a disagreement causes the network to divide. The good news is that some great advances can happen as a result of forks since they allow things to change without losing decentralization.

Put These Blockchain Terms to Use

The blockchain is an advanced technology that has created a whole new way to perform transactions using valuable digital resources.

Blockchain technology companies are growing rapidly, and digital currency is rising in value. How can you harness this knowledge for yourself?

Start learning how to use blockchain trading now. To learn more about how and why you should use blockchain platforms, check out this post.