The five key blockchain buzzwords you need to know — and none of them are Bitcoin

There’s a good chance that you’ve dipped your toe into the blockchain space to better understand what it is and how it might impact you. Chances are that you also feel a bit overwhelmed by the plethora of buzzwords that you need to wrap your head around.

To be totally honest, you don’t really need to know how blockchain works — just like you don’t need to understand how the internet works, or how cloud services actually work — but it’s helpful to know the basics, so we’ve put together a simple explanation of the top five blockchain buzzwords:

1. Decentralisation — Blockchain enables smarter transactions because the database (or ledger) is managed by a network, not any one central authority. This is typically called ‘decentralisation’, which basically means the network operates on a peer-to-peer basis — no middle man clipping the ticket.

Cryptography is used to secure and verify transactions, which are all validated and chronologically recorded on distributed ledger technology, also known as blockchain. In a decentralised blockchain environment, the ledger is updated by a network of computers, who use cryptography to validate and record every transaction — so it’s very secure, the code is law, setting a new bar for trust.

2. Smart contracts — these are essentially the rules of engagement that are stored on a public ledger and monitored by the network of computers that run the blockchain. They clearly articulate everyone’s roles and responsibilities — and also the penalties for not meeting the terms. Keeps everyone honest, while enhancing efficiency via process automation.

Because all blockchain transactions are completely transparent, it becomes clear who’s meeting the terms, and who isn’t… The smart contract rules and blockchain transparency forces people to behave in a different way — no more finger pointing.

3. Identity — This is a big one, that most people don’t realise is an issue — but are you aware that you hand over your personal information every time you sign in to and new website or app?

Organisations, like Facebook and Google can then freely monetise your information by serving up paid advertisements. There’s big money in ‘data-driven advertising’, but just to be clear — they’re not sharing the money with you.

In a blockchain environment the consumer has more control who they share their personal information with. We don’t hold the information ourselves, and we don’t have access to it unless we are given access by the consumer.

When the consumer controls their identity they can get more value for their participation in the network, and businesses have a higher degree of responsibility to provide a good service and do what they say they are going to do. If the customer experience isn’t up to standard then that user (and their data) can say ‘see you later alligator’- try not to get drunk on all that power….

4. Cryptocurrency — virtual or digital currencies really started to gain momentum Bitcoin (hey, I didn’t say I wasn’t going to mention Bitcoin at all…) and there are now a number of legitimate cryptocurrencies that you can use to trade value.

If you want to join a blockchain ecosystem (like the ours for example… J) you’re going to need a digital wallet — we’re going to cover this off in the next blog, so make sure you subscribe to our blog to get the alert.

5. Tokenisation — ‘Tokenisation’ enables new asset classes, while a ‘token’ represents a unit of value. You can assign a token to almost any asset, person, organisation or utility — a European DJ called Gramatik has just tokenised himself, so people could buy shares in his intellectual property. Has your mind just exploded? This opportunity to create new business models is broadly referred to as the ‘internet of value’.

Tokens are important in a blockchain environment because it’s how we exchange and share value with our customers and partners — Centrality is about to undergo our main token sale in mid-January, which will mean that we can further invest in our technology and platform. If you are interested in the token sale then check out our website for more details https://www.centrality.ai/token/.